Supreme Court New South Wales Medium Neutral Citation: Cambodian Buddhist Society of NSW Inc v Thai [2017] NSWSC 620 Hearing dates: 15, 16 May 2017 Date of orders: 16 May 2017 Decision date: 16 May 2017 Jurisdiction: Equity - Duty List Before: Parker J Decision: Interlocutory orders made by consent Catchwords: INCORPORATED ASSOCIATIONS – disputed election of new board – application for interlocutory relief Category: Procedural and other rulings Parties: Cambodian Buddhist Society of NSW Inc trading as Cambodian Buddhist Society of NSW (Plaintiff) Meng Eang Thai (First Defendant) Tramouch Neariroth Keo (Second Defendant) Thearak Boun (Third Defendant) Phuyi Yort (Fourth Defendant) Buncheon Chuan (Fifth Defendant) Vong Ven (Sixth Defendant) Ya Hoeung (Seventh Defendant) Sokchea Kong (Eighth Defendant) Lim Meng Eang (Ninth Defendant) Kim Hor Lim (Tenth Defendant) Huot Chuon (Eleventh Defendant) Chan Top Kong (Twelfth Defendant) Representation: Counsel: T Crispin (Plaintiff) U Okereke-Fisher (Defendants) Solicitors: Concorde Legal (Plaintiff) Pennicott Weir Lawyers (Defendants) File Number(s): 2017/141644 Publication restriction: Nil Judgment – EX TEMPORE 1. This is an application by the plaintiff for interlocutory injunctions. 2. Following a number of hours of argument spread over two days, the parties have agreed upon an interlocutory regime and I will make orders in due course giving effect to their agreement. 3. I had prepared a set of reasons for judgment which I do not now need to deliver. However, those reasons concluded with some observations about the state of affairs so far as the plaintiff organisation (which I will refer to as "the Society") is concerned. I propose now to outline the concerns that I have developed in the course of this hearing, in the hope that those in the community who are interested in the functioning of the Society will be aware of those matters and may take them into account in setting their course. 4. There are four matters in particular which I wish to refer to. The first is that the hearing of this application has revealed problems with the Constitution of the Society. The evidence in this application as to the terms of the Constitution consisted of a written nine page document headed "Constitution of The Cambodian Buddhist Society, Inc. of New South Wales" and apparently dating from October 1991; and secondly, a copy of a Department of Fair Trading form attaching amendments to the Constitution, apparently lodged in November 2000. 5. It is not easy to reconcile how those amendments fit in with the original terms of the Constitution. One particular problem is that the original Constitution contains section 28, which deals with the removal of directors from the board of the Society. The amendment document contains a new provision dealing with the same subject matter which is described as section 29. The two provisions are not consistent. 6. One would have thought that a mistake may have occurred and that the intent had been that the new provision was intended to replace section 28, but the amendment document quite explicitly refers to section 29 and counsel appearing for the plaintiff in this application expressly disclaimed, when I raised the matter with him, any suggestion that the new section 29 replaced the old section 28. The result is that the two provisions sit alongside each other with the difficulty, as I have indicated, that they are not consistent with each other. 7. More broadly, one of the issues raised on this application is how that removal provision works. It appears to confer an entitlement on the members, at a special meeting of the members, to remove the directors, but neither section 28 in the Constitution nor section 29 in the amendment document provides for the membership to replace the existing directors. Had this application proceeded to a contested conclusion, it would have been necessary for me to consider, on an interlocutory basis, whether I was satisfied that the resolutions purportedly passed on 30 April 2017 had validly replaced the whole of the old board with a slate of new candidates. 8. No doubt, that question remains open to be determined in the main proceedings, but there is at least a doubt as to whether, even if there is power to remove the board under the Constitution, the membership can then replace that board. On one view, removal of the board simply triggers an entitlement under section 27 of the Constitution for the remaining members of the board to appoint new members in a form of casual vacancy. It seems obviously unsatisfactory that the membership, should it decide to remove the board, is then unable to replace the board with a new board to the membership's liking, but it is at least possible that, on the terms of the Constitution and as amended, the entitlement of the membership is limited in that way. 9. A more fundamental problem still, it seems to me, may arise from amended section 26 of the Constitution. Section 25 provided for the membership, other than the Abbot and the Assistant Abbot, who hold office ex officio, to be elected by the members. The new version of section 25, numbered as section 26, provides for the members to elect the president and for the president, once elected, to nominate a team of 12 to work with him. 10. Ignoring the numbering problem, on its face, this change means that the entitlement of the members to vote is restricted, in effect, to electing the president, and the members, as voters, have no role in selecting the remainder of the board. That might be thought strange in circumstances where, as is usually the case, the board operates by majority. It could lead to a situation where the board could be under the de facto control of a group of members, none of whom had actually been elected by the membership. 11. It would also give rise to the curious circumstance that, although the members could elect the president, the president would control the initial appointment of the rest of the directors, but the president would have no right of removal. Rather, the right of removal would vest in the membership and then the filling of vacancies would go back to the remaining members of the board. 12. I cannot imagine that this is a basis for stable and sensible corporate governance and it seems very unlikely that it was intended. Indeed, I find myself somewhat surprised as to why it was approved, as I assume it was, by the Department of Fair Trading or its predecessor. 13. I should say, in making these remarks, that I am far from convinced that I have got all of the evidence as to exactly what the terms of the Constitution are, but, on the material before me, the provisions seem unsatisfactory and apt for dispute. The provisions also appear ill‑adapted to ensuring that ultimately it is the membership which decides who the board is and that it is up to the membership ultimately as to whether the board remains in control. 14. The second matter to which I refer is that on the evidence, which is not controverted, there is a significant section, at least, of the community who are dissatisfied with the current board. The effect of the orders to be made will leave the current board in control of the affairs of the Society, although subject to safeguards in the form of scrutiny from representatives of the new board purportedly elected. 15. As I have said, it may be that for a number of reasons, some of which have been referred to in the submissions with which I have been provided by the defendants, the resolutions purportedly passed on 30 April were ineffective to achieve their purpose. If that is the Court's conclusion on a final hearing, these proceedings will be dismissed. 16. It is important for those who stand behind the new board to appreciate that risk and to recognise that if these proceedings are pursued, and that is the Court's ultimate conclusion (namely, there are deficiencies in the process which was followed leading up to the meeting of 30 April), then they will effectively have to start again. 17. It seems to me, from a very quick appreciation of the evidence and the arguments, that the risks are substantial and the plaintiff's camp would be well‑advised to consider those risks before expending a considerable amount of money and a considerable amount of time in seeking to uphold those purported resolutions. 18. For their part, the defendants need to recognise that even if they are successful in the proceedings so that the purported resolutions are ineffective, no organisation of this kind can continue for long if there is a majority or even a substantial minority of its membership which is disaffected. Sooner or later, the grievances of such a group will need to be addressed. 19. Third, it appears from the evidence that the Abbot, in some respects, is dissatisfied with the way in which the existing board has been discharging its duties. Under the Constitution, the Abbot, of course, is only one of the members of the board and does not control the board. The other board members have independent obligations under the law which they must discharge to the best of their abilities, and their role is not simply to do what the Abbot tells them to do. 20. Having said that, the principal purpose of the Society is the maintenance of the temple at Bonnyrigg as a public place of worship according to Buddhist rites. It will not be possible for the Society to achieve that purpose for long (or, perhaps at all) if, in matters of religion, it does not have the co‑operation of the Abbot. It behoves the defendants to consider very carefully the objections which the Abbot has apparently made and to consider whether, in particular, they should proceed with steps which may antagonise the Abbot and put him in a position where he feels he is unable to discharge his religious duties. 21. Fourth, there are allegations against the defendants of certain specific matters which appear to have caused unrest in the community and among the religious residents of the temple. One of those is the action of the defendants in installing cameras. Although this matter was not fully explored in the evidence and the agreed orders provide for the cameras to be made inoperative pending the result of the proceedings, I find it hard to imagine how such heavy‑handed surveillance in a religious house could possibly be justified. 22. The defendants should appreciate that if they persist in the course of action of installing and using such cameras, they will need to justify that course of action sooner or later. They will also need to appreciate that if that course causes legitimate religious concerns on behalf of the religious leadership, then the course runs the risk of prejudicing what is the key part of the Society's function. 23. Similarly, issues have been raised about whether moneys have been fully accounted for. The defendants can expect to face scrutiny about that matter sooner or later and independently of the result of the proceedings. 24. In these circumstances, irrespective of the outcome of the proceedings, members of the community on all sides would be wise to co‑operate in two things. First, in adopting rules which will allow for a proper opportunity for the membership to have ultimate control over the composition of the board and, second, to deal openly and fairly with any proper concerns which are raised among the membership concerning the operation of the Society and the way in which the temple is conducted. 25. I order that: (a) By consent as between the plaintiff and the defendants, other than the 3rd and 6th defendants, I make orders in accordance with paragraphs 1-8 of the Short Minutes initialled by me and dated today. In those Short Minutes the reference to the defendants is taken to be a reference to defendants other than the 3rd and 6th defendants. (b) I make no other order in relation to the plaintiff's interlocutory relief to the intent that the application for interlocutory relief is otherwise dismissed. ********** 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: 18 May 2017