Supreme Court New South Wales Case Name: In the matter of Order of AHEPA NSW Inc. Medium Neutral Citation: [2019] NSWSC 1329 Hearing Date(s): 13–15 March 2019 Date of Orders: 3 October 2019 Decision Date: 3 October 2019 Jurisdiction: Equity - Corporations List Before: Rees J Decision: Plaintiffs’ claim dismissed Declarations made as sought by first defendant Consequential orders: see [198] Catchwords: VOLUNTARY ASSOCIATIONS — Unincorporated and incorporated associations — Effect of incorporation — Whether unincorporated association survives incorporation — Relationship between unincorporated and incorporated associations — Complex federation or affiliation with unincorporated associations on local, state and national level —Meaning of “unincorporated association” in rules of incorporated association — Office- holders of incorporated association
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· Web viewJudgment. HER HONOUR: The plaintiffs are three members of the first defendant, Order of AHEPA NSW Incorporated (AHEPA NSW).). “AHEPA” stands for Australasian (or,
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Supreme Court
New South Wales
Case Name: In the matter of Order of AHEPA NSW Inc.
Medium Neutral Citation: [2019] NSWSC 1329
Hearing Date(s): 13–15 March 2019
Date of Orders: 3 October 2019
Decision Date: 3 October 2019
Jurisdiction: Equity - Corporations List
Before: Rees J
Decision:
Plaintiffs’ claim dismissedDeclarations made as sought by first defendantConsequential orders: see [198]
Catchwords:
VOLUNTARY ASSOCIATIONS — Unincorporated and incorporated associations — Effect of incorporation — Whether unincorporated association survives incorporation — Relationship between unincorporated and incorporated associations — Complex federation or affiliation with unincorporated associations on local, state and national level —Meaning of “unincorporated association” in rules of incorporated association — Office-holders of incorporated association identified by reference to
rules of unincorporated associations. VOLUNTARY ASSOCIATIONS — Membership — Construction of rules of incorporated association — Original rules provided for transfer of members from previously unincorporated association — Separate pathway for new members — Subsequent amendments obscure this distinction — “Unincorporated association” came to refer to other bodies in federation of unincorporated associations — Where one path provided for voting rights only after end of financial year — Whether second pathway to membership exists independent of this requirement — Where large number of new members allowed to vote immediately — Held that second pathway to membership valid and conferred immediate voting rights. CORPORATIONS — Constitution and replaceable rules — Construction of incorporated association’s constitution — Meaning of term “unincorporated association” changed over time — Approach to construing constitutional document of long standing — Relevance of practice of association — Use of extrinsic material. CORPORATIONS — General meeting — Irregularities — Corporations Act s 1322 as applied to incorporated association — Where proceedings on foot to determine disputed memberships — No notice of meeting sent to disputed members — Some attended and voted with differentiated ballot papers — Membership subsequently accepted — Insufficient notice of special resolution not otherwise complained of — Informal notice by email not complained of — Exclusion of members is substantive irregularity — No substantive injustice where presence of remainder of disputed members could not have altered outcome — Appropriate to validate under s 1322(4). CORPORATIONS — Directors’ duties — Duty of disclosure — As applied to committee of incorporated association — Proposal put to general meeting for major development with significant costs — No evidence that information withheld — Any further evaluation could not be paid for absent consent of general meeting — Level of disclosure reasonable — No breach of duty.
Allen v Townsend (1977) 16 ALR 301; (1977) 31 FLR 431Atlas Holdings Pty Ltd (as trustee for the Atlas Trust) v Allied Resource Partners Pty Ltd (2017) 122 ACSR 345; [2017] FCA 923Bull v Australian Quarter Horse Association [2014] NSWSC 1665Burston v Oldfield [2003] NSWSC 88Cambodian Buddhist Society of NSW v Thai [2017] NSWSC 1433Cameron v Hogan (1934) 51 CLR 358Campolongo v Club Marconi of Bossley Park Social Recreation & Sporting Centre Ltd [2012] NSWSC 750Carpathian Resources Ltd v Hendriks (2011) 81 ACSR 542; [2011] FCA 41Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295Conservative and Unionist Central Office v Burrell (Inspector of Taxes) [1980] 3 All ER 42Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 55 ACSR 185 [2005] NSWSC 1005ENT Pty Ltd v Sunraysia Television Ltd (2007) 61 ACSR 626; [2007] NSWSC 270Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55Faehrmann v Van Vucht [2018] NSWSC 397Fraser v NRMA Holdings (1995) 55 FCR 452; (1995) 127 ALR 543Hall v Job (1952) 86 CLR 639Haselhurst v Wright (1991) 4 ACSR 527; (1991) 9 ACLC 728In re Vernon’s Will Trusts [1972] Ch 300; [1971] 3 All ER 1061In the matter of New South Wales Leagues’ Club Ltd [2014] NSWSC 1610In the matter of Order of AHEPA NSW Incorporated [2018] NSWSC 458Jobnet Employment Services Inc v Copeman (1999) 32 ACSR 554; [1999] NSWSC 848Johnston v The Greens NSW [2019] NSWSC 215Kepert v West Australian Pearlers Association (Inc) (1926) 38 CLR
507Kibby v Registrar of Titles [1999] 1 VR 861; [1998] VSC 148Lai v Tiao (No 2) [2009] WASC 22Lewis v Heffer [1978] 1 WLR 1061Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1; [2006] FCAFC 144Minister of State for the Army v Dalziel (1944) 68 CLR 261Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37MTQ Holdings Pty Ltd v RCR Tomlinson Ltd [2006] WASC 96Mune v Centro Argentino of Victoria Inc [1996] 2 VR 82Newey v Westpac Banking Corporation [2014] NSWCA 319Overall v Family Voice Australia Inc [2014] NSWSC 736Pacific Carriers Ltd v BNP Paribas (2004) 2118 CLR 451; [2004] HCA 35Pine Rivers, Caboolture and Redcliffe Group Training Scheme Inc v Group Training Association Queensland & Northern Territory Inc [2015] 1 Qd R 542; [2013] QCA 358Public Trustee v Cerebral Palsy Association of Western Australia Ltd (2004) 28 WAR 496; [2004] WASC 36Ray v Eastern Suburbs Motorcycle Club Incorporated [2012] NSWSC 1151Reel v Holder [1981] 3 All ER 321; [1981] 1 WLR 1226Re Ferguson (1995) 58 FCR 106; sub nom. Re Giga Investments Pty Ltd (in admin) (1995) 17 ACSR 472Sir Moses Montefiore Jewish Home v Howell and Co (No 7) Pty Ltd [1984] 2 NSWLR 406Stratford Racing Club Inc v Adlam [2008] NZAR 329; [2008] NZCA 92Stratton v Simpson (1970) 125 CLR 138Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52
Texts Cited:
Dal Pont, Law of Associations (LexisNexis Butterworths, 2017)Ford’s Principles of Corporations Law (LexisNexis, looseleaf)Stewart et al., The Law of Unincorporated Associations (Oxford, 2011)
Category: Principal judgment
Parties:
George Lianos (First Plaintiff)Con Gouros (Second
Plaintiff)Luke Kyprios (Third Plaintiff) Order of AHEPA NSW Inc. (First Defendant)NSW Commissioner for Fair Trading (Second Defendant)
Representation:
Counsel:M Ashhurst SC with J Willis and D Meyerowitz-Katz (Plaintiffs)V Bedrossian (First Defendant) Solicitors:McCabe Curwood Lawyers (Plaintiffs)Kreisson Legal Pty Limited (First Defendant)
File Number(s): 2019/25650
JUDGMENT1 HER HONOUR: The plaintiffs are three members of the first defendant, Order
of AHEPA NSW Incorporated (AHEPA NSW). “AHEPA” stands for Australasian
(or, sometimes, Australian) Hellenic Educational Progressive Association. The
second defendant is the NSW Commissioner for Fair Trading, who has filed a
submitting appearance. This case is about whether the constitution of AHEPA
NSW was validly amended at a meeting in November 2018 and whether
resolutions passed at subsequent meetings in accordance with the new
constitution — concerning AHEPA NSW’s participation in redeveloping Bexley
Bowling Club, about which its members are sharply divided — were also valid.
In the event that there is a problem with how the constitution was adopted in
November 2018 or subsequent resolutions, then AHEPA NSW seeks orders
under section 1322(4) of the Corporations Act 2001 (Cth) declaring that the
resolutions are valid nonetheless.
2 This case turns upon the membership rules of AHEPA NSW and who was
entitled to vote at the meeting in November 2018. This is the third proceedings
to have considered these rules, although the first and second proceedings
were resolved by consent and thus not the subject of argument. Put shortly, the
plaintiffs contend that before one is entitled to be a member of AHEPA NSW,
one must be a member of a NSW “Chapter” of an unincorporated association,
The Order of AHEPA Australasia, itself recently incorporated as AHEPA
Australia Limited.
3 Three difficulties presented themselves in resolving the issues in this case.
First, the foundational documents of AHEPA NSW and The Order of AHEPA
Australasia — rules, constitutions, regulations and by-laws — do not align and
appear to have been drafted and amended over several decades without the
consistent involvement of people qualified to ensure such documents are
internally consistent, clear and accurate. The structure of The Order of AHEPA
as recorded in these documents was both complex and obscure. The use of
defined terms appears to have changed over time, suggesting a loss of
corporate memory. Record-keeping has been patchy, with some of the
foundational documents going missing for lengthy periods and amendments to
foundational documents not being registered with NSW Commissioner for Fair
Trading in a timely manner. For about a decade, the members appear to have
conducted themselves in a manner not referred to in the documents at all. This
has led, over time, to entrenched but not necessarily informed ideas about how
things should be done.
4 Second, there was a lack of understanding amongst members as to the nature
of unincorporated and incorporated associations, differing views as to what
“The Order of AHEPA” referred to, and the extent to which “The Order of
AHEPA” in its unincorporated form operated alongside the incorporated
association, AHEPA NSW. AHEPA NSW described the confusion as arising “in
respect of the interaction and co-existence (or non-existence) of one or more
incorporated associations, various of which have been referred to as the Order
of AHEPA”. The competing submissions had, on occasion, an ethereal rather
than legal quality. Third, the acrimony amongst some members of AHEPA
NSW and with the national bodies of The Order of AHEPA may have impinged
upon people’s ability to think critically about these subtle matters.
5 In the result, I have concluded that:
(a) The membership rules of AHEPA NSW permitted the addition of 124 members before the meeting on 13 November 2018 at which a new constitution and by-laws were adopted.
(b) Some members of AHEPA NSW entitled to vote at the meeting were not given notice of it, although most attended anyway. Even if those members had voted against the resolutions, the new constitution and by-laws would have been adopted. An order under section 1332(4) of the Corporations Act is appropriate.
(c) It follows that the new constitution and by-laws were validly adopted and registered by NSW Commissioner for Fair Trading, the secretary and treasurer of AHEPA NSW were validly endorsed on 18 February 2019 and the resolutions passed at a meeting on 28 February 2019 were also valid.
6 I hope this judgment clarifies long-standing issues and enables the members of
AHEPA NSW to turn their efforts to the admirable objects of the association,
including,
to stimulate, promote and practice good fellowship;
to generate the spirit of altruism, understanding, co-operation and benevolence and to establish and encourage a strong sense of tolerance in the Association and society in general
to create an association of men and women with like attitudes of benevolence and good will … in support of the principles of good government and administration.
The amount of time and energy which has been expended in fighting for control
of AHEPA NSW and the property development has doubtless been exhausting
and expensive, both in monetary and human terms.
Witnesses
7 Seven witnesses gave evidence for the plaintiffs: Demetrios (Jim) Antonakos (a
director of AHEPA Australia Ltd), Maria Alexandrou (President of Chapter
Arete No. 3), Mary Nagle (Secretary of Chapter Heracles No. 12), George
Lianos (longstanding member of the committee of management of AHEPA
NSW), Michael Londos (a member of Chapter Heracles No.12),
Anthony Alexandrou (a member of Chapter Prometheus No. 6) and Stephanie
Andrews (solicitor). Some were cross-examined although the credit of the
witnesses was not in issue: Mr Antonakos, Mrs Alexandrou and Ms Nagle were
long-standing antagonists of AHEPA NSW and this was apparent in the
manner in which they gave evidence; Mr Lianos was a nice man.
8 Five witnesses gave evidence for AHEPA NSW: John Kallimanis (former
President of AHEPA NSW), Dr Panayiotis Diamandis (Secretary of AHEPA
NSW), Theophilus Premetis (Treasurer of AHEPA NSW), Harry Fandakis
(Chairman of the Buildings Committee of AHEPA NSW) and Nick Kagelaris
(Secretariat for AHEPA NSW). Mr Fandakis was a pleasant fellow who seemed
exhausted by his efforts to advance the property development in the face of
significant obstacles. He did not have a clear appreciation of the precise nature
of any particular meeting that was held and was subjected to unnecessarily
aggressive cross-examination, as was Dr Diamandis who was suggested from
the outset to be lying. The plaintiffs did not, in the result, submit that Dr
Diamandis was a liar. Whilst his decisions and approach were not perfect, at
the end of the day he was a school teacher serving in a voluntary community
organisation guided by legal advice.
9 It seemed to me that, on both sides, the witnesses’ interpretations of the
membership rules of AHEPA NSW were overly technical when it suited them
and otherwise ‘high level’. I was not much assisted by their evidence in the
witness box as to what they thought or understood the rules meant.
History of AHEPA
10 Although AHEPA NSW was incorporated in January 1993, the genesis of the
association was some 60 years earlier. In 1934, some 30 Australians of Greek
heritage gathered at Werris Creek in regional New South Wales and decided to
set up a fellowship organisation inspired by the American Hellenic Education
Progressive Association, founded in the USA in 1922. The By-laws and Ritual
of the American association were adopted to form “The Order of AHEPA”,
initially in New South Wales but then also in Queensland and Victoria.
Members formed a number of “Chapters” in each state. The over-arching
organisational body in each state for the Chapters was called a “Grand Lodge”.
11 In 1954, New South Wales, Queensland and Victoria formed the “Supreme
Lodge of Australia" and held the inaugural national convention. Further
“Chapters” were formed for women in the 1950s. The over-arching
organisational body in each state for the women’s Chapters was called the
“District Lodge”. Further Chapters were formed for younger people in the
1970s. The Order of AHEPA came to be established in Western Australia
(1965), South Australia (1977) and the A.C.T. (1987).
12 In 1980, Mr Antonakos became a member of The Order of AHEPA and joined
Chapter Prometheus No. 6. In 1986, he was elected President of the Chapter
and consequently became a member of the Grand Lodge of New South Wales.
In 1981, Mrs Alexandrou became a member of The Order of AHEPA and
joined Chapter Arete No. 3, a women’s chapter. In 1988, Mr Lianos became a
member of The Order of AHEPA and joined Chapter Heracles No. 12. In the
late 1980s or early 1990s, Mr Kallimanis joined The Order of AHEPA and
Chapter Diogenes No. 8.
13 In 2016, AHEPA NSW described Sydney as the centre of AHEPA activities and
initiatives in New South Wales and Australia. Of 35 Chapters throughout
Australia, AHEPA NSW described itself as having 11 Chapters and also 8
committees dedicated to special interests such as education, culture and
archaeology, golf, Hellenic literature and poetry and bowling. AHEPA NSW
owns property in Surry Hills and Rockdale, the latter housing its headquarters
and meeting hall. AHEPA NSW’s property is worth some $20 million.
14 The first contemporaneous document in this case is a trust deed executed in
1981 in connection with the purchase of a property in Chippendale. The deed
refers to the property being purchased by the trustees on trust for “the Order of
AHEPA in the State of New South Wales”. Whether this was a reference to
“The Order of AHEPA” in the form of the “Supreme Lodge of Australia”, the
“Grand Lodge” of New South Wales or some other embodiment of the Order is
not stated. The fact that the Order was specified with respect of “the State of
New South Wales” suggests the land was held on trust for the members of the
Order in that state.
Constitution and regulations for The Order of AHEPA Australasia 1990
15 In 1990, The Order of AHEPA adopted a Constitution and Regulations for
Australia and New Zealand. As these documents have changed little since, it is
worth describing the arrangements thereby put in place. Clause 7 of the
Constitution provided:
THE AHEPA DOMAIN
7. The Order in its complete entirety, shall be composed of the following units:
(a) National Convention
(b) Supreme Lodge
(c) State Conventions
(d) Grand Lodges and District Lodges
(e) Chapters …
16 The National Convention was described as “the highest constituted body of the
Order”: clause 8. It was an overarching “legislative” body with general powers
to fix fees and distribute them, establish charitable institutions, amend the
Constitution and award honorary membership. The National Convention is
convened once a year, and is formed primarily of delegates from Grand and
District Lodges and Chapters.
17 The Supreme Lodge is another national body, having an “executive” character.
It has power to contract and employ, to settle disputes between state lodges
and chapters, and to “interpret and enforce the Constitution”. It is comprised of
former Presidents of the Supreme Lodge and Grand Lodges only. It also
appoints a variety of office-holders, including a President, who is then eligible
to sit on the body in perpetuity.
18 This structure is replicated at the state level. The Grand Lodge is an executive
body formed from past and present Presidents of Chapters. A District Lodge
holds the same place in the hierarchy, but is constituted by female Chapters
known as the “Daughters of Penelope”. The Grand Lodge is to convene a State
Convention, made up of all the Grand and District Lodge members, and also
delegates from the Chapters in that State, which has a similar deliberative role
to the National Convention.
19 In respect of “Chapters” at Clause 22(a):
The Chapter shall be the basic primary and fundamental unit of the Order and each member of the Order shall be a member of a Chapter.
This is the local, regular gathering of members. There are various types: the
ordinary Chapter, as well as the female “Daughters of Penelope” Chapters, the
junior male “Sons of Pericles” Chapters, and the junior female “Maids of
Athena” Chapters. Each Chapter has elected office-holders.
20 Importantly, Part XIV of the Constitution was entitled “Order of AHEPA in the
State of New South Wales”. Section 64 provided:
Notwithstanding anything hereinbefore contained the Order of AHEPA in the State of New South Wales (hereinafter referred to as the Order) shall be governed by the following rules …
The Constitution does not describe what The Order of AHEPA in the State of
New South Wales was; whether it was the aggregate of the Grand and District
Lodges, the State Convention, the Chapters and members of the Chapters or
some combination thereof, or something else altogether. But Part XIV does
suggest that The Order of AHEPA had a distinct and separate existence in
New South Wales from The Order of AHEPA Australasia. This is consistent
with the history of The Order of AHEPA, beginning in New South Wales,
expanding within New South Wales, expanding to other states and then
forming a national body.
21 Rules followed in Part XIV in respect of: keeping a register of members; the
keeping, audit and presentation of accounts; the annual general meeting (to be
held on the same day as the State Convention); the composition of the
Management Committee of the Order of AHEPA in the State of New South
Wales (being the officers of the Grand Lodge) and, the composition of
Management of Committee of New South Wales Chapters (being the officers
elected under the regulations of The Order of AHEPA Australasia). Some rules
were different from The Order of AHEPA Australasia and some envisaged an
overlap between the Orders going forward in respect of the composition of
Management Committees of Chapters and The Order of AHEPA in the State of
New South Wales. Part XIV envisaged that The Order of AHEPA in the State of
New South Wales, whatever that was, would co-exist with the State
Convention, Grand Lodge and the New South Wales Chapters.
22 Although clause 35 of the Constitution gave each of the units of AHEPA the
power to appoint trustees to hold property, Additional Rule 7 provided that, for
the Order of AHEPA in New South Wales, three trustees would be elected at a
general meeting and, in Additional Rule 7(b):
All property of whatever kind belonging to the Order shall be vested in the Trustees and they shall have the custody of all deeds and documents of title relating to the property of the Order and shall be responsible for the same and shall deal with and dispose of all the property of the Order whether real or personal for the time being vested in them and the income thereof in accordance with the directions of the Management Committee provided that
such directions are not in violation of the trusts upon which the property is held.
As such, the Constitution added an Additional Rule likely reflective of the fact
that the Order of AHEPA in the State of New South Wales already owned
property which it would continue to hold in accordance with Additional Rule
7(b) on trust for that Order.
23 Additional, and different, rules were also made in the Constitution for the Order
of AHEPA in the State of Victoria, although not for holding property. There
would appear to have been no property then owned by the Order of AHEPA in
Victoria which warranted particular treatment. This rather suggests that the
Order of AHEPA, as it had begun in New South Wales and spread to Victoria,
had an independent existence of sufficient longstanding in those states to
warrant specific rules to reflect the practices which had been adopted in those
states to run their respective associations.
24 The Regulations for The Order of AHEPA Australasia included the procedure
for applications for membership of a “Chapter”, which envisaged a committee
investigating the fitness of the applicant followed by an interview and
instruction of the applicant in the ways of the Order. In the event of a
favourable report from the interviewing committee, the application was to be
submitted to a Chapter at a meeting and determined by secret ballot. A
successful candidate was required to present themselves for initiation into the
Order.
25 As I read these foundational documents, there were in fact a number of
unincorporated associations in The Order of AHEPA at the time: there were (at
least) Chapters, The Order of AHEPA in New South Wales, The Order of
AHEPA Australasia and likely other unincorporated associations in other states
and territories. The Constitution and Regulations contained a structure or
framework in which these unincorporated associations interacted.
Unincorporated associations can “affiliate” or “federate” in a larger
unincorporated association. As Professor Dal Pont explained in Law of
Associations (LexisNexis Butterworths, 2017) at [10.16]:
The relationship between two (or more) unincorporated (or, for that matter, incorporated) associations may instead take the form of a ‘federation’. Here
the respective associations retain a separate existence — in a relationship wherein the federal body becomes the ‘servant’ of its constituent associations — reflecting a contractual commitment to a common cause or some other ‘co-ordinating mechanism’, often in the form of a league or the like. In this event, matters of significance to the federation will usually be addressed by representative vote of the associations rather than individual vote of their membership. … Straddling a branch and a federation is an ‘affiliation’, where the relevant associations are distinct but rules of a central association, under the rules of affiliation, control the affiliated associations or at least some aspects of their operation.
26 An example is the Conservative Party in the United Kingdom, considered in
Conservative and Unionist Central Office v Burrell (Inspector of Taxes) [1980] 3
All ER 42. The Conservative Party has a complex structure with three
elements: the Parliamentary Party comprising members of both Houses of
Parliament; the mass membership represented by the National Union of
Conservative and Unionist Associations comprising local constituency
associations, and the party headquarters knows as the Central Office. These
three elements are repeated at three levels — constituency, area and national.
At the head stands the Leader of the Party. The National Union provides a
meeting place where members of the party come to debate policy and
organises an annual party conference attended by representatives of the local
constituency associations and other conservative bodies such as the Young
Conservatives. It was argued in that case that the National Union was an
unincorporated association with its members being all the members of all the
local constituency conservative associations. Vinelott J disagreed, at 55:
Counsel … submitted, rightly I think, that, not being a legal person, an unincorporated association cannot itself be a member of another unincorporated association … I can see no reason why an unincorporated association should not agree to send representatives to meet representatives from other unincorporated associations having a common purpose in order to discuss matters of common interest, whether informally or in accordance with some formal constitution, without its members thereby becoming members of a wider unincorporated association. …
27 The similar structure of the Australia Labor Party State of Victoria was
described Cameron v Hogan (1934) 51 CLR 358 at 373–4. Another example is
the International Amateur Athletic Federation, to which was affiliated numerous
national bodies: Reel v Holder [1981] 3 All ER 321; [1981] 1 WLR 1226 (Court
of Appeal). In contrast, in Hall v Job (1952) 86 CLR 639, the High Court
considered the Loyal Orange Institution of New South Wales, established in
1875, and held that a subordinate Lodge established in Parkes in 1902 under
the rules and regulations of the Institute did not exist as an exclusive
association but was an integral part of the larger organisation. At 650:
A subordinate Lodge is therefore not to be considered as if it were an association by itself; it is in truth a branch of the Institution, a section of its membership …
Property acquired by the Lodge was thus acquired for the Institution.
28 Whilst the plaintiffs submitted that The Order of AHEPA Australasia bore
substantial similarities to Hall v Job, I disagree. The Chapters, Grand and
District Lodges and State Convention were not subordinate units of a national
body, but distinct entities in their own right, not established by the national body
but pre-dating it and with an independent existence. Rather, seems to me that
the Constitution of The Order of AHEPA Australasia documents an affiliation or
federation of unincorporated associations rather than creates one
unincorporated association. The fact that some of these unincorporated
associations have since incorporated — some Chapters, The Order of AHEPA
in New South Wales and The Order of AHEPA Australasia (which the plaintiffs
submitted was the incorporation of the National Convention) — rather confirms
that each of these unincorporated associations had a sufficient sense of
identity, organisation and continuity (Kibby v Registrar of Titles [1999] 1 VR
861; [1998] VSC 148 at [50]) to incorporate without thereby diminishing the
existence of any other unincorporated association within the Order.
29 In 1991, Dr Diamandis became a member of The Order of AHEPA and was
initiated into Chapter Heracles No. 12. Dr Diamandis says he has never been a
member of The Order of AHEPA Australasia and referred to Chapters as
Chapters of The Order of AHEPA NSW, not Chapters of The Order of AHEPA
Australasia. The differences in nomenclature used by the parties were
indicative of the nebulous nature of The Order of AHEPA and its
manifestations. But in reality I think that the Chapters were neither Chapters of
The Order of AHEPA Australasia or The Order of AHEPA in the State of New
South Wales but simply Chapters in their own right, that is, unincorporated
associations which interacted with each other and the other “units” in the
AHEPA hierarchy utilising the framework in the Constitution.
Unincorporated and incorporated associations
30 It is timely to say something about the differences between unincorporated and
incorporated associations. Unincorporated associations are not recognised by
the law as legal entities. As Lord Millett explains in the Foreword to Stewart et
al., The Law of Unincorporated Associations (Oxford, 2011), at v:
They do, however, give rise to difficult legal problems. An unincorporated association is not a legal person. Since its existence as an entity distinct from its members is not recognized by the law, it cannot hold property, whether legal or equitable, and a conveyance or lease cannot be taken in its name. Nor, unless it is charitable, is it possible for property to be held on trust for its purposes. It cannot enter into a contract, nor can it be liable in tort, whether directly or vicariously. It cannot be defamed; only individual members can sue for defamation.
Yet such associations do exist in fact, even though not in law.
31 To his Lordship’s summary may be added the following: the association’s rules
do not necessarily have contractual force even between the members, unless
the members intend to create legal relations between themselves. As such, the
basic position at common law and in equity is that the Courts will not intervene
in the management of unincorporated associations to enforce those rules. The
seminal case of Cameron v Hogan (1934) 51 CLR 358 makes this clear. Per
Rich, Dixon, Evatt and McTiernan JJ at 370:
… except to enforce or establish some right of a proprietary nature, a member who complains that he has been unjustifiably excluded from a voluntary association, or that some breach of its rules has been committed, cannot maintain any action directly founded upon that complaint. … One reason … is the general character of the voluntary associations which are likely to be formed without property, and without giving to their members any civil right of a proprietary nature. They are for the most part bodies of persons who have combined to further some common end or interest which is social, sporting, political, scientific, religious, artistic, or humanitarian in character, or otherwise stands apart from private gain and material advantage. Such associations are established upon a consensual basis, but, unless there was some clear positive indication that the members contemplated the creation of legal relations inter se, the rules adopted for their governance would not be treated as amounting to an enforceable contract…
More recent authorities have been assembled and analysed by Ward J (as her
Honour then was) in Campolongo v Club Marconi of Bossley Park Social
Recreation & Sporting Centre Ltd [2012] NSWSC 750 at [48] ff.
32 The position cited above holds true today in the United Kingdom, except for
limited statutory ameliorations. In this jurisdiction, however, these problems are
sought to be remedied by the Associations Incorporation Act 2009 (NSW), the
Associations Incorporation Act 1984 (NSW), and its predecessors in other
states, and in New Zealand, going back to the middle of the nineteenth century.
The Preamble to the Associations Incorporation Act 1858 (SA) conveniently
sets out what these Acts seek to do:
WHERAS great inconvenience has arisen in cases where property belonging to institutions established for the promotion of religion, education and benevolent and useful objects, has become vested in trustees, by the refusal of such trustees to act, and by the necessity for the frequent change of trustees; and great expense is often incurred by reason of such change, and the appointment of other trustees, and the transfer of such property to such other trustees; and it expedient, for the encouragement of such institutions, to facilitate the incorporation of the same—Be it therefore Enacted…
The benefit of incorporation is that it confers on the previously unincorporated
association many of the advantages of the corporate form: the ability to
transact in the association’s own name, perpetual succession, so that property,
rights and liabilities are held by the association itself, independently of the
identity of its members from time to time, and a constitution binding the
association and its members as a contract.
33 Importantly, Schedule 2 of the 2009 Act, as applied by section 8 (or Schedule 2
of the 1984 Act as applied by section 15), provides that, on registration, the
former unincorporated association ceases to exist: the definition of “former
body” as including “an unincorporated body that has been incorporated as a
consequence of its registration under this Act” makes this plain. The Schedule
provides for the transfer of assets, rights and liabilities and any proceedings to
the new incorporated association. Likewise, acts and omissions are taken to be
done by the new body, and any reference to the former body in any document
is taken to be a reference to the new body. So much was confirmed many
years ago in the High Court of Australia in Kepert v West Australian Pearlers
Association (Inc) (1926) 38 CLR 507 per Knox CJ, Gavan Duffy, Rich and
Starke JJ at 514:
… Upon incorporation the voluntary association ceases to have any existence apart from the incorporated body. There are not two entities existing side by side — a voluntary association and an incorporated body; and the rules when filed become the rules of the incorporated association and subject to the Act regulate the internal economy of the incorporated association and have no separate operation for the management of a voluntary association.
And at 515, per Higgins J:
In my opinion, there is no valid foundation for the theory that after incorporation the association as unincorporated exists or can exercise any powers. By section after section it is made clear that the association when incorporated is the same association as existed before incorporation…
34 More recently, in Faehrmann v Van Vucht [2018] NSWSC 397, Ward CJ in Eq
considered whether it is possible for an unincorporated association to continue
to exist notwithstanding incorporation. Amongst the authorities collated and
analysed by her Honour at [97] ff is Burston v Oldfield [2003] NSWSC 88,
where Hamilton J found that the incorporation of One Nation NSW Political
Party Inc was not a case of an unincorporated association incorporating at all,
but a new association being formed and incorporated for a separate purpose.
His Honour Hamilton J observed at [11]:
… it may well be that a separate association was created and incorporated with the same name leaving the original unincorporated association concurrently existing: see Mune v Centro Argentino of Victoria Inc [1996] 2 VR 82; cf Kibby v Santiniketan Park Association Inc [1998] VSC 148; Jobnet Employment Services Inc v Copeman (1999) 32 ACSR 554. It is clear to me on the evidence that that is what occurred in this case. The Incorporated Association was intended to be created for certain financial purposes. The persons who became the members of the new association were the members of the existing State Executive, or a large number of them, rather than all the people who were by then members of the Political Party. …
35 In Mune v Centro Argentino of Victoria Inc [1996] 2 VR 82, the Court of Appeal
of the Supreme Court of Victoria held that the majority of the members of an
unincorporated association did not agree to incorporate and thus, although the
incorporated association had the same name as the unincorporated
association, it was not in fact the successor to the unincorporated association
but was successor to the ad hoc group that met to approve its incorporation:
Ormiston JA (with whom Winneke P agreed) at 94; Hayne JA at 95–6. In Kibby
v Registrar of Titles, Mandie J held that there was no unincorporated
association in existence at all when land was purchased by people who met
regularly at a chapel at Ferny Creek to discuss religion and philosophy, and so
the property was not held on trust for such an association but, obiter, if it was
an unincorporated association, then the majority of its members approved its
incorporation.
36 In Ray v Eastern Suburbs Motorcycle Club Incorporated [2012] NSWSC 1151,
Ball J found that the unincorporated association ceased to exist when the Club
decided to incorporate, but as Ward CJ in Eq noted in Faehrmann at [102]:
… [Ball J] clearly treated this as a question of intention of the incorporators, the answer to which would be indicated by: the contemporaneous documents; the name used (whether it was the same or different to the unincorporated association); and whether the members of the unincorporated and the incorporation association corresponded. (I also note particularly his Honour’s comment at [48], reserving his view about circumstances where “an association was incorporated but the [un]incorporated association did not cease to exist immediately, as in this case”.)
37 A similar review of contemporaneous evidence — correspondence, minutes,
bank accounts and conduct — led Windeyer J to conclude in Jobnet
848 that it was intended that an unincorporated association would become
incorporated and continue to carry out the work of the unincorporated
association as the incorporated association: at [26]. Likewise in Faehrmann,
whilst Ward CJ in Eq accepted that it was theoretically possible for the
unincorporated association to continue to exist alongside the incorporated
association, it was found not to have been established in that case, at [112]:
In the present case there is nothing to suggest that there was any intention at the time of incorporation of The Greens N.S.W. Incorporated to create a separate (and co-existing) incorporated association from the then existing unincorporated association. Indeed the 2002 Constitution (with its references to the Associations Incorporation Act) points to the contrary. It can safely be concluded in my opinion that, on incorporation as The Greens N.S.W. Incorporated in 2002, the former unincorporated association known as The Greens NSW ceased to exist. …
Curiously, Kepert v West Australian Pearlers Association was not referred to in
Faehrmann v Van Vucht, Ray v Eastern Suburbs Motorcycle Club or Burston v
Oldfield but suggests, conformably with the conclusions reached by the trial
judges in each of those cases, that it would be unusual to find a situation where
the unincorporated association continues to exist alongside an incorporated
association.
Incorporation of AHEPA NSW
38 In January 1993, AHEPA NSW was incorporated under the Associations
Incorporation Act 1984 (NSW). Mr Antonakos and Dr Diamandis were founding
members. AHEPA NSW adopted rules, “Rules of Order of AHEPA NSW
Incorporated”. It is these rules I have to interpret — as amended in 2003, 2005,
2007 and 2010. The Rules commenced:
PART I – INTERPRETATION
1. (1) The name of the Association shall be “ORDER OF AHEPA NSW INCORPORATED” (referred to in these rules as “the Association”).
39 The objects of the AHEPA NSW were described in rule 2: (emphasis added)
(a) to take over the funds and other assets and liabilities of the presently unincorporated association the Australian Hellenic Educational Progressive Association in New South Wales also known as the Order of Ahepa New South Wales.
(b) to take over the assets and liabilities of the trustees of the unincorporated association.
(c) to adopt the objects of the unincorporated association …
The ensuing objects were almost identical to those in clause 3 of the
Constitution of The Order of AHEPA Australasia of 1990. The only substantive
difference was that references to “members of the Order” in the Constitution of
The Order of AHEPA Australasia were replaced in the Rules with “members of
the Association”, where the Association was defined as AHEPA NSW. The
plaintiffs rely on the identity of objects as indicating that “the unincorporated
association” was a reference to The Order of AHEPA Australasia, although
I note that the Rules then proceed to set out a further three pages of additional
objects of AHEPA NSW which are not in the Constitution of The Order of
AHEPA Australasia.
40 The plaintiffs submit that the reference to “the unincorporated association” in
rule 2 is a reference to The Order of AHEPA Australasia, “there being no other
“unincorporated association” in existence”. For the reasons already stated, I do
not think it was the only unincorporated association in existence. Further, the
plaintiffs’ submission is at odds with the express reference in rule 2(a) to
“AHEPA in New South Wales” and “the Order of AHEPA New South Wales”. In
addition, the objects which follow rule 2(c) use the phrase “members of the
Association” where Association was defined in the Rules as AHEPA NSW.
41 AHEPA NSW says the reference to an unincorporated association was plainly
a reference to the unincorporated existence of the association prior to its
registration. I agree, but the question is what that was. Further, APEPA NSW
submits that the Chapters were not incorporated in 1993, although some have
since been incorporated, and it was these Chapters that constituted, and now
constitute, the “unincorporated association”. I do not think that follows. Rather, I
consider the reference to the “unincorporated association” in 1993 was to the
entity referred to in the 1981 trust deed and Part XIV of the Constitution of The
Order of AHEPA Australasia, that is, The Order of AHEPA in the State of New
South Wales.
42 This is confirmed by contemporaneous documents. In July 1993, consistently
with what was apprehended would occur in rule 2(a) and (b), the solicitor for
AHEPA NSW made a statutory declaration in support of an application to
change the name of the proprietor of the Chippendale property declaring:
1 I am the solicitor for the Order of Ahepa NSW Incorporated. …
3 The persons presently named as registered proprietors … were formerly Trustees of the unincorporated association prior to its incorporation.
4 Since the date of incorporation they have signified their preparedness to divest themselves of ownership now that the body is an incorporated body and capable of having property recorded in its own name for and on behalf of its members.
It seems to me that the “unincorporated association” referred to in paragraph 3
of the affidavit was that identified in the trust deed of 1981, being “the Order of
AHEPA in the State of New South Wales”.
43 In August 1993, an Application to Record Change of Name was completed,
including a second statutory declaration by George Kyriazakos, company
director, to the effect that AHEPA NSW was now an incorporated association
and:
The registered proprietors held the title for and on behalf of the former unregistered association Order of AHEPA New South Wales.
As to whether the “former unregistered association Order of AHEPA New
South Wales” was a reference to The Order of AHEPA Australasia or The
Order of AHEPA in the State of New South Wales, I think it was clearly the
latter. That such an entity existed is consistent with the history of AHEPA: The
Order of AHEPA began in New South Wales, gradually expanded into other
states and territories of Australia and, in time, formed an overarching national
entity, The Order of AHEPA Australasia, but The Order of AHEPA in New
South Wales had a continuing and separate existence recognised in Part XIV
of the Constitution of the Order of AHEPA Australasia. Further, reference in the
two statutory declarations to New South Wales suggests that it was this entity
to which reference was made in rule 2.
44 Returning to the Rules, Part II “MEMBERSHIP”, Rule 1 provided: (emphasis
added)
Any person who has:
(a) been a financial member of the unincorporated association for 3 years prior to its incorporation: or
(b) agrees to be bound by the code of ethics and rules of the unincorporated association adopted in table A.
shall be entitled to be a member of the Association.
PROVIDED however that until such time as a person has been a financial member continuously for three years such person shall be deemed to be an associate member and shall not participate in elections or resolutions until the expiry of three years from the date of joining.
This envisaged existing members of the unincorporated association, The Order
of AHEPA in New South Wales, becoming members of AHEPA NSW under
sub-rule (a), but also new members joining AHEPA NSW directly under sub-
rule (b). The proviso had the result that members joining by either means could
only vote on satisfying the same threshold: membership for three years. As
everyone becoming a member under sub-rule (a) already met that criterion, the
proviso only applied to sub-rule (b).
45 The plaintiffs say that the reference to “the unincorporated association” in rule
1(a) is a reference to The Order of AHEPA Australasia although, consistently
with what I have already said, I think it is a reference to The Order of AHEPA in
New South Wales. It is implicit in the incorporation of a previously
unincorporated association that members of the former unincorporated
association are transitioned to the incorporated association, hence reference in
rule 1(a) to members of the association “prior to its incorporation”, where “it”
was AHEPA NSW.
46 As to rule 1(b), the Rules provided:
BY-LAWS AND ADOPTION OF TABLE ‘A’
47 The Association immediately upon registration shall adopt the constitution and rules of the former unincorporated Association and these shall be the by laws and internal structure of the Association and each individual member shall be bound by them.
48 Where the constitution and rules of the former unincorporated Association conflict with any section of the rules of the incorporated Association the rules of the incorporated Association shall take precedence.
Where rule 47 and 48 refer to “the former unincorporated Association” and “the
Association” is defined by the Rules as AHEPA NSW, I think the former
incorporated Association is a reference to the Order of AHEPA in the State of
New South Wales. The “constitution and rules of the former unincorporated
Association” are not in evidence although the plaintiffs submit that these were
the constitution and regulations of The Order of AHEPA Australasia. Whilst the
Order of AHEPA Australasia did have a constitution at this time, it did not have
rules but regulations. I am reluctant to infer that The Order of AHEPA in New
South Wales had no constitution and rules before it was incorporated in 1993
from the fact that none were produced 26 years later. Given the long history of
the New South Wales organisation, this seems inherently unlikely. And, as will
be seen, AHEPA NSW’s record-keeping appears to have been poor.
47 As to who was qualified to be a member of AHEPA NSW, rule 2 provided:
A person is qualified to be a member of the Association if, but only if, –
(a) The persons is a person referred to in section 15(1)(a), (b) or (c) of the Act and has not ceased to be a member of the Association under the Act; or
(b) The person is a natural person who –
(i) has been nominated for membership of the Association as provided by rule 3; and
(ii) has been approved for membership of the Association by the committee of the Association.
As to rule 2(a), the certificate of incorporation of AHEPA NSW was issued
under section 10 of the Associations Incorporation Act 1984. As such, section
15(1)(a) of the Act applied with the result that rule 2(a) seems to be a reference
to “the persons who were the members of the association immediately before”
the date of incorporation.
48 Like rule 1, it seems to me that rule 2 envisaged existing members of the
unincorporated association becoming members of AHEPA NSW under sub-
rule (a), but also new members joining AHEPA NSW directly under sub-rule (b)
through a process of nomination and approval. As to nomination, rule 3
provided:
NOMINATION FOR MEMBERSHIP
3. (1) A nomination of a person for membership of the Association
(a) shall be made by a member of the Association in writing in the form set out in Appendix 1 to these rules; and
(b) shall be lodged with the secretary of the Association.
(2) As soon as practicable after receiving a nomination for membership, the secretary shall refer the nomination to the committee which shall determine whether to approve or to reject the nomination.
(3) Where the committee determines to approve a nomination for membership, the secretary shall, as soon as practicable after that determination, notify the nominee of that approval and request the nominee to pay within the period of 28 days after receipt by the nominee of the notification the sum payable under these rules by a member as entrance fee and annual subscription.
(4) The secretary shall, on payment by the nominee of the amounts referred to in clause (3) within the period referred to in that clause, enter the nominee’s name in the register of members and, upon the name being so entered, the nominee becomes a member of the Association.
Appendix 1 to the Rules is not in evidence. The committee is “the committee of
management of the Association”: rule 12. The fee was $1: rule 8(1), and
remains the same today (plus GST). What rule 3 indicates is that new
members were nominated by existing members of AHEPA NSW, approved by
the committee of management and, on payment of $1 by the applicant,
became a member on entry of their name into the register of members. It was
process which was self-contained within AHEPA NSW and separate from The
Order of AHEPA Australasia.
49 In respect of the register of members, rule 7 provided:
REGISTER OF MEMBERS
7. (1) The public officer of the Association shall establish and maintain a register of the Association specifying the name and address of each person who is a member of the Association together with the date on which the person became a member.
(2) The register of members shall be kept at the principal place of administration of the Association and shall be open for inspection free of charge, by any member of the Association at any reasonable hour.
The secretary of AHEPA NSW, Dr Diamandis, was responsible for maintaining
the register of members and did so with the assistance of Mr Kagelaris, the
Secretariat for AHEPA NSW, an IT and business administrator by trade. In
addition to rule 7(2), rule 38 provided that the records, books and other
documents of the Association were open to inspection free of charge by a
member of the Association at any reasonable hour.
50 Rule 12 provided for the affairs of AHEPA NSW to be managed by a committee
of management comprising the President, Vice-President, Treasurer and
Secretary of AHEPA NSW and three ordinary members: rule 13. In respect of
the election of office-bearers and ordinary members of the committee of
management, rule 14 provided for candidates to be nominated by a member of
the Association at the annual general meeting, seconded by another member
of the Association and voted for at the meeting. Again, the committee of
management was sourced from members of AHEPA NSW, selected by its
members with no apparent involvement by The Order of AHEPA Australasia.
51 As to witnesses in these proceedings who were on the committee of
management from time to time, either as office bearers or ordinary members:
(a) Mr Antonakos, public servant, was President of AHEPA NSW from 1995 to 1997 at the same time as serving as President of the Grand Lodge of New South Wales.
(b) Mr Kallimanis, restaurateur, was on the committee from 2001 to 2010 and was President of AHEPA NSW from 2013 to December 2018. He also held various positions in the Grand Lodge of New South Wales including President from 2013.
(c) Mr Premetis, chartered accountant, has been the Treasurer of AHEPA NSW since September 2017, and also a member of the committee of management since 2014.
(d) Dr Diamandis, school teacher, has been the Secretary of AHEPA NSW since December 2013.
(e) Mr Lianos has served on the committee of management from 1997 to January 2018 including as chair.
(f) Mr Fandakis, consultant engineer and project manager, has been a member of the committee of management since 2009.
52 The committee of management was entitled to delegate to one or more sub-
committees, consisting of such members as the committee thought fit: rule 20.
AHEPA NSW has a Buildings Committee of which Mr Fandakis is the Chair.
53 The committee could not exercise functions that were required by the Rules to
be exercised by a general meeting of members of the Association (rule 12(b)).
Further, a special resolution at a general meeting was required before the
committee of management could “sell, purchase, mortgage, charge, lien,
borrow, lend, encumber or create any liabilities”: rule 12(d). A special resolution
required 75% of members to vote at a meeting of which 21 days’ notice had
been given: rule 30(a).
54 The committee of management could call special general meetings whenever it
thought fit (rule 24(1)). Where the nature of the business proposed to be dealt
with at a general meeting required a special resolution of the Association, 21
days’ notice was required, to be given by the Secretary sending notice by post
to the members’ addresses appearing in the Register of Members: rule 25(2).
For meetings where the business proposed to be dealt with did not require a
special resolution, 14 days’ notice was required: rule 25(1). Questions were to
be determined on a show of hands unless a poll was demanded, in which case
a poll was to be taken: rule 29. All votes were required to be given personally
(rule 31(2)) and a member was not entitled to vote unless all money due and
payable by the member to the Association had been paid (rule 31(4)).
55 In Part V, “Miscellaneous”, Rule 40 provided:
SURPLUS PROPERTY
40. In the event of a winding up of the Association all surplus property of the Association shall vest in The Trustee for the benefit of the members.
“The Trustees” is not defined in the Rules. Additional Rule 7(b) of the
Constitution of the Order of AHEPA of 1990 may assist, being rules then
prescribed to govern the Order of AHEPA in the State of New South Wales,
which provided that the trustees were those elected at a general meeting to
hold property for the Order of AHEPA in the State of New South Wales.
56 Section 19(2) and (3) of the 1984 Act provided:
2 The rules of the incorporated association are:
(a) where the application for incorporation of the association was accompanied by a copy of rules … those rules as altered by the incorporated association from time to time in accordance with section 20 …
3 Where in relation to any matter the model rules makes provision but the rules of an incorporated association do not make provision, the provision of the model rules shall, in relation to that matter, be deemed to be included in the rules of the incorporated association.
57 AHEPA NSW submitted that, as a consequence of section 19 and confirmed
by rule 48, the only rules applicable to AHEPA NSW were those lodged with
the Corporate Affairs Commission upon registration. This is correct. Part XIV of
the Constitution of The Order of AHEPA Australasia ceased to prescribe the
rules for “Order of AHEPA in the State of New South Wales”. However, there
was nothing to stop AHEPA NSW incorporating the Constitution by reference if
it wished.
58 There is no evidence to suggest that the incorporation of AHEPA NSW was not
authorised by the members of The Order of AHEPA in the State of New South
Wales (Mune v Centro Argentino of Victoria Inc) or that it was not a case of an
unincorporated association incorporating but a new association being formed
and incorporated for a separate purpose (Burston v Oldfield) or that it was
envisaged that The Order of AHEPA in the State of New South Wales would
coexist with AHEPA NSW. The plaintiffs place weight on Mr Kallimanis’
understanding, described in his affidavit in the first proceedings, In the matter
of Order of AHEPA NSW Incorporated [2018] NSWSC 458 (AHEPA No 1), that
AHEPA NSW was formed to look after properties owned by the Grand Lodge
of NSW and the members of AHEPA in NSW as somehow confining the nature
and role of AHEPA NSW. However, Mr Kallimanis did not become actively
involved in AHEPA until 1999 — at Chapter level — and became a member of
the Committee of Management in 2000, seven years after AHEPA NSW was
incorporated. His understanding is thus of little assistance. Further, the Rules
of AHEPA NSW go well beyond holding property and extend to membership,
management, meetings, money and, to the extent not covered, adopted the
model rules. According, it seems to me that in 1993, The Order of AHEPA in
the State of New South Wales ceased to exist apart from AHEPA NSW: Kepert
v West Australian Pearlers.
59 The Grand Lodge, District Lodge, State Convention and NSW Chapters
continued, however, presumably as unincorporated entities within the
framework provided by the Constitution of The Order of AHEPA Australasia. In
1995, Mr Antonakos became President of the Grand Lodge of New South
Wales and New Zealand. In 1999, Mr Antonakos became Secretary of the
Grand Lodge of New South Wales and New Zealand and served in this
position until October 2009.
AHEPA NSW 2003 rules
60 In 2000, Mr Kallimanis became a member of the Committee of Management of
AHEPA NSW. He asked for a copy of the Rules and no one was able to give
him a copy, nor could he find one. It was thought that the Rules had never
been registered. In fact, the Rules had been registered but a copy was not
retrieved until 2016, and then only from the NSW Commissioner of Fair Trading
after a physical search of its archive facility.
61 In any event, in September 2003, a special general meeting was called to
adopt the Rules, which Mr Kallimanis was informed were the same as those
adopted in 1993. In fact, the rules were substantially revised. Importantly,
“unincorporated association” was now defined in rule 1(2)(f):
“unincorporated association” means AHEPA NSW also known as the Order of AHEPA NSW.
This is consistent with my interpretation of the 1993 Rules, that the reference to
the “unincorporated association” is a reference to The Order of AHEPA in the
State of New South Wales rather than The Order of AHEPA Australasia.
62 Rules 1 and 2 in respect of membership were combined and re-numbered as
rule 3. Rule 3 now provided, with changes from the former rules marked:
3. MEMBERSHIP QUALIFICATIONS
(1) Any person who has:
(a) been a financial member of the unincorporated association for three (3) years prior to its incorporation:
or and
(b) agrees to be bound by the code of ethics and rules of the unincorporated association adopted in Table A.
shall be entitled to be a member of the Association.
PROVIDED however that until such time as a person has been a financial member of the unincorporated association continuously for three years such person shall be deemed to be an associate member and shall not participate in elections or resolutions until the expiry of three years from the date of joining.
(2) A person is qualified to be a member of the Association if, but only if:
(a) the person is a person referred to in section 15(1)(a), (b) or (c) of the Act and has not ceased to be a member of the Association at any time after incorporation of the Association under the Act; or
(b) the person is a natural person who –
i has been nominated for membership of the Association as provided by rule Part II-4(1); and
ii has been approved for membership of the Association by the committee of the Association.
63 As originally framed, the 1993 Rules brought members of the unincorporated
association of The Order of AHEPA in the State of New South Wales into the
incorporated entity under rule 1(a) and rule 2(a), and also provided for the
admission of new members directly under rule 1(b) and rule 2(b). The two
pathways to membership, being for existing and new members, were obvious.
The amendments to the Rules in 2003, however, appear to have muddied the
waters. In particular, changing “or” to “and” between former rule 1(a) and (b) —
now rule 3(1)(a) and (b) — had the result that the rule 3(1) only applied to pre-
existing members of the Order of AHEPA NSW “prior to its incorporation” in
1993 and only rule 3(2)(b) provided a pathway for new members.
64 The plaintiffs submit that the reference in rule 3(1) to the “unincorporated
association” is a reference to the national body and its membership rules as
AHEPA NSW was an incorporated association by this time and thus did not
meet the description of an unincorporated association. This submission ignores
two things. First, the text in rule 3(1) was first enacted in 1993 when The Order
of AHEPA NSW was an unincorporated association and seems to me to have
been directed towards bringing the members of The Order of AHEPA NSW into
the incorporated association, AHEPA NSW. Second, the submission ignores
the definition of “unincorporated association” in rule 1(2)(f). In AHEPA No 1,
Black J noted at [9]:
[AHEPA NSW’s counsel] point out that cl 3(1) of the 2003 Rules links membership of AHEPA NSW with membership of the “unincorporated association” – which is defined in cl 1(2)(f), except in so far as the context of subject matter otherwise indicates or requires, as “AHEPA NSW also known as the Order of AHEPA NSW”: [AHEPA NSW’s counsel] submit, and I accept, that “member[ship] of the unincorporated association” within cl 3(1) of the 2003 Rules means membership of the Order of AHEPA as geographically situated
in New South Wales, that is, membership of a Chapter of the Order of AHEPA based in New South Wales.
The plaintiffs point to this as consistent with the interpretation that the plaintiffs
are now proposing but accept, correctly, that his Honour did not ultimately
determine the matters now in issue.
65 Rule 3 in the 1993 Rules became rule 4, with changes to sub-rules (1) and (2)
as marked:
4 NOMINATION FOR MEMBERSHIP
(1) A nomination of a person for membership of the Association,
a) shall be made in writing by the secretary of the unit of the unincorporated association nominating the person for membership of the Association; and
b) shall be lodged with the Secretary of the Association.
(2) As soon as practicable after receiving a nomination for membership, the Secretary shall refer the nomination to the committee for endorsement by the committee.
Materially, new members were now nominated, not by members of the
Association, but by the secretary “of the unit of the unincorporated association”,
which appears to be a reference to Chapters of the Order of AHEPA. In this
amendment, “unincorporated association” appears to now be used in a
different sense to refer to “The Order of AHEPA” more generally rather than
pre-incorporation entity of The Order of AHEPA in the State of New South
Wales. The role of the committee of management is now one of endorsement
of the application rather than determining whether to approve or reject the
nomination. However, as the plaintiffs note, the requirement in sub-rule 3(2)(b)
continued to apply and so approval of the committee was still required.
66 Mr Kallimanis said that he could not recall the procedure in rule 4 being
followed while he was on the committee of management. Rather, a person
became a member of a Chapter in New South Wales and, each year before the
State Convention, each Chapter submitted a list of its financial members as at
30 June of that year as part of its annual reports, including the names of any
new members admitted to the Chapter during the year. The list was tabled at
the State Convention and adopted by the delegates. At the convention, or
shortly afterwards, the Chapters paid to AHEPA NSW $1 plus GST for every
new member admitted to the Chapter during the year. The list as approved at
the State Convention was then sent to the secretary of AHEPA NSW and
became the list of financial members. Once a member had been a financial
member of a Chapter for three years, they were treated as a member of
AHEPA NSW entitled to vote at the annual general meeting. Mr Antonakos
described a slightly different process. Either way, it was a significant departure
from the procedure laid down by the 2003 Rules.
67 Rule 5 of the revised 2003 rules provided: (changes marked)
5. CESSATION OF MEMBERSHIP
(1) A person ceases to be a member of the Association if the person –
a) dies;
b) resigns that membership; or
c) is expelled from the Association
d) is an unfinancial member of the unincorporated association for a consecutive period of two (2) fiscal years.
Sub-rule (d) is curious. It does not sit well with the definition of “unincorporated
association” in clause 1(2)(f), nor with the fact that the Order of AHEPA NSW
was incorporated a decade earlier. The term “unincorporated association”
appears now to be being used in a manner different from that originally
envisaged and has become a reference to a Chapter, or perhaps the Chapters
collectively, or perhaps the Grand Lodge or State Convention. The plaintiffs
submit that the reference in sub-clause (d) to an “unfinancial member” of the
unincorporated association uses the same terminology as Part XI of the 1990
Regulations of The Order of AHEPA Australasia and that this is further
evidence that, where the Rules of AHEPA NSW refer to the “unincorporated
association”, they are referring to The Order of AHEPA Australasia. There is
certainly an overlap of terms and some clauses between the foundational
documents, but pointing to similarities (where they exist) does not assist
greatly.
68 The 2003 Rules contained equivalent provisions in respect of the Register of
Members (now rule 8). The powers of the committee of management remained
the same (now rule 13) but the membership of the committee increased to five
ordinary members in addition to the office bearers: now rule 14. But an
important change was made to the election of office-bearers and ordinary
members of the committee of management. Whilst originally each member of
the committee of management was nominated by a member of the Association
at the annual general meeting, rule 15 now provided:
15. ELECTION OF MEMBERS
(1) The committee shall be elected from the following duly elected office bearers or members of the unincorporated association:
a) Grand President
b) District President
c) nominated member from each chapter of the unincorporated association,
(2) Provided however that:
a) the duly elected Grand President of the unincorporated association shall automatically be appointed as the President of the Association
b) the duly elected District President of the unincorporated association shall automatically be appointed as the Vice President of the Association
(3) The nomination of the member from each chapter of the unincorporated association under clause (1) c) shall occur by way of an election process to be conducted by each of the respective chapters of the unincorporated association in the month of October and advised in writing to the Secretary by the secretary of the chapter of the unincorporated association within fourteen (14) days following the election of the committee member.
69 “Grand President”, District President” and “chapter” were not defined in the
2003 Rules but were terms which would have had a clear meaning to those
involved in the activities of The Order of AHEPA through their local Chapter. It
is perhaps in the context of this drafting mess that AHEPA NSW’s senior
counsel submitted in AHEPA No 1 in respect of the meaning of “unincorporated
association” — in the face of its definition — “we take that to mean the
membership of the Order of AHEPA geographically situated in New South
Wales, that is, Chapters in New South Wales”. In any event, rule 15 now
radically shifted the composition of the committee of membership from
members of AHEPA NSW to the officers of the Grand Lodge and District Lodge
of New South Wales and nominees of the Chapters in New South Wales. The
plaintiffs submit that these amendments increased the importance of the
“unincorporated association” to the functioning of AHEPA NSW and further
incorporated aspects of the Constitution of The Order of AHEPA Australasia
into AHEPA NSW’s Rules. The latter proposition is correct insofar as the
Constitution of The Order of AHEPA Australasia described how the Grand
President and District President were elected, was a Chapter was and who
was a member and Secretary of a Chapter, and thus identified the persons
who the 2003 Rules then prescribed would form the committee of
management.
70 Otherwise, the ability to delegate to sub-committees was now rule 21. The
rules in respect of calling meetings remained the same, albeit re-numbered:
calling special meetings (rule 24), notice (rule 26), making of decisions (rule
30), special resolutions (rule 31) and voting (rule 32). The right to inspect the
books were now in rule 39. Rule 40 in respect of Surplus Property which, it will
be recalled, provided that in the event of winding up of AHEPA NSW, surplus
property would vest in The Trustees, was removed.
Amendments to the rules of AHEPA NSW: 2005 to 2010
71 Recalling the annual method of recording existing and new members of
AHEPA NSW set out at [66], Mr Kallimanis said that the list of financial
members that each Chapter submitted with its annual report to the State
Convention did not record how long the members had been financial members,
whether the member had been unfinancial for a period and, if so, for how long.
This made it very hard to work out who was a member of AHEPA NSW or a
member entitled to vote. From 2003 to 2005, the committee of management
regularly discussed and debated rule 3 and that it was not working. Further, the
three year waiting period was considered to be too long and leading to the loss
of members.
72 This debate appears to have been misguided as, not only was rule 3 not being
applied in its terms but rather by some informal process which appears to have
arisen whilst the rules were mislaid, but rule 3 as amended in 2003 did not
apply a three-year waiting period to new members but only those were already
members on incorporation of AHEPA NSW in 1993. The ham-fisted nature of
the 2003 amendments resulted in theoretical unfairness to existing members
— I say theoretical as by 2003 all existing members had more than served their
3 year waiting period — but unfairness undetected by the committee.
73 In November 2005, AHEPA NSW’s rules were amended by special resolution.
Rule 3 became:
3- Membership Qualification
(1) Any person who has
a) been a financial member of the unincorporated association on 30 June of the last financial year.
and
b) agrees to be bound by the code of ethics and rules of the unincorporated association.
shall be entitled to be a member of the Association.
The distinction between an associate member and one entitled to vote was
also removed. The minutes of the annual general meeting at which this motion
was passed do not shed any light on the amendment. The metamorphosis of
rule 3 had continued since its original function in 1993, being to transition
members from The Orders of AHEPA in the State of New South Wales into
AHEPA NSW. The rule now reflected the practice described in [65] of AHEPA
NSW adopting the annual lists of financial members submitted by the Chapters
to the State Convention as its register of members. The reference to
“unincorporated association”, at least in rule 3(1)(a), is to Chapters. Another
curious feature of this resolution is that, although it was passed in 2005, it was
not registered until 2018 and then only after the first proceedings, AHEPA No
1.
74 According to Mr Kallimanis, after this amendment the Chapters continued to
submit their annual report to the Grand Lodge before the State Convention
including a list of financial members as at the end of 30 June of that financial
year: this was then approved as the list of members in New South Wales at the
State Convention. The list was sent to AHEPA NSW and became the list of
members of AHEPA NSW for the next financial year. Members on this list were
entitled to vote at AHEPA NSW’s general meetings. AHEPA NSW did not have
a separate Register of Members. Mr Antonakos described a slightly different
process.
75 On 29 November 2007, rule 14 of the 2003 Rules was amended to expand the
number of ordinary members of the committee of management to “such
number of ordinary members as corresponds to the number of Active Chapters
of the unincorporated Association”. “Active Chapters” was not defined in the
AHEPA NSW rules although the 1990 Constitution of The Order of AHEPA
Australasia dealt with inactive chapters in clause 102. Again, it seems that the
term “unincorporated association” or the amalgam “unincorporated
Association” was now being used in a way different to that originally intended in
1993. This resolution was also not registered until 2018. In AHEPA No 1, Black
J noted at [14]:
… The evidence led by AHEPA NSW indicates that the purpose of this amendment was to permit each Chapter of AHEPA NSW to nominate a representative to the Committee of Management, where the number of Chapters had increased (Kallimanis [74]-[79], [81]).
76 In 2009, Mr Antonakos was elected as National President of The Order of
AHEPA Australasia.
77 On 22 January 2010, AHEPA NSW again amended its rules to add back to rule
3(1) “Membership Qualifications”:
PROVIDED however that until such time as a person has been a financial member of the unincorporated association on the 30th June of the last financial year, such a person shall be deemed to be an associate member and shall not participate in elections or resolutions.
That is, an “associate member” was reintroduced but with a shorter period of
up to one year, depending on their date of membership. Again, the term
“unincorporated association” seems to now be being used in a manner different
to that intended when the term was first introduced in 1993 and now refers to a
Chapter. Although the minutes of the annual general meeting record that Mr
Antonakos gave an explanation of the amendment “and the history of the
Membership Qualifications”, the history is not set out in the minutes. This
resolution was also not registered until 2018. In AHEPA No 1, Black J noted at
[17]:
[AHEPA NSW’s counsel] point out that that amendment was in one sense misconceived, since the 2005 resolution amending cl 3(1) of AHEPA NSW’s constitution had purportedly removed the proviso at the foot of cl 3(1). However, a 2007 consolidation of the constitution had not reflected that change by deleting the proviso as originally set out in the 2003 Rules … and the amendment appears to have been passed on an assumption that the proviso remained in cl 3(1), and to have conformed that proviso to the change to cl 3(1)(a) made in 2005 … thereby reinstating the proviso in an altered form.
Order of AHEPA Australasia constitution and rules 2010
78 In 2010, the constitution and regulations of The Order of AHEPA Australasia
were amended, the latter now called By-laws. The constitution, again,
contained its own provisions for trustees (now Part VII) and, perhaps curiously,
additional rules for The Order of AHEPA in the State of New South Wales. The
Additional Rules now noted:
The Order of AHEPA NSW Incorporated has adopted this Constitution and By-laws.
Where this Constitution and By-laws conflict with the rules of AHEPA NSW Incorporated, the rules of AHEPA NSW Incorporated shall take precedence.
The Additional Rules in respect of trustees remained unchanged. Additional
Rules were provided for Victoria but not Queensland, the constitution recording
that “Queensland does not require additional rules as long as the original
Principles and Objects remain unchanged”.
79 The drafters of the 2010 constitution of The Order of AHEPA Australasia do not
appear to have appreciated the implications of the incorporation of AHEPA
NSW and simply retained the Additional Rules from the 1990 constitution
without amendment, apart from referring to The Order of AHEPA in the State of
New South Wales as AHEPA NSW Incorporated. Before passing on from this
document, it should be noted that the Additional Rules were not the same as
AHEPA NSW’s rules. In respect of the register, funds and authorisation of
accounts, AHEPA NSW’s rules were more detailed although not necessarily
inconsistent. In respect of the financial year, audits and trustees, the Additional
Rules had no comparable in the AHEPA NSW’s rules. In respect of the annual
general meeting and distribution of surplus property on dissolution, AHEPA
NSW’s rules were inconsistent with the Additional Rules. Overall, the Additional
Rules appear to have been written without regard to the rules of AHEPA NSW.
80 Like the 1990 Regulations before it, the 2010 By-laws contained Part X in
respect of the admission of new members to Chapters. The process of
application, investigation and interview was, essentially, unchanged. As before,
in the event of a favourable report from the interviewing committee, the
application was to be submitted to the Chapter at a meeting for voting. As
before, a successful candidate was required to present themselves for initiation
into the Order. Dr Diamandis says the interview procedure has not been used
for many years, and I am inclined to accept that evidence as inherently likely.
The struggle begins
81 In about 2010, the committee of management of AHEPA NSW reviewed its
future. The average age of members of AHEPA NSW was then between 65
and 70 years. Less than 10% of members were under 50 years of age. The
number of active members was about 300. Mr Fandakis was then a member of
the committee of management and expressed a concern that the majority of
members chose not to be involved in the activities of AHEPA NSW as they did
not find the organisation interesting or engaging. It was thought that one of the
main reasons why members did not attend events was because AHEPA
NSW’s headquarters on the Princes Highway at Rockdale did not have modern
facilities or parking. This was thought to be unacceptable, particularly where
AHEPA NSW had assets worth some $20 million. It was thought that, to better
secure the future of the organisation, AHEPA NSW should establish new
headquarters capable of attracting more new and younger members. From
2011 to 2014, the committee of management explored various options.
82 In March 2015, the Grand Lodge of New South Wales was said to have
seceded from The Order of AHEPA Australasia and informed the National
Lodge of this fact in May 2015. Legal advice was obtained and the National
Lodge decided to expel Mr Kallimanis, then President of the Grand Lodge, for
breaches of the Constitution. In June 2015, the president of the National Lodge
met with the Grand Lodge of New South Wales to try to negotiate their
differences.
83 In October 2015, at the National Convention of The Order of AHEPA
Australasia, the chairman gave an opening address defending the continuing
relevance of the ideals of the Order as “NOT antiquated” and noted:
It is disappointing that the Grand Lodge of NSW is not involved, they have decided to hold their State Convention at a time which firstly, is Unconstitutional and is a deliberate act of insubordination. …
The National Lodge over the last 2 years and in particular the previous 12 months, has been challenged and subjected to un-AHEPAN behaviour from some Grand Lodge members in NSW.
Deliberate acts of harassment were said to have been engaged in towards the
women’s Chapters in New South Wales and a motion was moved, but lost, that
the District Lodge come under the jurisdiction of the National Lodge. A further
motion was moved and carried:
That any AHEPA incorporation or entity in Australia must fully adopt the Constitution and By-Laws of the unincorporated association, namely the Order of AHEPA Australasia, in order to be permitted to use the trade mark, name and logo.
84 Further, it was resolved:
To unify AHEPA and have One Head of the Association in each State and Territory by establishing a STATE COUNCIL as the highest executive body which will comprise of all past and present Grand & District Lodge presidents and past and present Chapter presidents, with the executive elected at the State Convention/AGM. Only past Chapter Presidents qualify for election to the State Council executive.
Finally, it was resolved to incorporate the National Lodge as the highest
executive body of the Order in Australasia with all State Councils, Lodges and
Chapters as the stakeholders and comprising all past National or Supreme
Presidents, the current National President and the 17 elected members. It
would appear that major changes were being proposed in order to unify the
State bodies and deal with an emerging difference in direction with the Grand
Lodge of New South Wales.
85 On 18 November 2015, the 2003 Rules of AHEPA NSW were further
amended, although the amendment was not registered and, in the first
proceedings, AHEPA NSW agreed not to register the amendment as part of a
compromise of the proceedings. It is reasonable to think that the amendments
were directed towards further separating AHEPA NSW from the hierarchy of
The Order of AHEPA Australasia. On 21 November 2015, Elias Doufas, who
appears to have a held a senior role within The Order of AHEPA Australasia,
emailed Mr Antonakos and other representatives of the New South Wales,
Queensland, Victoria, Western Australian and ACT Grand Lodges, formulating
a “Plan of Action”. It was then apparently in mind to bring legal action against a
member referred to as “JK”, which I take to be a reference to Mr Kallimanis,
President of AHEPA NSW. Mr Doufas proposed:
1. Incorporate the National Lodge and the State councils of VIC and NSW.
We now have the approved National Convention decisions to move forward with actioning them.
This has become URGENT as we need to establish a legal entity in order to take any legal action necessary.
If the National Lodge is incorporated as a company limited by guarantee it has no assets and can take any legal action in its own right without worrying about having repercussions in if it does not succeed. No one member can carry this responsibility on their own.
The NL will also own the Name and trade mark as well be able to enforce the “legal” Constitution.
Incorporating a NEW AHEPA NSW Inc. with the remaining Chapters will also give you this right.
It was proposed to take action against “JK” by both the newly incorporated
National Lodge and State Councils “re the name and logo and AHEPA Inc for
the property”. A member of the Queensland State Council replied in favour
noting, “We are not going to give up if the State of NSW got his way this time”.
86 As best the “Plan of Action” can be understood, it appears that there was
something of a power struggle between The Order of AHEPA Australasia and
the Grand Lodge of New South Wales such that the national body was giving
consideration to incorporating a new AHEPA NSW. The dispute appeared to
concern matters of intellectual property of AHEPA and property. In December
2015, the president of the National Lodge again met with the Grand Lodge of
New South Wales to attempt to negotiate their differences.
Property development at Bexley
87 In February 2016, Rockdale City Council called for tenders to redevelop Bexley
Bowling Club and enter into a long-term lease. On 18 March 2016, Mr
Kallimanis submitted a tender prepared by the Committee of Management of
AHEPA NSW. Mr Fandakis believed that the project should be undertaken to
ensure the future survival of AHEPA NSW by upgrading its facilities and
attracting new and younger members.
88 AHEPA NSW proposed to refurbish and repair the existing buildings to bring
them up to current building codes, retain one of the bowling greens and
construct car parking on another. AHEPA NSW committed to invest $950,000
in this task, including a new cafe and commercial grade kitchen. On completion
of these works, AHEPA NSW proposed to submit a development application to
construct a multi-purpose hall called “the North Bexley Community &
Recreational Centre” costing between $3 million and $4 million, to include a
main hall for sport and social use, a stage, canteen, community rooms,
gymnasium and facilities. Preliminary concept plans and perspectives for the
multi-purpose hall, surrounding spaces and the existing buildings were
submitted. As to its financial capacity to undertake and complete the proposed
works, AHEPA NSW stated in its tender:
ORDER OF AHEPA NSW INC is a financially sound organisation and can fund the proposed activities from the sale of our property at 394-396 Princes Highway Rockdale, our ongoing property rental income and cashflow. In addition to funding this project proposal, as a Community Organisation we are also donating over $900,000 over the next 5 years and we will retain a surplus of over $1m.
A business plan accompanied to the tender together with a projected profit and
loss statement for the first five years of trading, itemised works and costings
and an independent building inspection report. Salient leasing terms were
submitted: a minimum lease of 21 years was requested. AHEPA NSW
submitted financial reports as part of its tender, both for AHEPA NSW and its
Committees and Chapters.
89 In April 2016, the Council accepted the tender for the leasing of the site. In
June 2016, a Deed of Agreement was signed by the Council and AHEPA
NSW.
90 In July 2016, the President of the National Lodge endeavoured to continue
negotiations with the Grand Lodge of New South Wales but a motion was
unanimously passed by the National Lodge that there should be no further
talks with the Grand Lodge of New South Wales.
91 In September 2016, AHEPA NSW submitted a revised proposal. An extension
was proposed to the first floor of the existing building. A lower ground parking
area was also proposed for the new multi-purpose hall. President Kallimanis
proposed to do the project in two stages, the first being to refurbish the existing
buildings and grounds including an extension to the first floor and the lower
ground floor parking area. The new multi-purpose hall would then be
completed in Stage 2.
92 In October 2016, the National Convention of the Order of AHEPA Australasia
took place. The chairman, in his opening address, recorded his disappointment
that only 50 AHEPANs were in attendance and the younger people “stayed
away”.
It could be all the problems we were having in the last few years and the differences we are having as a National Lodge with the biggest and prime state the Grand Lodge of NSW arguing amongst ourselves we end up divided and we are two AHEPA’s now in NSW three Sister Chapters and one AHEPA Chapters started a State Council, as per a decision taken at the 61st National Convention, as they do not want to be under the Grand Lodge of NSW.
93 A motion was passed that the National Lodge finalise amendments to its
constitution, on the path towards the incorporation of the National Lodge. Mr
Doufas pointed out some important matters in respect of the incorporation of
the national body, including:
There is no need to have any Trustees as the Company may hold the assets, Trade mark and any property but will not have any rights in any State assets.
Reference was made in the minutes to a “split” with the Grand Lodge of New
South Wales and it is clear that the structure of the Order of AHEPA was being
reviewed and changed to deal with this problem and to protect the intellectual
property of the Order of AHEPA. The name of the “Grand Lodge” was to be
changed to “State Council”.
94 On 30 October 2016, the State Council of New South Wales was formed by
members of Chapters Arete, Antigone and Apollon. Ms Penny Cretan was
State President.
95 On 14 December 2016, the Council accepted AHEPA NSW’s revised proposal.
Mr Fandakis said that, whenever a proposal was made to the Council, some 20
colour copies of the proposal on A3 size paper were printed and placed on the
main table at the meeting hall of AHEPA NSW so that whoever wanted a copy
could get one.
First proceedings
96 On 19 December 2016, AHEPA NSW commenced proceedings in the
Corporations List, as it had not registered the resolutions passed in 2005,
2007, 2010 or 2015, amending its rules, in the time required by the 2009 Act
and the Associations Incorporation Regulation 2016 (NSW). In April 2017, two
members of AHEPA NSW, Mrs Alexandrou and Louisa Melas, were appointed
as representatives on behalf of any of the members of AHEPA NSW who
wished to contend that any of the resolutions were invalid.
97 In January 2017, a newspaper article appeared in a local newspaper, “Big
Plans for Bexley Club”, reporting that AHEPA NSW had taken over the lease of
the site after its tender had been accepted by Rockdale Council. Photographed
in the article is the first plaintiff, Mr Lianos, described as of the representatives
of AHEPA NSW. Dr Diamandis described Mr Lianos as an integral part of the
project team. Mr Lianos has attended most meetings of the committee of
management since 2015 as a delegate of Chapter Anatole and has actively
participated in discussion and debate about Bexley Bowling Club. The third
plaintiff Luke Kyprios has attended almost every meeting of the committee of
management since about 2016 as a delegate of Chapter Prometheus No. 6.
AHEPA Australia Limited
98 In July 2017, AHEPA Australia Limited was incorporated. Mr Doufas was
appointed as secretary and one of its many directors. Mr Antonakos became a
director. The only asset of AHEPA Australia Limited is a trademark and some
cash. Mr Fandakis considered that AHEPA NSW does not have any ties with
AHEPA Australia Limited. AHEPA NSW says that the decision by persons
aligned with the plaintiffs to incorporate AHEPA Australia Limited with a similar
name is itself a reflection of the strategic steps taken by factions as part of a
“broader dispute” concerning the future direction of various Greek cultural
organisations or associations.
To be blunt, the Plaintiffs’ contention that AHEPA Australia Limited has some role to play in determining the membership or governance of the Association is but a thinly veiled attempt to take over control of the Association by stealth.
99 In October 2017, the National Convention of The Order of AHEPA Australasia
took place. The State Council of New South Wales attended, represented by
Ms Cretan and Mrs Alexandrou. The minutes record that Mrs Alexandrou and
Ms Melas “reported passionately” on their situation in New South Wales. It was
said that AHEPA NSW had used a security guard to exclude 20 members of
Daughters of Penelope Chapters from the annual general meeting, changed
the locks of the AHEPA meeting hall, sold the building without going to an
annual general meeting and drafted a new constitution which did not include
the Daughters of Penelope. The following motion was carried:
That the AHEPA 63rd National Convention held on 16-18th 2017 write to the NSW Chief Justice regarding the matters re AHEPA NSW and ask the Chief Justice to order all parties to the negotiable table under the rules of AHEPA as existed lawfully before the NSW INC seceded and to be conciliated by a court appointed mediator.
Mrs Alexandrou was presented with The AHEPAN of the Year 2016 award by
the National President. Mr Doufas praised Mrs Alexandrou and Ms Melas “for
taking the brunt of a court case and representing not only the members of
NSW but all AHEPA in the current court case”. In contrast, a letter from another
member was discussed: the National Lodge was criticised by the member “for
not acting properly in the matter with the Grand Lodge of New South Wales
and for spending large amounts on legal fees”. The National Lodge was
accused of a “secret plan” to destroy the Grand Lodge of New South Wales.
This was rebutted by a former National President.
100 A new constitution was approved at the National Convention of AHEPA
Australasia, being “Revision C” of The Order of AHEPA Australasia
constitution. Mr Doufas explained to those present:
Membership
The Membership of AHEPA Australia will comprise of all members of all Units of AHEPA in all states of Australia. However only those who are eligible to attend the National Convention shall be eligible to carry a vote. …
101 On 6 March 2018, the Minister for Local Government approved the issue of a
21-year lease of Bexley Bowling Club to AHEPA NSW. This was an important
advance in AHEPA NSW’s efforts to develop the site. The Council contacted
AHEPA NSW and arranged a meeting at Council’s chambers on 12 April 2018.
Before the meeting, AHEPA NSW inspected the property with a BCA
consultant and a structural engineer with a view to preparing building condition
reports.
Clarifying the Register of Members
102 On 21 March 2018, Black J heard the first proceedings. As senior counsel for
AHEPA NSW explained, after a protracted period of negotiation, AHEPA NSW
and the representative members had come to an agreed position, abandoning
the 2015 resolution but jointly seeking to have the earlier resolutions registered
and also to establish a regime to ascertain the membership of AHEPA NSW
going forward. After an explanation by AHEPA NSW’s senior counsel, adopted
by counsel for the defendants, as to the circumstances in which the constitution
had sought to be amended from time to time, his Honour made consent orders
to register the 2005, 2007 and 2010 amendments and to call a special general
meeting to reconstitute the membership. Further, the Court noted an
agreement between AHEPA NSW and the representative defendants:
10. If the [NSW Commissioner of Fair Trading] registers the … resolutions … the persons who are members of [AHEPA NSW] in the financial year in which the New SGM is held and who are also entitled to vote at the New SGM consist of all persons who as at the 30 June date immediately preceding the holding of the New SGM, were financial members of a Chapter listed in Schedule 1 of these orders, such membership to be proven by each Chapter submitting to [AHEPA NSW]:
(a) receipts issued to each member of the Chapter, showing that each member has paid the applicable membership fee required by the Chapter within the financial year ending on the 30 June date immediately preceding the New SGM; and
(b) a statutory declaration made by the Secretary or other responsible person of the Chapter verifying the list of members who have been issued with such receipts and verifying that he or she has no reason to doubt the correctness of the information shown in such receipts (including the information as to the date when the membership fee was paid).
Chapter Alexandros No. 25; Chapter Odysseas Elytis No. 26 and
Chapter Antigone No. 27. As I understand it, the chapter numbers are assigned
consecutively across Australia, but with separate series for men’s and
combined chapters, on the one hand, and women’s chapters on the other,
hence the two chapters being “No. 8”. Chapter Antigone No. 27 purports to be
a successor to Chapter Antigone No. 8, but recently re-founded as a combined
chapter, not a women’s chapter as originally constituted. Chapter Antigone No.
8 also still exists, such that there are two Antigone Chapters, one in each of the
factions represented in this litigation.
103 On 10 April 2018, AHEPA NSW inspected the Bexley Bowing Club with a
structural engineer. The building appeared to have deteriorated and the
engineer expressed concern about the structural capability of the building to
permit the extension to the first floor. On 12 April 2018, AHEPA NSW met with
the Council and conveyed the findings of its engineer, suggesting that their
consultants needed to examine the building further to determine the best
course of action. Council stressed that this must be done immediately and
AHEPA NSW must submit a proposal quickly. Council required AHEPA NSW
to compile and submit a schedule of all works and associated specifications for
Stage 1 and to advance the proposed works from conceptual to full design,
with the design package to form part of a development application. AHEPA
NSW retained structural, hydraulic, electrical, mechanical and BCA consultants
to report on the existing condition of the building and consider revised
proposals.
104 On 13 April 2018, Black J gave reasons in respect of the orders already made
in AHEPA NSW No 1, noting at [2]: (emphasis added)
It is common ground that there have been broader disputes between AHEPA NSW’s committee of management and persons aligned with it, and Ms Melas and Ms Alexandrou and persons aligned with them, concerning AHEPA NSW’s management and future direction. Those disputes also concern the management of, and the relationship between AHEPA NSW and the constituent units of, an unincorporated association known as the Order of the Australasian Hellenic Educational Progressive Association (“Order of AHEPA”). It is also common ground that it is not necessary for the Court to determine these disputes or the contested factual matters underpinning them.
The judgment reflected the consent position reached by the parties and an
adoption of AHEPA NSW’s submissions rather than a critical analysis of the
underlying rules. In these proceedings, AHEPA NSW did not accept any
suggestion that AHEPA Australia Limited was one and the same (albeit in
corporate form) as the unincorporated association referred to by Black J in this
passage.
105 On 27 April 2018, Mr Kagelaris made sure the Register of Members was up to
date and sent it to Mrs Alexandrou in preparation for a Special General
Meeting to take place on 30 April 2018. A “unique list” was also provided to
check members as they entered the room to vote, comprising 302 names. Mr
Kagelaris had only been secretariat of AHEPA NSW since November 2017 and
so it was, it seems to me, probably the first time he had done this task. In
respect of discrepancies or errors in earlier versions of the register of
members, President Kallimanis noted in a letter to Mrs Alexandrou attaching
the list:
Finally, we wish to remind everyone that people at AHEPA work on a voluntary basis and as such they are excused if they make an error. Also let us not forget that for most AHEPANs, English is their learned second language which makes things a little harder.
On 30 April 2018, a special general meeting was held. The “unique" list of 302
members was approved.
106 In May 2018, AHEPA NSW received the reports and findings of its consultants
and in June 2018, AHEPA NSW submitted an amended proposal to the
Council to demolish the existing buildings on the site. AHEPA NSW submitted
to Council that, based on its consultants reports, it was not technically feasible
to retain the existing building and extend the first floor as previously envisaged.
It was also not economically viable to refurbish and upgrade the existing
building. In June 2018, AHEPA NSW submitted an architectural proposal for
the proposed new building, to also be completed in Stage 1.
Second proceedings
107 It would appear that the judgment of Black J in AHEPA No 1 did not quell the
disputes between the members of AHEPA NSW. On 12 June 2018, President
Kallimanis invited the members of AHEPA NSW to an open forum on 24 June
2018 to “put an end to the lies and to the personal attacks” and to discuss:
a. the organisation before the General Meeting of 2015;
b. the organisation after the General Meeting and the judicial period until today;
c. the development process for Bexley Bowling Club;
d. the future.
108 On 24 June 2018, the Open Forum was held from 3.30 pm to 6.00 pm. Some
65 people attended. Notes of the meeting prepared by Mr Antonakos, who, it
will be recalled, swore an affidavit in support of the defendants’ position in the
first proceedings, reflect the level of acrimony then present. An explanation
appears to have been given of AHEPA No 1 and discussion as to how to move
forward, including proposing a new constitution at the next annual general
meeting. According to Mr Antonakos’ note, which I am slightly reluctant to rely
upon given his apparent antipathy to Mr Kallimanis, Mr Kallimanis expressed
concern about the National Lodge’s “Plan of Action”, thought to include taking
control of the assets of AHEPA NSW. In respect of the Bexley Bowling Club,
the architect explained that it was not viable to refurbish the existing building
and that plans to demolish that building were currently with Council for
approval. There were questions from the floor as to the cost of the new
building, and the architect was unable to commit to a cost at that stage.
109 On 23 July 2018, AHEPA NSW wrote to Chapters Arete No. 3, Antigone No. 8
and Apollon No. 16, rejecting cheques for membership fees of AHEPA NSW.
The letter stated:
… the Order of AHEPA NSW Inc. only recognises the standing and authority of Chapters which abide by the Rules and Regulations of the Grand Lodge of NSW and therefore only members of Chapters which abide by the Rules and Regulations of the Order of AHEPA NSW Inc are eligible to become and/or remain members of the Order of AHEPA NSW Inc.
Accordingly, as [your] Chapter … does not abide by the Rules and Regulations of the Order of AHEPA NSW Inc., persons initiated into this Chapter are not eligible for membership of the Order of AHEPA NSW Inc. as such persons do not satisfy the eligibility criteria for membership of the Order of AHEPA NSW Inc.
The connection between these letters and the rules of AHEPA NSW was non-
existent. The Chapters were those which formed the State Council and the
letter appears referable to a broader power struggle between unincorporated
entities within the AHEPA structure.
110 On 24 August 2018, Mrs Alexandrou and Evangelia Bouris commenced a
second set of proceedings against AHEPA NSW in the General List of the
Equity division of this Court seeking declarations as to who were members of
AHEPA NSW. Mrs Alexandrou and Mrs Bouris sought to be appointed as
representatives of all members of Chapters Arete No. 3, Antigone No. 8 and
Apollon No. 16.
111 On 12 September 2018, the Council endorsed AHEPA NSW’s revised proposal
to replace the existing building and resolved that a further report be submitted
tabling the proposed lease terms and design documentation including a
detailed program and costings, demonstrating AHEPA NSW’s financial
capacity to deliver the proposed works. Council also resolved that, three
months after Council resolved to progress the lease, AHEPA NSW would be
required to lodge a development application for the site. On 13 September
2018, Council asked AHEPA NSW to submit a full scope of works including
specifications as required by the Preliminary Deed of Agreement in one month
and, further, to advance discussions on the proposed terms for the Deed of
Agreement to Lease and the lease.
112 In about September 2018, Mr Kagelaris completed the annual task of updating
the Register of Members. He used the lists of financial members sent by the
Secretary or President of each Chapter after the end of the financial year on 30
June 2018: the lists did not have a standard format and were generally
handwritten. The lists arrived in July and August. Mr Kagelaris updated the
Register of Members based on this information, adding new members who had
joined the Chapters and deleting the members who had neglected to pay their
annual membership fees, had resigned or passed away. Mr Kagelaris
maintained the register in an excel spreadsheet recording the name, address
and contact details for each member and the Chapter to they belonged. On
completion of this task, the Register of Members had 368 members. A member
of Chapter Arete No. 3, Mary Loizou, was omitted in error.
Membership of AHEPA NSW increased
113 On 18 September 2018, AHEPA NSW obtained advice from counsel on rule 3
of AHEPA NSW’s rules. Counsel concluded that rule 3 identified two separate
pathways to membership:
(a) under sub-rule 3(1), a person is “entitled to membership” if they were a member of the unincorporated association as at 30 June of the last financial year; or
(b) a person is “qualified” to be a member if they are nominated for membership in accordance with rule 4(1) and if the committee approves their membership.
Counsel advised that one did not need to comply with both sub-rule 3(1) and
sub-rule 3(2) in order to become a member of AHEPA NSW. Counsel
suggested that such an approach would enable new members to be admitted
in a short time frame and this may well be a cost-effective way of dealing with
obstacles arising from the need to pass special resolutions at a general
meeting of AHEPA NSW.
114 On 25 September 2018, the Council met with AHEPA NSW and outlined its key
timeframes established by Councillors with a view to a further report being
submitted at the December meeting of the Council to consider the full legal
documents with the development application to be lodged in February 2019.
President Kallimanis advised that “there are a few necessary items which will
need to be endorsed by the members of the organisation via normal voting; it is
a fact of life that when we deal with community organisations, members often
alter their opinion over time and it becomes necessary to vote again on
motions that were previously accepted”. On 10 October 2018, Council met and
received an update from AHEPA NSW on Bexley Bowling Club.
115 It would appear that Counsel’s advice was followed and nominations for
membership of Chapters of AHEPA NSW increased substantially. On 9
October 2018, lists of nominees for membership of Chapters Diogenes No. 8,
Antigone No. 27, Chiron No. 22 and Ippokratis No. 21 were sent to the
secretary of AHEPA NSW, Dr Diamandis. There were 140 nominations in total.
On 9 and 10 October 2018, Dr Diamandis deposited membership fees for
applicants nominated by the Chapters of Chiron No. 22 and Antigone No. 27,
being $1.10 per member.
116 On 11 October 2018, the committee of management of AHEPA NSW met and,
amidst discussions about the development at Bexley Bowling Club, the second
proceedings and whether to call a special general meeting to adopt a new
constitution to “close all the open wounds”, the nominees for membership of
the Chapters Anatole, Antigone No. 27, Chiron, Diogenes and Ippokratis were
endorsed.
117 A few days later, Dr Diamandis gave Mr Kagelaris the lists of nominees for
membership who had been endorsed and Mr Kagelaris revised the Register of
Members accordingly. The total number of members in the Register was now
492: this was an increase of 124 members (it is not clear what happened to 16
of the 140 members endorsed on 11 October 2018). Dr Diamandis agreed that
this was the first time that members had been admitted to AHEPA NSW
without being financial members of a Chapter of AHEPA NSW as at 30 June of
the previous financial year. Dr Diamandis referred to this as “a second
pathway” identified by counsel.
Were these new members valid members of AHEPA NSW?
118 This is the key question in this case. AHEPA NSW lodged a revised set of rules
in 2018 incorporating the orders made in the first proceedings. For ease of
reference, Rule 3, “MEMBERSHIP QUALIFICATION”, now provided:
(1) Any person who has:
(a) been a financial member of the unincorporated association on the 30 June of last financial year;
and
(b) agrees to be bound by the code of ethics and rules of the unincorporated association.
shall be entitled to be a member of the Association.
PROVIDED however that until such time as a person has been a financial member of the unincorporated association on the 30th June of the last financial year, such person shall be deemed to be an associate member and shall not participate in elections or resolutions.
(2) A person is qualified to be a member of the Association i[f] but only if:
(a) the person is a person referred to in section 15(1)(a), (b) or (c) of the Act and has not ceased to be a member of the Association at any time after incorporation of the Association under the Act; or
(b) the person is a natural person who -
(i) has been nominated for membership of the Association as provided by rule Part II-4(1); and
(ii) has been approved for membership of the Association by the committee of the Association.
119 The plaintiffs seek declarations that:
(a) on and from the registration of the 2005, 2007 and 2010 resolutions, the reference in clause 3(1) of the Rules to the “unincorporated association” has been and is a reference to those Chapters (or Units) of AHEPA Australia Limited that are geographically located in New South Wales; and
(b) in order to become a member of AHEPA NSW entitled to vote at any general meeting, a person must have been a financial member of a NSW-based Chapter (or Unit) of AHEPA Australia Ltd on the 30th of June of last financial year, such membership to have occurred in accordance with Part X of the By-Laws of AHEPA Australia, as promulgated by the National Convention
pursuant to clause 2 of Part X of the Constitution of AHEPA Australia.
120 The plaintiffs submitted that the amendments to the Rules in 2005, 2007 and
2010 significantly altered the effect of rule 3(1)(a). Whilst it was previously
arguable that the rule had only been operable once — on the date that a
certificate of registration was granted to AHEPA NSW — it now applied to a
new group of people each financial year. The proviso to clause 3(1) continued
to have no work to do in relation to anyone to whom sub-clause (a) applied and
operated only in relation to those to whom sub-clause (b) applied, that is, those
who agreed to be bound by the code of ethics and rules of the unincorporated
association but were not financial members of that association on 30 June of
the last financial year. It was also submitted that these amendments to clause
3(1) resolved any difficulties with the word “and” as a conjunctive interpretation
could now be adopted. On this construction, in order to be entitled to become a
member of AHEPA NSW, a person must be both a financial member of the
unincorporated association on 30 June of the previous financial year and
agreed to be bound by the code of ethics and rules of the unincorporated
association.
121 Further, it was submitted by the plaintiffs that The Order of AHEPA Australasia
had now formed a company limited by guarantee, AHEPA Australia Limited,
and that this was the entity to which the rules now referred. The plaintiffs
contended that it ought to be read as referring to the New South Wales based
Chapters of AHEPA Australia Limited. It was suggested that it was the National
Convention which was the entity incorporated but a separate unincorporated
association continued to exist, membership of which meant membership of a
Chapter. The plaintiffs accepted that the company and the unincorporated
association could not be the same entity but submitted that the unincorporated
association continued to exist but handed over some of its executive functions
to the new entity. AHEPA Australia Limited sits alongside the Chapters, which
are granted charters by the National Council but are not themselves a part of
the company.
122 The plaintiffs conceded that there may be no precedent for the construction of
the constitution of an incorporated association where the constitution
incorporates by reference the constitution of a different association which has
since ceased to exist in the same form, but submitted it was analogous to
situations where a bequest was made in a Will to a charitable association
which, at the time that probate was granted, had ceased to exist: In re Vernon’s
Will Trusts [1972] Ch 300 at 304–5; [1971] 3 All ER 1061 at 1065; Sir Moses
Montefiore Jewish Home v Howell and Co (No 7) Pty Ltd [1984] 2 NSWLR 406
at 413; Stratton v Simpson (1970) 125 CLR 138 at 144; Public Trustee v
Cerebral Palsy Association of Western Australia Ltd (2004) 28 WAR 496;
[2004] WASC 36 at [68]–[69]; Overall v Family Voice Australia Inc [2014]
NSWSC 736 at [45]–[46].
123 The plaintiffs submitted that the reference to financial membership of the
unincorporated association in rule 3(1)(a) should not be held to have lapsed or
become devoid of meaning but should be interpreted as reference to financial
membership of a New South Wales-based Chapter of AHEPA Australia
Limited, as determined by the Constitution and By-laws of that organisation. To
paraphrase Darke J in the Family Voice Australia case, from the point of view
of the membership of the Order of AHEPA, all that happened in 2017 is that
they became members of a new organisation, namely AHEPA Australia
Limited, which had the same objects and substantially the same rules as the
former unincorporated body. There have been changes to the organisational
structure but no changes to the stated aims or objectives or applicable by-laws.
That is, a new instrument was adopted for the carrying on of the organisation’s
charitable purposes.
124 In order to be a member of a New South Wales-based Chapter of AHEPA
Australia Limited, the plaintiffs submitted that Part X of the By-laws of AHEPA
Australia Limited set out the procedure and contained 12 steps, which Ms
Nagle said usually takes three months or longer to complete, being:
(a) First, a member “in good standing” (clause 1) recommends a person for membership by submitting an application in writing in the prescribed form to the Secretary of their Chapter, including the names and addresses of three referees (clause 2).
(b) Second, the Secretary presents and reads the application to the Chapter at its next meeting (clause 3).
(c) Third, at the meeting where the application is read, the Chapter refers the application to a committee for interview (clause 3).
(d) Fourth, the interview committee interviews and “instructs” the applicant (clauses 3 and 4).
(e) Fifth, the interview committee reports its findings to the Chapter in the prescribed form (clause 3).
(f) Sixth, on receipt of the interview committee’s report:
(i) If the report is favourable, the application is referred to the
Chapter for approval (clause 3) and the name and address of
each applicant and the proposer is circulated to the members
along with notice that a ballot will be taken (clause 5).
(ii) If it is unfavourable, there is an appeal process (clause 7).
(g) Seventh, the application is referred to “the appropriate State/District Lodge” for registration (noting that registration does not take place until after initiation) (clauses 3 and 6(b)).
(h) Eighth, balloting for acceptance or rejection of the application is conducted “at a regularly convened meeting” of the Chapter (clause 6(a)).
(i) Ninth, if the application is accepted in the ballot, the secretary designates a time and place for initiation into the Order (clause 10(a)).
(j) Tenth, prior to initiation, the applicant pays initiation fees (clause 10(c)).
(k) Eleventh, initiation occurs (clause 10(a)). According to Ms Nagle, this is scripted and the applicant is required to recite the “Decalogue” in the presence of members including a solemn affirmation to “always be loyal and steadfast to the Order of Ahepa” and to “obey the Constitution and traditions of the Order of Ahepa”.
(l) Twelfth, the applicant is registered by the State/District Lodge, and the application form is then returned to the Lodge for archiving (clause 3 and 6(b)).
125 The plaintiffs submitted that it is clear from the By-Laws that attending an
initiation ceremony is a precondition to membership of the Order of AHEPA.
Part X, clause 11 of the By-Laws which states that if an applicant for
membership fails to attend for initiation when notified by the secretary and fails
to give a reason for non-attendance, the application will be deemed to be
rejected as from the date set for initiation, unless the Chapter is of the opinion
that the failure to attend was due to an unavoidable circumstance. Part X,
clause 3 of the By-Laws states that the new applicant's application is referred
to the Lodge (being the state-level “Grand Lodge” or “District Lodge”), for
registration after initiation. Accordingly, the By-Laws do not permit registration
of an application for membership until after the prospective member has
attended initiation.
126 The plaintiffs submitted that, under both limbs of clause 3(1) of the 2018 Rules
of AHEPA NSW, an applicant cannot become a member of AHEPA NSW until
an initiation of the member has been conducted:
(a) As to sub-clause 3(1)(a), it is a prerequisite for membership that a person was a financial member of a Chapter of the Order of AHEPA on 30 June of the last financial year. A person who has not attended an initiation ceremony is not a registered member of the Order of AHEPA.
(b) As to sub-clause 3(1)(b), a prerequisite of membership to AHEPA NSW is that an applicant for membership “agrees to be bound by the code of ethics and rules of the unincorporated association”. The agreement to be bound is given by the applicant through the recitation of the Decalogue during the course of their initiation.
It follows, it was submitted, that the persons who, pursuant to sub-clause 3(1)
of the rules of AHEPA NSW, are entitled to be members of the association and
to participate in elections or resolutions, are those who, prior to 30 June of the
last financial year, were admitted as financial members of the unincorporated
association in accordance with Part X of the By-Laws promulgated by the,
National Convention of AHEPA Australia Limited.
127 AHEPA NSW submitted that, with the incorporation of the association in 1993
and the subsequent passage of time, there no longer exists any meaningful
work for rule 3(1) to perform. But this does not mean that its proper
interpretation has changed from its predecessor in the 1993 Rules. The
suggestion that the rules or by-laws of an external association, whether it be
incorporated or not, operate to limit or curtail the membership regime defined in
sub-rule 3(2) and rule 4 is inconsistent with rule 48, which expressly excludes
the ability of any other purported constitutional rules to take precedence over
the actual registered rules of the Association.
128 AHEPA NSW drew a distinction between the use of the word “entitled” in sub-
rule 3(1), which suggested that a person who fell within that rule would not
receive automatic membership but would still need to be entered in the
Register of Members, with the use of the word “qualified” in sub-rule 3(2). The
process of qualification set out in sub-rule 3(2)(b) requires nomination for
membership and approval. Such a person, even if nominated and approved,
does not become a member until their name is entered upon the Register in
accordance with sub-rule 4(4).
129 AHEPA NSW noted rule 3 was originally enacted as rules 1 and 2. They were
stand-alone rule rather than sub-rules. There was no structural indication that
they were to be read together, or that rule 2 was subservient to rule 1. Further,
it was submitted there was no practical reason why the proviso to rule 3(1)
ought to apply to rule 3(2). If the association determines to permit additional
persons to become members, there is no sensible reason why voting
entitlements must be deferred until the following financial year, as the incoming
member has already been nominated for membership and approved by the
committee of management.
Construction of constitutions
130 In Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1;
[2006] FCAFC 144, Weinberg, Kenny and Lander JJ considered the
construction of corporate constitutions in light of the High Court’s judgments in
[2004] HCA 55 and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR
165; [2004] HCA 52 in respect of construing commercial contracts by taking
surrounding circumstances into account (see, more recently, Newey v Westpac
Banking Corporation [2014] NSWCA 319, Mount Bruce Mining Pty Ltd v Wright
Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 and Cherry v Steele-
Park (2017) 96 NSWLR 548; [2017] NSWCA 295). In separate judgments, their
Honours expressed like views. Whilst it can no longer be said that surrounding
circumstances can never be taken into account in construing constitutions
(Weinberg J at [55]), or that terms cannot be implied (Lander J at [243]), the
case for restraint when construing a constitution is powerful: Weinberg J at
[56], Kenny J at [124], Lander J at [239], [243]. The rules of construction that
apply to contracts should be applied with caution to constitutions, as a
company’s constitution is a contract of an unusual kind: it can be altered
without the agreement of all of the contracting parties; it cannot be rectified
even if it does not accord with the concurrent intention of the signing parties;
the contracting parties vary from time to time as the members come and go,
the constitution binding the members for the time being; and the constitution
has a public dimension with statutory force and by its nature is more likely to be
read and relied upon by third parties: Weinberg J at [57]–[58], Kenny J at [123],
Lander J at [225]–[226]. These principles have been applied by Robb J in
Johnston v The Greens NSW [2019] NSWSC 215 and Brereton J in In the
matter of New South Wales Leagues’ Club Ltd [2014] NSWSC 1610.
131 As to how the meaning of terms in a corporate constitution may change over
time, Branson J considered this in Re Ferguson (1995) 58 FCR 106; sub nom.
Re Giga Investments Pty Ltd (in admin) (1995) 17 ACSR 472 when construing
whether the requirement to “meet together” extended to participation by
telephone. At FCR 111, ACSR 476:
... Orthodox rules of construction would require that the words of the articles of association be given the meaning which they had as at the date of their adoption. If this is a recent date no difference between that meaning and the current meaning of such words is likely. If the articles of association were adopted many years ago the position might be different.
However, without departing from the orthodox rules of construction, courts are, in my view, entitled to recognise that articles of association are instruments of company governance intended to endure and to be capable of operating with flexibility in changing circumstance (cf the approach of the High Court to the interpretation of the Constitution as reflected in eg Australian National Airways Pty Ltd v Commonwealth (1945) 71 CLR 29 at 81; Lansell v Lansell (1964) 110 CLR 353; R v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Inc) (1979) 143 CLR 190; 23 ALR 439).
132 Re Giga Investments was noted with approval by Lander J in Lion Nathan
Australia v Coopers Brewery at [244] and Brereton J in In the matter of New
South Wales Leagues’ Club Ltd at [9]:
… Corporate constitutions must be afforded a measure of flexibility, as they are enduring documents which may have to apply in circumstances rather different from those that obtained when they were first adopted.
133 However, the authors of Ford’s Principles of Corporations Law (LexisNexis,
looseleaf) note at [6.080]:
Progressive interpretation is only appropriate where it can be reasonably supposed from reading the constitution that the drafters using an expression contemplated that it would extend to such subject matter as should from time to time be described by the expression: cf R v Brislan (1935) 54 CLR 262; R v Judges of the Federal Court of Australia; Ex parte WA National Football League (Inc) (1979) 143 CLR 190; 23 ALR 439; Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2005) 223 ALR 560; 56 ACSR 263; [2005] FCA 1812 at [77] (appeal dismissed Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1; 236 ALR 561; 59 ACSR 444; 24 ACLC 1436; [2006] FCAFC 144 at [111] and [244]).
134 As to the relevance of established practices, the plaintiffs relied on Lewis v
Heffer [1978] 1 WLR 1061, where the Court of Appeal considered the rules of
two unincorporated associations, the national Labour Party and the local
constituency party, in circumstances where the National Executive Committee
of the Labour Party suspended members of a local constituency party. There
was strong evidence that the National Executive Committee had exercised a
power over local constituency parties in this way over the years. Lord Denning
MR noted at 1072, “In a body like this, rules are constantly being added to, and
supplemented by, practice or usage: and, once accepted, become as effective
as if actually written”. Per Ormrod LJ at 1076:
Where there is an established and well known and unquestioned practice in use in the association it is some evidence, and indeed it may be strong evidence, that this practice too is part of the terms and conditions which were accepted by persons joining the association. … If one adopted the contrary view, it must require an extraordinarily strong and clear case to justify the court in holding a well-established practice like this to be unconstitutional or ultra vires, more particularly where the organisation concerned is a voluntary, unincorporated and essentially informal body.
The judgments of both Lord Denning MR and Ormrod LJ emphasise the
qualities of unincorporated associations and their remarks may have less ready
application to construing the constitutions or rules of incorporated associations.
In this country, it seems to me that I should be guided by the principles
articulated in Lion Nathan Australia v Coopers Brewery.
Construction of membership rules
135 In the revised set of rules in 2018 incorporating the orders made in AHEPA No
1, Rule 1, “INTERPRETATION” provided:
(1) The name of the Association shall be “ORDER OF AHEPA NSW INCORPORATED” (referred to in these rules as “the Association”).
(2) In these rules, except in so far as the context of subject matter otherwise indicates or requires …
(f) “unincorporated association” means AHEPA NSW also known as the Order of AHEPA NSW.
Having regard to the history of AHEPA and of the incorporation of AHEPA
NSW, I think this is a reference to the unincorporated association of The Order
of AHEPA in the State of New South Wales referred to the 1981 trust deed and
Part XIV of the 1990 Constitution of The Order of AHEPA Australasia. This
definition appears to have been largely overlooked in subsequent amendments
to, and application of, the rules.
136 In its original sense, “unincorporated association” in rule 3(1)(a) was a
reference to The Order of AHEPA in the State of New South Wales as it
existed pre-incorporation in 1993. As that term had come to be used in rule
3(1)(a), as a result of the loss of the 1993 Rules for a period of time, the
development of a practice of assembling the Register of Members each year
based upon the lists of financial members submitted by the Chapters to the
State Convention, the recasting of the Rules in 2003 to record this practice,
and further amendments in 2005 and 2010, “unincorporated association” had
come to mean the Chapters. Whether one refers to the Chapters as the
Chapters of The Order of AHEPA Australasia or Chapters of AHEPA NSW is
an exercise in semantics: the Chapters were unincorporated associations in
their own right (or, sometimes, incorporated entities) who were affiliated with
other unincorporated (or incorporated) entities in the framework provided by
the Constitution of The Order of AHEPA Australasia. But it is those Chapters to
which rule 3(1)(a) now referred. Rule 3(1)(b) was essentially a vestigial limb,
reminiscent of the incorporation of AHEPA NSW in 1993 when “unincorporated
association” meant something else.
137 The proviso inserted at the conclusion of sub-rule 3(1) operates only with
respect to the text immediately preceding it. It does not apply to sub-rule 3(2).
As Latham CJ stated in Minister of State for the Army v Dalziel (1944) 68 CLR
261 at 274–5:
As a general rule a proviso should not be interpreted as if it were a substantive provision independent of the provisions to which it is a proviso. Speaking generally, a proviso is a provision which is “dependent on the main enactment” and not an “independent enacting clause”: Cf. R v Dibdin [1910] P 51 at 125.
The Chief Justice noted that, depending on the drafting in the particular case, it
may be that the proviso is in substance an independent and substantive
enactment, adding to and not merely qualifying that which goes before: at 275.
As explained at [44], when the proviso was enacted in 1993, it was a proviso to
the then rule 1. Rule 3(2) — then rule 2 — was a separate, stand-alone rule.
There was no reason then, and is no reason now, to apply to proviso other
than to rule 3(1).
138 The members coming to AHEPA NSW through rule 3(1) are “entitled” to be
members of AHEPA NSW. That is, if a person has been a financial member of
a Chapter on 30 June of the last financial year, then that person is entitled to
be a member of AHEPA NSW without further ado, and to vote, but for a finite
period of time, being until the register of members is updated after the end of
the next financial year. AHEPA NSW does not need to, and indeed is not
permitted to, exercise its own corporate mind through a general meeting or the
committee of management and decide not to add such a person as a member
or not allow them to vote if they meet this criteria.
139 Rule 3(2)(b) remained a second pathway for new members, albeit diminished
by the ham-fisted amendments to the rules of AHEPA NSW in 2003 which
eliminated a pathway for such members through rule 3(1)(b). Applicants for
membership through the process of nomination under rule 4(1) and approval of
the committee of management of AHEPA NSW are “qualified” for membership
rather than “entitled”. “Entitled” suggests that someone has a present right to
be a member, whilst “qualified” suggests that someone has fulfilled the
prerequisites to becoming a member but does not necessarily have the right,
without more, to become a member. This subtle difference in terminology may
reflect the fact that, through the second pathway, AHEPA NSW is making the
decisions and taking the actions necessary to make such an applicant a
member rather than following the dictates of the Chapters. However, I am
reluctant to read too much into subtleties of language in a document which has
been crudely amended over time without consequential amendments to ensure
that the document remained consistent.
140 Rule 4, “NOMINATION FOR MEMBERSHIP” provided:
(1) A nomination of a person for membership of the Association,
(a) shall be made in writing by the secretary of the unit of the unincorporated association nominating the person for membership of the Association; and
(b) shall be lodged with the Secretary of the Association.
(2) As soon as practicable after receiving a nomination for membership, the Secretary shall refer the nomination to the committee for endorsement by the committee.
(3) The Secretary shall notify the nominee and request the nominee to pay within the period of 28 days after receipt by the nominee of the notification the sum payable under rule 9(1) by a member as entrance fee.
(4) The Secretary shall, on payment by the nominee of the amount referred to in clause (3) within the period referred to in that clause, enter the nominee’s name in the register of members and, upon the name being so entered, the nominee becomes a member of the Association.
141 The “secretary of the unit of the unincorporated association nominating the
person for membership” is a reference to the Secretary of a Chapter. Whilst,
under clause 7 of the 1990 Constitution of the Order of AHEPA Australasia,
that could have been any unit of The Order of AHEPA including the Grand
Lodge or National Convention, as best I understand the 2017 Constitution of
AHEPA Australia Ltd, units are Chapters only. The “Secretary of the
Association” is the Secretary of AHEPA NSW elected in accordance with rule
15 being, relevantly, Dr Diamandis. Thus, the second pathway of membership
is as follows:
(a) Nomination of person in writing by the Secretary of a Chapter, sent to the Secretary of AHEPA NSW, who sends it to committee of management for endorsement.
(b) Committee of management approves the application.
(c) Applicant pays $1 to AHEPA NSW within 28 days of request.
(d) On payment of $1 within 28 days, the Secretary of AHEPA enters the applicant’s name into the Register of Members and the nominee is thus a member of AHEPA NSW.
142 Members joining AHEPA NSW directly through the second pathway did not
have a temporal limit on their membership, that is, it did not fall to be
determined again by a Chapter at the end of the next financial year. The
differences between these pathways is simply the result of a series of
amendments over time to one pathway but not the other. It is not incumbent
upon me, in construing the rules, to ensure that the pathways were comparable
or fair, but simply to say what the document means as it is stated.
143 Rule 4(1)(a) says nothing about the nominee having been initiated as a
member of the Chapter, although it is reasonable to think that the Secretary
would not nominate someone to be a member of AHEPA NSW unless they
were also content for that person to be a member of the Chapter. As to how
someone becomes a member of a Chapter, a “ritual of ceremonies” for the
Order of AHEPA, Grand Lodge of NSW, published in 2017 but first circulated
by the Grand Lodge Ritual Committee in 2001 contains detailed instructions for
an initiation (nine pages), including semi-darkness, lit candles, the Bible,
statuary, and an apparently elaborate and lengthy ceremony. Ms Nagle says
this process was used in each of the Chapters with which she has been
affiliated or a member and ceremony takes at least an hour although accepted
that “quite often members … don’t follow word for word, but, yes, more or less”.
Dr Diamandis, having been a member of a Chapter for many years, says that
the usual procedure nowadays is that the Chapter Secretary mentions to the
members that an application or nomination form has been received and
records it in the minutes. If it was necessary to determine the matter, I would
prefer the evidence of Dr Diamandis as inherently more likely; either way, the
2003 Rules say nothing about adherence to such rituals at the Chapter level
before its nomination of a member of AHEPA NSW is valid.
144 Rule 5, “CESSATION OF MEMBERSHIP” provided:
(1) A person ceases to be a member of the Association if the person:
(a) dies;
(b) resigns that membership; or
(c) is expelled from the Association
(d) is an unfinancial member of the unincorporated association for a consecutive period of two (2) fiscal years.
The reference to “unincorporated association” in rule 5(1)(d) seems also to
refer to the Chapter. It is one of the ways in which a member of AHEPA NSW
will cease to be a member. It makes sense, in a way: if someone becomes a
member of AHEPA NSW through the first pathway — as a financial member of
a Chapter — they should cease to be a member of AHEPA NSW if they cease
to be a financial member of the Chapter. It does not necessarily impinge on
someone who becomes a member of AHEPA NSW directly through the second
pathway. But searching for perfect consistency in an imperfect document is an
elusive task and, in the result, a construction which gives a common sense,
efficacious construction is the only relevant goal.
145 It follows that the applicants for membership, whose nominations were
submitted on 9 October 2018 to Dr Diamandis, endorsed by the committee of
membership on 11 October 2018 and entered on the register of members a
few days later, became members of AHEPA NSW in accordance with rule 3(2)
(b) on entry into the register.
146 One feature of these events, however, is potentially significant. The
membership fees of the nominees from two of the Chapters were paid before
entry into the Register of Members. Cheques for the membership fees of the
nominees from the other two Chapters were not deposited until after the names
had been added to the register: Chapter Ippokratis No. 21’s fees were
deposited on 20 October 2018 and Chapter Diogenes No. 8’s fees were
deposited on 21 November 2018. Dr Diamandis said that the treasurers of the
Chapters paid the sum required by giving him a cheque for the Chapter’s
nominees, and that the receipts relating to the deposit of the cheque payments
were tabled at the meeting on 11 October 2018. Certainly, the minutes of
meeting record that two deposit slips were tabled, but obviously enough, the
remaining deposit slips could not have been tabled because the cheques
weren’t deposited until after the meeting. The dates when the cheques were
deposited by AHEPA NSW do not tell me when the nominees paid their fees of
$1.10 each to the Chapter. It was not put to Dr Diamandis that, in fact, he didn’t
receive the membership fees until after the names of the members were
entered in the register, and thus I will proceed on the basis that the fees were
paid before their names were entered.
A new constitution for AHEPA NSW
147 On 18 October 2018, the committee of management of AHEPA NSW held a
special meeting. AHEPA NSW’s solicitor attended and presented a draft
Constitution and By-laws.
(a) The amendments to the 2003 Rules, now re-named a Constitution (probably to encapsulate the change in legislative language in 2009), were wholesale and represented the first substantive re-write of the document since 1993.
(b) The by-laws was a new document, the contents of which appear to have been drawn from the 2010 version of the Constitution and By-Laws of The Order of AHEPA Australasia.
After a presentation by the solicitor, the committee of management
recommended the adoption of the Constitution and By-laws. A date for the
special general meeting was set for 13 November 2018. The minutes also
referred to the fact that the Council was pressing to close the lease and tender
documents by Christmas and that the National Convention would take place on
2 December 2018. It was hoped to approve the change of constitution by then.
148 On 22 October 2018, notice of a special general meeting at 7.30pm on 13
November 2018 was issued by AHEPA NSW to its members, being those on
the Register of Members updated by Dr Diamandis to include the new
members accepted at the committee of management meeting on 11 October
2018, the total membership thus being 492. The notice proposed a resolution
that the Constitution be adopted in lieu of the current Rules, and attached the
Constitution in clean and marked-up form as well as the proposed By-laws.
149 The notice and its attachments was sent to members according to the contact
details recorded in the Register of Members. Where members had provided an
email address, then an email was sent to them, being 229 members. The
remaining members were posted the notice and accompanying documents.
Some 40 members were sent the documents by both post and email. On 22
October 2018 at lunchtime, President Kallimanis and Treasurer Premetis
posted the envelopes at the post office. The emails were sent late in the
evening on 22 October 2018. Only two or three posted items were ‘returned to
sender’, although the member to whom one of these items had been sent
attended the meeting anyway.
150 On 23 October 2018, an advertisement in respect of the meeting was
published in Greek newspapers O Kosmos and The Greek Herald and was
also published on the website of AHEPA NSW.
151 Rule 40 of the Rules provided:
SERVICE OF NOTICES
(1) For the purpose of these rules a notice may be served by or on behalf of the Association upon any member either personally or by sending it by post to the member at the member’s address shown in the register of members.
(2) Where the document is sent to a person by properly addressing prepaying and posting to the person a letter containing the document shall unless the contrary is proved be deemed for the purposes of these rules to have been served on the person at the time at which the letter would have been delivered in the ordinary course of post.
The rule does not refer to service of notices by email but doesn’t suggest that
service may only be effected by post. As I understand the evidence, none of
the members object to being served by email per se and no-one to whom an
email was sent says they didn’t receive it. So those served by email appear to
have been given 21 days’ notice of the special general meeting.
152 The postal articles are deemed to be received on the day they would arrive in
the ordinary course of post: rule 40(2). Section 160(1) of the Evidence Act
1995 (NSW) provides:
It is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the seventh working day after having been posted.
Absent evidence to the contrary, the posted items are presumed to have been
received on 31 October 2018, being less than 21 days before the meeting on
13 November 2018. As to receipt by post, Mr Antonakos said he received the
notice by post and email, and on 22 October 2018, but I think the date
reference is likely to the email only. Mr Kallimanis said he received the post on
23 or 24 October 2018. On 30 October 2018, Ms Nagle emailed Dr Diamandis
saying that she had not received notice of the meeting. Dr Diamandis replied
that he had checked the Register of Members, confirmed that her name
appeared on the register and that she had been sent the notice of meeting and
accompanying material. Dr Diamandis also provided her with a link to access
all documents relevant to the meeting online. Ms Nagle replied that she had not
received the package and, as she had not received his email until 1 November
2018, she had not been provided with the requisite notice of the meeting.
153 It seems to me that the presumption of service of postal items was not
displaced by evidence, and thus the members to whom notice was sent by post
only did not have 21 days’ notice of the meeting. However, the plaintiffs did not
take this point, but challenged whether particular members had been notified of
the meeting (the complaint being made on 30 October 2018 and thus in ample
time for the people concerned to make arrangements to attend the meeting if
they so wished). Section 1322(1)(b)(ii) of the Corporations Act provides that “a
reference to a procedural irregularity includes a reference to a defect,
irregularity or deficiency of notice or time.” Sub-sections 1322(2) and (3) have
the result that the meeting is not invalidated unless the Court is of the opinion
that the irregularity has caused or may cause substantial injustice that cannot
be remedied, and the Court declares the meeting to be void. These provisions
are applied to associations by the 2009 Act: section 96 and section 97 provide
that the Regulations may declare any matter to be an applied Corporations
legislation matter, and to modify those provisions in their application to
associations, and regulation 18 of the Associations Incorporation Regulation
2016 (NSW) declares any matter relating to associations to be such a matter in
relation to section 1322 of the Corporations Act, except for subsection (3B).
See also the Corporations (Ancillary Provisions) Act 2001 (NSW); section 5F of
the Corporations Act and section 95 of the 2009 Act. No application was made
by the plaintiffs to invalidate the meeting on this score, as would be required to
avoid the automatic validating effect of subsections (2) and (3).
154 On 30 October 2018, the solicitors for the plaintiffs in the second proceedings
wrote to AHEPA NSW’s solicitors querying whether members of the disputed
Chapters Arete No. 3, Antigone No. 8 and Apollon No. 16 would be allowed to
vote on 13 November 2018 and conveying an offer by their clients to pay for
the meeting to be professionally filmed. The solicitors also sought a list of all
people who would be permitted to vote at the meeting to whom notice of the
meeting had been given and sought confirmation as to how notice had been
given. On 2 November 2018, AHEPA NSW’s solicitors replied. Whilst declining
to have the meeting recorded, the solicitors advised:
The Register of Members lists names and addresses of everyone known to be a financial member of a Chapter on 30 June 2018. That information is provided by the Secretaries of the respective Chapters. …
All members are welcome to participate in th[e] meeting. Our client has never asserted any financial member is not entitled to vote. Nor has our client prevented any member from exercising any other right attaching to membership.
The letter was somewhat misleading in that the Register of Members had been
supplemented by members whose nominations had been approved by the
committee of management on 11 October 2018. Further, the letter did not sit
well with AHEPA NSW’s letters of 23 July 2018.
155 On 5 November 2018, the plaintiffs’ solicitors in the second proceedings
responded, providing names of 17 members who it was said had not received
notice of the meeting. Further:
… [W]e find it impossible to reconcile your client’s position in its letters dated 23 July 2018 … that members of the Disputed Chapters were “not eligible for membership of the Order of AHEPA” with the assertion in your letter of 2 November 2018 that “[AHEPA NSW Inc] has never asserted any financial member is not entitled to vote. Nor has our client prevented any member from exercising any other right attaching to membership”.
A copy of the Register of Members was requested. The solicitors also
proposed that the meeting be delayed to ensure that the notice requirements
were complied with.
156 On 12 November 2018, the National Convention of AHEPA Australia took
place at which its Constitution was amended to clarify membership,
composition of the National Convention and its relationship with State and
Territory Councils. The definition of the purpose of AHEPA was amended, to
add that the purpose of AHEPA is “to unite and represent all State/Territory
AHEPA Associations in Australia…" The membership rule was replaced with:
Membership of AHEPA AUSTRALIA LTD shall consist of the following:
a) One Incorporated AHEPA State/Territory Council operating in each State/Territory of Australia.
b) Any other AHEPA UNITS/Chapters incorporated or unincorporated Associations in a State or Territory, which are under the jurisdiction and control of the State/Territory AHEPA Incorporated Association.
c) The State/Territory Council and all the AHEPA Units under its jurisdiction must subscribe and operate under the Constitution and By-Laws of AHEPA Australia LTD as adopted at a National Convention of all member
States/Territories and or as amended by the National Convention from time to time.
d) The State/Territory Council and all the AHEPA Units under its jurisdiction must subscribe and operate under the Constitution and By-Laws of AHEPA AUSTRALIA LTD as adopted at a National Convention …
followed by a list of individual members, being past and serving presidents of
state and national councils. The Additional Rules for New South Wales and
Victoria were removed (but not for Queensland)
157 On 12 November 2018, the day before the special general meeting, the
solicitors for the plaintiffs in the second proceedings wrote to AHEPA NSW’s
solicitors again, pressing for a copy of the Register of Members and requesting
inspection of the current Register of Members pursuant to rule 39 of the Rules
together with the minutes of all Chapters under the control of the Grand Lodge
of New South Wales from 30 June 2017 to 30 June 2018, to be made available
from 5.00 pm to 7.30 pm on 13 November 2018, that is, immediately before the
meeting. Presumably, the solicitors wished to check the register against the
minutes of the Chapters. Apparently, it was thought that AHEPA NSW would
have minutes of the Chapters in its possession because Mr Kagelaris was
thought to keep them on his computer. An examination of the minutes, if
indeed AHEPA NSW had them, would not have revealed the members added
to the register on 11 October 2018.
158 On 13 November 2018, AHEPA NSW’s solicitors replied that the Register of
Members was available for inspection by any member in accordance with the
rules and statutory requirements.
It is unclear why a request for inspection of the Register has been left to this point in time. A copy of the Register will be available for inspection by all member at tonight's meeting, but it is unreasonable for special arrangements to be made for your proposed time period. …
…Given the position that you and your clients have foreshadowed, the persons named in your letter dated 5 November 2018 will be allowed to join the meeting as well as the members enrolled in the Register. But that is not an acceptance that those persons are members. That contention is likely to be the subject of dispute.
Any ballot cast by those disputed persons will be preserved, so that there is a basis for identifying whether their vote was or was not relevant to the meeting’s outcome.
Dr Diamandis says he was unavailable at the time requested to inspect the
register. That may well have been the case, but AHEPA NSW clearly did not
want the plaintiffs to see the register in advance of the meeting and thereby
become aware of the second pathway.
Meeting on 13 November 2018
159 As described by Dr Diamandis, Mr Premetis and Mr Kallimanis, the meeting on
13 November 2018 was carefully organised, well attended and meticulously
run. Of 492 members, 381 attended. According to Mr Antonakos, this was the
highest attendance that he can recall of any general meeting since 1993.
Rather than members signing themselves in on arrival, Mr Premetis, assisted
by two other members, identified and marked members off the Register of
Members. Whilst the plaintiffs’ witnesses were concerned about the departure
from usual meeting practice, it seems to me that AHEPA NSW recognised that
this meeting needed to be conducted in a more meticulous manner than usual
given the subject-matter and likely controversy attending any outcome. Dr
Diamandis gave members whose names were on the Register of Members a
blue ballot paper. Dr Diamandis handed out 371 blue ballot papers.
160 A list of disputed members was also at the meeting, listing 12 members, to
which four additional names were added in handwriting at the meeting, and 10
of whom attended. The list was drawn from a list in circulation between the
solicitors in the second proceedings, and comprised people about whom
AHEPA NSW said it had not received sufficient information to verify whether
they had become financial members of a Chapter between 30 April 2018 and
30 June 2018. The names of those people had not yet been entered in the
Register of Members and thus they were not then members. If the member
was not in the Register of Members but on the list of disputed members, then
Mr Premetis ticked their name off the list of disputed members. Dr Diamandis
gave these members a pink ballot paper. Dr Diamandis handed out 10 pink
ballot papers. Dr Diamandis explained that the purpose of the pink ballot
papers was so that the votes cast by the people whose membership at the time
was disputed could be distinguished by the other votes should it be necessary
to do so.
161 According to Dr Diamandis, one person was refused entry as she had not paid
the membership fee to become a member and was not eligible to attend or
vote. The membership fee was subsequently received from the Chapter in
January 2019.
162 Michael Londos complains that, although a financial member of Chapter
Heracles No. 12, he did not receive notice of meeting and, when he attended
the meeting hall, he was refused entry by Dr Diamandis, Mr Premetis and Mr
Kallimanis. He would have voted against the resolutions. When the Register of
Members was finalised before issuing the notice of the meeting, the most
recent list of financial members of Chapter Heracles No. 12 which Dr
Diamandis had was for the year ended 30 June 2017, which Ms Nagle had
provided in March 2018. Mr Londos’ name was not on the list. Although Mr
Londos’ name was included on the list of financial members of Chapter
Heracles No. 12 for the year ended 30 June 2018, that list was not sent to
AHEPA NSW until the early hours of the morning of 23 October 2018, after the
notice of meeting had been issued. But even when Dr Diamandis received the
2018 list, he did not necessarily accept that Mr Londos was in fact a financial
member of Chapter Heracles No. 12:
… I have no documentation from Mr Londos or from Chapter Heracles that this gentlemen is a member.
… I have been a member of Chapter Heracles for 26 years. I know who is a member and who is not.
… I’m secretary of the Order of AHEPA NSW Incorporated. Therefore I have access to the membership lists going back a number of years. Mr Londos’ name does not appear on any list before this document.
163 There are no minutes of meeting of Chapter Heracles No. 12 in evidence and
so I cannot determine whether Mr Londos became a member of that Chapter
following the initiation process described by Ms Nagle, or at all. Dr Diamandis’
stringent approach to Mr Londos’ right to vote was perhaps at odds with that
taken to the admission of new members via the second pathway. Having
become aware that Mr Londos was entitled to vote by reason of having been
identified as a financial member of Chapter Heracles No. 12 for the year ended
30 June 2018, Dr Diamandis should have sent him a notice of meeting and
given him a ballot paper.
164 After reading the proposed resolution, members spoke for and against the
motion. Mr Lianos spoke against the motion as did Ms Nagle. The procedure
adopted at the meeting was slightly different from usual as the vote was not
taken on a show of hands but by ballot. Ballot papers were provided and
placed in ballot boxes. Counting commenced at 9.10 pm. Mr Premetis counted
the votes assisted by two others. Mrs Alexandrou and another were
scrutineers. The votes were counted twice. In favour of the resolution were
290. Against the resolution were 78 votes with one blank ballot paper. With
78.6% of the votes cast, the motion was carried. Of disputed members’ votes,
one voted in favour of the motion and seven against. Including the disputed
members’ votes, the motion was carried by 77.2% of the votes cast.
165 The ballots have been re-counted by the plaintiffs’ solicitor, Ms Andrews. There
were 367 ballot papers (358 were blue and 9 were pink). Counting blue ballots
only, there were 76.02% in favour of the resolution and, counting pink ballots
as well, there were 76.29% votes in favour of the resolution. However, Ms
Andrews included abstentions in her tally, and the rules required 75% of votes
cast: rule 31; section 39(1), 2009 Act.
Section 1322 of Corporations Act
166 As outlined at [153] above, section 1322 of the Corporations Act applies to
incorporated associations in NSW. Pursuant to section 1322(2) of the
Corporations Act, a “procedural irregularity” does not invalidate a relevant
proceedings “unless the Court is of the opinion that the irregularity has caused
or may cause substantial injustice that cannot be remedied by any order of the
Court and by order declares the proceedings to be invalid.” On the other hand,
where the irregularity is “substantive” and not merely “procedural”, the
proceeding will be presumed to be invalid; although the Court has the power to
make a validating order under its inherent jurisdiction or under section 1322(4)
(a): Cordiant Communications (Australia) Pty Ltd v The Communications Group
167 The plaintiffs’ submissions were largely directed to AHEPA NSW admitting
ineligible votes at the general meeting – those added by the second pathway –
being a “substantive” irregularity which would not warrant a validation order as
substantial injustice was caused as the admission of those votes made a
difference to the result of the meeting: Cordiant at [108]; Cambodian Buddhist
Society of NSW v Thai [2017] NSWSC 1433 at [82]-[83], [124]. However, I
have found that the members endorsed by the committee of management on
11 October 2018 and added to the register soon afterwards were members of
AHEPA NSW, and thus their votes were valid. There was no irregularity on this
score which requires a validation order.
168 The plaintiffs pointed to two further problems with the meeting: Mr Londos was
excluded from voting; and the people on the list of disputed members who did
not attend the meeting had not received notice of it. It is possible that, if they
had been notified, they may have attended and voted against the resolutions.
As mentioned, the list of disputed members had 16 names, of which 10
attended and voted: eight voted against the resolutions, one voted in favour,
and one abstained. On the conclusion of the second proceedings, to which I
will refer shortly:
(a) of the 6 who did not attend the meeting, it was later agreed that 4 were members of AHEPA; and
(b) of the 10 who did attend the meeting, it was later agreed that 2 were not members of AHEPA.
169 How does one unscramble this omelette? I think one ought to consider the
potential result in the most conservative manner favourable to the plaintiffs.
Thus, I have adopted Ms Andrews’ tally, which does not accord exactly with the
count at the meeting. I assume that Mr Londos, as he said, would have voted
against the resolutions. I assume that, notwithstanding that the second
proceedings were resolved on 10 December 2018 and then only by a
declaration that the disputed members were members as at that date, that the
members were accepted by AHEPA NSW as members when the notice of
meeting was issued on 22 October 2018. I will assume that if the 6 who did not
attend or, more specifically, the four of their number who were entitled to vote,
had received notice then they would have attended and voted against the
resolutions. I will assume that the two disputed members who attended and
voted, but shouldn’t have, accounted for the ‘yes’ vote and the abstention. If
one adds 13 ‘no’ votes (including the eight pink ballots actually cast) and
removes one ‘yes’ pink ballot from the total votes cast as counted by Ms
Andrews, the result is 370 votes cast of which 279 voted yes and 91 voted no,
that is 75.4% in favour of the resolutions.
170 The question is whether an order should be made under section 1322 to cure
any irregularity in respect of Mr Londos or the disputed members who did not
attend the meeting and, potentially, could otherwise have voted against the
resolutions. The irregularities were substantive, in that AHEPA NSW thereby
deprived members of a right to vote by not recognising their entitlement to do
so under its Rules. As to whether the persons party to the contravention acted
honestly, it seems to me that AHEPA NSW had retained solicitors in respect of
the second proceedings and counsel in respect of the membership rules and, it
would appear, was acting consistently with their advice. Steps were taken to
preserve the votes of disputed members pending the resolution of that issue.
Overall, I consider that section 1332(6)(a)(ii) is satisfied. As these irregularities
would have made no difference to the result of the meeting, making all
assumptions in favour of the plaintiffs, then I consider it appropriate to make an
order under section 1332(4) as I am satisfied that no substantial injustice has
been or is likely to be caused to any person.
Registration of new constitution
171 The constitution adopted at the meeting was promptly lodged with NSW Fair
Trading by Dr Diamandis.
172 On 16 November 2018, the second proceedings were listed before Black J for
hearing of the plaintiffs’ application to be appointed as representatives of all
members of Chapters Arete No. 3, Antigone No. 8 and Apollon No. 16 and for
AHEPA NSW to pay their costs of appearing as representatives. Counsel for
AHEPA NSW abandoned reliance on the position put in its letter of 23 July
2018, accepted that the plaintiffs were entitled to vote at general meeting and
were members of AHEPA NSW but was unable to assist the Court as to how
many other members of the three Chapters were also on the Register of
Members. His Honour considered AHEPA NSW’s position to be “incoherent”,
leaving all members of the three Chapters in considerable uncertainty as to
their position.
173 His Honour was satisfied that a representative order should be made,
permitting Mrs Alexandrou and Ms Bouris to be representatives of all members
of the three Chapters. However, his Honour was not satisfied that AHEPA
NSW should indemnify the plaintiffs for their costs of doing so. Further, in order
to clarify which members of the three Chapters were accepted as being
members of AHEPA NSW, his Honour made the following orders:
1. Within seven days, [AHEPA NSW] advise the Plaintiffs of:
(a) which persons in the represented class [AHEPA NSW] accepts are members of [AHEPA NSW], having the same membership rights as all other members of [AHEPA NSW]; and
(b) which persons in the represented class [AHEPA NSW] does not accept have such membership rights and why.
174 By now, the Council was becoming impatient. Council expressed concerns
over the capacity to meet the commitments made in AHEPA NSW’s tender, in
particular, the lack of a full design specification. On 16 November 2018, the
Council requested an update on the design for Stage 1 by 19 November 2018
so that an update could be provided to the Council in advance of its December
meeting. On 19 November 2018, Mr Fandakis advised the Council that it had
become necessary to call a special general meeting to adopt a new
constitution and obtain a fresh endorsement by the members at a general
meeting to allow AHEPA NSW to continue its commitment to the Council
regarding Bexley Bowling Club. Although a new constitution had been adopted
and registered, the committee of management still needed to convene a
general meeting to put a motion that the members re-endorse the agreement
with Council regarding Bexley Bowling Club. As soon as the new constitution
was registered, AHEPA NSW would give the required 14 days’ notice to
members for a general meeting: “based on the results of the previous vote for
the constitution there will be no problem in passing the motion for Bexley
Bowling Club”. The initial proposed internal configuration of the Stage 1
building would also be presented to the members at the meeting and it was
anticipated that AHEPA NSW would be in a position to proceed with the
Council on 20 December 2018.
175 On 22 November 2018, AHEPA NSW’s solicitors wrote to the solicitors for the
plaintiffs in the second proceedings accepting that each of the persons in the
represented group were entitled to membership and that their names already
appeared in the Register of Members. AHEPA NSW accepted that all of those
persons had the same membership rights as every other member of AHEPA
NSW.
176 On 29 November 2018, NSW Commissioner for Fair Trading emailed AHEPA
NSW indicating that several representations had been received about the
management of AHEPA NSW and the validity of the meeting on 13 November
2018. Notice of 21 days was said not to have been provided in some instances
or at all. It had also been asserted that some of the committee’s actions were
not consistent with their statutory responsibilities and that internal disputes
were impacting on the operation and corporate governance of the association.
On 5 December 2018, NSW Commissioner for Fair Trading sought
confirmation that notice of the proposed special resolution had been provided
to members and that the process undertaken in respect of passing the special
resolution to adopt the new constitution complied with the Act, the current
constitution and the law generally. AHEPA NSW’s solicitor provided the
assurances sought.
177 On 10 December 2018, the second proceedings were resolved by the entry of
consent orders. The Court declared that each of the plaintiffs and the persons
who they represented were members of AHEPA NSW and entitled to have
their names recorded on the Register of Members. Dr Diamandis said that,
after these orders were made, these members were included in the Register of
Member, being the members to whom pink ballot papers had been issued if
they had attended the special general meeting.
178 On 17 December 2018, Council followed up Mr Fandakis as to the registration
of a new constitution and the new members’ endorsement of the proposal for
Bexley Bowling Club. A meeting was requested to obtain an understanding of
AHEPA NSW’s adherence to the time frames in relation to proving AHEPA
NSW’s financial capability to carry out the works, providing design detailed
documentation and a firm date for lodgement of a development application. A
meeting was arranged for 20 December 2018.
179 On 18 December 2018, the new Constitution and By-laws were registered by
NSW Commissioner for Fair Trading. By reason of my earlier conclusions as to
the validity of the resolutions passed on 13 November 2018, it follows that the
registration was valid and correct.
180 On 20 December 2018, AHEPA NSW and the Council met. After the meeting,
Council confirmed key dates to be adhered to: detailed floor layout plans,
project management methodology, project scope and team by 21 January
2019 to be discussed at a meeting on 22 January 2019; detailed funding model
by 28 January 2019 to be discussed on 29 January 2019; and all required
documentation to lodge the development application by 30 April 2019. The
Council concluded:
Please note that due to the nature of time lapsed well beyond what was initially envisaged, if the above dates are not adhered to we may reconsider our offer to AHEPA for potential works licence to undertake development works at the subject site, 72 Laycock St Bexley North, and subsequent lease of the site. We are more than happy to assist where required and provide any guidance as requested, however we need to be in a position to demonstrate considerable effort has been made by AHEPA to progress this project when the matter is put before council in early Feb 2019.
Calling meetings to approve the development
181 The new Constitution of AHEPA NSW enables the committee of management
to deal with property with a resolution of members in general meeting, but no
longer requires a special resolution. On 10 January 2019, the committee of
management of AHEPA NSW sent an agenda to members inviting them to
attend the annual general meeting on 28 January 2019. The notice proposed
the following motion:
The members authorise the Committee of Management to perform all such acts and do all such things as appear to the Committee of Management to be necessary or convenient to finance the development of the project, including construction of any new buildings in Bexley North Bowling Club; additionally, the members authorise the Committee of Management to execute any Joint Venture, lien, mortgage, or sell any AHEPA property, as it may become necessary for the completion of the project.
182 On 13 January 2019, Mr Antonakos as secretary of Chapter Apollon No. 16
sent a letter enquiring why its representative (him) was not being invited to
attend meetings of the committee of management. Dr Diamandis says this was
because the meeting of the committee of management on 13 December 2018
discussed the outcome of the second proceedings in which Mr Antonakos was
a witness for the plaintiffs.
183 On 22 January 2019, AHEPA NSW met with Council officers and provided
concept plans. The project was to be placed before the Council at its next
meeting in early February 2019 and Council officers requested that AHEPA
NSW provide a detailed funding model to complete the project by 1 February
2019 including a statement of financial position, proof of equity, anticipated
project cost by major work stages and a breakdown of funding sources for
major work stages. A meeting with Council was proposed on 4 February 2019
to discuss funding strategies.
Third proceedings
184 On 22 January 2019, solicitors for the plaintiffs in these proceedings wrote to
the Secretary of AHEPA NSW objecting to the resolution being put to the
annual general meeting as the information provided to members was said to be
manifestly deficient. Complaint was made that the members had never been
provided with documents with, so far as I can tell, did not then exist, being a
proposed development application, proposed lease, quantitative survey in
respect of the cost of the project, finance plans or professional advice. It seems
to me that the committee of management had been distracted by its efforts to
achieve a mandate for the proposal and install a workable decision-making
structure going forward from attending to the substantive tasks in progressing
the development. The solicitors suggested, on a basis that is not clear to me,
that AHEPA NSW was engaged in an “apparently deliberate attempt to conceal
all particulars” concerning the project sufficient to amount to a breach of
section 30A of the Associations Incorporation Act 2009 as well as fiduciary
duties owed to members of the association. In addition, the solicitors
suggested that a large number of the votes cast at the 13 November 2018
special general meeting were by members not entitled to vote and thus the
new constitution had not been passed. A copy of the Register of Members was
sought or, failing that, inspection of it. The plaintiffs said they would approach
the Duty Judge to seek injunctive relief unless AHEPA NSW agreed not to put
the proposed resolution to the meeting on 28 January 2019 and to provide the
Register of Members and supporting documents in respect of each recent
member.
185 On 24 January 2019, these proceedings were commenced before the Duty
Judge, Lindsay J. Affidavits in support were filed by Ms Nagle, Mrs Alexandrou,
Mr Lianos and Mr Antonakos. On 25 January 2019, by consent, Lindsay J
ordered an interlocutory injunction preventing AHEPA NSW from proposing or
permitting voting on motions in respect of the Bexley Bowling Club at the
meeting on 28 January 2019. The meeting took place but the resolution was
not discussed.
186 On 1 February 2019, AHEPA NSW provided a preliminary funding scenario to
the Council. It comprised a list of possible options subject to approval of
AHEPA NSW’s members including borrowing against the equity of AHEPA
NSW’s properties at Rockdale or Surry Hills, negotiating a joint venture or
selling AHEPA NSW’s properties in Rockdale and borrowing part of the cost.
Preliminary discussions were said to be underway with other parties and once
a suitable scenario was reached, they would request members’ approval. I
suspect the information submitted to Council was far less detailed than what
was sought but, in the circumstances, there was little AHEPA NSW could do
given its inability to discuss the matter at a meeting of members.
187 On 7 February 2019, AHEPA NSW attended a further meeting with the
Council. Following the meeting, Council sent an email requesting a current
market valuation of the properties AHEPA NSW wished to borrow against to
fund the project, audited financial statements, a statement of loan balances for
loans against any properties owned by AHEPA NSW and a summary of what
was expected from a meeting scheduled for 27 February 2019 and the
upcoming hearing in the third proceedings. Whilst the Council officer noted that
the delays to date had been caused by AHEPA NSW’s internal disagreements
and subsequent inability to resolve to proceed with the project,
It is important that we eliminate any excess delays beyond this point as it may start to compromise Council’s confidence in the project proceedings.
188 On 11 February 2019, AHEPA NSW issued a notice of general meeting to take
place on 28 February 2019 proposing the following motions:
1) That this meeting notes the contents of the Information Memorandum, as attached;
2) That the Committee of Management be authorised to proceed with negotiations with Bayside Council regarding the project at 72 Laycock Street Bexley North (Bexley North Bowling Club); and
3) that the Committee of Management be authorised to obtain funds not exceeding seven million dollars (AUD$7M) for the construction and completion of Stage 1 of the project.
Attached to the notice was a three-page information memorandum describing
the deficiencies in AHEPA NSW’s current premises, the history of AHEPA
NSW’s efforts to obtain better premises, the progress of the tender to the
Council and the current proposal for Bexley Bowling Club. The information
memorandum noted that the Council required a complete development
application to be lodged no later than 30 April 2019 and the next step was to
engage planning, architectural, engineering and specialty consultants to
prepare it. At the same time, Council would prepare the lease documents to be
reviewed by AHEPA NSW’s solicitors.
189 Mr Fandakis said that the latest preliminary floor layouts had been made
available for inspection at the AHEPA headquarters, Monday to Friday, from
3.00 to 8.00 pm, from 13 February 2019 onwards. Mr Fandakis said:
Whenever there was a meeting for the members, the documentation that was applicable to that meeting was placed - was physically tabled next to the attendance book and every member that attended the meeting had an opportunity to inspect whatever documentation was pertinent to the meeting …
Endorsement of secretary and treasurer of AHEPA NSW
190 On 18 February 2019, a meeting of the committee of management endorsed
Mr Diamandis as Secretary and Mr Premetis as Treasurer of AHEPA NSW.
The plaintiffs submit that under rule 15, the Secretary and Treasurer are to be
elected by the committee of management by ballot rather than “endorsed” as
they appear to have been. Further, as Dr Diamandis has never been a member
of The Order of AHEPA Australasia, the plaintiffs submit he is not eligible to be
appointed as secretary of AHEPA NSW.
191 By reason of my earlier conclusions as to the validity of the resolutions passed
on 13 November 2018, it follows that the procedures for appointment of a
treasurer and secretary under the new constitution were the ones to be
followed. Whilst the former rules provided for the committee of management to
elect its office-bearers, apart from the president and vice-president, from its
members, the new constitution provided that the President, Vice-President,
Treasurer and Secretary of the Grand Lodge hold the same roles in AHEPA
NSW ex officio. Consistently with this, office-bearers in the committee of
management were “endorsed” rather than elected. Whilst AHEPA NSW did
not put on clear evidence that Mr Premetis and Dr Diamandis were, after the
State Convention held on 2 December 2018, the Treasurer and Secretary
respectively of the Grand Lodge of New South Wales, I infer it from the minutes
of meeting of AHEPA NSW thereafter. They were thus correctly endorsed as
the Treasurer and Secretary of AHEPA NSW on 18 February 2019.
192 On 20 February 2019, the plaintiffs’ application for an interlocutory injunction to
prevent the meeting on 28 February 2019 was determined, largely by consent,
on terms to enable AHEPA NSW to obtain the funding needed to meet
Council’s requirements to lodge a development application and thus keep the
commercial opportunity at Bexley Bowling Club alive until these proceedings
were finally determined. AHEPA NSW gave an undertaking that, if the third
resolution was passed at the meeting then AHEPA NSW would only expend up
to $375,000 for the purpose of preparing reports to lodge a development
application with the Council for Stage 1 of the development at Bexley Bowling
Club, such funds to be raised from an authorised deposit-taking institution and
secured by a mortgage against the Surry Hills property.
Meeting on 28 February 2019
193 On 28 February 2019, a special general meeting was held. The minutes of
meeting suggest it was a tumultuous affair. Anthony Alexandrou, a member of
Chapter Prometheus No. 6 and husband of Mrs Alexandrou, received the
notice of meeting and information memorandum in the post on 15 February
2019. On arriving at the meeting, his name was marked off a list of members
by Mr Premetis and on a laptop by Dr Diamandis and given a ballot paper. The
meeting was chaired by the new President of AHEPA NSW, Bill Skandalakis.
Two members spoke in favour of the motion and two against, being Mr Lianos
and Mr Alexandrou. Mr Premetis and Mr Alexandrou counted the votes with
scrutineers.
194 The resolutions passed with 72.48% of the votes cast: 189 members voted,
137 in favour and 52 against. It is not known which of the members who voted
in favour of the resolutions were amongst those endorsed by the committee of
management on 11 October 2018 nor, for the reasons given, does it matter.
Under the former constitution, 21 days’ notice would have been required for
this meeting, along with75% of the vote. AHEPA NSW accepts that, if the Court
concludes that the adoption of the new constitution in November 2018 was
invalid, then the resolutions passed at this meeting were rendered invalid. By
reason of my earlier conclusions as to the validity of the resolutions passed on
13 November 2018, it follows that these resolutions were validly passed.
195 The plaintiffs object to the third resolution on the basis that the committee of
management substantially failed to make full and fair disclosure of all facts and
material to enable members to determine whether to vote on the resolution.
The information memorandum did no more than set out the nature of the
project in broad terms. The committee failed to inform the members of the
manner in which funding was proposed to be obtained, the extent to which it
was proposed that any assets would be sold or encumbered and the terms on
which this was proposed to occur, the estimated costs and duration of the
project or the estimated financial impact of the project on the association based
on an independently prepared feasibility study. The plaintiffs submit that the
members of the committee of management breached their fiduciary duties.
196 Accepting that the members of the committee of management owed fiduciary
duties to the members of the association (Lai v Tiao (No 2) [2009] WASC 22 at
[577]; Pine Rivers, Caboolture and Redcliffe Group Training Scheme Inc v
Group Training Association Queensland & Northern Territory Inc [2015] 1 Qd R
542; [2013] QCA 358 at [39]; Stratford Racing Club Inc v Adlam [2008] NZAR
329; [2008] NZCA 92 at [58]; Haselhurst v Wright (1991) 4 ACSR 527; (1991) 9
ACLC 728; Allen v Townsend (1977) 16 ALR 301; (1977) 31 FLR 431) and that
this encompassed a duty of disclosure (Fraser v NRMA Holdings (1995) 55
FCR 452 at 466; (1995) 127 ALR 543 at 554, per curiam) there are two
problems with the plaintiffs’ complaint. The first is that the documents which
the plaintiffs say should have been provided did not, so far as I can see, exist.
It was not misleading to withhold documents which did not exist unless,
perhaps, it was suggested by the committee that the documents existed. As
Austin J noted in ENT Pty Ltd v Sunraysia Television Ltd (2007) 61 ACSR 626;
[2007] NSWSC 270 at [21]:
The Full Federal Court's decision in Fraser v NRMA Holdings Ltd is authority for the proposition (stated at 466) that “a proper discharge of the duty may require that the directors take reasonable steps to ascertain relevant information for communication to members if that information is not known to the board”. That, in turn, is qualified by the proposition that in considering whether the directors should seek out additional information, it is relevant to take into account the time and cost of acquiring and preparing such information, and the delay involved in doing so (Cleary v Australian Co-operative Foods Ltd (Nos 2 and 3) [1999] NSWSC 991; (1999) 32 ACSR 701, 719). …
197 The question of time and cost that his Honour raises goes to the second
problem: that the reason why the documents, studies and analysis did not exist
was because, as I understand it, the committee of management could not raise
the funds to pay the consultants to prepare the reports, do the studies and
undertake the analysis or take any significant step in respect of the
development without a special resolution. It is difficult to maintain that the
committee did not take “reasonable steps” in the circumstances. In fact, they
did take steps to obtain the necessary information to inform the project by
removing this impediment: hence the attempt, successful as it turned out, to
revise the constitution and enable the committee of management to progress
the development with a simple majority of its members.
ORDERS198 For these reasons, I make the following orders:
(1) Order pursuant to section 1322(4)(a) of the Corporations Act 2001 (Cth), as applied by sections 96 and 97 of the Associations Incorporation Act 2009 (NSW) and regulation 18 of the Associations Incorporation Regulation 2016 (NSW):
(a) that the conduct of the special general meeting of the first defendant held on 13 November 2018 (the November SGM) is not invalid by reason of any contravention of any provision of the
Corporations Act, the Associations Incorporation Act or the Association’s constitution.
(b) that the resolutions passed at the November SGM to amend the Association’s constitution and/or adopt a new constitution is not invalid by reason of any contravention of any provision of the Corporations Act, Associations Incorporation Act or the Association's constitution;
(c) that the lodging of the amended constitution with the second defendant for registration is not invalid by reason of any contravention of a provision of the Corporations Act, Associations Incorporation Act or the Association's constitution; and
(d) that the endorsement of persons to the office of Secretary and Treasurer of the Association at a meeting of the Committee of Management of the Association on 18 February 2019 are not invalid by reason of any contravention of a provision of the Corporations Act, Associations Incorporation Act or the Association’s constitution;
(e) that any acts, matters or things purporting to have been done by the Association, or by persons acting on the Association’s behalf, in the period from 13 November 2018 to date are not invalid by reason of any contravention of a provision of the Corporations Act, Associations Incorporation Act or the Association’s constitution.
(2) Dismiss the Amended Originating Process filed on 8 March 2019.
(3) Order the plaintiffs to pay the defendants’ costs of the proceedings.
(4) Discharge Order 1 made by Lindsay J on 25 January 2019 and release the first defendant from the undertaking noted in Order 2 on 25 January 2019.
(5) Release the first defendant from the undertaking noted in Order 1(a) made by Rees J on 20 February 2019.
(6) Grant liberty to the parties within 14 days to notify any correction or amendment sought to be made to these orders or any variation sought to Order 3.
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Amendments
04 October 2019 - Coversheet - Orders [198]
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