Supreme Court New South Wales Medium Neutral Citation: Rana v Survery (No 1) [2012] NSWSC 439 Hearing dates: 2 May 2012 Decision date: 02 May 2012 Jurisdiction: Equity Division Before: Pembroke J Decision: Resolution invalid Catchwords: INCORPORATED ASSOCIATION - strict adherence to rules for expulsion - nature of rights of membership - policy and principle demand strict adherence Legislation Cited: Corporations Act (Cth) 2001 Interpretation Act 1987 Cases Cited: Gates v Vickery (1973) ACLC 27,517 Goodwin v Vietnam Veterans Motor Cycle Club Australia NSW Chapter Inc (2008) 72 NSWLR 224 Hornby v Narrandera Ex-Servicemen's Club Ltd [2001] NSWSC 235 McClelland v Burning Palms Surf Life Saving Club (2002) 191 ALR 759 Samuel v St George Leagues Club Limited (unreported, NSWSC, 20 October 1992, Powell J) Category: Separate question Parties: Wajahat Ali Khan Rana - first plaintiff Mohammad Abdul Sami - second plaintiff Rab Nawaz - third plaintiff Hafizur Rahman Khan Survery - first defendant Masud Cheema - second defendant Islamic Association Western Suburbs Sydney Inc - third defendant Representation: Counsel: A M Pickles - for the plaintiffs R W Tregenza - for the defendants Solicitors: Forbes Smith & Co - for the plaintiffs N A Lawyers - for the defendants File Number(s): 2011/400057 EX TEMPORE Judgment Introduction 1The issue for determination in this case is the validity of a resolution to expel the plaintiffs from the Islamic Association Western Suburbs Sydney Inc (Association). The question arises because the Foundation Members of the Association did not simply resolve to expel the plaintiffs from the Association, as the Constitution contemplates, but they purported to do so for a period of five years. 2The determination of this question requires analysis of the Rules of the Constitution. That analysis reveals a clear dichotomy between "expulsion" and "suspension". The latter must be for a specified period. On the other hand, the former is unqualified. The Rules contemplate that an expelled member ceases to be a member for all time unless and until an application for re-admission is made and granted. The status of a suspended member is however different. Expulsion & Suspension - Difference 3The difference between expulsion and suspension is apparent in several aspects of the Rules. For example, Rule 6 provides that: A person ceases to be a member of the Association if the person: (a) dies (b) resigns their membership or (c) is expelled from the Association. Expulsion therefore does, but suspension does not, cause a person to cease to be a member of the Association. 4Rule 17 provides that the office of a member of the Executive Council shall become vacant if, among others, "he/she ceases to be a member of the Association". There is no express provision for the office of a member of the Executive Council to become vacant if the person is merely suspended from membership of the Association. 5Of paramount importance is Rule 11. It is headed "Disciplining of Members" and provides, among other things, that: The Foundation Members may by resolution: 1. Expel the member from the Association; or 2. Suspend the member from membership of the Association for a specified period. 6In this case, as I have said, the Foundation Members resolved and duly confirmed that the plaintiffs were to be expelled for five years. The essential difficulty with the resolution is that expulsion for a specified period is not, on its face, contemplated by the Constitution. I do not think that it was authorised. Strict Adherence to Rules 7The defendants say that I should adopt a purposive approach and that I should ignore or excise the temporal qualification which the Foundation Members imposed. I do not think that this is appropriate as a matter of principle. 8Powers of expulsion prescribed in the constitutions of incorporated associations should be construed carefully, with circumspection, and certainly no more broadly than the ordinary and natural meaning of the language necessitates. That is because rights of membership of incorporated associations are often of unique value to the member concerned. Sometimes they are of cultural and social significance. Sometimes their importance to a particular member is intangible but nonetheless of considerable value for that member's identity, wellbeing and social status. For those reasons, when a person joins an incorporated association, he or she is entitled to expect that the provisions of its constitution, particularly those relating to expulsion, will be faithfully and scrupulously adhered to. And this is more than a legitimate expectation. It is a contractual right which a member is entitled to have specifically performed. 9The contractual nature of the rights of members in an incorporated association is enshrined by section 26(1) of the Associations Incorporation Act 2009: 26 Nature of association (1) Subject to this Act, as association's constitution binds the association and its members to the same extent as if it were a contract between them under which they each agree to observe its provisions. 10The need for scrupulous adherence to the precise language of the provisions of the constitution of an incorporated association explains why it is often said that the power to suspend or expel "must be exercised strictly in accordance with the procedures laid down in the club's constituent statute": Samuel v St George Leagues Club Limited (unreported, NSWSC, 20 October 1992, Powell J). 11There are many well-known authorities to this effect, all of which I endorse. They include Goodwin v Vietnam Veterans Motor Cycle Club Australia NSW Chapter Inc (2008) 72 NSWLR 224 at 233; Hornby v Narrandera Ex-Servicemen's Club Ltd [2001] NSWSC 235 at [8], [9] and [10]; McClelland v Burning Palms Surf Life Saving Club (2002) 191 ALR 759 at [74] and Gates v Vickery (1973) ACLC 27,517 at 27,519 (Street CJ in Eq). Application to this Case 12The Rules of the Constitution in this case do not recognise the concept of an expulsion for a specified period. In fact, an expulsion for a specified period would be inconsistent with the scheme of the Constitution and might well operate harshly. That is because if a member is expelled, he or she is entitled to re-apply for membership at any time. By contrast, if a member is expelled for five years, the clear implication is that, for the period of expulsion, he no longer has a right to re-apply for membership. In my view, the Constitution does not expressly or impliedly permit expulsion to be attended with what is, in effect, a prohibition on a fresh membership application, either at all or for a period of five years. Interpretation Act 13It is true that the Rules of the Constitution in this case provide that the provisions of the Interpretation Act 1987 apply to and in respect of them as if the Rules were an instrument made under an Act. However Section 33 of the Interpretation Act does not assist the defendants. The approach that I have adopted promotes, rather than diminishes, the purpose or object of the Constitution. The Constitution represents a compact for the benefit of all members. The question is not whether the expulsion for five years gives effect to the intention of the Foundation Members. It does not matter that the meeting of Foundation Members disapproved of the conduct of the plaintiffs and wanted to discipline them one way or the other. It was not open to the Foundation Members to create their own instrument of discipline. 14The Foundation Members were constrained by the language of the particular Rules to which they and all members subscribed. Those Rules gave them a choice: expulsion or suspension for a specified period. Depending on the choice they made, the consequences to the plaintiffs would vary in significance. A hybrid choice not sanctioned by the Constitution was not open to the Foundation Members. They failed to adhere to the terms of the Rules that governed their conduct. The resolution to expel the plaintiffs for five years was therefore invalid. Section 1322 Corporations Act 15Section 1322 of the Corporations Act (Cth) 2001 does not assist the defendants. There is no "procedural irregularity". In fact there was nothing procedural about what happened. Nor was it an irregularity. Section 1322(2) defines procedural irregularity inclusively to mean an absence of a quorum and a defect, irregularity or deficiency of notice or time. In this case the effect on the plaintiffs' rights was substantive. There is in my view no reasonable basis for saying that the imposition of an expulsion for a period of five years in circumstances where the Constitution provided no power to do so is an irregularity, let alone a procedural irregularity. Excision 16Finally, the defendants suggest that I should ignore and excise the five year qualification which the Foundation Members have added to the expulsion which they purported to impose on the plaintiffs. This is a curious submission. There is no warrant for me transforming what the Foundation Members have done. They have chosen to do what they have resolved to do. The only question is whether the resolution is authorised by the Rules of the Constitution which governs their conduct. There is no analogy with the principles applicable to the construction of a contract where the excision of certain words may be appropriate if those words do not affect the real meaning and substance of the agreement. In this case the five year qualification was central to the resolution of the Foundation Members. Conclusion 17For those reasons I have concluded that the resolution of the Foundation Members of the Association made on 18 December 2011 and confirmed on 22 January 2012 is invalid. The defendants should pay the plaintiffs' costs of the hearing of the separate issue. Amendments 06 August 2012 - unincorporated association(s) to incorporated association(s) Amended paragraphs: Cover sheet and paragraphs 8, 9 and 10 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: 09 May 2012