Supreme Court New South Wales Medium Neutral Citation: Kabir Ahmed & Ors v Ayubur Rahman Chowdhury & Ors [No. 2] [2011] NSWSC 954 Hearing dates: 24 & 25 August 2011 Decision date: 25 August 2011 Jurisdiction: Equity Division - Duty List Before: Slattery J Decision: Orders made requiring the parties to approach the President of the Law Society of New South Wales to nominate a person suitable for appointment as a referee. Costs reserved. Catchwords: ASSOCIATIONS AND CLUBS - incorporated associations - members - dispute about the validity of persons elected to the Executive Council of an incorporated association - parties agree that new elections for the Executive Council should be held at an Annual General Meeting - parties cannot agree on (1) who are the Association's members; (2) who should call the Annual General Meeting; (3) who should be a referee to decide on a referred question as to the membership of the Association. Legislation Cited: Associations Incorporation Act 2009, s 96 Associations Incorporation Regulation 2010, Regulation 16 Civil Procedure Act 2005, ss 26, 56 Corporations Act 2001, ss 1321, 1322 Cases Cited: Kabir Ahmed & Ors v Ayubur Rahman Chowdhury & Ors [2011] NSWSC 893 Category: Consequential orders Parties: First Plaintiff/Respondent- Kabir Ahmed Second Plaintiff/Respondent- Saiful Islam Chowdhury Third Plaintiff/Respondent- Iftikhar Uddin Fourth Plaintiff/Respondent- Fazlur Rahman First Defendant/Applicant- Ayubur Rahman Chowdhury Second Defendant/Applicant- Moshiur Rahman Redoy Sheikh Third Defendant/Applicant- Harun Rachid Azad Fourth Defendant/Applicant- Motiur Rahman Representation: Defendants/Applicants- M. Condon (on 24 August 2011) Plaintiffs/Respondents- R. Mitry, Mitry Lawyers (on 24 August 2011), C. Cedergren (on 25 August 2011) Defendants/Applicants- B. Barrack, Barrak Lawyers (on 25 August 2011) File Number(s): 2011/173388 Publication restriction: No Judgment 1This is the Court's second judgment in these proceedings. In the principal judgment ( Kabir Ahmed & Ors v Ayubur Rahman Chowdhury & Ors [2011] NSWSC 893) the Court dismissed the defendants' Motion, which claimed that these proceedings had been settled. This judgment should be read with the principal judgment. Persons, events and things are referred to in the same way in both judgments. 2After the dismissal of the defendants' motion the parties attempted to formulate orders to resolve or at least reduce their disputes through the holding of an Annual General Meeting at which a new Executive Council of the Association would be elected. As the Court observed in the principal judgment ( Kabir Ahmed & Ors v Ayubur Rahman Chowdhury & Ors [2011] NSWSC 893 at [61]) this course appears likely to provide the most practical near term solution to the current deadlock within the Association. 3But the parties have been unable to agree upon a form of orders which will allow an Annual General Meeting of the Association to be held. So the Court has formulated orders to bring order to the affairs of the Association. From the principal judgment the Court is familiar with the issues between the parties. The Court must seek to give effect to the overriding purpose of facilitating the just, quick and cheap resolution of these proceedings: Civil Procedure Act, s 56. The more efficient course to fulfil this purpose here is for the Court now to consider granting remedies to resolve issues of final relief that remain among the parties. The Court's orders were made earlier today. I indicated then that I would publish my reasons for making orders in this form later. These are my reasons. 4The principal obstacle to holding an Annual General Meeting of the Association to validly elect a new Executive Council that will be accepted by all sides within the Association, is the inability of the parties to these proceedings to agree on what persons have been approved as members of the Association in accordance with its Constitution. The procedure provided for under clause 9 of the Constitution, involving as it does approval by the Executive Committee of the candidates for membership, has become paralysed by disputes about who presently constitutes the Executive Committee. There are other disputes but they need not be detailed in these reasons. 5The Court has ample power to resolve this problem through the operation of Corporations Act 2001, s 1322, which applies to the Association by the operation of Associations Incorporation Act 2009, s 96 and Associations Incorporation Regulation 2010, Regulation 16. The Court can make orders and declarations validating a procedural irregularity in a disputed electoral process or one which may be defective because of issues about the qualifications of the officers involved: Corporations Act , s 1322(4). 6But before the Court can make such orders the Association itself must be made a party to these proceedings, so that it will be bound by the orders made. Also there must be some objective determination of what persons would be members or eligible for membership of the Association, in the absence of other issues, including issues about the validity of the appointment of persons on the Executive Council. 7The Uniform Civil Procedure Rules , r 20.14 allow the Court to appoint a referee to determine the question of membership or eligibility for membership of the Association. This is an appropriate case for the exercise of the Court's power to refer this question to a referee. But the parties presently cannot agree upon a person for the Court to appoint as the referee. The parties initially disagreed about whether the proposed referee should be an accountant or a solicitor. But after argument on the issue, the insistence by one party that an accountant be appointed was abandoned. So the initial orders the Court will now make set up a mechanism for a neutral person, the President of the Law Society New South Wales to nominate a suitably qualified solicitor, who the Court could then appoint as referee. Once the Law Society President's nomination has occurred the matter will then come back before the Court on 6 September 2011. Then the Court can appoint that person as the referee. Once those orders are made, he or she will then embark on the task of ascertaining the membership or the eligibility for membership of the Association. 8The orders providing for the first stage of this process up to 6 September 2011 are set out below. With those orders is a "Schedule A", which sets out the form of the further orders which the Court presently proposes to make on 6 September 2011 appointing the referee. Of course both the referee and the parties may wish to vary the form of these orders. If the Schedule A orders are made they will take the matter through to 5 October, when the Court should be presented with the referee's report, containing a final set of persons eligible for membership of the Association. 9It is at that point, on 5 October 2011 that the Court will then consider the making of detailed orders for the calling of an Annual General Meeting and the holding of elections for the Executive Council of the Association. It is presently reasonable to anticipate that upon the implementation of those orders the Association's Annual General Meeting will be held and a fresh Executive Council elected in either October or November of this year. There may be residual matters of final relief and questions of costs that will need to be debated before the Court after that. 10There are two supplementary matters. The first is the question of mediation. In the orders today I have not made an order for mediation under the Civil Procedure Act , s 26 because it is not appropriate at this time. Mediation now would create an unnecessary burden for the parties and the principal officers of the Association, who will be fully involved in assisting the referee in determining the identity of the Association's membership. Second, once the steps outlined in these reasons take place, many of the procedural differences between the parties should be resolved and a mediation may not then be necessary. 11The other supplementary issue is the question of costs. On behalf of the plaintiffs, the successful applicants on the Motion, Mr Mitry seeks an order for costs. Mr Condon for the defendants, the unsuccessful respondents to the Motion, resists such an order. In my view it is appropriate to reserve costs at this stage. There are questions as to whether the plaintiffs should have the whole of their costs of the Motion because, as Mr Condon claims, the plaintiffs required an adjournment on the first day of the hearing of the Motion to put on further evidence. Moreover, Mr Condon submits that the plaintiffs were ultimately successful on the Motion on the basis of evidence which largely emerged in cross-examination of the plaintiffs' witnesses, rather than through their previously served affidavits. It seems to me that in these circumstances the question is best decided when the Court is considering costs orders at the end of the proceedings, after all other issues have been resolved. For that reason in the orders made today I have reserved the costs of the Motion. 12Accordingly, the Court makes the following orders:- 1. Order that the Bangladesh Islamic Centre of New South Wales Inc. ("the Association") be joined as the 5 th Defendant to these proceedings. 2. Order that the plaintiffs serve a copy of these orders on the Association by delivering to its registered office by 5.00pm on Friday 26 August 2011. 3. Direct that the plaintiffs and the first and third defendants (referred to in these orders as "the co-operating parties") shall by 4.00pm today jointly request the President for the time being of the Law Society of New South Wales (referred to in these orders as "the President") to nominate by 2 September 2011 a solicitor to act as a referee under the proposed orders in Schedule A hereto, being a solicitor who practises in Sydney in a small to medium sized law firm and who consents to such appointment ("the nominee"). 4. Direct that the co-operating parties jointly provide to the President as soon as is practicable such information as the President requests in order to make the appointment the subject of order 3 hereof. 5. Direct that the co-operating parties jointly provide as soon as is practicable to the nominee such information as the nominee requests in order to commence the nominee's role as the referee appointed under the proposed orders in Schedule A hereto. 6. List these proceedings on Tuesday 6 September 2011 for directions and for the making of further orders for the appointment of the nominee as a referee under UCPR r. 20.14. On that date the Court presently proposes to make the orders set out in Schedule A hereto to refer to the nominee as referee the questions provided therein, but subject to the nominee's own requirements for the nominee's appointment as referee and subject to any further submissions from the co-operating parties or the Association as to the form of the orders. 7. Note that despite orders 3, 4 and 5 above that it is not inconsistent with the operation of these orders for the co-operating parties and (if it seeks to be represented in these proceedings) the Association to agree for a solicitor of their mutual choice to be appointed by the Court to act as a referee under the proposed Schedule A orders. 8. Note that if any co-operating party fails to comply with any part of these orders that such party may be liable to pay the costs of any other party to the proceedings (including the Association) occasioned by any such non-compliance. 9. Adjourn the proceedings to 9.30am on 6 September 2011 before me and reserve costs. 10. The Court grants Liberty to restore on 1 day's notice. SCHEDULE A 11. Appoint the nominee solicitor pursuant to UCPR r. 20.14 to act as referee for enquiry and report back to the Court by 28 September 2011 upon the following two questions: "(1) Who are the present members of the Association (including members renewing membership, members being nominated for the first time and life members) determined in accordance with the Association's Constitution? (2) If question (1) cannot be completely answered, then who are the persons who would be either members (or persons presently eligible for approval as members) of the Association under the Association's Constitution, if there were no issue within the Association concerning the validity of the appointment of the General secretary, the President or the Executive Council?" 12. Order that the referee's costs will, in the first instance be paid, in accordance with the referee's terms, by the co-operating parties as to 50% by the plaintiffs and 50% by the first and third defendants, but the making of this order will not preclude the Association from later passing a motion to indemnify the co-operating parties from their liability under this order. 13. Direct that the referee will have all the powers to conduct the reference provided for in UCPR r. 20.20 but will do so subject to the terms of these orders. 14. Note the agreement of the plaintiffs and the defendants (but not the Association at this point) that in the course of the reference and otherwise during these proceedings that each party will not contend or object that any person is not a member of the Association on the grounds of: (1) the identity of or the validity of the appointment of the Association's General Secretary or its President; or, (2) the identity, constitution or the validity of the appointment of the Association's Executive Council, at the time that any application for membership, renewal of membership or application for life membership is made, approved or entered into the register of Members; or (3) whether or not any such register of Members is kept by the Plaintiffs or the Defendants. 15. Direct any party seeking to adopt, vary or reject the Referee's Report to file and serve any Notice of Motion for that purpose by 5 October 2011, and further direct such motion to seek such other relief as that party requires and all necessary orders pursuant to the Associations Incorporation Act 2009 and s 1322 of the Corporations Act 2001 (1) for the notification of the Association's members of the terms of these orders and the referee's report, (2) for the holding of an election for office bearers of the Association, and (3) for validating the outcome of any election of the Association conducted on the basis of the membership determined in accordance with the referee's report and these orders. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 August 2011