Harold James Hird; Ian Cocks; Patrick Mcgibbon and Kevin Graham v the Royal Life Saving Society - Australia [1987] ACTSC 67 (2 October 1987)

SUPREME COURT OF THE ACT

HAROLD JAMES HIRD; IAN COCKS; PATRICK McGIBBON AND KEVIN GRAHAM v. THE ROYAL
LIFE SAVING SOCIETY - AUSTRALIA
S.C. No. 1108 of 1987
Company Law - Natural Justice

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Kelly J.(1)

CATCHWORDS

Company Law - Company limited by guarantee - Predecessor an unincorporated association with unincorporated State and Territorial branches - Power of company to admit those branches as its branches - A.C.T. Branch so admitted in exercise of power - By-laws of company - Whether within power if made by company's executive only - Resolutions by executive of company purporting to reconstruct A.C.T. Branch by dismissal of its elected board and proposing to hold fresh election - Whether proposed course of action reconstruction of branch.

Natural Justice - Whether if resolutions valid board of branch entitled to be heard before dismissal.

Brooklands Selangor Holdings Ltd. v. Inland Revenue Commissioners (1970) 1 WLR 429.

Navarro and Another v. The Spanish-Australian Club of Canberra, A.C.T. Incorporated (Supreme Court, A.C.T., Miles C.J., 8 April 1987, unreported).

Cameron & Ors. v. Hogan [1934] HCA 24; (1934) 51 CLR 358.

Kioa v. West [1985] HCA 81; (1985) 159 CLR 550.

Re Ingleburn Horse and Pony Club Ltd. and the Companies Act (1973) 1 NSWLR 641.

Plenty v. Seventh-day Adventist Church of Port Pirie (1986) 43 SASR 121.

Dixon v. Commonwealth of Australia (1981) 61 ALR 173.

HEARING

CANBERRA
2:10:1987

ORDER

The resolution of 3 September 1987 of the Executive of the defendant, The Royal Life Saving Society - Australia, purporting to remove the plaintiffs as directors of The Royal Life Saving Society - Australia, Australian Capital Territory Branch, is invalid and of no force and effect.

The purported appointment by the said Executive of the defendant of Sir Basil Osborne, Messrs Bruce Campbell, Michael Scott, Peter Fehre, Neville Bayfield, J. Burrowes, L. Marston and Dr. D. Johannes to positions on the Board of Directors of The Royal Life Saving Society - Australia, Australian Capital Territory Branch is invalid and of no force and effect.

The plaintiffs are and remain validly appointed as members of the Board of Directors of The Royal Territory Branch and are entitled to possession and control according to the rules of the said Branch to all property of that Branch.

The defendant its servants or agents be restrained from seizing, holding or taking possession of any of the property, assets or premises of The Royal Life Saving Society - Australia, Australian Capital Territory Branch pursuant to any such resolution.

The defendant its servants or agents be restrained from causing or permitting the persons named in declaration 2. hereof or any of them to hold themselves or any of them out as directors and/or office bearers or agents of The Royal Life Saving Society - Australia, Australian Capital Territory Branch pursuant to any such resolution.

The defendant its servants or agents be restrained from causing or permitting the persons so named or any of them to be authorized to operate upon any of the bank accounts of The Royal Life Saving Society - Australia, Australian Capital Territory Branch pursuant to any such resolution.

DECISION

On 28 June 1984 The Royal Life Saving Society - Australia (the defendant) was incorporated as a public company, limited by guarantee, under the Companies Act 1981 (the Act). Its Memorandum of Association sets out its first object as the preservation of human life especially in aquatic situations. Before the company was incorporated, an unincorporated association known as "The Royal Life Saving Society - Australia National Branch" had been formed as a State branch member of the Royal Life Saving Society of the United Kingdom. The unincorporated association formed branches. One of them was the Australian Capital Territory Branch. It came into existence on 16 October 1982 following a resolution in the following terms: -

"That the Australian Capital Territory

Sub-Branch of the New South Wales State
Branch be and is hereby elected a State
Branch of the Australia National Branch in
accordance with Clause 11 of the
Constitution."

2. Clause 11 provided that the Board of the National Branch should have power, inter alia, to create branches of the Australia National Branch other than those then existing. The Australian Capital Territory Branch, to which I will hereinafter refer as "the Branch", is an unincorporated association. Its function, like that of the other branches of the defendant, is to further and promote the business of the company directly. Each branch, including the Branch, has a member and governor of the company appointed to represent his or her branch at annual general meetings of the Board of Governors.

3. Article 3 of the Articles of Association provided that the subscribers to the Memorandum of Association and such other persons as the Executive should admit to membership in accordance with the Articles should be members of the defendant. By Article 1 the Executive means the board of directors and governing council of the defendant. The subscribers to the Memorandum of Association were Sir Basil Osborne and Messrs Bruce Alpin Campbell, Neville William Bayfield, Desmond George Johannes and James Burrowes. Article 32.1 provided that those persons should constitute the first Executive.

4. On 23 July 1984 the Executive made a number of resolutions using the procedure provided for by Article 55 whereby a resolution in writing signed by all the members of the Executive in Australia for the time being entitled to receive notice of a meeting of the Executive shall be as valid and effectual as if it had been passed at a meeting of the Executive duly convened and held. Such a resolution may consist of several documents in like form each signed by one or more members of the Executive. Five documents were in fact signed, one by each member of the Executive. Included in the resolutions so made was the following: -

"18. That the By-Laws, a copy of which has
been signed by the President for
identification purpose, be and are hereby
adopted as the By-Laws of the Society."

5. By-law 2 provided that until further resolution of the defendant in General Meeting the branches should consist of the unincorporated associations which included the Branch.

6. Article 64 provides that the defendant in general meeting may make, adopt and enforce such by-laws not inconsistent with its memorandum and articles of association as in the opinion of its members are necessary or desirable for the proper control, administration and management of its objects, finances, affairs, honours, competitions, interests, effects and property and may amend or rescind any such by-law from time to time. Any by-law made under the article is to come into force and be duly operative upon the approval of the same by the defendant in general meeting.

Article 40, so far as is relevant, provides that: -
"The business of the Company shall be managed
by the Executive who may . . . exercise all
such powers of the Company as are not by the
Act or by these Articles, required to be
exercised by the Company in General Meeting,
subject, nevertheless, to any of these
Articles and to the provisions of the Act,
and to such regulations, being not
inconsistent with the aforesaid Articles or
provisions, as may be prescribed by the
Company in General Meeting; provided that any
rule, regulation or by-law of the Company
made by the Executive may be disallowed by
the Company in General Meeting . . . "

7. The Article is in familiar form. See Article 66, Table A, Schedule 3 to the Act and its predecessors. The width of the power given by the Article is not, in my opinion, in doubt. It is not cut down by any requirement that the defendant's power to make by-laws must be exercised by the defendant in general meeting or must be the subject of a special resolution as, for example, is the power to alter the memorandum and articles of association given by ss. 73 and 74 of the Act. See, generally, as to the nature of the power, an article, "The Relationship Between the Board of Directors and the General Meeting in Limited Companies", by G.R. O'Sullivan, (1977) 93 L.Q.R. 569. I am satisfied that the Executive had and has the power to make by-laws and that it adopted an appropriate method of doing so in this instance.

8. The branches (including the A.C.T. Branch) of the defendant therefore depend for their existence as part of the defendant upon a by-law made by the Executive in exercise of a power given it under the Articles. It is a peculiar form of membership of a company but not, I should think, unique or to be invalidated on that account.

9. I turn to the matters directly in issue in this case.

10. By their statement of claim annexed to a writ of summons issued out of this Court on 10 September 1987 the plaintiffs sought declarations that: -

(a) a resolution of the Executive of the defendant
removing the plaintiffs as directors of the Branch
was invalid and of no force and effect;
(b) the purported appointment by that Executive of
persons to the positions on the Board of the
Branch was invalid and of no force and effect; and
(c) the plaintiff's were and remain validly appointed
as members of the Board of the Branch and
according to the rules thereof to possession and
control of all the property of the Branch.

11. The plaintiffs also sought a number of injunctions.

12. Late on 10 September 1987 by notice of motion bearing that date the plaintiffs sought interlocutory injunctions ex parte. Orders were made that until 5 p.m. on the following day the defendant should be restrained from seizing, holding or taking possession of any of the property, assets or premises of the Branch, from causing or permitting a number of named persons to hold themselves or any of them out as directors and/or office bearers or agents of the Branch and from causing or permitting any of those persons to operate upon any of the bank accounts of the Branch.

13. Orders were made to the intent that prompt notice of the injunctions might be given to the defendant and proceedings were adjourned to 10 a.m. the following day.

14. On 11 September 1987 the interlocutory injunctions were continued by consent to 5 p.m. on Friday, 18 September 1987 and the proceedings were adjourned to that day.

15. The plaintiffs had moved on the affidavit of Harold James Hird sworn 10 September 1987. He deposed that he was President and Chairman of the Branch, having been elected to those offices on 10 February 1987 for a period which was expected to expire about Easter 1988. At the Annual General Meeting at which he was elected, the plaintiffs Ian Cocks and Kevin Graham were elected to the Board as were Karla Knight, Peter McArdle and Diana Lansberg. Karla Knight was elected Vice-President of the Branch and Ian Cocks treasurer. Mr Hird had been elected to the offices of President and Chairman originally on 19 August 1985.

16. The Branch has made application to the Corporate Affairs Commission for incorporation under the Associations Incorporation Ordinance 1953. Mr Hird expected the Certificate of Incorporation to issue within the next few days.

17. He deposed further that since the Annual General Meeting on 9 February 1987 the affairs of the Branch had been conducted by the Board of Directors elected at that meeting. Monthly Board meetings had been held. There had, he said, been no communications to the Branch from the Executive of the defendant about the operation and administration of life saving in the Australian Capital Territory by the Branch except an approach made by the National Executive in July 1987.

18. On or about 10 July 1987 Mr Hird received a telephone call from Mr Peter Fehre, the Executive Director of the defendant, who asked Mr Hird to meet him and Mr Bayfield. He met them on Thursday, 16 July 1987. At the meeting the two outlined to him several areas of concern at the conduct and activities of Mr Geoffrey McGibbon, the Executive Director of the Branch, one of the plaintiffs. After that meeting Mr Hird asked Mr McGibbon to give him a written report in relation to the matters of concern raised.

19. At a special meeting of the Board of the Branch held, apparently, on 21 July 1987, it discussed the concerns expressed by Messrs Fehre and Bayfield and Mr McGibbon's written report on the matters. The Board expressed its confidence in Mr McGibbon and authorised Mr Hird to forward to the National Executive of the defendant an appropriate letter.

20. On 24 July 1987 Mr Hird wrote to Mr Bayfield a letter, part of which I set out hereunder:-

"I refer to our discussion held at the
Lakeside Hotel on 16th July 1987 concerning
certain queries by National Branch about my
Executive Director, Mr Geoff McGibbon. I
fully appreciate the serious nature of the
queries raised by you and in that regard I
would like to thank you and the National
Executive Director, Peter Fehre, for bringing
my attention to them.
Following our discussions I provided Mr
McGibbon with a list of those queries and
directed that he immediately supply answers
to them, . . . This he has done . . . I have
also examined our records concerning the
matters raised by you.
I have fully investigated these queries and
while there are some irregularities which I
believe are minor, I am fully satisfied that
there has been no impropriety or wrong doing
by Mr McGibbon.
As a result of my investigations the
following facts have been established:
Querie 1. 'THAT A HOLDEN GEMINI CAR
REGISTERED TO CHRISTINE MCGIBBON
WAS PURCHASED THROUGH THE RLSS TO
AVOID SALES TAX.'
Finding: A Holden Gemini purchased by the
Society on 13th May 1983 for the
sum of $6,692 is registered in the
name of the Royal Life Saving
Society ACT Branch.
Querie 2. 'THAT AN ASSET A MOTOR VEHICLE
VALUED $11,421.74 LESS ALLOWANCE
FOR DEPRECIATION OF $1,758.74 WAS
NOT REGISTERED AS AN ASSET OF
$9,663.00 IN THE 1986 BALANCE SHEET
AND THAT MONIES HAVE BEEN
MISAPPROPRIATED.'
Finding: A Ford Falcon Station Wagon owned
by the Branch and assigned to the
Executive Director was sold in
December 1985 and the proceeds of
$9,000 credited to the General
Account on the 19th December 1985.
Querie 3. 'THAT A SERIOUS BREACH OF THE
TAXATION ACT BY ACT BRANCH OCCURRED
AND WAS DETECTED BY THE TAXATION
INVESTIGATORS.'
Finding: An audit carried out by an officer
of the Australian Taxation Office
found no serious breach of the
Income Tax Act.
Querie 4. 'THAT THE MOTOR VEHICLE EXPENSES AS
SHOWN ON THE AUDITED 1985/86
STATEMENT OF INCOME & EXPENDITURE
WAS EXCESSIVELY HIGH.'
Finding: Running and maintenance costs are
incurred on two motor vehicles.
Following the sale of the Ford
Falcon Station Wagon in 1985 a Ford
Spectrum was leased as a
replacement vehicle on 23rd
December 1985. The cost of leasing
the vehicle was reflected in the
1985/86 Audit Statement.
Querie 5. 'THAT AS AN ACT AUSTSWIM DELEGATE,
ATTENDING A MEETING IN HOBART IN
APRIL, GEOFF TRIES TO EVADE PAYING
ACCOMMODATION AND MEALS FOR A
PERSON WHO ACCOMPANIES HIM TO THAT
MEETING.'
Finding: Mr McGibbon was accompanied to
Tasmania by a friend visiting from
America. Following inquiries made
at the hotel, Mr McGibbon was
advised that the friend could share
his room at no extra cost as
Austswim had already paid for a
twin room. An additional dinner
and breakfast was incurred at the
hotel, the cost of which was
defrayed by Mr McGibbon.
Querie 6. 'THAT THE EXECUTIVE DIRECTOR DID
NOT ATTEND THE COMMONWEALTH
CONFERENCE IN ENGLAND AS STATED IN
HIS REPORT TO THE BOARD OF
DIRECTORS.'
Finding: Prior to Mr McGibbon's leaving for
England he was under the impression
that he could attend the
Conference. On arrival he
contacted the RLSS Headquarters and
was advised that he could not
attend unless he paid a Conference
fee of five hundred pounds
Sterling. On June 20 he drove to
Solihull where he attended the
International Water Safety
Symposium and met with some
delegates attending the
Commonwealth Conference. Mr
McGibbon then proceeded to visit
aquatic centres throughout the
United Kingdom. Mr McGibbon was
also able to arrange a meeting with
Mr Keith Sach, the United Kingdom
Director at Mountbatten House where
he was given a tour of the various
departments of the UK
Headquarters. A further tour of
the United Kingdom and France was
made visiting various aquatic
centres and speaking with aquatic
groups. The difficulties in
attending the Conference were
explained to the Board prior to the
tabling of his report on the 5th
November 1986.
Querie 7. 'THAT A CHEQUE FROM THE ACT BRANCH
PRESENTED TO THE TASMANIA BRANCH IN
1984 FOR THE LIFESAVING TEAM
ACCOMMODATION HAD BOUNCED,'
Finding: This Branch has an overdraft
arrangement with the ANZ Bank
(Woden branch) for $20,000. At the
time in question the Bank Manager
was on holidays and the relieving
manager was unaware of this
arrangement. It is interesting to
note that our overdraft
arrangements are and have been for
some years secured by way of a
mortgage on a house owned by the
McGibbon family.
I have discussed all the abovementioned
queries and Mr McGibbon's responses with my
Board at a meeting held on Tuesday 21st
July. Following my recommendation that no
further action be taken in relation to these
queries, a vote was passed expressing
complete confidence in the Executive
Director.
As already mentioned, I deeply appreciate the
serious nature of these allegations.
However, I must now take the approach that if
there are any further queries concerning the
Executive Director, I will require that they
be made in writing and that the names and
addresses of the people raising those queries
and documentary evidence in support thereof,
be supplied to me. It is my belief and that
of my Board that it would not be fair or
equitable to expect Mr McGibbon to continue
to provide answers to queries made by
anonymous persons without any supporting
documentary evidence."

21. Mr Hird further deposed that the defendant had not responded, either in writing or orally, to his letter.

22. On Saturday, 5 September 1987, the defendant caused to be delivered to him at his home a letter dated 3 September 1987. Letters in similar terms were also delivered eventually to Messrs Cocks, Graham and McGibbon, the second, third and fourth plaintiffs and to Mr McArdle. The letters stated that at a meeting of the Executive of the defendant held on Thursday, 3 September 1987, it had been resolved, pursuant to by-law 14.13, to reconstruct the Branch by removing its Board of Directors and appointing a new executive. The recipients were advised of their removal from the Board of the Branch with effect from 11 a.m. on 3 September 1987. Notice was given of the appointment of a completely new Board of Directors. The letters requested the recipients to cease to hold themselves out as representing the Branch in any way whatsoever, to sign all documents and do all such acts as might be necessary to vest all the assets of the Branch in the names of the newly appointed directors and to deliver up any motor vehicle or other assets, moneys, documents or keys in their possession to the newly appointed directors.

23. The letter did not advise, although it was the fact, that amongst the resolutions the Executive had passed on 3 September 1987 was one in the following terms: -

"As soon as practicable, in the opinion of
the Chairman, an Extraordinary General
Meeting of the A.C.T. Branch be called for
the purpose of considering the conduct and
administration of the A.C.T. Branch and to
call for an election of the new Board of
Directors."

24. A copy of the minutes of the meeting held by the Executive on 3 September 1987 was tendered in evidence. It showed that the meeting was held at the Flight Deck, Sydney Airport, at 11 a.m. on that date.

25. At no time did the defendant or its National Executive supply to the plaintiffs reasons for their decision of 3 September 1987.

26. Mr Hird also deposed that he held the position of Governor, representing the Branch, of the defendant. He was thus, as I understood the evidence, a member of the Board of Governors of the defendant.

27. Mr Hird also deposed that a public meeting had been convened for the evening of 10 September 1987 to seek the public's final views as to the future operation of a swimming pool complex at Dickson and the allocation of the right to the lease and management of that pool. He expected that at that meeting, or shortly thereafter, the A.C.T. Administration would announce the name of the successful applicant for the lease and operation of the pool complex. He was confident that the Branch would be allocated the lease and the right to manage the complex. He had reason, he said, to believe that Mr Fehre was present in the Australian Capital Territory on that day and that he, other members of the Executive of the defendant, or members of the newly constituted Board might attend the meeting and seek to hold themselves out as representing the Branch as members. He deposed that he had received no notice of any intention by the Board of Governors to reconstruct or dismiss the Board of Directors of the Branch and had not attended any meeting of the Board of Governors at which that topic had been discussed.

28. On 7 September 1987 Mr Hird telephoned Mr Fehre to request him to forward a copy of the Memorandum and Articles of Association of the defendant and of its by-laws. He received those documents on the morning of 8 September.

29. The last matters in his affidavit to which I think it necessary to make reference are his statements that he had attempted to contact Ms Karla Knight but could not do so but that he had not attempted to contact the other member of the Board, Ms Diana Lansberg.

By-law 14.13 is in the following terms: -
"Subject to a special resolution of the Board
of Governors a Branch may be dissolved or
reconstructed by the executive. No part of
the liabilities of any Branch shall be
payable otherwise than out of the moneys of
the Branch unless the Executive shall
otherwise determine. Any dispute between two
or more Branches or any dispute within a
Branch shall, in default of agreement be
settled by the Executive whose decision shall
be final, subject to the Board of Governors
ratifying the same in General Meeting."

30. It seemed to me on the facts deposed to by Mr Hird that there was a strong possibility of confusion arising at the public meeting which was to be held on the evening of 10 September 1987 and that the confusion which could come about as a result of competing claims by the elected Board and the newly appointed Board to control the management of the Branch could lead to the loss by the Society of the right to operate the Dickson pool complex. It was contended that upon its true construction by-law 14.13 did not give the Executive of the defendant power to act as it had done and that in any event what had been done did not constitute a reconstruction of the Branch as that phrase was properly to be understood.

31. In all the circumstances it seemed to me that the balance of convenience dictated that the interlocutory injunction, limited in time as it was, should go in the first instance.

32. Senior counsel for the defendant contended that, upon its true construction, by-law 14.13 did not mean that it was a condition precedent to any such action by the Executive as is provided for by that by-law that there should be a special resolution of the Board of Governors. He contended that all that was meant was that the Board of Governors might, following a special resolution, command the Executive to dissolve or reconstruct a branch or might veto by such a resolution any action taken by the Executive to dissolve or reconstruct a branch. He contended, in effect, that the word "a" where first appearing in the by-law should be construed as "any".

33. By-laws 10.7 and 10.8 give further powers to the Governors. They provide respectively that:-

"The Governors may by special resolution
remove the Medical Adviser before the
expiration of his time of office."
and that
"The Governors may by special resolution
appoint an eligible person to be the Medical
Adviser in the place of a person who has
resigned or who has been removed from office
as aforesaid."

34. It is clear that the power of dismissal and appointment thereby vested in the Governors may only be exercised by special resolution. But by-law 14.13 gives the power of dissolution or reconstruction to the Executive subject only to a special resolution of the Board of Governors. Had the word "upon" been used in the by-law instead of the words "subject to" I would have been content to accept the submission that such a resolution was a condition precedent, at least, to the exercise by the Executive of the power vested in it under the by-law.

35. The difference in the form of drafting makes it clear, I think, that the construction contended for by senior counsel for the defendant is correct. The preliminary point taken on behalf of the plaintiffs that the Executive did not have power to attempt to dismiss or reconstruct the Branch in my opinion, therefore, fails.

36. The parties agreed that the matter might proceed on affidavit evidence, subject, of course, to the right of cross-examination of the deponents. The matter proceeded on that basis and eventually I made a formal order, under 0.40, r.24, that the evidence to be adduced in the trial should be taken by affidavit. Subsequently, I ordered that the evidence of the plaintiff, Kevin Graham, might be taken orally.

37. By their statement of claim, the plaintiffs contended that the resolution for the reconstruction of the Branch was void and of no effect upon the grounds that:-

(a) The rules of the Branch did not empower the
defendant to dismiss the plaintiffs as Directors
of the Branch or to appoint other persons as
directors in their stead.
(b) The memorandum and articles of the defendant did
not empower the making of by-law 14.13 which was
consequently void and of no effect.
(c) The by-law did not empower the executive of the
defendant to pass the resolution<.
(d) The resolution was carried and purportedly put
into effect without notice of intention to do so
or of the grounds therefor being given to the
plaintiffs or any person or persons on their
behalf within a reasonable time of the meeting or
at all and it was implicit in the by-law that no
such resolution as was passed would be put or
carried unless a fair opportunity had been given
to the plaintiffs as persons affected thereby to
answer the grounds proposed for the resolution and
to be heard with respect thereto.

38. The first ground seems to me to have no force. It is not the rules of the Branch which are under consideration but the power of the Executive of the defendant under the Act, its memorandum and articles of association and the by-laws made thereunder to pass and to put into effect the resolution in question.

39. It was submitted as to ground (b) that by-law 14.13 was inconsistent with article 61, contrary to the provisions of article 64, the provisions of which are referred to above. Article 61 provides that the defendant "may establish such branches and may make such regulations for their management and may close and discontinue the same as it may from time to time in general meeting think fit and determine."

40. It was submitted that the word "close" means "to bring to an end or to shut down either temporarily or permanently", that to "discontinue" means "to cause to cease, put an end to, or to terminate", that "to dissolve" means "to dismiss, to bring to an end, to destroy, or to annul" and that "to reconstruct" means "to construct again, to rebuild, or to recreate".

41. In their ordinary meaning the two sets of words used in article 61 and in by-law 14.13 were effectively, so it was submitted, to be taken as having the same meaning and therefore by-law 14.13 dealt with the same subject matter as did article 61.

42. At first sight the words "close" and "discontinue" used in article 61 do not appear to have the same meaning as the words "dissolve" and "reconstruct" in by-law 14.13 but counsel contended that when there is ascribed to the word "close" the meaning "bringing to an end temporarily" it means effectively "to reconstruct". When used in the sense of bringing to an end permanently the word "close" means the same as the word "dissolve" as, of course, does the word "discontinue". It was therefore argued that if, pursuant to article 61, a general meeting were needed to "end a branch" whether it was to be reconstructed or not, then the power given in by-law 14.13 was inconsistent with the power to end given by article 61 and that before there could have been an end made to or a reconstruction of the Branch there should have been a general meeting. No such general meeting having taken place the "ending of the A.C.T. Branch" was invalid.

43. In my opinion the argument is not well founded. I have already referred to the extent of the powers given the Executive pursuant to article 40. It may exercise the powers of the defendant in general meeting unless the contrary intention be shown. I see no such contrary intention here. Even if there be a total correspondence between the power given in article 61 and the power given by by-law 14.13, I see no inconsistency in the two. The Executive might, in my opinion, pursuant to article 40, have established such branches and closed and discontinued such branches as it thought fit. In doing so it would be doing no more than exercising the power in general meeting given the Executive of the defendant by articles 40 and 61. Such an exercise of power would be, in my opinion, entirely valid. If there is a difference between the power given in article 61 and by-law 14.13, it seems to me that, for the reasons I have earlier given, the by-law was within power when made and it requires no general meeting of the company to endorse the action taken by the Executive if it were otherwise correctly taken.

44. A more cogent argument against the reconstruction of the Branch said to be effected by the resolution of 3 September 1987 was that what took place was not a reconstruction of the Branch at all.

45. It was put by senior counsel for the defendant that I should give to the word "construct" and its several parts the meaning ordinarily ascribed to it and them in company or commercial matters. I did not understand senior counsel for the plaintiffs to have so restricted himself. I approach the construction of the word giving to it, therefore, the widest possible meaning. To the meaning of "reconstruct" given above (from the Macquarie Dictionary, 2nd edn.) I add the meanings "to build again" and "to reorganise" taken from the Concise Oxford Dictionary. That there are others of similar effect appears from a later written submission by senior counsel for the defendant.

46. In Brooklands Selangor Holdings Ltd. v. Inland Revenue Commissioners (1970) 1 WLR 429, Pennycuick J considered the meaning of the word "reconstruction" in the light of existing authority. At p. 444, he said:

"I will deal first with the question whether
the transaction amounted to a
reconstruction. In ordinary speech the word
reconstruction is, I think, used to describe
the refashioning of any object in such a way
as to leave the basic character of the object
unchanged. In relation to companies, the
word "reconstruction" has a fairly precise
meaning which corresponds, so far as the
subject-matter allows, to its meaning in
ordinary speech. It denotes the transfer of
the undertaking or part of the undertaking of
an existing company to a new company with
substantially the same persons as members as
were members of the old company."

47. He went on to consider earlier authorities and then, at p. 445, said:-

"The other case was In re South African
Supply and Cold Storage Co. Ltd. (1904) 2
Ch. 268, where, again in a different context
from the present case, Buckley J had to
consider the meaning of the term
'reconstruction'. He said, at p. 286:
'Then it remains to consider whether what was
done was for the purpose of "reconstruction
or amalgamation". What does "reconstruction"
mean? To my mind it means this. An
undertaking of some definite kind is being
carried on, and the conclusion is arrived at
that it is not desirable to kill that
undertaking, but that it is desirable to
preserve it in some form, and to do so, not
by selling it to an outsider who shall carry
it on - that would be a mere sale - but in
some altered form to continue the undertaking
in such a manner as that the persons now
carrying it on will substantially continue to
carry it on. It involves, I think, that
substantially the same business shall be
carried on and substantially the same
persons shall carry it on. But it does not
involve that all the assets shall pass to the
new company or resuscitated company, or that
all the shareholders of the old company shall
be shareholders in the new company or
resuscitated company. Substantially the
business and the persons interested must be
the same.'
So, in that passage Buckley J repeated in
effect what was said by Chitty J in the
earlier case but he repeatedly inserted the
qualification 'substantial'. I respectfully
adopt that passage as an accurate statement
of what is meant by the word
'reconstruction', always, of course, in the
absence of any controlling factor leading to
some other meaning. To quote again the last
sentence: 'Substantially the business and the
persons interested must be the same'."

48. No evidence was placed before me as to the numbers of persons who made up the Branch at 3 September 1987. It would seem, however, that the Branch consisted of more persons than those who made up its Board elected early in 1987 for otherwise an election would have been unnecessary. There is no suggestion in the evidence, nor was it suggested in argument, that the Branch itself was to be in any way reorganised. All that happened was that its governing body, board or executive, call it what one may, was purportedly dismissed from office. Giving the word "reconstructed" the widest meaning possible, I am unable to see that the dismissal of the Board operated to reconstruct the Branch in any way.

49. The matter may be tested by asking whether, if the board of a major public company were dismissed by an appropriate resolution of the members, there would have been a reconstruction of the company. In my opinion there would not. It is difficult to see how the dismissal of an executive, whether a single person or a board, can constitute a reconstruction of a company or of an unincorporated association when the membership of the company or association remains exactly the same as it was before the dismissal and when there is no change of any kind in its undertaking.

50. I think, therefore, that the Executive of the defendant did not have power under by-law 14.13 to take the action which it did. It was not suggested that the Executive acted under any other power, express or implied. The resolution purporting to reconstruct the Branch in pursuance of that by-law by the dismissal of the Board was therefore void and of no effect.

51. If, however, I be wrong in that view, there remains the question of whether the Board of the Branch was denied natural justice.

52. Senior counsel for the defendant submitted that there was no requirement that natural justice demanded that the Board of the Branch should be given an opportunity to be heard before it was dismissed. He contended further, however, that, should it be found that there was such a requirement, the Board had been given an adequate opportunity to answer what were in effect charges levelled against it.

53. Senior counsel for the plaintiffs pointed out that before a member of the defendant could be censured, fined, suspended or expelled, he was entitled to be heard in respect of the allegations made against him (Article 12). He pointed out also that by virtue of s. 249 of the Act and Article 38 an office bearer or other member of the Executive could not be removed before the expiration of his period of office without being given the opportunity to be heard.

54. Senior counsel for the plaintiffs argued, therefore, that it was implicit in the articles of association that before the board of a branch could be dismissed it must be given the opportunity to be heard in respect of the charges against it.

55. It does not follow necessarily in my view that the provisions of Articles 12 and 38 and of s. 249 of the Act require that the board of a branch should be given the opportunity to be heard before it is dismissed. In this I follow, with respect, what I understand to have been the general view expressed by Miles CJ in his judgment handed down on 8 April 1987 and, as yet, so far as I know, unreported in Navarro and Another v. The Spanish-Australian Club of Canberra, ACT. Incorporated at pp 12 and 13 of the transcript of the judgment.

56. Senior Counsel for the plaintiffs relied upon Cameron & Ors. v. Hogan [1934] HCA 24; (1934) 51 CLR 358.

57. The principle established by that case is, I think, accurately summarised in the judgment of Starke J at pp.383-4 when he said:-

"Has Hogan, however, any redress in a Court
of law for such unauthorized act? It may be
unlawful in the sense that it is void (Graham
v. Sinclair (1918) 25 CLR at p 107). But
to give him a right of relief at law or in
equity, Hogan must establish some breach of
contract with him, or some interference with
his proprietary rights or interests. As a
general rule, the Courts do not interfere in
the contentions or quarrels of political
parties, or, indeed, in the internal affairs
of any voluntary association, society or
club. 'Agreements to associate for purposes
of recreation, or an agreement to associate
for scientific or philanthropic or social or
religious purposes, are not agreements which
Courts of law can enforce. They are entirely
personal. Therefore, in order to establish a
civil wrong from the refusal to carry out
such an agreement, if it can be inferred that
any such agreement was made, it is necessary
to see that the pursuer has suffered some
practical injury, either in his reputation or
in his property' (Murdison v. Scottish
Football Union (1896) 23 R.(Ct. of Sess.)
449, at pp 466, 467). Contractual rights,
therefore, appear to me out of the question.
The rules of a voluntary association
organized for political purposes are not
agreements enforceable at law, or in other
words, contracts. Members of such
associations who have grievances must resort
to the remedies and the redress afforded them
by the rules of their associations, and not
to the Courts of law."

58. The dismissal of a board necessarily involves, in my opinion, some reflection on the reputation of the persons concerned. When all the facts are known the dismissal may not in fact reflect upon that reputation but it would, in the first instance, be seen, readily, I think, and generally, as such a reflection.

59. In my opinion, the applicable rule was stated by Mason J (as he then was) in Kioa v. West [1985] HCA 81; (1985) 159 CLR 550 at pp 582-3. He said:-

"It is a fundamental rule of the common law
doctrine of natural justice expressed in
traditional terms that, generally speaking,
when an order is to be made which will
deprive a person of some right or interest or
the legitimate expectation of a benefit, he
is entitled to know the case sought to be
made against him and to be given an
opportunity of replying to it: Twist v.
Randwick Municipal Council [1976] HCA 58; (1976) 136 CLR
106, at p.109); Salemi (No.2) (1977) 137
CLR at p.419; Ratu (1977) 137 CLR, at
p 476; Heatley v. Tasmanian Racing and Gaming
Commission [1977] HCA 39; (1977) 137 CLR 487, at
pp 498-499; F.A.I. Insurances Ltd. v. Winneke
[1982] HCA 26; (1982) 151 CLR 342, at pp 360, 376-377;
Annamunthodo v. Oilfields Workers' Trade
Union (1961) AC 945. The reference to
'right or interest' in this formulation must
be understood as relating to personal
liberty, status, preservation of livelihood
and reputation, as well as to proprietary
rights and interests.
The reference to 'legitimate expectation'
makes it clear that the doctrine applies in
circumstances where the order will not result
in the deprivation of a legal right or
interest."

60. In my opinion, when parties engage to act together in association as the parties here have done and to regulate their relationship under the Act, they go beyond the limitations imposed by Cameron v. Hogan (supra) and bind themselves to deal with matters which may affect the reputation of members of the association in accordance with the rules of natural justice. By way of analogy I refer to s. 320 of the Act and the remedy it gives against oppression of members of a company. Such a remedy was granted in Re Ingleburn Horse and Pony Club Ltd. and the Companies Act (1973) 1 NSWLR 641 by Street, J (as he then was). The plaintiffs' proceedings are not open to objection on the ground that merely declaratory judgment or order is sought thereby for O.29, r.5 of the rules of this Court provides that no action or proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make binding declarations of right, whether any consequential relief is, or could be, claimed or not. See also Plenty v. Seventh-day Adventist Church of Port Pirie (1986) 43 SASR 121.

61. In my opinion, there was a duty cast upon the Executive of the defendant to act in accordance with the principles of natural justice.

62. The defendant contended, however, that the plaintiffs had been accorded the right to be heard. Its counsel submitted that the enquiry into the conduct of Mr McGibbon must have put them on notice that their conduct as members of the board was under consideration and that if they did not furnish reasons satisfactory to the Executive they and all their fellow members were liable to dismissal as a board. I am unable to see that such a submission can succeed. The matters in question related to the conduct of a particular person. I do not think it could fairly be said that the conduct of the investigation must have brought home to the Board of the Branch, necessarily or at all, the implication that its own conduct was under consideration and that a failure to answer the questions raised to the satisfaction of the Executive of the defendant would put the Board of the Branch at risk of dismissal.

63. In my opinion, therefore, the plaintiffs were denied natural justice and, subject to considerations which properly affect the exercise of the discretion, an injunction ought to go.

64. It was contended that because the resolution for reconstruction, so-called, was subject to a resolution of the Board of Governors the plaintiffs had a remedy other than their approach to the Court. It was said that they were entitled to call for a meeting of the Board of Governors which could hear their case and, if it thought proper, set aside the resolution of 3 September 1987 by an appropriate special resolution.

65. No evidence was placed before me to indicate that such a procedure would be anything but illusory.

66. Senior counsel for the defendant submitted that the conduct of the plaintiff, Mr Hird, and his evidence was such that I ought to refuse the injunction sought. I do not think I should do so on this ground. It is not appropriate that I make any findings concerning the matters which were the subject of investigation between the Executive of the defendant and the Board of the Branch. It seems to me that it would be inappropriate that I enter upon a consideration of these matters of fact. The questions to be answered are whether the resolution was void and whether natural justice was accorded the plaintiffs. Whether their conduct was blameworthy or not does not fall to be decided in this action. See Dixon v. Commonwealth of Australia (1981) 61 ALR 173.

67. Nor do I think that the plaintiffs' conduct in obtaining the interlocutory injunctions earlier granted disentitles them to the remedies now sought. They might have given notice of the intended motion to the defendant but one can readily understand the viewpoint that Mr Hird, at least, seems to have adopted, namely, that they had been dealt with without warning and that the circumstances did not require them to give warning of the motion to the Executive of the defendant.