Supreme Court New South Wales Medium Neutral Citation: The Australian Federation of Islamic Councils Inc v Hafez Kassem [2017] NSWSC 206 Hearing dates: 03/03/2017 Date of orders: 03 March 2017 Decision date: 03 March 2017 Jurisdiction: Equity Before: McDougall J Decision: Grant interlocutory injunctions to restore interim control of AFIC to individual plaintiffs. Catchwords: Injunctions – interlocutory injunctions – identification of the status quo that is to be restored pending a final hearing Legislation Cited: Associations Incorporation Act 1964 (Tas) Australian Charities and Not-for-profits Commission Act 2012 (Cth) Cases Cited: Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130 Remrose Pty Ltd v Allsilver Holdings Pty Ltd (2005) 225 ALR 588 Category: Procedural and other rulings Parties: The Australian Federation of Islamic Councils Inc (First Plaintiff) Harun Abdullah (Second Plaintiff) Jamal El Kholed (Third Plaintiff) Kazin Ates (Fourth Plaintiff) Hafez Kassem (First Defendant) Farouk Khan (Second Defendant) Refaat El-Hajje (Third Defendant) Mohammed El-Mouelhy (Fourth Defendant) Bachar Dib (Fifth Defendant) Amjad Mehboob (Sixth Defendant) Agim Garana (Seventh Defendant) Kylie Wee (Eighth Defendant) Holly Soh (Ninth Defendant) Representation: Counsel: M A Ashhurst SC / A W Smith (Plaintiffs) A P Cheshire SC (First, Third, Fourth and Fifth Defendants) Solicitors: McCabes Lawyers (Plaintiffs) Goldrick Farrell Mullan (First, Third, Fourth and Fifth Defendants) File Number(s): 2017/49787 Judgment (ex tempore – revised 3 march 2017) 1. HIS HONOUR: The issue in these proceedings is which of two warring factions controls, and which should control for the time being, the affairs of the Australian Federation of Islamic Councils Inc (AFIC). 2. I start by observing that AFIC has been made a plaintiff in the proceedings. Where the fundamental question in dispute is who controls AFIC, and where the ability of one faction to retain solicitors to act for it in its capacity as a plaintiff necessarily depends on resolution of the question of control, it is not appropriate that AFIC be a plaintiff. 3. I accept, as Mr Ashhurst of Senior Counsel, who appeared with Mr Smith of Counsel for the plaintiffs, submitted, that there is a question as to application of AFIC's property. Nonetheless in my view, without resolution of the question of control, the retainer must be at least as doubtful as the question of control. 4. In short, AFIC should have been named as a defendant. 5. I have been informed from the Bar table that AFIC's funds have not been used in the prosecution of this litigation. To make crystal clear that they should not be, I propose to order that neither the individual plaintiffs nor the defendants are to have recourse to or contribution or indemnity from the funds of AFIC for the purpose of funding their costs in this litigation. 6. Having got those matters out of the way, the sorry history of the dispute requires attention. 7. On 13 January 2017 a number of persons, including the 6th defendant Mr Mehboob, called or purported to call what was described as "a Special Congress/Special General Meeting" of AFIC for Saturday, 28 January 2017. 8. The matters to be considered at that meeting included motions of no confidence in various people. It would appear that this was intended to resolve the question of control, because another resolution proposed the appointment of an interim management committee. 9. There was then a purported adjournment of that meeting. I say purported, but there is an issue as to whether what happened was an adjournment (or a postponement) or, as the defendants contend, the calling of a new meeting. 10. It is common ground, for the purposes of this application (which is an interlocutory application seeking to restore the individual plaintiffs to their former control of AFIC, and to oust the defendants from their present control), that there was no power to postpone the meeting called for 28 January 2017. If that be correct (and it is if disputed, a question to be decided in a final hearing), then what happened at the purported or postponed or adjourned meeting on 11 February 2017 is a nullity. 11. What did happen is that the meeting went ahead on 11 February 2017 and purported to pass a number of resolutions, including that the resolutions the subject of the original notice (which were repeated verbatim in the later notice) not be put to the meeting, and that two named individuals be confirmed as the "rightful President" and "rightful Vice President", respectively, of AFIC. 12. The resolutions went further, and purported to remove certain persons from whatever is the "Proscribed List of AFIC". No notice whatsoever had been given that this matter was to be put before the meeting (whenever it was to be held). Mr Cheshire of Senior Counsel, who appeared for the defendants, accepted that he could not sustain its validity. Since the fact that the resolution is on the books of AFIC is apparently regarded as an impediment to holding a new meeting to sort out, by the membership rather than the Court, the question of control, the appropriate course is that, notwithstanding that this is an interlocutory application, I should declare that particular resolution to be void and of no effect. 13. Mr Ashhurst submitted that it followed equally that other resolutions purportedly passed on 11 February 2017, but not notified in advance, were invalid. That may be so, but since resolving that question is not necessary for the purpose of enabling some form of democracy to prevail, I will not take it any further. 14. The submissions ranged far and wide over the constitution of AFIC, over the provisions of the Associations Incorporation Act 1964 (Tas) (the Tasmanian Act) under which it was incorporated, and over the model rules that were promulgated pursuant to s 16 of that Act. 15. Mr Cheshire accepted that the various issues raised as to the validity of what happened all involved arguable propositions, as to which the individual plaintiffs might succeed at a final hearing. He was correct to do so. Mr Cheshire did not accept Mr Ashhurst's characterisation of the plaintiffs' case as being a strong one. I do not agree with Mr Cheshire on that point. 16. When one looks at the document that purported to postpone the (first) special meeting, it bears the date 26 January 2017 - 2 days before that meeting was due to take place. It repeats verbatim the first notice, where the first notice stated that pursuant to s 22A of the Tasmanian Act, the subscribers "for and on behalf of members of AFIC hereby call a Special Congress/Special General Meeting of [AFIC] to be held in Sydney on 28 January 2017". Thus, what purported to be a notice of postponement (but what Mr Cheshire characterised as a notice calling a new meeting), repeated verbatim the words calling the first meeting, including its date. 17. It is correct that the notice then went on to say that, "The Special Congress/Special General Meeting will be held" on the date and time, and at the location, thereafter specified. However, that is not the only matter. 18. The letter or email under cover of which the notice of 26 January 2017 was provided to members, referred twice to a "rescheduling" of the meeting that had been called for 28 January 2017, and once to a "postponement" of it. 19. In those circumstances, it seems to me, as I have said, that the individual plaintiffs' case that what happened was a postponement, and therefore prima facie invalid, is a strong case. 20. There are other technicalities, but in view of the time and the need to allow the parties to try and sort themselves out, I do not propose to go to them. 21. What happened after the meeting of 11 February 2017, was that the defendants effectively used self-help to enter AFIC's premises, lock out the individual plaintiffs, and take over the books and records. The defendants, further, opened a new bank account into which revenues received by AFIC (including from providing halal certification services), were paid. 22. Mr Ashhurst submitted that to leave the defendants in control pending resolution of the question of control by the members of AFIC, would be to legitimise self-help, and reward the defendants for doing not what they should have done (come to the Court), but what they did in fact do. There is great force in that submission. 23. Another factor, the relevance of which did not appear until today (and I should have said that this is an adjournment of the original interlocutory hearing), is that the Commissioner of the Australian Charities and Not-for-profit Commission (respectively, the Commissioner and the Commission), appeared by a solicitor, pursuant to provisional leave which has been confirmed, to bring a very important matter to the Court's attention. 24. That matter is that on 17 August 2016, AFIC gave to the Commission, and the Commission accepted, enforceable undertakings under the Australian Charities and Not-for-profits Commission Act 2012 (Cth). One of those undertakings, as summarised in a way which is not contentious, was that within 7 days of receiving the Commissioner's approval, AFIC would engage an approved expert to conduct a comprehensive audit of its finances and operations from 1 January 2016 to 30 June 2016, and to provide a written report to AFIC and the Commission with the findings from that audit within 4 months of engagement. 25. Mr Garey, solicitor, who appeared for the Commissioner, stated (and it does not appear to have been contentious) that the approval was given on 30 November 2016, and thus that the report must be furnished by the end of this month: 30 March 2017. 26. There is some, although not entirely satisfactory evidence, that on 3 December 2016 AFIC, then acting through one of the individual plaintiffs, Mr Trad, did engage an expert who had been approved by the Commission: a Mr Peter Ristevski. 27. It seems to have been something of a surprise to the defendants that the undertaking had been given, and had to be complied with, and that Mr Ristevski was required to undertake the work of reporting. That suggests to me that if the defendants remain in control, the ability of AFIC to comply with its enforceable undertaking may be compromised. 28. Mr Ashhurst submitted that the preferable course was to reinstate the individual plaintiffs and to list the matter before the expedition judge with a view to obtaining a swift, final hearing. He resisted the proposition that there should be a Special or Annual General Meeting to resolve the question of control because, he submitted, the "Proscribed List" resolution would be an impediment. Since I am going to declare that resolution to be void, that impediment is removed. 29. It would be an appalling waste of time and money if further funds were to be spent in Court agitating the question of interim control when the question of control is ultimately one for the members, and one that the members should have the opportunity to decide. 30. At the conclusion of the first hearing, I indicated a strong disposition to appoint a receiver, and to give the receiver the powers of the various relevant organs of AFIC so that the receiver could, among other things, call a meeting. Mr Ashhurst opposed that on bases that included that AFIC's funds were not infinite, would be depleted by a receivership, and should not be used for that purpose. With some reluctance, I am prepared to accept those propositions, and to give the warring parties one more opportunity to permit the membership to decide the question of control. 31. The question of the form of the interlocutory orders to be made necessarily requires consideration of who should be in control until the meeting is called. For three reasons, I think that it should be the individual plaintiffs. 32. The first reason is, as I have said, that I think their case as to the invalidity of what happened on 11 February 2017 – the question turning on postponement – is a strong one. 33. The second reason is that I do accept that the defendants should have come to the Court if there were a real issue as to the efficacy of what they had done, and that by using self-help as they did, they have disturbed the apparently pre-existing legal position in a way that should not have happened. 34. The third reason is that I perceive it is slightly more likely that Mr Ristevski will be able to complete his audit and report if the individual plaintiffs are reinstated, for the time being, to their position of control. 35. As to the second of those propositions, I should note that there was a most learned debate as to what constituted the status quo, for the purpose of assessing the serious question to be tried and the balance of convenience. Mr Ashhurst referred to the decision of Hasluck J in Remrose Pty Ltd v Allsilver Holdings Pty Ltd (2005) 225 ALR 588, in particular at [118], [119]. I set out what his Honour there said. [118] It is generally thought to be no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature consideration. These are matters to be dealt with at the trial. In Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471 Kennedy J held that the normal rule is that a court does not undertake a preliminary trial in granting or withholding interlocutory relief upon a forecast as to the ultimate result of a case. However, there are cases when an evaluation of the strength of a plaintiff's case for final relief can determine which claim to legal rights is more likely to be unjustly defeated by refusing or granting an injunction. [119] Care must be exercised in determining what is the status quo. If an order is sought in order to preserve the status quo, it is important to understand that the status quo is the state of affairs existing before the last change; that is, during the period immediately preceding the motion for interlocutory injunction, Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130 at 140. 1. Mr Cheshire referred to Lord Diplock's speech in Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130 at 140 (to which Hasluck J had referred at [119] of Remrose). His Lordship said at 140: ... the relevant status quo ... is the state of affairs existing during the period immediately preceding the issue of the writ claiming the permanent injunction, or if there be unreasonable delay between the issue of the writ and the motion for an interlocutory injunction, the period immediately preceding the motion. 1. I do not accept that the question of the "status quo" or its "identification" is a question of law to be decided by the literal application of judicial authority, even from a judge of such eminence as Lord Diplock. On the contrary, I think, it is essentially a factual question that requires consideration of what has happened and what it is that the plaintiffs seek to achieve by their application for interlocutory relief. The way that Hasluck J put it in Remrose at [119], immediately before the citation of Garden Cottage Foods, seems to me to be consistent with what I have just said. 2. In this case, if the defendants had done what they should have done and come to Court once it was clear that their purported right to control the affairs of AFIC was challenged, the status quo would have been, undoubtedly, the individual plaintiffs' control. I do not really see why the defendants' resort to self-help should be regarded as irrevocably changing that position. 3. For those reasons, I propose to make, among other things, orders in accordance with that version of the Short Minutes of Order proposed by Mr Ashhurst, which effectively returns interim control to the plaintiffs. However, I do not propose to make Order 7 which contemplates an expedited final hearing. What I propose to do is to make the orders conditional upon the individual plaintiffs' taking all reasonable steps to call as quickly as may be done, having regard to AFIC's constitution and any relevant legislative constraint, either a Special General Meeting or an Annual General Meeting for the purpose of deciding, among other things, who it is that will be elected as the office bearers and the executive committee of AFIC for whatever may be the relevant ensuing period under the constitution. 4. As I have said, I will also make a declaration as to the invalidity of the "Proscribed List resolution" and I will also make orders to the effect of those I have indicated, preventing either side from dipping into the funds of AFIC for the purpose of funding this litigation. 5. That will leave the question of the costs of this application. In the ordinary way, my view with interlocutory applications is that the costs should be reserved to abide the outcome of a final hearing, but if anyone wishes to make a specific costs submission, I will entertain it. [Counsel addressed.] 1. I make the following orders: 1. Direct the plaintiff to bring in short minutes of order to give effect for my reasons. 2. List matter before the Registrar on 13 March 2017. ********** Amendments 07 March 2017 - [35] grating to granting 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: 07 March 2017