Australian Karate Federation (Qld) Inc v Australian Karate Federation Inc [2004] QSC 53

1 4th Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 3247 4360 Fax: (07) 3247 5532 [2004] QSC 053 SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION FRYBERG J No BS 2539 of 2004 AUSTRALIAN KARATE FEDERATION (QLD) INC Applicant and AUSTRALIAN KARATE FEDERATION INCORPORATED Respondent BRISBANE ..DATE 19/03/2004 ORDER WARNING: The publication of information or details likely to lead to the identification of persons in some proceedings is a criminal offence. This is so particularly in relation to the identification of children who are involved in criminal proceedings or proceedings for their protection under the Child Protection Act 1999, and complainants in criminal sexual offences, but is not limited to those categories. You may wish to seek legal advice before giving others access to the details of any person named in these proceedings. -- 1 of 10 -- 19032004 T26/EAM19 M/T 3/2004 (Fryberg J) 2 ORDER 1 10 20 30 40 50 60 HIS HONOUR: This is an application by an incorporated association, the Australian Karate Federation (Queensland) Incorporated for injunctions to restrain certain conduct by the Australian Karate Federation Incorporated. The latter is an incorporated association incorporated under the equivalent New South Wales legislation. It has both individual members and, what it calls, affiliate members some of whom are State bodies such as the applicant. The relationship between the applicant and the respondent has, in recent times, been somewhat turbulent. The applicant was a member of the respondent and was previously recognised by it as a State Association for Karate. That position came to an end, whether lawfully or not does not now matter, in August last year when the respondent introduced a new set of rules and shortly prior to that time terminated the applicant's membership. The problems which now arise, arise under the new rules. The interest which the applicant has in the proceedings arose in this way. From toward the end of last year until recently, the applicant has embarked on a course designed to achieve reinstatement as a member of and recognition by the respondent. It wrote to the respondent, referred to certain provisions of the respondent's new rules, and required that it be recognised as a "recognised State body". The respondent took legal advice and ultimately responded that, very reluctantly - I put -- 2 of 10 -- 19032004 T26/EAM19 M/T 3/2004 (Fryberg J) 3 ORDER 1 10 20 30 40 50 60 it mildly, the language is perhaps a little more colourful than that - it accorded the applicant that recognition. The applicant subsequently applied for membership of the respondent as an affiliated body, a status to which it became entitled by reason of its recognition. Whether it was necessary for the applicant to seek membership as a separate step or whether such membership flowed automatically from the rules, is now in dispute. But it does not seem to me to matter because the respondent certainly treated the applicant as a member adopting the view that membership flowed automatically by reason of the recognition. This application today, therefore, must be approached on the basis that the applicant is both a recognised State Association and a member of the respondent. During the period when the applicant was not a member and was not recognised from about August 2003, another body in Queensland was given recognition and presumably became a member. That means that with the accession of the applicant to membership and recognition, there are now two Associations in Queensland which hold the same status. It is plain on the evidence that the respondent finds that situation intolerable. It is not surprising that it should do so. Although it is not a true federal body, the respondent has a number of characteristics of such a body and two persons representing a State would be embarrassing. More -- 3 of 10 -- 19032004 T26/EAM19 M/T 3/2004 (Fryberg J) 4 ORDER 1 10 20 30 40 50 60 interestingly, there is apparently some arrangement whereby Associations operating within a particular State, which have the status of recognition from the respondent, receive money from State governments. The evidence before me indicates that recognition is worth something between $40,000 and $60,000 to the applicant. The respondent having, as I said, reluctantly conferred the status upon the applicant has now set about doing something to rid itself of the problem. The correspondence which has emanated from the respondent indicates that it proposes first to place a resolution before a special general meeting of the respondent to be held this evening to amend its rules. Among the amendments is one which provides that, if an affiliate membership is obtained through the according of recognised State Association to a body, then upon revocation of such status, affiliate membership automatically ceases and has no further effect. That proposed change must be read in the light of the provisions governing affiliate membership and recognition. They are to be found in rules 5 and 7 of the rules of the respondent. Those rules make it clear that the committee of the respondent may revoke the status of recognised State Association at any time. It follows therefore that if the rule change which is proposed to be implemented this evening and which apparently has the support of some 93 per cent of the membership of the respondent is carried, all that will stand between the -- 4 of 10 -- 19032004 T27/JLP15 M/T 3/2004 (Fryberg J) 5 ORDER 1 10 20 30 40 50 60 applicant and the termination of its membership is a resolution to revoke its status as a recognised State association. It is clear from the material, in my view, that the respondent is intent upon adopting that course and I therefore do not think that the proceedings are premature as submitted by Mr Hackett on behalf of the respondent. The proposed resolution does not contain any saving in respect of any member of the association, and I am now referring in particular to rule 7 paragraph 11, for any person whose membership exists at the date of the change. It seems to me that this is tantamount to a rule which effectively permits the termination of membership of a person of the description in the rule. Mr Hackett submitted that that did no more than mirror the existing position under the rules. He submitted that the committee already had the power to terminate and that continuing recognition as a recognised State body was a requirement for the continuation of affiliated membership. I do not read the existing rule in this sense. Recognition confers a right to become a member. The word is "become". There is no requirement for recognition in order for an affiliated member to be or remain a member. I therefore think that the proposed rule changes the present position and does so in a way which is adverse to the -- 5 of 10 -- 19032004 T27/JLP15 M/T 3/2004 (Fryberg J) 6 ORDER 1 10 20 30 40 50 60 applicant and which I have no trouble in concluding is deliberately intended to be used to terminate the applicant's membership upon the termination in the future of its recognition. The evidence does not disclose any intent on the part of the respondent to use the powers of expulsion contained in the rules to expel and, as I understand the submissions on behalf of the applicant, paragraph 1(a) of the application is not intended to refer to any such proposal but rather is intended to refer to the procedure being adopted this evening. I see no need for an injunction in the terms of paragraph 1(a), at least not at the present time, but I am prepared to grant an injunction in terms of paragraph 1(b). I should however make it clear that the injunction would not extend to a resolution which contained not only the proposed changes but also provision to preserve the position of any existing member. Whether it is within the power of the respondent to permit the amendment of special resolutions in such a way is something about which I cannot comment. Mr Hackett submitted that the applicant being merely an affiliate member of the respondent and therefore not entitled to vote, lacked the standing to complain about the proposed motion and meeting. That is not to me an acceptable submission. It is true that the applicant does not have a -- 6 of 10 -- 19042004 T28/AMS37 M/T 2/2004 (Fryberg J) 7 1 10 20 30 40 50 60 right to vote. That is an incident of being an affiliate member. However that does not mean its membership is valueless and it certainly does not permit the respondent to terminate the applicant's membership without reasonable cause. Mr Hackett also submitted that the rules of the respondent contain a dispute resolution procedure in rule 15. However that procedure is apt only for disputes between members, not for a dispute of the present sort. As regards the relief sought in paragraph 1(c), that is an injunction to prohibit the respondent from taking steps to revoke the applicant's status as a recognised State association, I am not persuaded by the evidence at this stage that the respondent proposes to ignore the requirements of rule 10 of the model rules. On the material before me it does seem that any dispute between the parties as to the revocation of the applicant's status ought to be dealt with in the manner set out in that rule before any revocation is to occur. Moreover, the respondent has invited the applicant to show cause why the revocation should not occur and the applicant has responded. The respondent's reaction to that is unknown. In my view the respondent should be given the opportunity to demonstrate its bona fides. If it accepts what the applicant has submitted by way of response to the requirement to show cause, there will be no dispute over the revocation because there will not be a revocation. It may be a little naive to consider that possibility having regard to the relations -- 7 of 10 -- 19042004 T28/AMS37 M/T 2/2004 (Fryberg J) 8 1 10 20 30 40 50 60 between the parties. If the respondent does not accept the submissions, as seems highly likely, it should in my view of the evidence before me, avail itself of the procedure set out by rule 10. Any attempt to exercise the power of revocation without doing so would appear on the evidence to be misguided. It is, however, a matter for the applicant to demonstrate the existence of such an intention. It has not at any stage sought assurances on this point from the respondent. It has not asserted the existence of a dispute on this point and on the whole I am not satisfied that the matter is, in relation to that paragraph, yet ripe for an injunction. I would hope that the need for the parties to return to Court will be obviated by what I have just said about the procedure which ought to be followed by the respondent. It is to be hoped that it will not try to present the applicant with a fait accompli but rather will consider the position carefully in the light of what has been said. No doubt if it acted otherwise, the applicant would have remedies in this Court. The respondent also submitted that there is no jurisdiction in this Court to deal with the question. The respondent is incorporated in New South Wales. The evidence is a little uncertain about whether it carries on business in Queensland but it would appear that it probably does so. Its secretary is located in Queensland and correspondence to the applicant has emanated from the secretary in this Stage. -- 8 of 10 -- 19032004 T29/NW1 M/T 3/2004 (Fryberg J) 9 ORDER 1 10 20 30 40 50 60 More importantly, when the matter was called on this morning, the respondent appeared in the matter by counsel. The appearance was not conditional. Mr Hackett submitted that the unconditional appearance should not be treated as submitting to the jurisdiction because his outline when later handed up showed that the respondent was, in fact, challenging the jurisdiction. In my view, that is not good enough. There has been, I think, a submission to the jurisdiction. In the end, I do not think that matters very much. As I say, it is quite likely that the respondent is carrying on business in the jurisdiction and also I have the jurisdiction of the Supreme Court of New South Wales by reason of the cross- vesting legislation and that is a sufficient power for me to exercise if all else fails. There is, I think, no issue of significance as to jurisdiction. One matter of some concern is the sufficiency of the applicant's proposed undertaking as to damages. The only evidence is that the applicant is solvent. That does not satisfy me. The applicant ought also to provide security to support its undertaking in the sum of $10,000 in a form satisfactory to the Registrar by 4 p.m. on next Monday, 22 March. ... HIS HONOUR: I should say that a further reason for my desire to have the undertaking supported by security is the delay -- 9 of 10 -- 19032004 T29/NW1 M/T 3/2004 (Fryberg J) 10 ORDER 1 10 20 30 40 50 60 which has occurred in bringing these proceedings. That delay is unexplained and has possibly led to members of the respondent incurring some cost. ... HIS HONOUR: Direction Number 3 will be: I direct that the parties inquire as to the willingness of the Queensland Karate Association Incorporated to participate in a mediation and provide a joint report to me on the prospects of a mediation succeeding, giving reasons for their views, within 28 days. ... HIS HONOUR: I order in accordance with the draft initialled by me and placed with the papers. ----- -- 10 of 10 --