Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : LAI -v- TIAO [No 2] [2009] WASC 22

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : LAI -v- TIAO [No 2] [2009] WASC 22 (S)

Incorporated association - Failure to abide by constitution - Failure to keep and maintain records - Failure to elect Board members - Failure to hold valid meetings - Question of who are or were the members of the Association - No ordinary members of the Association

Waiver - The meaning of 'waiver' - Whether open to the Board of the Association to 'waive' the membership criteria in the constitution and apply its own criteria - Board bound by the membership criteria in the constitution

Agency - Unauthorised contract for the sale of land owned by the Association - Whether a person who was a member of the Board and a foundation member of the Association acted on behalf of the Association in entering into the contract - Whether the person had actual or apparent (ostensible) authority to sell

Joinder of parties to proceedings - Procedural fairness - Whether third person should have been joined as a party to the primary proceedings - Whether orders made by the trial judge affecting third person should be set aside

Associations Incorporation Act 1987 (WA)

Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570

Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394

Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd [1975] HCA 49; (1975) 133 CLR 72

Durban Roodepoort Deep, Ltd v Newshore Nominees Pty Ltd [2005] WASCA 231

Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50

Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

George Whitechurch Ltd v Cavanagh [1902] AC 117

Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549

Homestyle Pty Ltd v City of Belmont [1999] WASCA 59

International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49; (2009) 240 CLR 319

John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 84 ALJR 446

Kavourakis v Waverley Bowling & Recreation Club Ltd [2010] NSWSC 439

Lai v Tiao [2006] WASC 232

Lai v Tiao [No 2] [2009] WASC 22 (S)

Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144; (2006) 156 FCR 1

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

Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52

Perseus Mining NL v Landbrokers (Perth) Pty Ltd [1972] WAR 12

Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405

Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd [2005] WASCA 106; (2005) 30 WAR 290

Owen JA's reasons....................................................................................... 6

Murphy JA's reasons................................................................................... 56

2 BUSS JA: The second respondent, Australian Chinese Confucius-Mencius Saint Tao Centre Inc (the Association), is a religious and charitable organisation. It was incorporated on 22 December 1992 under s 9(1) of the Associations Incorporation Act 1987 (WA) (the Act). The primary purpose of the Association is to provide a temple and other facilities for the followers of I-Kuan Tao. I-Kuan Tao is a religious movement. It originated in China in the course of the 20th Century and incorporates elements of Confucianism, Taoism and Chinese Buddhism.

3 The Association is the registered proprietor of a piece of land at Lot 42 Warton Road, Canning Vale (the Land). The Association's temple is on the Land. The Land was purchased and the temple was constructed substantially, if not wholly, from moneys contributed by various persons to the Association.

4 On 15 April 2005, the first respondent (Mr Lai) commenced proceedings in the Supreme Court as plaintiff against the first appellants (Mr Tiao and Mr Hui Wang) as first defendants and the Association as second defendant. In the proceedings, Mr Lai sought to restrain by permanent injunction what he claimed was the unauthorised sale by Mr Tiao, purportedly on behalf of the Association, of part of the Land. Mr Lai also sought, amongst other things, a permanent injunction restraining Mr Tiao and Mr Hui Wang from representing that they are directors of the Board of the Association and a declaration that various persons named in an annexure to the statement of claim are the only members of the Association.

5 The proceedings were tried before Johnson J. Her Honour entered judgment for Mr Lai and made numerous declarations and orders.

6 Mr Tiao and Mr Hui Wang have appealed to this court against her Honour's judgment.

The Level Holdings Contract and Level Holdings' non-joinder as a party to the Supreme Court proceedings

7 The second appellant (Level Holdings) was not a party to the proceedings in the Supreme Court.

8 On 11 May 2004, Mr Tiao entered into a contract, purportedly on behalf of the Association as vendor, with Level Holdings as purchaser, to develop part of the Land (the Level Holdings Contract). The contract

provided for the relevant part of the Land to be subdivided into 10 lots. It was agreed that, in consideration of Level Holdings paying all the costs of the subdivision, the Association would transfer five of the subdivided lots to Level Holdings.

9 On 19 April 2005, upon application by Mr Lai, Master Newnes granted an interlocutory injunction until 13 June 2005 restraining Mr Tiao, Mr Hui Wang and the Association from giving effect to or proceeding further with the Level Holdings Contract. On 13 June 2005, Master Newnes extended the interlocutory injunction until further order.

10 On or about 25 July 2006, Level Holdings made application to be joined as a party to the Supreme Court proceedings. Master Newnes dismissed the application. See Lai v Tiao [2006] WASC 232. He decided that the essential issues in dispute in the proceedings related to matters that were 'internal' to the Association and directed primarily at determining who were its members. The prayer for relief in the statement of claim did not seek the declarations and orders ultimately made by the trial judge in relation to the Level Holdings Contract. The master did, however, grant Level Holdings liberty to renew its application at or before the commencement of the trial of the Supreme Court proceedings. On 28 September 2006, Level Holdings filed an application for leave to appeal against the master's dismissal of its application, but on 8 December 2006, abandoned it.

11 The trial occurred on 19 - 23 and 26 November 2007 and 22 February 2008.

12 On 12 February 2009, the trial judge published her reasons for decision. She found, amongst other things, that Mr Tiao had 'no authorisation' [583] to enter into the Level Holdings Contract on behalf of the Association. Her Honour did not make any qualification as to the scope of the want of authority.

13 In March 2009, Mr Lai filed a minute of proposed orders which purported to give effect to the trial judge's reasons. The minute sought, amongst other things, a declaration that the Level Holdings Contract was 'null and void', and a permanent injunction restraining the Association from proceeding with the contract.

14 On 8 May 2009, Level Holdings' solicitors wrote to the trial judge's associate and requested an opportunity to appear before her Honour if she was contemplating making orders in terms of Mr Lai's minute. Her Honour's associate informed Level Holdings' solicitors that an appearance was not required.

15 On 22 May 2009, the trial judge published supplementary reasons. See Lai v Tiao [No 2] [2009] WASC 22 (S).

16 Also, on 22 May 2009, the trial judge made 'final orders' in the proceedings. She declared, relevantly to Level Holdings and the Level Holdings Contract, that Mr Tiao was not authorised by the Board or by the members of the Association to enter into the contract. Her Honour also made, relevantly to Level Holdings and the Level Holdings Contract, these orders:

1. [Mr Tiao and Mr Hui Wang] and Song Tyan Kuo be and are permanently restrained from giving effect to or further proceedings [sic] with the Level Holdings contract.
2. Once the Association has held a General Meeting, elected a board of directors, identified its 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.

17 In her supplementary reasons, the trial judge said there was 'ample justification' for permanently restraining Mr Tiao, Mr Hui Wang and the Association from proceeding with the Level Holdings Contract. Her Honour did not, however, grant a permanent injunction. She did not disturb the interlocutory injunction granted by Master Newnes and, on 12 June 2009, she refused to make orders discharging it.

18 On 12 June 2009, Level Holdings' solicitor sought and was granted leave to appear before the trial judge. Her Honour stated on this occasion that:

(a) her reasons were intended to show that Mr Tiao had no actual or ostensible authority to enter into the Level Holdings Contract (ts 628);

(b) Level Holdings should have been joined as a party to the Supreme Court proceedings (ts 629); and

(c) the basis for the refusal of Level Holdings' joinder application had not been brought to her attention at the trial (ts 629).

19 On 25 August 2009, Pullin JA ordered, relevantly, that Level Holdings be joined to the appeal as the second appellant.

21 Section 5(1) provides that an application for the incorporation of an association (as defined in s 3(1)) must be made to the Commissioner in the prescribed manner and form by a person duly authorised by the association to apply for incorporation. By s 5(2), an application for incorporation must be accompanied by a copy of the 'rules' of the association conforming to the requirements of the Act and a certificate given by the applicant which, relevantly, verifies that 'the copy of the rules of the association accompanying the application is a true copy and that the rules include provisions as to the matters set out in sch 1'.

If upon an application duly made in accordance with this Part, the Commissioner is of the opinion -

...

(b) that the rules of the association lodged with the Commissioner conform to the requirements of this Act;

...

the Commissioner shall, subject to subsection (2), incorporate the association by the issue to the association of a certificate of incorporation.

23 Section 14 sets out the manner in which an association may make contracts. It provides:

(1) Contracts may be made by or on behalf of an incorporated association as follows -

(a) a contract which, if made between natural persons, would be required to be in writing under seal may be made by the incorporated association under its common seal;

(b) a contract which, if made between natural persons, would be required to be in writing signed by the parties may be made on behalf of the association in writing by any person acting under its express or implied authority; and

(c) a contract which, if made between natural persons, would be valid although not in writing signed by the parties may be made orally on behalf of the association by any person acting under its express or implied authority.

(2) A contract may be varied or rescinded by or on behalf of an incorporated association in the same manner as it is authorised to be made.

24 Part IV is headed 'Rules of incorporated associations'. The heading forms part of the Act. See s 32(1) of the Interpretation Act 1984 (WA). Part IV comprises s 16 - s 19.

25 Section 16 provides that the rules of an association do not conform to the requirements of the Act unless they include provision in respect of each of the matters that are specified in sch 1 and the rules are otherwise consistent with the Act.

26 The matters specified in sch 1 comprise, in essence:

(e) the entrance fees, subscriptions and other amounts (if any) to be paid by members;

(f) the name, constitution, membership and powers of the committee or other body having the management of the incorporated association;

(g) the quorum and procedure at general meetings of members;

(h) the time within which, and manner in which, notices of general meetings and notices of motion are to be given, published or circulated;

(i) the manner in which the funds of the association are to be controlled;

(j) the intervals between general meetings of members and the manner of calling general meetings;

(k) the manner of altering and rescinding the rules and of making additional rules of the incorporated association;

(l) provisions for the custody and use of the common seal;

(m) the custody of records, books, documents and securities; and

(n) the inspection by members of records and documents of the incorporated association.

27 Section 17(1) provides:

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

The term 'special resolution' is defined in s 3(1) to mean a resolution of an association passed in accordance with s 24. By s 24(1), for the purposes of the Act, a resolution is a special resolution if it is passed by a majority of not less than three-fourths of the members of the association who are entitled under the rules of the association to vote and vote in person or, where proxies or postal votes are allowed by the rules of the association, by proxy or postal vote, at a general meeting of which notice specifying the intention to propose the resolution as a special resolution was given in accordance with those rules.

28 Section 17(2) provides:

Within one month of the passing of a special resolution altering its rules, or such further time as the Commissioner may in a particular case allow, an incorporated association shall lodge with the Commissioner notice of the special resolution setting out particulars of the alteration together with a certificate given by a member of the committee certifying that the resolution was duly passed as a special resolution and that the rules of the association as so altered conform to the requirements of this Act.

29 Section 18 concerns an alteration of the rules having effect to change the name of the association (which does not take effect until s 17 is complied with and the approval of the Commissioner is given to the change of name). Section 19 relates to an alteration of the rules having effect to alter the objects or purposes of the association (which also does not take effect until s 17 is complied with and the approval of the Commissioner is given to the alteration of the objects or purposes).

30 Section 16 (in combination with s 5(2) and s 9(1)(b)) requires, in effect, that an association's rules include provision in respect of each of the matters specified in sch 1. Significantly, neither s 16 nor any other section in the Act specifies the content of the provision which must be made in respect of each of those matters. In other words, the statute requires that some provision be made in respect of each of the matters set out in sch 1, but each association decides upon the substance of the provision. Further, the Act does not provide that the matters specified in sch 1 are exhaustive of the matters which may be dealt with in an association's rules. That is plain from the language of s 5(2) and s 16, which require that the rules 'include' provisions in respect of the matters set out in sch 1. The Act does not restrict the nature, extent or content of any other matters that an association may include in its rules. The absence of such a restriction is consistent with the diverse objects and purposes of associations which are eligible for incorporation under the Act, and the differing views that will undoubtedly exist between members of associations concerning the degree to which their rules should be prescriptive.

31 Section 17(1), which provides, subject to s 18 and s 19, that an incorporated association may alter its rules by special resolution but not otherwise, does not expressly distinguish between rules dealing with the matters specified in sch 1 and rules dealing with other matters. In my opinion, s 17(1) applies to any alteration to an association's rules. There is no satisfactory basis for an implication that s 17(1) applies only to alterations to those rules which deal with the matters specified in sch 1. Such an implication would be inconsistent with the express and general language of s 17(1). Also, as I have mentioned, s 16 (in combination with s 5(2) and s 9(1)(b)) stipulates that the rules must make provision in respect of each of the matters set out sch 1, but does not specify the content of the provision. The absence of a requirement to adopt 'model rules' in respect of those matters, and the absence of any specification as to content, suggest that Parliament did not intend that s 17(1) should be confined to those rules of an association which deal with the subjects itemised in sch 1.

The relevant provisions of the Association's constitution

32 Clause 1 of the Association's constitution states that the name of the Association is 'Australian Chinese Confucius-Mencius Saint Tao Centre Incorporated'.

33 By cl 6, provision is made for membership, as follows:

6.1 The Board shall have the sole right to approve or reject any person who apply [sic] to be a member of the Centre, without giving any reason if [sic] in the case of rejection.

6.2 Anyone who has attained the age of 18, is baptised at the Centre and pays a subscription fee of $AUD10.00 is eligible to be a member. Application for membership must be in writing.

6.3 Any application shall be brought before the Board, which shall have the right to approve or reject, and if the Board approves the applicant shall be admitted.

6.4 Membership of the Centre, unless otherwise advised by the Board, shall be for an indefinite period.

6.5 The Board shall have the sole right to place any applicant, who subscribes to the objects of the Centre, into the following three [sic] membership categories and the Board's decision is final:

6.5.1 Ordinary Members

An Ordinary Member must be a natural person.

6.5.2 Supervisors

Supervisors are Ordinary Members, who are appointed by the Board to oversee the operations of the Board of Directors.

6.5.3 Associate Members

An Associate Member can either be a natural person or a corporate body, who wishes to assist the Centre in achieving its objects and in its activities.

6.5.4 Foundation Members

Foundation Members are the first contributors of all the Centre's assets at the Centre's formation stage.

6.6 Termination of Membership

A member shall cease to be a member if:

6.6.1 Such a member resigns from the Centre at any time by giving notice in writing to the General Secretary. Such resignation shall take effect at the time such notice is received by the General Secretary unless a later date is specified in the notice when it shall take effect on that later date.

6.6.2 Being a natural person such a member is found to be of unsound mind, or is expelled in terms of Clause 6.7.

6.6.3 Being an incorporated or unincorporated body, such a member becomes defunct or is wound up.

6.6.4 Members [sic] failure to pay fees to the Centre as shall from time to time be determined by the Board.

6.7 Expulsion of Members

The Board may by a resolution expel any member, whom the Board is satisfied, has:

1. committed a breach of the objects of the Centre or regulations; or
2. by his conduct, in the opinion of the Board (which opinion shall be final and binding) becomes no longer acceptable as a member of the Centre provided that written notice of such pending expulsion shall be given to the member in question at least seven (7) days before a Board meeting at which meeting such a member shall be entitled to be heard in their defence.

34 In cl 7, the duties and privileges of members are set out:

1. abide by the provisions of the Constitution;
2. assist the Board in its activities; and or

7.2 Ordinary Members only shall enjoy privileges as follows:

1. attend General Meetings and vote thereat; and
2. be appointed Supervisor or elected member of the Board of Directors;

1. have the right to partake in all activities of and present constructive proposals to the Centre.

35 Clause 8 deals with the composition of the Association's board of directors, vacancies of office and the remuneration of directors. It provides:

1. The Director General
2. Deputy Director General

1. Deputy Secretary General
2. Treasurer
3. The persons appointed in accordance with the provision of this Constitution.

8.2 The Board shall consist of a minimum of 5 and a maximum of 9 elected members.

8.3 Board Members shall be elected by Ordinary Members at a Annual General Meeting.

8.4 Board Members shall in turn elected [sic] office bearers amongst themselves.

8.5 All office bearers will hold office for a period of three years and unless re-elected, their positions shall be terminated at the conclusion of the Annual General Meeting at which an election is held.

8.6 The Board may grant leave of absence to any Board member for such term as it may think fit.

8.7 Vacancies of Office

The Board may by resolution declare vacant the seat or office of any Board Member who dies or resigns, or is absent from three consecutive Board meetings without apologies, or who becomes ineligible for office under the provisions of this Constitution and may fill any vacancy so created.

8.8 Remuneration

Board Members and any member of committees shall receive no remuneration.

36 The powers of the Board, as set out in cl 9, include, relevantly:

9.1 General Meeting

The high authority of the Centre shall be vested in the members in General Meeting.

9.2 The Board

The business of the Board shall be managed by the Board who may exercise all such power [sic] of the Centre as are not required to be exercised by the members in General Meeting.

...

9.4 Board Meetings

9.4.1 The Board shall unless otherwise determined by the Centre in a general Meeting, meet at least twice every twelve months on such day as the Board shall from time to time determine.

9.4.2 Meetings of the Board may be convened by [sic] if more than 50% of the Board Members agreed [sic].

9.4.3 All meetings of the Board shall be presided over by the Director General. In the absence of the Director General, any other Board Member shall be elected by the Board Members present to chair the meeting.

9.4.4 The Chairperson of each meeting of the Board shall in the event of an equality of votes, have a second or casting vote.

9.4.5 No business shall be transacted at any meeting of the Board unless a quorum of Board Members is present at the time when the meeting proceeds to business. Except otherwise [sic] provided herein at all meetings of the Board a quorum shall be 50% of the elected Board Members.

37 Clause 10 deals with the election, resignation and removal of the director general and elected Board members. It provides, relevantly:

10.1 Election

10.1.1 Nomination for five (5) Board members.

a. be made on prescribed form;

1. be in writing and shall be signed by the candidate and a proposer and a seconder, who must be Ordinary Members; and

1. be lodged with the Secretary General at least twenty one (21) days before the appropriate General Meeting.

10.1.2 Where there is no nomination for at least 5 Directors to the Board within 21 days before the General meeting, nomination for the same will be called from the floor at the General Meeting. Such nomination shall be proposed and seconded by Ordinary Members.

10.1.3 Unless otherwise determined by the Ordinary Members present at the General Meeting, election shall be by secret ballot.

10.1.4 The nomination and election of members of the Board of Directors shall be done in accordance with clauses 8.2, 8.3 & 10.1.2 of this Constitution.

10.1.5 Director General

The Elected Members of the Board of Directors shall elect a Director General and other office bearers, who shall hold office for three (3) years, among themselves.

10.1.6 Only Ordinary Members are eligible for election to the Board of Directors at the Annual General Meeting at which this Constitution is adopted.

10.1.7 The Director General shall, if willing, preside as chairman at every meeting of the Board and at every General Meeting. Where a meeting of the Board or General Meeting is held and the Director General is absent, another Board Member shall be acting as chairman of the meeting.

...

10.1.13 Supervisors

Supervisors are elected to oversee the operations of the Board, but have no voting power other than making report to the Ordinary Members at Annual General Meetings. Duties of the Supervisors includes the following:

1. to investigate financial matters of the Board;
2. to check documents of the Board;

1. to enquire matters [sic] concerning the workings of the Board; and

1. to attend Board meetings and state point [sic] of view but have no right to vote.

The Ordinary Members may, by ordinary resolution at a General Meeting remove any Board member (including the Director General and Elected Board Members) before the expiration of his period of office, and may by resolution appoint another person in his place. The person so appointed is subject to retirement at the same time as if he had become the Board Member on the day on which the Board Member in whose place he is appointed was last elected as Board Member.

38 The provisions as to general meetings in cl 11 read, relevantly:

11.1 Annual General Meeting

A meeting of the Centre shall be convened not later than the 30th day of October of each year which meeting shall be known as [sic] Annual General Meeting and the business of the Annual General Meeting shall be to:

1. have laid before the Annual General Meeting the Annual Report and the audited annual financial statements of the Centre;
2. elect members to the Board every three years;

1. transact any other business included in the Notice of the Annual General meeting.

Notice of the Annual General Meeting, Annual Report, audited annual financial statements of the Centre and a list of candidates for each election as members to the Board shall be forwarded to Ordinary Members and such other members as the Board may determine at least fourteen (14) days before the Annual General Meeting.

11.2 General Meetings

11.2.1 Other meetings of the Centre shall be convened as the Board may from time to time decide or at the request of at least 20 Ordinary Members of the Centre which meetings shall be known as General Meetings.

11.2.2 The request by such Ordinary Members shall be in writing addressed to the Secretary General stating the objects for which the General meeting is to be convened.

11.2.3 Notice of General Meetings shall be forwarded to ordinary Members at least fourteen (14) days before the General meeting.

11.2.4 No business other than as stated on the Notice of General Meeting shall be transacted at a General Meeting.

...

11.9 Quorum

11.9.1 The Quorum for the Board [sic] meeting is four (4).

11.9.2 No business shall be transacted at any General Meeting unless a quorum of Ordinary Members is present at the time when the meeting proceeds to business.

11.9.3 Except where otherwise provided herein at all General meetings a quorum for a General Meeting considering an ordinary resolution shall be thirty (30) Ordinary Members present in person and entitled to vote.

11.9.4 The quorum for a General Meeting considering an ordinary resolution shall be at least 50% of Ordinary Members present and eligible to vote and a minimum of 75% for a special resolution of the Ordinary Members present and entitled to vote.

11.9.5 If within half an hour from the time for the General Meeting a quorum is not present, the General Meeting, if convened upon the requisition of Ordinary Members in accordance with clause 11.2 of this Constitution shall be dissolved, in any other case it shall stand adjourned to the same day in the following week, at the same time and place, if at the adjourned General Meeting a quorum is not present within half an hour from the time appointed for the General Meeting the Ordinary Members present shall be a quorum.

11.10 Votes

At all General Meetings only Ordinary Members shall vote in person and each Ordinary Member shall have one vote. No proxy shall be accepted.

39 Clause 14 is concerned with the winding up of the Association. It provides:

If upon winding up of the Centre, there remains, after satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid or distributed among the members of the Centre, but shall be given or transferred to another institution or institutions, having the same or similar objects as the Centre, and which meet the requirements of section 78(1)(a) of the Income Tax Assessment Act 1936 as amended and which shall prohibit the distribution among its or their members to an extent at least as great as is imposed on the Centre by its Constitution, such institution or institutions to be determined by the Board and Foundation Members of the Centre.

40 Clause 16 states that the Association's constitution may be amended by a special resolution of ordinary members at a general meeting.

The trial judge's findings of fact, reasoning and conclusions

41 The trial judge made findings of fact, relevantly, as follows:

(a) Six people were involved in the formation of the Association. They were Master Ho Ming Wang, Mr Lai, Mr Tiao, Yung Sen Chou, Mr Hui Wang and Song Tyan Kuo. Her Honour referred to these six men as the 'originators' [5].

(b) Tao Tong, an accountant, arranged for the incorporation of the Association. Mr Tong was instructed by the originators to incorporate an association so that a temple could be built with funds donated by members [7].

(c) Following incorporation, the originators acted as the board of directors and managed the affairs of the Association. There was not, however, any formal nomination and certainly no election of Board members [10].

(d) On 12 May 1993, the Association entered into a contract to purchase the Land (the Land Purchase Contract). The purchase price was $152,500. Settlement was effected on 9 June 1993 [14].

(e) After acquiring the Land, the Association embarked on constructing a temple on the Land. While the temple was being built, Master Wang went to Taiwan and obtained financial contributions to the Association. A document was prepared by Mr Lai's daughter-in-law, Yu Chin Wang, which recorded dates, names and amounts of money [13], [15].

(f) Construction of the temple was completed in March 1996. On 17 March 1996, the Association held an opening ceremony. Her Honour made these findings:

All those who made contributions towards the purchase of the land and the building of the temple were invited to attend the opening of the temple. The names of those on the list who had contributed funds to the Association were written on a red commemorative banner displayed at the opening ceremony. Later, the information on the commemorative banner was engraved on a marble plaque, which is on display in the temple. Ms Wang said that the difference between the content of the red banner and that of the marble plaque was that the marble plaque contained only the names of those who had donated more than $100. An independent English translation of the content of the marble plaque headed 'List Of Contributors For The Construction Of The Australian Chinese Confucius Mencius Tao centre' (List of Contributors) was tendered into evidence [17].

(g) The Level Holdings Contract (which, as I have mentioned, was entered into on 11 May 2004 by Mr Tiao purportedly on behalf of the Association) was never put before a meeting of the members of the Association. Hence, no resolution was ever passed authorising Mr Tiao to enter into the contract [21].

(h) On 6 January 2005, Mr Lai lodged a caveat over the Land. Mr Lai stated in a statutory declaration that the basis for his caveatable interest was the Association's use of his money to build a temple on the Land. The estate or interest claimed in the caveat was, 'As claimant based upon the doctrine of resulting trusts' [22].

(i) When Master Newnes granted the interlocutory injunction on 19 April 2005, the subdivision provided for under the Level Holdings Contract was 90% completed [24].

(j) On or about 26 February 2005, Mr Tiao and Mr Hui Wang purported to hold a meeting of the members of the Association. According to the English translation of the minutes of the meeting produced by Mr Tiao and Mr Hui Wang, those present at the meeting retrospectively ratified 'all acts, actions, deeds, transactions and omissions of whatever nature of each and every person that has acted or purported to act for or on behalf of the Association' from the date of the Association's incorporation on 22 December 1992 [27].

(k) The Board members of the Association were unaware of the provisions of its constitution because the constitution was written in English and none of the Board members read or spoke English. A Chinese translation of the constitution was never prepared. The Board members were equally ignorant of the provisions of the Act [50].

(l) The Association became the vehicle for personal interests and was managed on an ad-hoc basis, often without a quorum of Board members, with no records to indicate the decisions made and by whom they were made [85].

(m) From the outset, Master Wang had a dominant role on the Board. He was the chairman of the Board. Mr Lai was the vice chairman. The remaining originators were merely referred to as 'standing board directors'. None of these titles was in accordance with cl 8.1 of the constitution [86].

(n) From incorporation of the Association up to his death in 2001, Master Wang effectively controlled the Association [87]. He did so with the assistance of Mr Tiao, Mr Hui Wang and, occasionally, Mr Kuo [118].

(o) The Association was never managed in accordance with the constitution. No record exists of the income and expenditure of the Association or of the activities of the Board before 2005 [89].

(p) The failure to identify and implement the relevant rules and statutory obligations was the result of a deliberate intention by the originators to manage the Association without the constraints provided for in the constitution and the Act [115].

(q) The originators made the initial financial contributions to the Association. In addition to these contributions, contributions were made by individuals and organisations who shared the Association's aim of building a temple [141].

(r) A commemorative banner was created for the opening ceremony in relation to the newly constructed temple. It was displayed in the temple and contained the names of those who had contributed funds to the Association [169]. Later, the information on the commemorative banner was engraved on a marble plaque, which is on display in the temple [17]. Her Honour made these findings:

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].

(s) Part of Mr Lai's total financial contribution to the Association was used to reimburse the Association, which had paid for the Land out of the funds initially contributed by the other Board members. Mr Lai was at all times understood to be the person who contributed the Land to the Association [197].

(t) A meeting of the Board of the Association was held on 8 April 1996 [204]. It appeared from the evidence of those present at the 8 April 1996 meeting that the main issue under discussion was the use of the temple by various worship groups [215]. Her Honour made these findings in connection with the meeting:

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].

(u) No Board meetings were held after the 8 April 1996 meeting [246]. Mr Lai and Mr Chou attempted at the meeting of 8 April 1996 to have the Association run 'along fair, formal and democratic lines' but met strong and concerted resistance from Master Wang, Mr Tiao and Mr Hui Wang. The preference of Mr Tiao and Mr Hui Wang was for Mr Lai and Mr Chou to have no involvement in the management of the Association, and they successfully attempted to exclude them from the activities of the Board [248].

(v) Her Honour did not accept that any authorisation was given to Mr Tiao by any of his fellow directors to enter into the Level Holdings Contract for the simple reason that, in view of the way in which the Association was managed by Mr Tiao and Master Wang before him, Mr Tiao did not consider he required any authorisation from the other Board members to deal with the finances and assets of the Association [302].

(w) Her Honour said it was difficult to accept that any person acting genuinely on behalf of an association incorporated for charitable purposes would consider it appropriate to enter into a contract to sell off valuable assets of the Association without advising all the Board members and the members of the Association. Her Honour said that Mr Tiao did this without obtaining formal authorisation or affixing the common seal or including the address of the Association, preferring instead to include his personal address [318].

(x) The originators had no input into the drafting of the constitution. The constitution was merely the creation of Mr Tong, the accountant, and his drafting source or sources were unknown [342].

(y) At the time of incorporation, the only members of the Association were the six originators. Even if they could properly be described as ordinary members and had held an annual general meeting at the outset, they could only have elected themselves [352].

(z) Once there were sufficient members, formal processes for the election of Board members should have commenced [353].

I believe the better interpretation [of the Constitution] is that the originators are the foundation members and were entitled to act as the inaugural board of directors pending the membership increasing to a level where an AGM could be held and a board of directors voted in. Therefore, it is only when the membership has reached the appropriate level that cl 8 comes into play.

...

Consequently, I find that, under the terms of the constitution, the six originators were the foundation members of the Association as well as the inaugural board members and were entitled to manage the Association until the AGM at which time, if there were sufficient membership, the first elected board of directors would take over management of the Association [362], [364].

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.

...

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 [368] - [369].

(cc) Her Honour said that in order to determine the 'actual membership' of the Association, it was necessary to consider 'the evidence of how the Association actually approached the issue of membership before the specific requirements of the constitution were known and then to consider the effect of the later identification of membership criteria' [371]. A little later, her Honour made these observations:

In fact, the Association had operated for 13 years without applying the criteria under the constitution. The board members had deliberately failed to make themselves aware of the criteria for membership, had not prepared membership application forms, did not require written applications for membership and, by a failure to state the contrary position, led contributors to believe that they would become members of the Association. On that basis, the contributors acted to their detriment in contributing money to an organisation that, if it strictly applied the relevant clause of the constitution, would not permit them to become members and ultimately, through the actions of Tiao and Hui Ping Wang, did exclude them from membership. It can be seen that significant unfairness would arise if the membership criteria were subsequently applied to deprive those people of membership [392].

Her Honour then said that a determination of the membership of the Association, and of who may be eligible for membership, was complicated by 'the absence of documentation created at the relevant time' [393]. The Association never kept an up to date list of members. However, according to her Honour, 'on one interpretation, the red banner and the marble plaque are membership lists, valid as to the date on which they were created' [393].

(dd) Her Honour decided that, in the absence of any knowledge of the membership criteria contained in the constitution, the foundation members and members of the inaugural Board of directors applied their own membership criteria [405]. She elaborated:

All that was required was for a person to be baptised in the I-Kuan Tao faith and to have made a financial contribution to the Association. There was no requirement for application forms or for re-baptism at the Centre or any associated temple and nor was a requirement for formal approval by the board adopted. I have no doubt that all the natural persons listed in the red commemorative banner who donated sums of money to the Association and who are baptised in the I-Kuan Tao faith were considered by the board to be members of the Association and certainly considered themselves to be members. To later exclude them from membership would, in my view, create a real injustice [405].

(ee) Her Honour then decided that the Board had 'effectively waived the membership requirements, whatever they may have been, and decided to apply their own criteria' [407]. She added:

The criteria was [sic] that, provided a person was properly baptised in the I-Kuan Tao faith and made a donation to the building of the temple, they were received as members. They were treated as members and invited to the opening of the temple as members. That being the position, the only record of the members of the Association is the marble plaque. Although the precise date of the creation of the marble plaque was not given in evidence, it would appear to have been created some time after the opening in March 1996. Therefore, the only record of membership of the Association is as at March 1996. Unfortunately, although others were no doubt admitted to membership according to the same criteria between March 1996 and January 2005 when the constitution was translated, there is no record of who they are.

It appears to be the case that at least some portion of those persons do not meet the more restrictive criteria contained in the constitution. For the reasons I have already given, I do not accept Tiao's evidence of those persons on the List of Contributors (compiled from the marble plaque) who have been baptised by the Association. However, it may well be that the number who are eligible for membership under the constitution are far fewer than the 20 members required to request a general meeting be convened (cl 11.2.1) or the 30 members required for a quorum at a general meeting (11.9.3) which included the AGM [407] - [408].

(ff) Mr Tiao asserted that at a Board meeting held on 8 February 2005, 38 applications for membership of the Association were examined and approved. Her Honour rejected his evidence. She was satisfied that no Board meeting was held on 8 February 2005 and that a document purporting to be minutes of that meeting was created at a later date [443]. She concluded that there was no approval of the membership applications as required by the constitution and, in consequence, the 38 applicants were not members of the Association [444]. See also her Honour's reasons at [511].

(gg) Her Honour recorded that the issue of whether the Association should be wound-up was 'squarely raised' by counsel at the trial [577]. Her Honour was not, however, willing to order winding-up. But she noted that winding-up may be necessary if a new Board with access to all the 'relevant information', and having addressed all the 'outstanding issues', forms the view that the Association has 'insufficient funds' and 'no real prospects of operating viably' [581].

(hh) Her Honour summarised her answer to various questions she had identified when addressing the issues to be resolved in the proceedings, as follows:

1. Who are the foundation members of the Association?
2. The originators: Master Wang, Lai, Chou, Tiao, Hui Ping Wang and Kuo.
3. Are there ordinary members of the Association?
4. Yes. They are the natural persons identified in the List of Contributors compiled from the marble plaque.
5. Was Tiao authorised by the Board, or by the members of the Association, by retrospective ratification or otherwise, to enter into the Level Holdings Contract?
6. No. Tiao had no authorisation to enter into the Level Holding contract and the meeting at which the retrospective ratification took place was invalidly convened and the resolution ratifying his past conduct was invalid and ineffective.
7. Was the meeting of 26 February 2006 valid?
8. No.
9. Was Tiao required to call a meeting of members as requested by [Mr Lai]?
10. Providing that the 24 persons who signed the draft notice of meeting were foundation members or members whose names appear on the marble plaque, then Tiao was required to call the meeting.
11. Did Tiao fail to comply with [Mr Lai's] request to call a meeting of members?
12. Yes.
13. Was Conal O'Toole validly engaged as solicitor for [Mr Tiao, Mr Hui Wang and the Association]?
14. Conal O'Toole, Solicitors, was not validly engaged as solicitor for the Association.
15. Are [Mr Tiao and Mr Hui Wang] elected members of the board of the Association?
16. Technically, the position of all board members should have been declared vacant at the first AGM which should have been held in accordance with the constitution at the appropriate time after the membership reached 30 ordinary members. As the AGM was not held and as the obligation to hold an AGM is a continuing one, notwithstanding the extensive period of time which has passed, [Mr Tiao and Mr Hui Wang] should remain as directors only until such time as a meeting of members can be convened when the position of all board members should be declared vacant. Each board member is entitled to stand for re-election [583].

42 On 22 May 2009, the trial judge made declarations and orders, relevantly, as follows:

1. All natural persons named in the List of Contributors compiled from a marble plaque displayed in the Temple belonging to the Australian Chinese Confucius-Mencius Saint Tao Centre Inc ('Association'), situated at Lot 42 Warton Road, Canning Vale, WA, being the persons named in the annexure in Chinese and its English translation to this order, are the only ordinary members of the Association ('Members').
2. Sheng Chin Lai, Cheng Chih Tiao, Yung Sen Chou, Hui Pin Wang and Song Tyan Kuo are the only foundation members, and the only board members, of the Association.
3. Except as provided in declarations 1 and 2, there are no other members of the Association.
4. The General Meeting held on 26 February 2005 was invalid.
5. All resolutions passed by persons purporting to be office bearers or members of the Association are invalid and not binding on the Association including:-
   1. general meetings held on 26 February 2005, 16 July 2006, 8 October 2006, 4 March 2007 and 14 October 2007; and
   2. board meetings held on 28 June 2006, 27 August 2006, and 12 February 2007.
6. Conal O'Toole, Solicitor and Butcher Paull & Calder, were not validly engaged as solicitors for the Association.
7. Cheng Chih Tiao was not authorized by the Board or by the members of the Association to enter into the contract between Level Holdings Pty Ltd and the Association dated 11 May 2004 (the Level Holdings contract) in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668 ('Land').

[Mr Lai] and [Mr Tiao and Mr Hui Wang] having given an undertaking to refrain from creating any disturbance or acting in any intimidating way, prior to, at or after the general meeting towards [Mr Lai], members of the Association, and/or their families

IT IS ADJUDGED AND ORDERED THAT:-

1. There be judgment for [Mr Lai].
2. [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.
3. [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.
4. [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.
5. 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.
6. 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.
7. [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.
8. No new members shall be admitted to the Association between the date of this order and the holding of the general meeting.

Mr Tiao's and Mr Hui Wang's appeal: the grounds of appeal

43 Mr Tiao and Mr Hui Wang rely on three grounds of appeal.

44 Ground 1 alleges that the trial judge erred in law in finding that the natural persons, as defined in the list of contributors compiled from the marble plaque, were the ordinary members of the Association, 'when she should have found that either the only ordinary members were the foundation members, or alternatively that there were no ordinary members of the Association'.

45 Ground 2 alleges that her Honour erred in law in concluding that the Board of the Association could waive the requirements for membership in the constitution and make people, who had not complied with those requirements, members.

46 Ground 3 alleges that her Honour was wrong in fact in concluding that the Board had applied their own membership criteria.

Mr Tiao's and Mr Hui Wang's appeal: the Association's stance

47 At the hearing, counsel for the Association informed the court that the Association had agreed to abide the outcome of Mr Tiao's and Mr Hui Wang's appeal against Mr Lai (appeal ts 42).

Mr Tiao's and Mr Hui Wang's appeal: matters not in issue

48 Before dealing with the merits of Mr Tiao's and Mr Hui Wang's grounds of appeal, I record that no cross-appeal or notice of contention was filed in relation to their appeal.

49 Also, I record that the Supreme Court proceedings tried before her Honour were not an oppression action, proceedings for the winding-up of the Association, or an action against any of the originators or any member for the time being of the Board for breach of duty, even though the issue of whether the Association should be wound-up was 'squarely raised' by counsel at the trial [577].

The merits of ground 1 of Mr Tiao's and Mr Hui Wang's appeal

50 The primary issue before the trial judge was who are or were the members of the Association. Her Honour found that the six originators were the foundation members, and also the inaugural Board members [364]. Further, she found that the natural persons identified in the list of contributors compiled from the marble plaque were the ordinary members [583]. The basis for this finding appears to have been that the Board of the Association 'effectively waived the membership requirements, whatever they may have been, and decided to apply their own criteria' [407]. Her Honour said that the criteria applied by the Board were that 'provided a person was properly baptised in the I-Kuan Tao faith and made a donation to the building of the temple, they were received as members' [407]. She added that they were 'treated as members and invited to the opening of the temple as members' [407].

Foundation Members are the first contributors of all the Centre's assets at the Centre's formation stage.

52 The trial judge rejected Mr Lai's contention that all of the people who had made a financial contribution to the construction of the temple were foundation members. This contention failed for two reasons. First, her Honour found that the six originators had provided the whole of the funds donated to the Association in 1993 for the purpose of purchasing the Land. Secondly, the temple was not constructed on the Land until 1996 with donations received after 1993.

53 The term 'Centre' is not defined in the constitution. The term is, however, part of the Association's name. See cl 1. The objects of the Association, as set out in cl 3, include doing 'all acts and things as are incidental and conducive to the attainment of the objects of the Centre'. See cl 3.5. There is no doubt, in my view, that the term 'the Centre', at least where used in cl 3.5 and cl 6.5.4, means the Association as an incorporated entity.

54 The term 'formation stage' in cl 6.5.4 is not defined in the constitution. There are three arguable contentions as to the period which constituted the 'formation stage' for the purposes of cl 6.5.4. First, the period on or about the date of the Association's incorporation on 22 December 1992. Secondly, the period in 1993 when the Land was acquired. Thirdly, the period in 1996 when the temple was constructed. Her Honour found that the 'formation stage' within cl 6.5.4 was the period in 1993 when the Land was acquired. That finding was, on the evidence, reasonably open to her. In any event, it is a finding that has not been challenged by Mr Lai, either in a notice of cross-appeal or otherwise.

55 Clause 6.5.1 of the constitution states that an ordinary member must be a natural person.

Anyone who has attained the age of 18, is baptised at the Centre and pays a subscription fee of $AUD10.00 is eligible to be a member. Application for membership must be in writing.

57 By cl 6.1, the Board has the sole right to approve or reject any person who has applied to be a member of the Centre, without giving any reason in the case of rejection. By cl 6.3, any application is required to be brought before the Board, which has the right to approve or reject, and if the Board approves then the applicant is admitted.

The Board shall have the sole right to place any applicant, who subscribes to the objects of the Centre, into the following three [sic] membership categories and the Board's decision is final:

59 The proper construction of the constitution of an incorporated association must, of course, be determined by reference to the language of the document, and the evident purpose or object of the original incorporators as discerned from its provisions and any admissible extrinsic evidence. See Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144; (2006) 156 FCR 1. In the particular circumstances of the present case, the focus is upon the language of the constitution.

60 It is apparent from the constitution considered as a whole (in particular, from the reference in cl 6.5 to 'three membership categories', the automatic appointment of the foundation members under cl 6.5.4, and the role of the foundation members under cl 14 in a winding-up of the Association) that the reference to foundation members in cl 6.5 was inadvertent and erroneous.

61 Clause 6.2 specifies four criteria for the obtaining of, relevantly, ordinary membership. First, an applicant must have attained the age of 18 years. Secondly, an applicant must have been baptised at 'the Centre'. Thirdly, the applicant must have paid a subscription fee of $10. Fourthly, the applicant must have made a written application for membership.

62 Clause 6.1 and cl 6.3 provide, in essence, that an applicant for ordinary membership will not become an ordinary member unless the Board has approved of his or her application, and approval may be given or withheld without the Board giving any reason for its decision.

63 In my opinion, the four criteria specified in cl 6.2 for the obtaining of, relevantly, ordinary membership are mandatory. I base this conclusion on the express language of cl 6.2. The essential nature of the criterion that there be an application for membership is reinforced by other provisions of the constitution. In particular:

(a) clause 6.1, which refers in essence to a person 'applying' to be a member; and

(b) clause 6.3, which refers in essence to 'any application' for membership being brought before the Board for approval.

64 Also, in my opinion, the stipulation in cl 6.3 that any application for membership must be brought before the Board for approval or rejection is mandatory. I base this conclusion on the express language of cl 6.3 combined with the conferral on the Board under cl 6.1 of the 'sole right' to approve or reject any person who applies for membership and the conferral on the Board under cl 6.5 of the 'sole right' to determine the category of membership into which an applicant for membership is to be placed.

65 The Board does not have a dispensing power under the constitution or otherwise in relation to compliance with the four criteria specified in cl 6.2 or the stipulation in cl 6.3.

66 The trial judge's findings of fact and, where findings were not made, the undisputed evidence reveals that:

(a) before 31 January 2005, none of the originators had read or was capable of reading the constitution;

(b) before 31 January 2005, none of the originators was aware of the terms of the constitution (including the obligations imposed under it);

(c) the Association was never managed in accordance with the constitution;

(d) between the date of the Association's incorporation (22 December 1992) and 31 January 2005, the Board never met, except on 8 April 1996;

(e) the meeting on 8 April 1996 did not consider any applications for membership, and no person was admitted to membership at that meeting;

(f) Mr Lai attacked the validity of the purported meetings of the Board held in 2005, 2006 and 2007, and her Honour found that these meetings were invalid and ineffective;

(g) no person made an application (written or unwritten), at any material time, for membership of the Association; and

(h) the Board had never met, at any material time, for the purpose of admitting any person to membership.

67 There was no factual foundation for the trial judge's conclusion that the list of contributors compiled from the marble plaque were ordinary members. In particular, there was no evidence that any of them had ever made an application to the Board for membership or had ever been admitted by the Board as an ordinary member.

68 There was no finding of fact, and no evidence, that any of the originators had made an application for ordinary membership or had ever been admitted by the Board as an ordinary member.

69 In my opinion, the ordinary membership (if any) from time to time of the Association must be determined by applying the relevant provisions of the constitution (properly construed) to the relevant facts (as found by the trial judge or as undisputed between the parties). The fact that some or all of the originators or the members for the time being of the Board may have acted in breach of the constitution or the Act or in breach of his or their duty to the Association, as to which it is unnecessary to make any findings, cannot override the provisions of the constitution with respect to membership or the provisions of the constitution or the Act with respect to the amendment of the constitution. As I have emphasised already, the Supreme Court proceedings were not an oppression action, proceedings for the winding-up of the Association, or an action against any of the originators or any members for the time being of the Board for breach of duty. See [49] above.

70 In the circumstances I have described, the only conclusion reasonably open is that at all material times there were no ordinary members of the Association. None of the natural persons, as defined in the list of contributors compiled from the marble plaque, was at any material time an ordinary member.

71 Ground 1 of Mr Tiao's and Mr Hui Wang's appeal has been made out.

The merits of ground 2 of Mr Tiao's and Mr Hui Wang's appeal

(a) in the absence of any knowledge of the membership criteria contained in the constitution, the foundation members, who were the members of the 'inaugural board of directors', applied their own membership criteria [405];

(b) all that was required for membership was that a person have been baptised in the I-Kuan Tao faith and have made a financial contribution to the Association [405];

(c) there was no requirement for application forms or for re-baptism at 'the Centre' or any associated temple, 'and nor was a requirement for formal approval by the board adopted' [405]; and

(d) the Board 'effectively waived the membership requirements, whatever they may have been, and decided to apply their own criteria' [407].

73 As I have mentioned, the trial judge found that the six originators were the inaugural Board members [364]. In declaration 2 of the final orders made by her Honour on 22 May 2009, she declared, relevantly, that Mr Lai, Mr Tiao, Yung Sen Chou, Mr Hui Wang and Song Tyan Kuo (being the five surviving originators) 'are ... the only board members, of the Association'. This declaration that in essence there is a subsisting Board whose members comprise the five surviving originators was not challenged before this court.

74 The trial judge made these findings and observations in relation to the establishment and subsistence of the Board, and the functions, powers and duties of the directors:

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].

75 It appears from these passages that the trial judge found that, at some unspecified time before 2006, the originators ceased to have any functions or powers as directors of the Board, except for the purpose of convening an annual general meeting of the ordinary members of the Association (that is, on her Honour's finding, the list of contributors compiled from the marble plaque) to elect a new Board.

76 In Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd [2005] WASCA 106; (2005) 30 WAR 290, Steytler P (McLure JA agreeing) considered the nature of 'waiver' in the context of a discussion of the doctrines of election and estoppel. His Honour noted that the law relating to waiver remains 'largely unclear' [40], and said it appears still to be regulated by what was said by the High Court in Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394.

77 In Verwayen, there was an issue as to whether the Commonwealth had waived particular defences or was estopped from relying upon them. Deane and Dawson JJ held that the Commonwealth was estopped, and Toohey and Gaudron JJ held that it had waived its rights. Mason CJ and Brennan and McHugh JJ dissented. The reasons of each of the judges include a discussion of waiver. It is convenient to reproduce Steytler P's review of the reasons on this point:

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):

'Waiver, in the sense used for the purposes of this appeal, may be found in the deliberate act of a defendant not to rely upon a defence available to him. That is not to say that there must be an intention to bring about the consequences of waiver; rather, the conduct from which waiver may be inferred, must be deliberate. Detriment is not an essential attribute of waiver, though it will often be found as a consequence.'

Gaudron J said (at 485) that she would continue to use the word 'wavier' 'in the present context to signify deliberate action or inaction which has resulted in a changed relationship to which the parties will be held whether or not detriment is actually established'.

McHugh J considered that most cases purportedly applying the doctrine of waiver are cases of contract, estoppel or election, but said that there are some cases which cannot fairly be characterised as falling within those categories and (at 497) that a person 'will be held to have waived compliance with the condition if he or she knowingly takes or acquiesces in the taking of a subsequent step'. However, he added that these cases were to an extent anomalous and 'should be strictly confined so as not to conflict with the more established doctrines of election, contract and estoppel' [41] - [47].

There has been a good deal of debate as regards the fate of 'waiver', as an independent doctrine, since Verwayen: see, for example, Freshmark Ltd v Mercantile Mutual Insurance (Aust) Ltd [1994] 2 Qd R 390 at 404 per Dowsett J, with whom McPherson JA was in agreement, Mowie Fisheries (at 241 - 242), per Beaumont J (and at first instance, Mowie Fisheries Pty Ltd v Switzerland Insurance Australia Ltd (1996) 140 ALR 57 at 80 per Tamberlin J). However, the use of that term in order to describe the situation in which a party has chosen not to insist on the performance of a provision inserted in a contract for its benefit (see, for example, Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537 at 543 per Gibbs CJ, and at 549 per Brennan J (with whom Stephen J agreed) does seem to have survived Verwayen (see at 423 - 424 per Brennan J; at 449 per Deane J; at 451 per Dawson J; at 468 per Toohey J; at 485 per Gaudron J; at 497 per McHugh J) and, in that sense, waiver is still a principle recognised by the law: see John Connell Holdings Pty Ltd v Mercantile Mutual Holdings Ltd (1998) 10 ANZ Insurance Cases 61-407 at 74,474, per Chesterman J (affirmed John Connell Holdings Pty Ltd v Mercantile Mutual Holdings Ltd (1999) 10 ANZ Insurance Cases 61-454; [1999] QCA 429 esp at [30] and [32]) [48].

79 In 2008, the High Court delivered judgment in Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570. Gummow, Hayne and Kiefel JJ, in their joint reasons, gave some detailed consideration to the notion of 'waiver'. Their Honours said, relevantly:

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].

80 I am satisfied that the trial judge erred in concluding that the Board of the Association could 'waive' the requirements for membership in the constitution. I am also satisfied that her Honour erred in concluding that the Board could make people, who had not complied with the requirements for membership in the constitution, members of the Association. My reasons are as follows.

81 First, the constitution binds the Board of the Association, including the foundation members in their capacity as the inaugural Board as well as in their capacity as foundation members. By cls 6.1, 6.3, 6.4 and 6.5 of the constitution, the power to admit members is vested in the Board. The Board has no power, however, to admit people as members of the Association unless and until those people comply with those provisions of the constitution which regulate the manner and circumstances in which they may be admitted to membership. I have found, in the course of considering ground 1, that the four criteria specified in cl 6.2 for the obtaining of, relevantly, ordinary membership are mandatory. I have also found, in the context of ground 1, that the stipulation in cl 6.3 that any application for membership must be brought before the Board for approval or rejection is mandatory. The Board has no relevant dispensing power.

82 Secondly, the constitution may only be amended by a special resolution of ordinary members at a general meeting. See cl 16. There was no finding of fact, and no evidence, that a special resolution amending the constitution was ever passed at any general meeting of the Association. In any event, as I have decided in the course of considering ground 1, the Association did not at any material time have any ordinary members.

83 Thirdly, if by 'waiver' [407] her Honour meant that the Board had dispensed with the requirements of the constitution in relation to membership, any such dispensation could not, as a matter of law, effect an amendment to the constitution. See s 17(1) of the Act which provides that, subject to s 18 and s 19, an incorporated association may alter its rules by special resolution but not otherwise. Sections 18 and 19 are not relevant for present purposes.

84 Fourthly, if by 'waiver' [407] her Honour meant that the Association is estopped from denying that the list of contributors compiled from the marble plaque are ordinary members, no proper basis exists for such an estoppel. Any representation or other conduct by any member or members for the time being of the Board to the effect that a person was or would become an ordinary member of the Association was incapable of founding an estoppel if made by a director or directors without relevant authority. See George Whitechurch Ltd v Cavanagh [1902] AC 117, 129 - 132; Kavourakis v Waverley Bowling & Recreation Club Ltd [2010] NSWSC 439 [34]. None of the directors for the time being of the Association had any authority to admit ordinary members in breach of the requirements of the constitution, a document filed on a public register.

85 The so-called indoor management rule has no application because that rule is concerned with the presumption of regularity in relation to, relevantly, compliance with the constitution of an incorporated entity and not with its breach.

86 Fifthly, this is not a case where the doctrine of election applied; in particular, it was not a case where there were competing or inconsistent legal rights which conferred or imposed on a party a right or an obligation to elect between them.

87 Counsel for Mr Lai sought to invoke, by analogy, the principle applied in Perseus Mining NL v Landbrokers (Perth) Pty Ltd [1972] WAR 12. The salient facts of that case were these. The articles of association of the plaintiff company contained no provision for the appointment of first directors. The subscribers to the memorandum of association had purported, without power, to appoint directors. The subscribers were also the only members of the company. Wickham J held that if there is no provision in the articles for the appointment of first directors, the first directors can be appointed only by the members voting in general meeting or manifesting their unanimous agreement without a meeting.

88 In my opinion, the decision in Perseus Mining does not apply, by analogy, to the Association's constitution or advance Mr Lai's case. At all material times, the constitution has contained provisions for the admission of ordinary members. Her Honour found that the originators were not only the foundation members, but also comprised the inaugural Board. That finding was not challenged. There is no deficiency in the provisions of the constitution and there was no absence of power in the inaugural Board in relation to the admission of ordinary members. The absence of ordinary members is attributable to the failure of the controllers of the Association to acquaint themselves with, and observe, the constitution and the Act.

89 The conduct of some of the originators as members of the inaugural Board may (possibly) have involved a breach of their duty to the Association, but that was not a matter in issue in the Supreme Court proceedings. Also, third persons who have suffered any loss or damage by reason of the conduct of some of the members of the inaugural Board may (possibly) have a right of action against them but, again, that was not a matter in issue at the trial before her Honour.

90 Ground 2 of Mr Tiao's and Mr Hui Wang's appeal has been made out.

The merits of ground 3 of Mr Tiao's and Mr Hui Wang's appeal

91 As I have mentioned, the trial judge found that the Board, having 'effectively waived the membership requirements, whatever they may have been', decided to apply their own criteria [407]. She added that the criteria applied were that, provided a person was properly baptised in the I-Kuan Tao faith and made a donation to the building of the temple, they were 'received as members'. She then said that these people were 'treated as members' and invited to the opening of the temple as members [407].

92 I have already decided, in the course of examining ground 2, that the trial judge erred in concluding that the Board of the Association could 'waive' the requirements of the constitution in relation to membership, and that the Board could make people, who had not complied with the requirements for membership in the constitution, members of the Association.

93 It is unnecessary to deal with ground 3 of Mr Tiao's and Mr Hui Wang's appeal. I merely note that there was no finding of fact, and no evidence, that any of the originators had ever turned his mind to 'ordinary membership' or to the criteria governing the admission of 'ordinary members'.

(a) finding that Cheng Chih Tiao was not authorized by the Board or by the members of the Association to enter into the contract between [Level Holdings] and [the Association] on 11 May 2004 (in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668);

(b) declaring that Cheng Chih Tiao was not authorized by the Board or by the members of the Association to enter into the contract between [Level Holdings] and [the Association] on 11 May 2004 (in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668) (Declaration 7 of the Final Orders made on 22 May 2009); and

(c) granting [the Association] liberty to apply for an order that [Mr Tiao and Mr Hui Wang] restore the land (being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668) to its original condition as it stood prior to 11 May 2004 (Order 5 of the Final Orders made on 22 May 2009),

as [Level Holdings'] legal rights were directly and adversely affected in circumstances where it was not joined as a party to the proceedings in order to be properly heard on the matter.

(a) by finding on 12 June 2009 that the declaration referred to in paragraph 1(b) above extended to ostensible authority such that [Level Holdings] could not enforce the contract; and

(b) in thereby failing and/or refusing to make an order discharging the interlocutory injunction imposed against [the Association] on 19 April 2005 by the learned Master Newnes (as he then was) and extended on 13 June 2005 until further order,

as [Level Holdings'] legal rights were directly and adversely affected in circumstances where it was not joined as a party to the proceedings in order to be properly heard on the matter. (original emphasis)

The application for review of Pullin JA's decision made on 25 August 2009

95 As I have mentioned, on 25 August 2009, Pullin JA ordered that Level Holdings be joined to the appeal as the second appellant.

96 On 31 August 2009, Mr Lai and the Association made application to this court for his Honour's decision on this issue to be reviewed. However, shortly before the hearing the Association abandoned its application, and at the hearing Mr Lai also abandoned it (appeal ts 43).

Level Holdings' appeal: the Association's stance

97 The Association conceded that the rulings, orders and declarations of the trial judge should be varied by this court, as follows:

(a) The interim injunction made by Master Newnes ... on 19 April 2005 and extended by Master Newnes on 13 June 2005 until further order restraining [the Association] from giving effect to or further proceeding with the 'Level Holdings Contract', be discharged;

(b) Declaration No. 7 of the Final Orders made on 22 May 2009 be varied to read:

'Cheng Chih Tiao had no actual authority (in contradistinction to ostensible authority which he may or may not have had) from the Board or members of the Association to enter into the contract between Level Holdings Pty Ltd and the Association dated 11 May 2004 ('the Level Holdings Contract') in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668 ('the Land').

(c) Order 5 of the Final Orders made on 22 May 2009 be varied to read as follows:

'Once the Association has held a General Meeting, elected a board of directors, identified its financial position and passed a resolution at a validly convened general meeting as to the position of the Association in relation to the Level Holdings Contract, there be liberty to apply for any further orders against [Mr Tiao and Mr Hui Wang], subject to the right of Level Holdings Pty Ltd to be heard so as to ensure that any contractual rights or proprietary interests it may have are not prejudiced by any further order.'

98 Counsel for the Association made submissions in relation to ground 1(a), (b) and (c). He conceded the merit of ground 2(a) and (b).

99 Level Holdings did not accept that the concession by the Association in relation to her Honour's rulings, orders and declarations adequately addressed the matters about which it complained (ts 68).

Level Holdings' appeal: the trial judge's supplementary reasons

100 The trial judge refused to make a declaration, which had been sought by Mr Lai, that the Level Holdings Contract (including any subsequent contracts between Level Holdings and any purchasers of any subdivided lots of the Land) was 'null and void'. Her Honour's reasons for refusing to make that declaration are illuminating as to her thinking about the effect of declaration 7 upon the rights and liabilities of Level Holdings, and the parties to the Supreme Court proceedings, in relation to the Level Holdings Contract:

In my view, the validity of the Level Holdings contract is an issue for another court to decide. Answering the question of whether the contract is null and void requires a consideration of matters which were simply not addressed in the course of this action. In any event, it would be inappropriate to make a declaration with respect to the Level Holdings contract without hearing from Level Holdings. However, the declaration I am prepared to make, that Tiao was not authorised to enter into the Level Holdings contract, will have the effect of removing that issue from determination in any action brought by Level Holdings in relation to the contract [22]. (emphasis added)

101 Later in her supplementary reasons, the trial judge made these observations about whether she should make a declaration as to the validity of the Level Holdings Contract:

Counsel for [Mr Lai] submitted that there was no question the Association was a victim in relation to the execution of the Level Holdings contract and no question that the contract was void. I have no difficulty with the first observation. However, for the reasons given in relation to the declaration which was sought by [Mr Lai], I do not consider it appropriate in this context to make any observation, declaration or order on the validity of the Level Holdings contract [94].

Her Honour added that 'the validity of the Level Holdings contract is an issue for another court to decide should an action be commenced which addresses this specific issue' [99].

102 The trial judge explained her reasons for making order 5, as follows:

Whilst I accept that the Association should not have to bring another action for [Mr Tiao and Mr Hui Wang] to right the wrong visited on the Association, the Association must be given the opportunity to determine what action is in its best interests. I have some reservations about granting liberty to apply generally. The history of this matter is such that there is a significant potential for the matter to be regularly returned to the court. However, in the circumstances to which I have referred, it would neither be appropriate for the order to be made before the Association is in a position to determine its best interests, nor should it be necessary for another action to be brought to ensure that Tiao rights the wrong he has inflicted on the Association in entering into the Level Holdings contract. I would, therefore, grant liberty to apply for an order of this type once the Association has held a general meeting, elected a board of directors, identified its 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 [107].

Level Holdings' appeal: actual and apparent (or ostensible) authority

103 The distinction between actual and apparent (or ostensible) authority was summarised by McLure JA (Steytler P & Murray AJA agreeing) in Durban Roodepoort Deep, Ltd v Newshore Nominees Pty Ltd [2005] WASCA 231. After referring to the analysis by Diplock LJ in Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 502 - 506, her Honour said:

Actual authority and apparent authority are independent, although generally they co-exist and coincide but either may exist without the other. Actual authority is a legal relationship between the principal and agent. Apparent authority, on the other hand, is a legal relationship between the principal and the third party created by representation, made by the principal to the third party, intended to be acted upon by the third party, that the agent has authority to enter on behalf of the principal into a contract of the kind within the scope of the apparent authority, so as to render the principal liable under the contract. The representation which creates apparent authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal's business with third persons. Lord Diplock summarised the law by stating four conditions that must be fulfilled to entitle a third party to enforce against a company a contract entered into on its behalf by an agent who had no actual authority to do so. The four conditions are as follows:

(1) that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the third party;

(2) that such representation was made by a person or persons who had actual authority to manage the business of the company either generally or in respect of those matters to which the contract relates;

(3) that the third party was induced by such representation to enter into the contract; and

(4) that under its constitution the company was not deprived of the capacity to enter into a contract of the kind sought to be enforced or to delegate authority to enter into such a contract [58].

Freeman & Lockyer was applied by the High Court in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd [1975] HCA 49; (1975) 133 CLR 72.

104 The actual authority of an agent may be express or implied. The distinction between express actual authority and implied actual authority was explained by Clarke and Cripps JJA in Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50:

Actual authority arises where a principal grants, and an agent accepts, authority for the agent to perform specific tasks on behalf of the principal - in short there must be a consensual agreement between the principal and agent. Notwithstanding the absence of an express agreement, the parties, that is, the principal and agent, may conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent.

Accordingly, where the question is whether the agent has implied authority to act in a particular way the court directs its attention to the conduct of the parties in order to decide whether the inference of authority should be drawn (132).

See also Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549, 583.

105 In Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405, Ormiston J drew attention to the breadth of the concept of implied actual authority (418). His Honour then cited with approval the following summary appearing in Bowstead on Agency (15th ed) page 93:

The most obvious cases of implied authority arise in the forms of incidental authority (implied authority to do whatever is necessarily or normally incidental to the activity expressly authorised), usual authority (implied authority to do whatever an agent of the type concerned would usually have authority to do) and customary authority (implied authority to act in accordance with such applicable business customs as are reasonable); there is a further general category of implied authority arising from the course of dealing between the parties and the circumstances of the case.

106 Section 14 of the Act specifies the manner in which contracts may be made by or on behalf of an incorporated association. By s 14(1)(b), a contract which, if made between natural persons, would be required to be in writing signed by the parties may be made on behalf of the association in writing 'by any person acting under its express or implied authority'. Section 14 does not refer to apparent (or ostensible) authority.

107 It is unnecessary, in this appeal, to consider the application of the common law principles of apparent (or ostensible) authority in the context of incorporated associations. In particular, it is unnecessary to decide whether s 14 is exhaustive of the means by which an incorporated association may contract or whether it excludes the operation of the common law principles of apparent (or ostensible) authority in relation to contracts purportedly made on behalf of an incorporated association.

108 I merely note that apparent (or ostensible) authority is concerned with a contractual or other legal relationship between the principal and the third party created by a representation made by the principal to the third party (and intended to be acted upon by the third party) that the agent in question has the principal's authority to enter into the relationship so as to bind the principal. By contrast, actual authority is the authority which the principal has expressly or by implication given to the agent under the legal relationship created by an agreement to which they are the only parties. See Freeman & Lockyer (502 - 503).

Level Holdings' appeal: the test for determining whether a third person should be joined as a party to pending civil proceedings

109 In Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, Lord Diplock, in delivering the advice of the Privy Council, said in relation to the joinder of a third person as a party to pending civil proceedings:

The cases illustrate the great variety of circumstances in which it may be sought to join an additional party to an existing action. In their Lordships' view one of the principal objects of the rule is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard. To achieve this object calls for a flexibility of approach which makes it undesirable in the present case, in which the facts are unique, to attempt to lay down any general proposition which could be applicable to all cases.

It has been sometimes said as in Moser v Marsden [1892] 1 Ch 487 and in Farbenindustrie AG Agreement [1944] Ch 41 that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between 'legal' and 'commercial' interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action (55 - 56)?

110 This passage from the Privy Council's advice was cited with approval by a Full Court of the Federal Court (Lockhart, von Doussa & Sackville JJ) in News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410, 524. Their Honours then said that an order which directly affects a third person's rights against or liabilities to a party to pending civil proceedings should not be made unless the person is also joined as a party (524).

111 Lockhart, von Doussa and Sackville JJ made these comments about the test enunciated in Pegang Mining:

The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. This is particularly so with remedies in the nature of an injunction: see Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 at 322 per Kirby P. The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.

Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties. Where the question arises after final orders have been made in the proceedings, the inquiry must be directed to the orders actually made, or which, on appeal it is contended should be made: cf Associated Grocers Co-operative Ltd v Hubbard Properties Pty Ltd (1986) 42 SASR 321 at 341 (525).

Level Holdings' appeal: setting aside an order made by a court which affects a third person who should have been joined as a necessary party

112 In News Ltd, certain agreements (referred to as the Commitment Agreements) were entered into by various clubs associated with the Australian Rugby Football League (ARL) and the New South Wales Rugby League (the League) in response to rumours that a new rugby league competition might be introduced by News Ltd (News) and associated companies (Super League). Later, when the threat of a rival competition persisted, the ARL and the League requested the clubs to execute certain deeds (referred to as the Loyalty Deeds) which confirmed the Commitment Agreements and were designed to strengthen those agreements if they had any technical defects. Super League commenced proceedings in the Federal Court claiming that the Commitment Agreements and the Loyalty Deeds should be set aside under s 45 and s 46 of the Trade Practices Act 1974 (Cth). The trial judge, in substance, found in favour of the ARL and the League. He made extensive orders restraining News, Super League and various 'rebel' clubs from conducting a rival rugby league competition for five years. The orders directly affected the rights and obligations of players and coaches contracted to Super League, even though the players and coaches had not been joined as parties to the proceedings. The Full Court of the Federal Court allowed the appeal.

113 Lockhart, von Doussa and Sackville JJ observed that if an order which directly affects a third person's rights against or liabilities to a party to pending civil proceedings is made without the third person having been joined, the order will be set aside (524).

114 Their Honours said in relation to the non-joinder of the players and coaches in News Ltd:

In our opinion, the non-joinder of the players and coaches, to the extent that orders made did so affect them, is not cured by the fact that they were permitted to make submissions after the delivery of judgment to the trial Judge as to the form of the orders. By that stage, they had been deprived of the opportunity to participate in the trial of the issues that had already been determined in a way that the trial Judge thought required redress in terms of the orders made. It follows that, regardless of whether Orders 12(a), 12(b), 15, 15A and 15B should be set aside on other grounds, they should be discharged by reason of the failure of the cross-claimants to join the Super League players and coaches in the proceedings (527).

115 Recently, in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 84 ALJR 446, the High Court (French CJ, Gummow, Hayne, Heydon & Kiefel JJ) held, relevantly, that the Court of Appeal of New South Wales had erred in not joining a third person (Walker Corporation) as a party as that court had been invited to make, or proposed to make, orders directly affecting the rights or liabilities of a non-party [131]. The High Court referred with approval to the reasons of the Full Court of the Federal Court in News Ltd [132] - [140].

116 French CJ, Gummow, Hayne, Heydon and Kiefel JJ held that, in general, if a court makes an order affecting a person who should have been joined as a necessary party, that person is entitled to have the order set aside, and is not merely limited to seeking the favourable exercise of a discretion, whether or not the person in question becomes a party [137].

117 Later, their Honours said in relation to the relevance of Walker Corporation having been aware of the existence of the relevant proceedings and having failed to make application to be joined as a party:

In News (at FCR 526; ... See also Wentworth v Wentworth (2001) 52 NSWLR 602; [2000] NSWCA 350 at [160]) Lockhart, von Doussa and Sackville JJ said:

'Generally speaking, to permit [the party prosecuting the proceedings] to transfer to others who might be affected by the outcome of the proceedings the responsibility of deciding whether or not they should apply to be joined could be productive of uncertainty and inconvenience. At times, it could lead to the need to halt expensive litigation part-way through, because a third party insufficiently understood the proceedings, or, through impecuniosity or some other reason, was not adequately advised.'

News was a case where players who had not been joined in the proceedings but only informed of them were not debarred from attacking the orders made. There is no doubt that Walker Corporation was aware of the first proceedings, and it informed the Court of Appeal of that fact. Walker Corporation said there was a reasonable explanation for its delay in seeking to be joined. Whether or not that is so, it had no duty to seek to be joined, and its delay does not in this case call for explanation [140].

118 In my opinion, declaration 7 and order 5 of the final orders made by the trial judge on 22 May 2009 directly affected Level Holdings' rights against and the liabilities to the Association in respect of the Level Holdings Contract. Declaration 7 directly affected Level Holdings' rights in relation to claiming specific performance of the contract and claiming damages for any breach by the Association of its obligations under the contract or for any repudiation of the contract. Declaration 7 also directly affected Level Holdings' liabilities to the Association by potentially exposing Level Holdings to a claim for damages or other relief in connection with work carried out and other action taken by Level Holdings on or in respect of the Land pursuant to or in reliance on the contract.

119 Order 5 directly affected Level Holdings' rights against and liabilities to the Association in respect of the Level Holdings Contract and the Land by enabling the Association, upon satisfaction of the conditions specified in order 5, to apply to the court for an order that, despite the terms of the Level Holdings Contract and the work carried out by Level Holdings on the Land, at its cost, pursuant to the contract, Mr Tiao and Mr Hui Wang be ordered to restore the Land to the condition in which it was before the contract was entered into on 11 May 2004. If this were to occur, the amount expended by Level Holdings in carrying out the work would be wasted, and the benefit it would otherwise have enjoyed under the Level Holdings Contract as a result of that expenditure would be lost.

120 The trial judge's refusal to discharge the interlocutory injunction, which refusal was based on the findings that culminated in the making of declaration 7 and order 5, directly affected Level Holdings' rights against the Association in respect of the Level Holdings Contract in that it:

(a) prevented the Association from taking any further steps to perform its obligations under the contract; and

(b) thereby required Level Holdings to commence legal proceedings to enforce the contract if it wished to procure the benefits which the Contract conferred on it.

121 Level Holdings is not, of course, bound by declaration 7 or order 5 in that the doctrine of issue estoppel and the doctrine of res judicata do not apply to it because it was not a party to the proceedings or a privy of any person or entity who was a party. However, the principles enunciated and applied by the Full Court of the Federal Court in News Ltd and the High Court in John Alexander's Clubs are, in my opinion, based on the principles which underpin the law of procedural fairness. Procedural fairness lies at the heart of the judicial function. See International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49; (2009) 240 CLR 319 [54] (French CJ), [141] - [143] (Heydon J). As the Full Court noted in News Ltd, the test laid down in Pegang Mining involves, ultimately, the making of a judgment having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third person said to be directly affected.

122 Level Holdings was not under a duty to make a fresh application to be joined as a party to the Supreme Court proceedings after Master Newnes dismissed its original application. Nothing turns on the fact that Level Holdings filed an application for leave to appeal against the master's order and, later, abandoned it. See John Alexander's Clubs [140].

123 It is irrelevant that Level Holdings may have had the same or similar interests to Mr Tiao and Mr Hui Wang in the sense that all of them appear to assert that the Level Holdings Contract is a valid and subsisting agreement which is binding on the Association and enforceable in accordance with its terms. The existence of any such common interest does not justify or excuse the failure to join Level Holdings as a necessary party whose interests were directly affected.

124 Level Holdings may obtain relief from this court without having to establish that there might have been a different outcome at trial had it been joined. See News Ltd (524 - 527); Homestyle Pty Ltd v City of Belmont [1999] WASCA 59 [44] - [45] (Templeman J, Malcolm CJ & Owen J agreeing).

125 In my opinion, the general rule that a third person is entitled to have an order made by a court set aside where the order affects the third person, and the third person should have been, but was not, joined as a necessary party, should be applied in the present case. The orders contended for by counsel for the Association do not resolve adequately the situation which has arisen. Declaration 7 and order 5 must be set aside. My reasons are as follows.

126 First, the dispute between Level Holdings and the Association (and, at least, Mr Lai) as to the validity and enforceability of the Level Holdings Contract should not be determined on a piecemeal basis. It should be determined by a trial on the question of authority as a whole, and not merely on the question of apparent (or ostensible) authority alone. Secondly, Level Holdings had a right to be heard before the trial judge (and will have a right to be heard at a subsequent trial) on the issue of Mr Tiao's express or implied actual authority to enter into the contract on behalf of the Association. Level Holdings may adduce evidence, cross-examine the Association's (or Mr Lai's) witnesses and make

submissions. Thirdly, there is the potential for inconsistency of reasoning and inconsistent judgments if declaration 7 and order 5 are not set aside.

127 Ground 1(a), (b) and (c) have been made out. The Association's concession in relation to ground 2(a) and (b) was properly made, and that ground has also been made out.

128 It remains necessary to consider whether this court should merely set aside declaration 7 and order 5 and discharge the interlocutory injunction granted by Master Newnes on 19 April 2005 and extended by him on 13 June 2005, and leave it to Level Holdings or the Association (or Mr Lai) to commence fresh proceedings to determine the validity and enforceability of the Level Holdings Contract and to claim declaratory or other relief including, for example, a decree for specific performance and damages in the case of Level Holdings, and damages in the case of the Association. Alternatively, the court could, in addition to setting aside declaration 7 and order 5 and discharging the interlocutory injunction, remit the action from which this appeal has been brought to a judge of the general division of the Supreme Court for the purpose of determining all outstanding issues between Level Holdings and the Association (and Mr Lai). This would involve (probably) an amendment to the writ of summons, the joinder of Level Holdings, and new or amended pleadings, including an amended statement of claim by the Association (and Mr Lai) and a counterclaim by Level Holdings.

129 I would hear from the parties as to the precise form of the orders which should be made, including whether Level Holdings and the Association (or Mr Lai) should be left to commence new proceedings or whether the action from which this appeal has been brought should be remitted to a judge of the general division.

130 I would allow both the appeal by Mr Tiao and Mr Hui Wang and the appeal by Level Holdings.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : TIAO -v- LAI [No 2] [2010] WASCA 189 (S)

AUSTRALIAN CHINESE CONFUCIUS-MENCIUS SAINT TAO CENTRE INC

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : LAI -v- TIAO [No 2] [2009] WASC 22

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : LAI -v- TIAO [No 2] [2009] WASC 22 (S)

Orders to be made upon appeals being allowed - Turns on own facts

Tiao v Lai [No 2] [2010] WASCA 189

2 BUSS JA: On 23 September 2010, this court published its reasons for allowing the appeal by the first appellants (Mr Tiao and Mr Hui Wang) and the appeal by the second appellant (Level Holdings). See Tiao v Lai [No 2] [2010] WASCA 189.

3 Also, on 23 September 2010, programming orders were made for the filing and serving of written submissions as to the orders that should be made, in addition to allowing the appeals. Written submissions were then filed and served on behalf of Mr Tiao and Mr Hui Wang, Level Holdings and the first respondent (Mr Lai), but not on behalf of the second respondent (the Association). On 18 October 2010, counsel for each of Mr Tiao and Mr Hui Wang, Level Holdings and Mr Lai made oral submissions.

4 Lex Legal are the lawyers on the record for the Association. Mr Yong of that firm appeared at the hearing on 18 October 2010. In an affidavit sworn 6 October 2010, Mr Yong deposes, relevantly, that Lex Legal have been unable to obtain instructions from the foundation members of the Association in relation to whether they wish Lex Legal to continue to act for the Association. The affidavit sets out in some detail the endeavours that have been made to obtain instructions. Mr Yong applied for leave to cease acting for the Association. The application was not pursued at the hearing on 18 October 2010, and leave was not granted.

5 These are my reasons for the orders I would make, in addition to allowing the appeals. My reasons must be read together with the reasons I published in Tiao [No 2].

6 On 22 May 2009, the trial judge made declarations and orders, as follows:

1. All natural persons named in the List of Contributors compiled from a marble plaque displayed in the Temple belonging to the Australian Chinese Confucius-Mencius Saint Tao Centre Inc ('Association'), situated at Lot 42 Warton Road, Canning Vale, WA, being the persons named in the annexure in Chinese and its English translation to this order, are the only ordinary members of the Association ('Members').

1. Sheng Chin Lai, Cheng Chih Tiao, Yung Sen Chou, Hui Pin Wang and Song Tyan Kuo are the only foundation members, and the only board members, of the Association.
2. Except as provided in declarations 1 and 2, there are no other members of the Association.
3. The General Meeting held on 26 February 2005 was invalid.
4. All resolutions passed by persons purporting to be office bearers or members of the Association are invalid and not binding on the Association including:-
   1. general meetings held on 26 February 2005, 16 July 2006, 8 October 2006, 4 March 2007 and 14 October 2007; and
   2. board meetings held on 28 June 2006, 27 August 2006, and 12 February 2007.
5. Conal O'Toole, Solicitor and Butcher Paull & Calder, were not validly engaged as solicitors for the Association.
6. Cheng Chih Tiao was not authorized by the Board or by the members of the Association to enter into the contract between Level Holdings Pty Ltd and the Association dated 11 May 2004 (the Level Holdings contract) in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668 ('Land').

[Mr Lai] and [Mr Tiao and Mr Hui Wang] having given an undertaking to refrain from creating any disturbance or acting in any intimidating way, prior to, at or after the general meeting towards [Mr Lai], members of the Association, and/or their families

IT IS ADJUDGED AND ORDERED THAT:-

1. There be judgment for [Mr Lai].
2. [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.
3. [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.
4. [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.
5. 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.
6. 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.
7. [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.
8. No new members shall be admitted to the Association between the date of this order and the holding of the general meeting.
9. [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.
10. [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.
11. 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.
12. 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.

7 I will consider each declaration and order in turn and decide whether it should be set aside or varied.

8 The appellants and Mr Lai were agreed that declaration 1 should be set aside. I am satisfied that it is proper that declaration 1 should be set aside.

9 The appellants and Mr Lai were agreed that declaration 2 should not be set aside or varied. I am satisfied that it is proper that declaration 2 should remain in the form in which it was made.

10 The appellants and Mr Lai were agreed that declaration 3 should be set aside. I am satisfied that it is proper that declaration 3 should be set aside.

11 There should, instead, be a declaration that, as at 22 May 2009, there were no ordinary members of the Association.

12 By declaration 4, the trial judge declared that the general meeting held on 26 February 2005 was invalid. Her Honour made this declaration on the basis of the following findings:

(a) Mr Tiao did not give notice of the meeting to Mr Lai or another foundation member, Yung Sen Chou [456], [519].

(b) The members of the Association were not provided with sufficient information to make an informed decision to sell part of the Association's assets or to ratify any action taken to achieve that result [494].

(c) The meeting was not convened by a decision of the board of the Association or at the request of at least 20 members of the Association [511].

(d) Inadequate notice of the meeting was given [521], [522].

(e) The validity of the meeting (including the validity of the resolutions allegedly passed at the meeting) was specifically raised on the pleadings: her Honour's supplementary reasons [15].

13 The findings at par [12] (a), (b), (c) and (d) above were not challenged by Mr Tiao and Mr Hui Wang or by Level Holdings in the appeals. Also, those findings have not been vitiated or falsified by the issues which have been determined by this court. The findings in question are sufficient to sustain declaration 4 despite this court's conclusions, including the conclusion that, as at 22 May 2009, the Association did not have any ordinary members.

14 Declaration 4 should not be set aside or varied.

15 The trial judge made a specific finding that the general meeting held on 26 February 2005 was invalid [583]. Her Honour did not, however, make any specific findings as to the validity of any of the other general meetings or any of the board meetings referred to in declaration 5. See [583] and also see her Honour's supplementary reasons [13].

16 It appears that the trial judge included the other general meetings (that is, the meetings apart from the meeting held on 26 February 2005) and the board meetings in the declaration of invalidity within declaration 5 on the basis of the following submission made by counsel for Mr Lai and recorded in her Honour's supplementary reasons:

In relation to declaration 6 [sic: 5], counsel for the plaintiff explained that, although no specific findings were made in relation to the validity of these meetings, the fact of invalidity flows from the finding that no board meeting was held on 8 February 2005 and hence the 38 applicants whose membership was alleged to have been approved at that meeting were not members of the Association. It was apparent from the evidence that the attendees at the meetings referred to in declaration 6 [sic: 5] were from that same group of applicants who were found not to be members. Consequently, the meetings were invalid as there was not a quorum of members [13].

17 I have decided that declaration 4 should not be set aside or varied. It follows that declaration 5 should remain to the extent that it relates to the resolutions passed or purportedly passed at that meeting.

18 However, declaration 5 should otherwise be set aside.

19 It appears that, to a material extent, her Honour declared invalid the resolutions passed at the general meetings held on 16 July 2006, 8 October 2006, 4 March 2007 and 14 October 2007 on the basis of her erroneous construction of the Association's constitution, including those provisions which are concerned with membership.

20 Also, it appears that, to a material extent, her Honour declared invalid the resolutions passed at the board meetings held on 28 June 2006, 27 August 2006 and 12 February 2007 on the basis of her erroneous construction of the Association's constitution, including those provisions which are concerned with membership.

21 It is difficult to ascertain the basis on which her Honour declared invalid all resolutions passed at every other general meeting and every other board meeting of the Association, but, again, it appears to have been based to a material extent upon her Honour's erroneous construction of the Association's constitution, including those provisions which are concerned with membership.

22 Declaration 5 should be varied so that it applies only to the resolutions passed or purportedly passed at the general meeting held on 26 February 2005.

23 The trial judge made declaration 6 on the basis of the following findings:

(a) Mr O'Toole was engaged by Mr Tiao and Mr Hui Wang in reliance on a resolution purportedly passed at the general meeting held on 26 February 2005 [25], [36] - [37], [464], [583].

(b) Her Honour found that the meeting in question was invalid and in consequence the resolutions purportedly passed at that meeting were invalid.

24 These findings were not challenged by Mr Tiao and Mr Hui Wang or by Level Holdings in the appeals. The findings in question have not been vitiated or falsified by the issues which have been determined by this court. The relevant findings are sufficient to sustain declaration 6 despite this court's conclusions, including the conclusion that, as at 22 May 2009, the Association did not have any ordinary members.

25 Declaration 6 should not be set aside or varied.

26 The appellants and Mr Lai were agreed that declaration 7 should be set aside. I am satisfied that it is proper that declaration 7 should be set aside.

27 The appellants and Mr Lai were agreed that order 1 should be set aside. I am satisfied that it is proper that order 1 should be set aside.

28 Order 2 should be varied by deleting the words 'and the Members' as a result of this court's conclusion that the Association does not have any ordinary members.

29 However, order 2 should otherwise remain undisturbed. My reasons are as follows. The trial judge found that:

(a) Mr Lai and Yung Sen Chou are foundation members.

(b) There had been a mixing of funds between the Association's money and Mr Tiao's and Mr Hui Wang's money, and the Association had not maintained proper accounting records [251] - [272], [577].

30 These findings were not challenged by Mr Tiao and Mr Hui Wang or by Level Holdings in the appeals. The findings in question have not been vitiated or falsified by the issues which have been determined by this court. The relevant findings are sufficient to sustain order 2 apart from deleting the words 'and the Members'.

31 Subject to the variation I have mentioned, order 2 should not be set aside or varied.

32 Order 3, which deals with the costs of the action, should be set aside.

33 It was submitted on behalf of Mr Lai that the question of costs in the action should be remitted for determination by a judge of the General Division. That is not appropriate. This court is in a position to make the requisite determination.

34 There is no reason why the costs of the action should not follow the event.

35 Mr Lai should be ordered to pay Mr Tiao's and Mr Hui Wang's costs of the action, including reserved costs, to be taxed.

36 The appellants and Mr Lai were agreed that orders 4 - 8 should be set aside. I am satisfied that it is proper that orders 4 - 8 should be set aside.

37 Mr Tiao and Mr Hui Wang are two of the five surviving foundation members. The restraint imposed by order 9 was to continue until the conclusion of the general meeting referred to in order 6; that is, the general meeting that was to be held within 60 days from the date on which the trial judge made the order (in other words, within 60 days after 22 May 2009). I have decided that order 6 should be set aside. On the information and other material before this court, there is no proper basis for maintaining the restraint imposed by order 9. It should be set aside.

38 The appellants and Mr Lai were agreed that order 10 should be set aside. I am satisfied that it is proper that order 10 should be set aside.

39 The trial judge made order 11 on the basis of her finding that Mr Tiao was not authorised to engage solicitors on behalf of the Association: [25], [36] - [37], [464], [583]. See also [76] - [92] of her Honour's supplementary reasons.

40 This finding was not challenged by Mr Tiao and Mr Hui Wang or by Level Holdings in the appeals. The relevant finding has not been vitiated or falsified by the issues which have been determined by this court. The finding is sufficient to sustain order 11 despite this court's conclusions in the appeal, including the conclusion that, as at 22 May 2009, the Association did not have any ordinary members.

42 The appellants and Mr Lai were agreed that order 12 should be set aside. I am satisfied that it is proper that order 12 should be set aside.

43 As I have mentioned at [11] above, a new declaration should be made that as at 22 May 2009 there were no ordinary members of the Association.

Mr Tiao's and Mr Hui Wang's costs of the action

44 As I have mentioned at [34] above, there is no reason why the costs of the action should not follow the event.

45 I would order Mr Lai to pay Mr Tiao's and Mr Hui Wang's costs of the action, including reserved costs, to be taxed.

46 Also, Mr Lai should be ordered to repay to Mr Tiao and Mr Hui Wang all sums paid by Mr Tiao and Mr Hui Wang to Mr Lai by way of costs (and interest) in the action plus interest on each such sum at the rate of 6% per annum calculated from the date of payment by Mr Tiao and Mr Hui Wang of the particular sum up to the date of repayment by Mr Lai.

Level Holdings' costs of the hearings in the action on 21 September 2006 and 12 June 2009

47 I would order Mr Lai to pay Level Holdings' costs of the hearings in the action on 21 September 2006 and 12 June 2009 to be taxed. These costs should be taxed on a party/party basis. Despite the submissions to the contrary made on behalf of Level Holdings, I am not persuaded that there has been any relevant misconduct or any other circumstances which justify an order for costs on an indemnity basis.

Mr Tiao's and Mr Hui Wang's costs of their appeal

48 In my opinion, there is no reason why Mr Tiao and Mr Hui Wang should not have the costs of their appeal. The usual rule that costs follow the event should be applied.

49 I would order Mr Lai to pay Mr Tiao's and Mr Hui Wang's costs of their appeal, including any reserved costs, to be taxed.

50 I would not order the Association to pay Mr Tiao's and Mr Hui Wang's costs of their appeal. The real protagonists in relation to this appeal were Mr Tiao, Mr Hui Wang and Mr Lai. Although the Association initially opposed this appeal, its stance changed (appropriately) shortly before the commencement of the hearing. It then informed the court and the other parties that it would abide the outcome.

51 In my opinion, there is no reason why Level Holdings should not have the costs of its appeal. The usual rule that costs follow the event should be applied.

52 I would order Mr Lai and the Association to pay Level Holdings' costs of its appeal, including any reserved costs and the costs of the application to review Pullin JA's decision to allow Level Holdings to be joined as a party to the appeal, to be taxed.

53 The subject matter of Level Holdings' appeal was the Level Holdings Contract between Level Holdings and the Association. Although the Association made concessions on some issues, it did not concede the appeal.

54 Level Holdings sought an order that Mr Lai and the Association pay its costs of:

(a) Level Holdings' application to be joined as a party to the appeal; and

(b) Mr Lai's and the Association's application to review Pullin JA's decision on the joinder application,

55 I am not persuaded that there has been any relevant misconduct or any other circumstances which justify ordering Mr Lai or the Association to pay any costs of Level Holdings on an indemnity basis.

56 Senior counsel for Mr Lai informed the court that no application would be made on behalf of Mr Lai for an indemnity certificate under the Suitors' Fund Act 1964 (WA).

57 The appellants and Mr Lai were agreed that the injunction granted by Master Newnes on 19 April 2005, and extended on 13 June 2005, restraining Mr Tiao and Mr Hui Wang and the Association from giving effect to, or proceeding further with, the Level Holdings Contract, should

be discharged. I am satisfied that it is proper that the injunction should be discharged.

Outstanding disputes between some or all of the parties

It remains necessary to consider whether this court should merely set aside declaration 7 and order 5 and discharge the interlocutory injunction granted by Master Newnes on 19 April 2005 and extended by him on 13 June 2005, and leave it to Level Holdings or the Association (or Mr Lai) to commence fresh proceedings to determine the validity and enforceability of the Level Holdings Contract and to claim declaratory or other relief including, for example, a decree for specific performance and damages in the case of Level Holdings, and damages in the case of the Association. Alternatively, the court could, in addition to setting aside declaration 7 and order 5 and discharging the interlocutory injunction, remit the action from which this appeal has been brought to a judge of the general division of the Supreme Court for the purpose of determining all outstanding issues between Level Holdings and the Association (and Mr Lai). This would involve (probably) an amendment to the writ of summons, the joinder of Level Holdings, and new or amended pleadings, including an amended statement of claim by the Association (and Mr Lai) and a counterclaim by Level Holdings [128].

59 Mr Tiao and Mr Hui Wang and Level Holdings submitted that any outstanding disputes between some or all of the parties should be resolved, if necessary, by the commencement of new proceedings. The remnants of the action that was before the trial judge should not be remitted either to her Honour or to another judge of the General Division.

60 Mr Lai submitted that the action should be remitted to a judge of the General Division.

61 I have no doubt that the proper and efficient course (given the unhappy history of the litigation between the parties) is for this court not to make an order for remittal but, instead, to leave it to one or other of the parties to commence fresh proceedings, if necessary, to resolve any and all outstanding disputes, including those disputes in the action which have not been the subject of a final determination on the merits by this court in the appeals or by the trial judge (to the extent that her Honour's findings, declarations and orders remain or remain as varied by this court).