Benson v Ortho-Bionomy Australia Limited

1. [1]

   The plaintiff, Ms Debra Benson (Ms Benson), seeks a declaration that her expulsion as a member of the defendant, Ortho-Bionomy Australia Limited (OBA or the Company), is invalid and of no effect. She also seeks damages against OBA for loss of income resulting from her expulsion.

Evidence

1. [2]

   The evidence for Ms Benson comprised two affidavits given by her and one by Mr Andrew Wilson, who acted as her solicitor in 2019 and attended the general meeting of OBA on 8 November 2019 as her proxy. Ms Benson was cross-examined. I accept that she sought to provide accurate and honest answers to the questions she was asked.

2. [3]

   The evidence for OBA comprised two affidavits given by Ms Karen Sonter (Ms Sonter) and one by Mr Clive Salzer (Mr Salzer). Both were members of the board of directors of OBA (OBA Board) during the period when the OBA Board made its decision to expel Ms Benson. Each was cross-examined. I accept that they sought to provide accurate and honest answers to the questions they were asked.

Background

1. [4]

   Ortho-bionomy is an alternative health practice which was described in evidence as involving a non-invasive method of therapeutic bodywork designed to address pain and stress patterns and promote structural balance and ease of movement. It was originally developed by an osteopath, Arthur Lincoln Pauls. It is a technique similar to, but not the same as, osteopathy and remedial massage. In contrast to osteopathy, it is not a health profession regulated by the Australian Health Practitioners Regulation Authority.

2. [5]

   OBA is a public company limited by guarantee which aims to “promote and establish an Ortho-Bionomy Community and to educate practitioners in the philosophies and principles of Ortho-Bionomy throughout Australia” (OBA’s Constitution, cl 3(a)). It requires its members to abide by a Code of Ethics and its instructors to abide by a Code of Conduct. However, it does not have any power to regulate or control who can practice ortho-bionomy in Australia and a person can practice ortho-bionomy in Australia without being a member of OBA. The Board of OBA is made up of voluntary members.

3. [6]

   Ms Benson had been a member of OBA since its establishment in July 2011. Ms Benson was the inaugural chairperson and served on the OBA Board until October 2012. In 2014, she became a member of the board of the Society of Ortho-Bionomy International (SOBI), which is an organisation based in the United States which acts as the peak international body for ortho-bionomy, and was its president from 2017 to 7 June 2019 when she resigned.

4. [7]

   Ms Benson has been a practitioner of ortho-bionomy since around 1995. She received training to teach other practitioners, becoming qualified as an advanced instructor through a course run by SOBI. She has derived income from being both a practitioner and teacher of ortho-bionomy.

5. [8]

   Ms Benson was expelled as a member of OBA by a resolution of the OBA Board passed on 3 September 2019 and confirmed by a resolution passed at a general meeting of members of OBA on 14 June 2020. The events leading up to her expulsion are summarised below, including three matters which led to the OBA Board’s dispute with Ms Benson. Those are (a) Ms Benson’s conduct in 2015 regarding the method of advertising ortho-bionomy (b) Ms Benson’s complaints against two other instructors in 2018 and (c) Ms Benson’s complaint against another instructor in 2019.

6. [9]

   In August 2014, Ms Sonter, then a member and director of OBA, facilitated a session at OBA’s annual conference which included some discussion on marketing a practitioner’s ortho-bionomy practice and whether it could be advertised under the “osteopathy” section in the Yellow Pages. Ms Sonter was advertising her business under “osteopathy” around that time following a discussion with a Yellow Pages representative who had suggested her advertisement could go in that section.

7. [10]

   On 15 July 2015, Ms Sharron Morgan, a member of OBA, sent an email to the OBA Board raising concerns regarding the appropriateness of advertising under “osteopathy”, to which Ms Sonter replied.

8. [11]

   Ms Benson became aware of Ms Morgan’s concern and, on 16 July 2015, had a telephone conversation with Mr Antony Nicholas, the CEO of Osteopathy Australia, regarding advertising under “osteopathy” in the Yellow Pages. The following day, on 17 July 2015, Mr Nicholas sent a letter to Ms Benson informing her that advertising under “osteopathy” in the Yellow Pages could be in breach of relevant codes and guidelines pursuant to s 39 of the Health Practitioner Regulation National Law (NSW) as well as an email to Ms Sonter informing her that her advertisement may be in breach of such laws.

9. [12]

   On 17 July 2015, Ms Benson forwarded that letter from Osteopathy Australia to Ms Morgan who then forwarded it to Ms Janine McCarthy (the then Chair of the OBA Board) raising her concern that members of OBA should be notified that this advertising practice was inappropriate. Shortly afterwards the OBA Board took steps to correct information on the members’ section of the OBA website to make the position of the OBA Board clear.

10. [13]

    On 5 October 2015, Ms McCarthy sent Ms Benson a letter setting out how the matter had been resolved and then went on to express concern regarding Ms Benson’s role in the matter and that the OBA Board (except for Ms Sonter who had not been part of its decision-making on the issue) considered her conduct to be inappropriate. I will set the letter out in full because it is relevant to Ms Benson’s challenge to her expulsion:

11. [14]

    OBA had a written grievance policy and procedure (Grievance Policy) whereby a member of OBA could submit a “grievance submission form” to the OBA Board. The Grievance Policy requires that the Board provide a copy of the form to both the person who was the subject of the grievance and the Ethics Committee established by the Board pursuant to cl 11.14 of the Constitution. The role of the Ethics Committee was to determine whether there had been a breach of the Code of Ethics or the Code of Conduct for instructors, and then report back to the OBA Board with any recommendations for action to be taken in relation to the grievance. The OBA Board was then required to decide what if any action should be taken based on the Ethics Committee’s recommendation.

12. [15]

    The Grievance Policy is not part of the Constitution and there is no evidence to suggest that it was brought into existence by a resolution of the OBA Board.

13. [16]

    On 12 September 2013, Ms Benson submitted a grievance submission against Ms Eileen Jeboult, a member of OBA, which concerned an allegation that Ms Jeboult had conveyed certain information about Ms Benson to third parties in breach of the Code of Ethics. The evidence does not disclose how this grievance was resolved but it appears that no disciplinary action was taken. It is relevant only because it is referred to briefly in the 12 August 2019 email at [30] below.

14. [17]

    On 6 September 2018, Ms Benson submitted a grievance submission form regarding Ms Donna-Lee Wynen (Wynen Grievance) and another regarding Mr Bruce Stark (Stark Grievance) both of whom were members of OBA and trainee instructors. Those grievances both arose out of an ortho-bionomy training session that Ms Benson did with Ms Wynen on 20 April 2018. Ms Benson raised concerns about that session directly to Ms Wynen as well as with Mr Stark and Mr Andrew Malone. On 28 December 2018, the Ethics Committee produced a report into the Wynen and Stark Grievances recommending that no further action be taken against either Ms Wynen or Mr Stark.

15. [18]

    On 8 January 2019, Ms Sonter (the Chair of the OBA Board) forwarded a copy of the Ethics Committee’s report by email to Ms Benson (8 January email). The 8 January email stated that the OBA Board had accepted the recommendation of the Ethics Committee and contained a detailed discussion of the two complaints and how they had been dealt with. The 8 January email then concluded with a request that Ms Benson exercise caution in regard to discussing information about trainee instructors with others, as follows:

16. [19]

    Ms Sonter received no formal response to the 8 January email.

17. [20]

    On 29 and 30 April 2019, Ms Benson emailed Ms Sonter raising her concerns regarding the manner in which an ortho-bionomy instructor, Mr Rob Rich had been teaching a “trauma study group” (Rich Complaint). Mr Rich was also a member of the OBA Board. The concern was that he was working outside his area of expertise. On 30 April 2019 Ms Benson also raised those concerns with two other members of OBA, Ms Eileen Jeboult and Mr Bruce Stark.

18. [21]

    On 21 May 2019, the OBA Board held a meeting considering action to be taken following the Rich Complaint. All members of the OBA Board (being Ms Sonter, Mr Selzer, Mr Rich, Mr Heslin and Ms Munro) were present, except for Mr Rich who recused himself. The minutes of the meeting record the following:

19. [22]

    The minutes state that the action for this item was that Ms Sonter would draft a letter to Ms Benson and email it to the OBA Board members for their contribution. Ultimately, the email referred to in the next paragraph was sent to Ms Benson.

20. [23]

    On 1 June 2019, Ms Sonter sent an email to Ms Benson (1 June email) regarding the Rich Complaint which commenced:

21. [24]

    The essence of the OBA Board’s concern, as stated in the 1 June email, was that Ms Benson had contacted three Ortho-Bionomy instructors (Mr Stark, Ms Jeboult and Ms Sonter) to discuss with them her concerns that Mr Rich was conducting a study group outside his area of expertise rather than raising it directly with Mr Rich. This was seen by the OBA Board as an attempt by Ms Benson to “draw others in” against another instructor, which was seen as both contrary to the 8 January email and in breach of a number of the provisions of the Code of Conduct and Code of Ethics. The 1 June email concluded as follows:

22. [25]

    On the same day, Ms Benson replied to the 1 June email by an email which addressed a number of the matters raised in Ms Sonter’s email but not the undertaking sought in the last paragraph set out above, and concluded:

23. [26]

    On 25 June 2019, the OBA Board held a meeting at which one of the matters discussed was Ms Benson’s email of 1 June 2019. All the members of the OBA Board were present at this meeting, being Ms Sonter, Mr Salzer, Mr Rich, Mr Heslin and Ms Munro. It appears that Ms Benson had not communicated with Ms Sonter or any other member of the OBA Board since 1 June 2019.

24. [27]

    The minutes of the meeting of 25 June 2019 record the following:

25. [28]

    Following this meeting, Ms Sonter commenced drafting an email to Ms Benson outlining the OBA Board’s concerns and that the OBA Board considered that her conduct amounted to an “Expulsion Event” for further discussion at the next OBA Board meeting which took place on 30 July 2019. Ms Sonter circulated a draft of the email to the other members of the OBA Board for their review and comment before the OBA Board meeting held on 30 July 2019, and it was then discussed at that OBA Board meeting. All members of the OBA Board were present at this meeting, being Ms Sonter, Mr Salzer, Mr Rich, Mr Heslin and Ms Munro.

26. [29]

    The minutes of the meeting of 30 July 2019 record the following:

27. [30]

    The letter which the minutes of the meeting on 30 July 2019 record as having been approved by the directors was ultimately sent to Ms Benson on 12 August 2019, without any further amendment from the draft approved by the directors, by way of an email sent by Ms Sonter, which was copied to all members of the OBA Board (12 August email). The 12 August email commenced as follows:

28. [31]

    The 12 August email then identified in some detail a number of the aspects of her “conduct” which were said to involve breaches of particular articles of the Code of Ethics and the Code of Conduct and then concluded:

29. [32]

    Ms Benson responded to the 12 August email by six emails, one sent on 12 August 2019, three on 13 August 2019 and two on 21 August 2019.

30. [33]

    The first of these emails sent on 12 August 2019 was as follows:

31. [34]

    Ms Sonter gave evidence in cross-examination, which I accept, that she was “extremely happy” with this response as she thought it might present an opportunity to have a discussion with Ms Benson as to “how to more productively move forward”. However, it is apparent that the position changed following the further emails which Ms Benson sent on 13 and 21 August 2019.

32. [35]

    The OBA Board dealt with Ms Benson’s responses at its next meeting on 23 August 2019. All the members of the OBA Board (being Ms Sonter, Mr Salzer, Mr Rich, Mr Heslin and Ms Munro) were present at the meeting. The minutes of that OBA Board meeting record:

33. [36]

    Ms Sonter was given responsibility for investigating the appointment of an independent mediator or arbitrator to help resolve this dispute. Ultimately, this did not progress as a result of the Company’s insurer, AON, indicating that the costs of a mediation would not be covered by the Company’s insurance policy and the Company did not have sufficient funds to pay for the mediation itself.

34. [37]

    On 28 August 2019, Ms Benson sent an email to Ms Sonter asking her to recuse herself from the expulsion process due to a perceived conflict of interest said to arise from Ms Benson’s complaint in 2015 about advertising as osteopaths. On 29 August 2019, Mr Salzer advised Ms Benson by email that the OBA Board had received her request, were still considering it and had referred the request to their solicitors. Ms Sonter ultimately decided to recuse herself (as recorded in the minutes of the next OBA Board meeting). Her evidence, which I accept, was while that she did not consider herself to be conflicted, as she bore no ill will whatsoever to Ms Benson from the earlier matter in 2015, she recused herself because she acknowledged Ms Benson’s concerns.

35. [38]

    The next OBA Board meeting was held on 3 September 2019. All of the members of the OBA Board (except for Ms Sonter) were present, being Mr Salzer, Mr Rich, Mr Heslin and Ms Munro. The minutes of that meeting record the following:

36. [39]

    Ms Benson was advised of the OBA Board’s decision by an email from Mr Salzer sent on 8 September 2019 which set out a response to each of the six emails which Ms Benson had sent to the OBA Board following the 12 August email, and then concluded:

37. [40]

    On 18 September 2019, Ms Benson’s solicitors sent a letter to Mr Salzer as Secretary of Ortho-Bionomy Australia Limited which stated:

38. [41]

    On 8 October 2019, the OBA Board distributed to OBA members a notice of a general meeting of members that was to take place on 8 November 2019. The notice informed members that the purpose of the meeting was to review a resolution of the OBA Board to expel Ms Benson from the OBA membership. The notice informed members of the structure of the meeting and how to attend, and attached, by way of background, all correspondence between the OBA Board and Ms Benson between 8 January 2019 and 8 September 2019.

39. [42]

    On 11 October 2019, Ms Benson’s solicitors wrote to the OBA Board enclosing a proxy form appointing Mr Wilson, her solicitor, as Ms Benson’s proxy in relation to the general meeting that was to take place on 8 November 2019.

40. [43]

    On 8 November 2019, the general meeting of the OBA was held. The Chair of the meeting was Ms Janine McCarthy (who was now the chair of the OBA Board). Ms Sonter provided an introduction which she read from a script that had been prepared in advance by a number of OBA members, including Ms Sonter. Ms Sonter was asked to deliver the script at the meeting after another member declined to do so. She did so at the commencement of the meeting and then said nothing further.

41. [44]

    The script read by Ms Sonter was as follows:

42. [45]

    A number of OBA members addressed the meeting. During the course of that process, Mr Wilson (Ms Benson’s proxy) complained that Ms Benson had not been given prior notice of some of the comments made by OBA members at the meeting.

43. [46]

    The OBA Board decided to offer Ms Benson an opportunity to respond to those comments and the meeting was adjourned prior to a vote being held.

44. [47]

    On 22 November 2019, the OBA Board gave notice to OBA members that the general meeting of members would be reconvened on 29 November 2019.

45. [48]

    On 27 November 2019, Ms Benson’s solicitors wrote to the OBA Board seeking an undertaking that a general meeting to review the resolution to expel Ms Benson from the OBA would not be held without 28 days’ notice to her legal representatives. The general meeting scheduled for 29 November 2019 did not take place.

46. [49]

    On 16 January 2020, Ms Benson’s solicitor informed Mr Salzer that Ms Benson had deposited her annual membership fee into OBA’s bank account and subsequently sought confirmation of renewal on 5 February 2020. That membership renewal was accepted by OBA, according to an email sent by the Secretary on 19 March 2020.

47. [50]

    On 5 April 2020, the OBA Board sent notice of a reconvened general meeting to take place on 26 April 2020. On 13 April 2020, a communication was sent to all OBA members advising that the 26 April 2020 meeting had been postponed due to COVID-19.

48. [51]

    On 24 May 2020, a notice was sent to OBA members that the reconvened general meeting would take place at 4pm on 14 June 2020.

49. [52]

    On 4 June 2020, Ms Benson’s solicitors wrote to the OBA Board attaching a proxy form appointing Ms Sam McKensey as a proxy for Ms Benson at that meeting.

50. [53]

    On 14 June 2020, the general meeting took place at the schedule time.

51. [54]

    At 5:16pm on the same day, Ms McKensey emailed Mr Salzer to say that she had been unable to connect to the meeting. She did not attempt to explain why she had been unable to connect. Ms McKensey asked for confirmation that Ms Benson’s proxy vote had been counted. At 6:01pm on the same day, Mr Salzer wrote to Ms McKensey to confirm that Ms Benson’s vote had been included in the vote count.

52. [55]

    On 16 June 2020, Mr Salzer wrote to Ms McKensey confirming the process and outcome of the general meeting on 14 June 2020. In that email, Mr Salzer noted that 23 votes had been submitted. Of these, 20 members had voted for the resolution to expel Ms Benson and three members had voted against it. A further four members abstained. Mr Salzer also stated in the email that the Chair had announced at the general meeting that OBA Board’s resolution to expel Ms Benson from membership of OBA had been confirmed.

53. [56]

    On 17 June 2020, a notice of the result of the vote was sent to all OBA members. Ms Benson also received that notice.

OBA’s Constitution

1. [57]

   OBA’s Constitution has effect as a contract between OBA and each of its members, and between the members, by operation of s 140(1) of the Corporations Act 2011 (Cth), which states:

2. [58]

   Under that contract, the company and its members each agree to observe and perform the constitution. It is not in dispute that as a consequence, the decision of OBA to expel Ms Benson is amenable to judicial review by the court by way of declaration: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths), [21-305].

3. [59]

   Clause 5.1 of OBA’s Constitution states that unless otherwise resolved by the company in a general meeting, the membership of the company consists of ordinary members. Clause 5.3 provides that a member has the right to receive notices of and attend and be heard at any general meeting of the company, and the right to vote at any general meeting

4. [60]

   The OBA Constitution provides for the expulsion of members in cl 7.2:

5. [61]

   The term “Expulsion Event” is defined as follows:

6. [62]

   Meetings of directors are dealt with in cl 11 of the Constitution. Clause 11.6(a) states that the directors may hold meetings for the conduct of business and adjourn and otherwise regulate their meetings as they think fit. Clause 11.9 provides that no business can be transacted at a meeting of directors unless there is a quorum, being three directors. Clause 11.11 provides relevantly:

7. [63]

   Clause 11.12 provides for the making of decisions of directors by circular resolution. It provides:

8. [64]

   During the period from 21 May 2019 to 3 September 2019 when the OBA Board gave consideration to the issue regarding the expulsion of Ms Benson, OBA had five directors: Ms Sonter, Ms Salzer, Mr Rich, Mr Heslin and Ms Munro. The minutes of the meetings on 21 May, 25 June, 30 July, 23 August and 3 September 2019 referred to earlier were attended by all five directors, except for the last meeting which was attended by all except for Ms Sonter as she had recused herself.

The issues

1. [65]

   As refined by Counsel for the plaintiff in closing submissions, the plaintiff challenges the validity of her expulsion on four grounds.

2. [66]

   First, it is said that the required procedure for expulsion of a member under the Constitution was not followed because there was no resolution of the OBA Board in accordance with cl 11.11 of the Constitution by which the required opinion under paragraph (b) of the definition of Expulsion Event was formed.

3. [67]

   Second, it is said that the requirements of natural justice were not followed because the 12 August email fails to identify with specificity the nature of the Expulsion Event and the reasons why the matters relied on by the OBA Board constitute an Expulsion Event.

4. [68]

   Third, it is said that the OBA Board’s decision was vitiated by apprehended bias due to Ms Sonter’s involvement in the OBA Board’s decision-making leading up to the meeting of 3 September 2019 (at which she was not present) and her action in reading a statement to the members of OBA at the commencement of the general meeting on 8 November 2019.

5. [69]

   Fourth, the OBA Board failed to give Ms Benson the benefit of the procedures contained in the Grievance Policy for resolving the grievance against her before making its decision to expel her on 3 September 2019.

Ground 1: No formal OBA Board resolution

1. [70]

   It is not in dispute that in order for a member of the OBA to be expelled the procedure laid down in the Constitution must be strictly followed: Hornby v Narrandera Ex-Servicemen’s Club Ltd [2001] NSWSC 235 at [8]–[10]; McLelland v Burning Palms Life Saving Club [2002] NSWSC 470 at [74].

2. [71]

   The Constitution requires the following steps to be taken where an Expulsion Event falling within paragraph (b) of the definition of that term in the Constitution is relied on. First, the OBA Board must form the opinion that the conduct of the member is unbecoming of the member or prejudicial to the interests or reputation of OBA. Ms Benson disputes that this occurred.

3. [72]

   Second, the OBA Board under cl 7.2(a) must give the member at least 10 business days’ notice in writing stating the Expulsion Event and that the member is liable to be expelled, and informing the member of his or her right under cl 7.2(c). It is not in dispute that this was done by the 12 August email (if the first step occurred).

4. [73]

   Third, the member is then entitled under cl 7.2(c) to give the directors either orally or in writing any explanation or defence of the Expulsion Event the member may think fit. It is not in dispute that this was done by Ms Benson’s six emails on 12, 13 and 21 August 2019.

5. [74]

   Fourth, the directors must then pass a resolution to expel the member (cl 7.2(a)). It is not in dispute that this was done by the resolution of the OBA Board on 3 September 2019.

6. [75]

   Fifth, the Company must then give the member notice in writing of the expulsion within 10 business days of the resolution of the directors referred to in the previous paragraph being passed (cl 7.2(d)). This was done by the email from Mr Salzer to Ms Benson on 8 September 2019.

7. [76]

   Sixth, the member then has the right by notice sent within 10 business days of receipt of notice of the resolution of the directors to request that the resolution be reviewed by the Company at the next general meeting (cl 7.2(e)). Ms Benson gave this notice by the letter sent by her solicitors on 18 September 2019 to the OBA Board.

8. [77]

   Finally, a general meeting must be held at which the resolution to confirm the expulsion is put to members (cl 7.2(e)). A general meeting was held on 8 November 2019 to consider Ms Benson’s expulsion but was adjourned before a vote. A reconvened meeting on 14 June 2020 was held at which the vote was confirmed by a majority of 87% of the members attending the meeting who voted.

9. [78]

   In relation to the first step of the required procedure, the contention for Ms Benson is that there was no resolution of the directors prior to the vote to expel her that the directors had formed the requisite opinion required by paragraph (b) of the definition of Expulsion Event. It was submitted that it is a requirement of cl 11.11(b) of the Constitution that in order for the directors to form the requisite opinion, there must be a meeting of directors at which a resolution to the effect that the directors have formed the relevant opinion is passed. It is not in dispute that the minutes of the OBA Board do not record a resolution to this effect.

10. [79]

    There are a number of problems with this submission. First, the Constitution does not require that the opinion referred to in paragraph (b) of the definition of Expulsion Event be formed at a meeting of the OBA Board and that it be expressed in the form of a resolution. This is clear from contrasting paragraph (b) with the terms of cl 7.2(a) which requires that the decision to expel a member must be by a resolution of the directors.

11. [80]

    Second, Counsel for OBA submitted that reliance can be placed on cl 11.12(a) of the Constitution which provides that an act is taken to have been done or a resolution passed by a meeting of the directors if a document containing a statement to that effect is assented to by all the directors. It is submitted that the draft letter approved by the OBA Board at its meeting on 30 July 2019 was a document containing a statement to the effect that the directors were of the opinion that an Expulsion Event had occurred in respect of Ms Benson and consequently under cl 11.12(a) it was an opinion of the directors for the purposes of cl 7.2(a)(i). While it is true that the formal requirements for the directors to signify their assent by signing the relevant document at the next meeting of the directors did not occur, it is clear from cl 11.12(e) that the failure to do so does not invalidate the act, matter, thing or resolution to which the document relates.

12. [81]

    In my opinion, OBA’s submission is correct. The minutes of the meeting of the OBA Board on 30 July 2019 at which all the directors were present records that the form of the 12 August email had been “approved by the directors”. This constitutes evidence that all the directors had assented to the statement contained in the draft letter that the necessary opinion had been formed as at 30 July 2019. While the formal requirement of cl 11.12(e) was not satisfied, it is clear from that clause that this does not invalidate the act of formation of the relevant opinion.

13. [82]

    Third, even if cl 11.12(e) is inapplicable, in my view the doctrine of unanimous assent, sometimes referred to as the Duomatic principle (based on Re Duomatic Ltd [1969] 2 Ch 365), applies. Under that principle, anything the directors can do at a formal board meeting they can do informally if they all agree to it. All the directors of OBA had, at or prior to the meeting on 30 July 2019, formed the opinion stated in the draft letter discussed at that meeting and their assent to that statement in the draft letter is as binding as a resolution of the directors would be: J W Broomhead (Vic) Pty Ltd (in Liq) v J W Broomhead Pty Ltd [1985] VR 891 at 915; Runciman v Walter Runciman Pty Ltd [1993] BCC 223 at 230; Franbar Holdings Ltd v Casualty Plus Ltd [2010] EWHC 1164 at [19] (affirmed on appeal [2011] EWCA Civ 60); Mercanti v Mercanti [2015] WASC 297 at [121]–[124] (affirmed on appeal (2016) 50 WAR 494; [2016] WASCA 206 at [205]–[213] and [366]–[369]).

14. [83]

    Accordingly, this ground is not made out.

Ground 2: Denial of procedural fairness

1. [84]

   In general terms, the minimum requirements of natural justice are, first, that the person is fairly appraised of the allegations against him/her; second, that the person is afforded a fair opportunity to bring forward material to correct or dispute any allegation made against him/her and third, that the relevant tribunal reaches a decision free from bias and unaffected by any ulterior or extraneous motive: Samuel v St George Leagues Club Ltd (NSWSC, 20 October 1992, Powell J, unreported); Hornby v Narrandera Ex-Serviceman’s Club Ltd [2001] NSWSC 235 at [8]; Bundagen Co-operative v Battle [2010] NSWSC 160 at [22].

2. [85]

   However the application of the principles of natural justice to the expulsion of a member of a private organisation such as the OBA can be excluded by express words or necessary implication and that, even where they do apply to the organisation, their requirements must depend on the circumstances of the case so that they may operate simply by requiring that the rules of the organisation be construed on the basis that fair procedures are intended: McLelland v Burning Palms Life Saving Club [2002] NSWSC 470 at [97]–[100].

3. [86]

   The Constitution of the OBA does not expressly exclude the application of the principles of natural justice. Indeed, the various steps required to be followed in a case of an expulsion of a member appear to implicitly recognise that the member should be given, in advance of any decision for expulsion, notice of what is alleged against him/her and the right to be heard (either orally or in writing) in answer to those allegations: cl 7.2(a) and (c) of the Constitution.

4. [87]

   It was not in dispute that it is not the role of the Court to substitute its own view on the question whether paragraph (b) of the definition of Expulsion Event is satisfied for the view of either the OBA Board or the OBA members in general meeting. The only recognised situation where the Court will interfere with the merits of a decision of a domestic tribunal is where it is satisfied that no reasonable person could have come to the conclusion that the tribunal came to: Dickason v Edwards (1910) 10 CLR 243 at 254 and 258; [1910] HCA 7; Paton v Sydney Press Club (1940) 57 WN (NSW) 57 at 58; Christie v Agricultural Societies Council of NSW Ltd [2015] NSWSC 1118 at [38]–[61]; Bromfield v New South Wales Gun Club [2019] NSWSC 430 at [92]–[95].

5. [88]

   It is also necessary that the decision to expel a member is exercised in good faith. This means that decision of the relevant tribunal “must be given in the interests, real or supposed, of the body it represents and not for an ulterior or extraneous motive”: Australian Workers Union v Bowen (No 2) (1948) 77 CLR 60 at 628 per Dixon J; [1948] HCA 35.

6. [89]

   It is not suggested by Ms Benson that the OBA Board or the OBA members in general meeting had not acted honestly in forming the view that paragraph (b) of the definition of Expulsion Event was satisfied, or that no reasonable person could have formed that view.

7. [90]

   The complaint made by Ms Benson is twofold. The first is that it is said that none of the matters identified by the OBA Board in the 12 August email as being matters to which they had regard in reaching its decision, either individually or cumulatively, amounted to an Expulsion Event for the purposes of cl 7 of the Constitution.

8. [91]

   The gravamen of this complaint is that the 12 August email states that the OBA Board considers that Ms Benson’s conduct, both currently and historically, amounts to a failure to comply with the provisions of OBA’s Constitution, but when regard is had to the nature of the matters dealt with in the email none can properly be regarded as involving a failure to comply with the Constitution. Mr Salzer accepted in cross-examination that this was an error and should not have been included in the email. However, it was not put to Mr Salzer or suggested that the directors did not honestly form the view that the conduct of Ms Benson detailed in the email involved a failure to comply with the Constitution. It is necessary to bear in mind that none of the directors are lawyers and while it appears that they sought legal advice about the email before it was sent, there is no evidence that they were given legal advice on this aspect of the 12 August email.

9. [92]

   This error in the specification of the Expulsion Event does not mean that the 12 August email has failed to identify an Expulsion Event for two reasons. First, the 12 August email states that Ms Benson’s conduct amounts to a failure to comply with the provisions of the Constitution and/or is unbecoming of a member or is prejudicial to the interests and reputation of OBA. Consequently, the error does not detract from the fact that the directors have formed the necessary opinion required by paragraph (b) of the definition of Expulsion Event. Second, the error made by the directors that she had breached the Constitution was capable of correction by Ms Benson in her response.

10. [93]

    Further, I note that when the matter was put to the general meeting on 8 November 2019 it was clearly explained to members both in the notice of meeting and in Ms Sonter’s introductory statement at [44] above that it was paragraph (b) of the definition of Expulsion Event which was relied on by the OBA Board by reason of breaches by Ms Benson of the Code of Ethics and Code of Conduct.

11. [94]

    The second complaint regarding the 12 August email is that it does not provide reasons as to why the matters referred to in it are said to involve conduct of Ms Benson which is “unbecoming of a member” or is “prejudicial to the interests or reputation of the Company”. In my view, the 12 August email contains detailed reasons, including by reference to both the Code of Ethics and the Code of Conduct as to why in the OBA Board’s opinion, the conduct of Ms Benson was unbecoming of a member or was prejudicial to the interests and reputation of OBA. The email states the nature of the relevant conduct and the parts of the Code of Ethics and the Code of Conduct which are said to be infringed. It was open to Ms Benson to address why, in her view, the decision of the OBA Board was incorrect. Indeed, she took up that opportunity by sending six emails over the period from 12 to 21 August 2019. Significantly, in none of those emails did she indicate that she did not understand what was being put against her.

12. [95]

    In my view, Ms Benson was given adequate notice of what was put against her and an adequate opportunity to meet it. Accordingly, this ground is not made out.

Ground 3: Apprehended bias

1. [96]

   The complaint that the OBA Board’s decision making was infected by apprehended bias relates to Ms Sonter’s participation in it given that the 21 August email identifies as one aspect of Ms Benson’s conduct on which the OBA Board based its decision that paragraph (b) of the definition of Expulsion Event was satisfied was Ms Benson’s calling into question in 2015 Ms Sonter’s advertising of her practice in the osteopathy section of the Yellow Pages.

2. [97]

   It is not in dispute that the test to be applied is whether a fair-minded lay observer having knowledge of the circumstances leading to the decision, might reasonably apprehend that the decisionmaker might not bring an impartial mind to the resolution of the question at hand: Ebner v Official Trustee in Bankruptcy (2006) 205 CLR 337; [2006] HCA 63 at [6]; Kirby v Dental Council of NSW [2020] NSWCA 91 at [64].

3. [98]

   It is recognised that the Ebner test can apply to partiality by reason of either pre-judgment or a conflict of interest, including a personal interest arising from prior involvement in the matter. It was the latter kind of “interest” which it was contended that the apprehended bias in this case arose from, due to Ms Sonter’s prior involvement with Ms Benson in connection with the advertising matter in 2015, relying upon the decision Isbester v Knox City Council (2015) 255 CLR 135; [2015] HCA 20.

4. [99]

   In Isbester the issue was whether the decision of a committee of the respondent council to put down the appellant’s dog should be quashed because one member of the committee (Ms Hughes) was a council employee who had previously initiated a prosecution of the dog owner in the Magistrate’s Court leading to a conviction. She then organised for the committee of the council to hear the question whether the dog should be destroyed and drafted the letter advising the appellant of it. She supplied the committee with evidence, including further evidence she had obtained as to the future housing of the dog. She was properly described as the moving force of the decision, if not the prosecutor: see [43].

5. [100]

   The plurality stated at [21] the nature of the enquiry required when applying the Ebner test:

6. [101]

   The plurality indicate at [33] the nature of the issue to be addressed in an “interest” case:

7. [102]

   Their Honours then set out how the “interest” arising from Ms Hughes’ prior involvement gave rise to apprehended bias in that case in the following passage:

8. [103]

   Counsel for the plaintiff relied on the test stated in Isbester at [46] to contend that Ms Sonter had a “interest” in the matter of Ms Benson’s membership akin to that of a prosecutor or other moving party and it might reasonably be thought that her involvement in that capacity would not enable her to bring the requisite impartiality to bear.

9. [104]

   In Isbester, the interest arising from Ms Hughes’ prior involvement was her role as a prosecutor or moving party in the decision, which was such as to lead to the reasonable apprehension that she would not bring the requisite impartiality to the decision-making process. Importantly, it was her role as prosecutor or moving party which lead to the conclusion that the decision of the committee as a whole was vitiated by her “interest”: see Isbester at [48].

10. [105]

    As pointed out in Isbester at [21] and [49], the first step in the application of the Ebner test in an “interest” case is to identify the nature of the decision-maker’s “interest” and then to determine if there is a logical connection between that interest and the feared deviation from the course of decision-making on the merits. In circumstances where, as in Isbester, the “interest” is that of a prosecutor or moving party, the logical connection required by the second step would be readily apparent. As Spigelman CJ said in McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504; [2008] NSWCA 209 at [40]:

11. [106]

    The observation of Spigelman CJ is illustrated in the context of a domestic tribunal by Bowen (No 2) where the question arose as to whether the decision of the appellant, a trade union organisation, was invalidated because the union’s executive and one of its members, Mr Dougherty, the General Secretary, were disqualified by bias. It was recognised that domestic tribunals (like the OBA Board) are often constituted of persons who have had prior involvement in the matters which they are called on to decide, and this of itself will not disqualify them from participation in the decision. Dixon J said (at 630):

12. [107]

    Dixon J then went on to deal with the significance of the role of Mr Dougherty as a member of the executive council, given that he had been engaged in bitter public attacks on the respondents and had taken on the role of prosecutor in the meetings of the executive counsel, of which he was a member. He said (at 631):

13. [108]

    In my view, there is no evidence that Ms Sonter was the prosecutor or moving party invincibly biased against Ms Benson. Indeed, the 1 June email is to the contrary, as it clearly states that if Ms Benson gave the written assurance of the kind sought, the matter would be taken no further. The 12 August email makes clear in the opening paragraphs that the OBA Board has proceeded as it has because that written assurance has not been given.

14. [109]

    Applying the first step in Isbester, it is necessary to identify the “interest” which it is said might lead to Ms Sonter not to decide the issue whether paragraph (b) of the definition of Expulsion Event is satisfied on its merits. This is said to be the fact that it was Ms Benson who made the enquiry which lead to Ms Sonter being shown to have incorrectly advertised her practice in the Yellow Pages in 2015. It may be that this caused Ms Sonter embarrassment at the time, but there is no evidence to suggest that she suffered any adverse repercussions or that this made Ms Sonter an adversary of Ms Benson. Ms Sonter’s evidence, which I accept, was that the reference to the issue concerning advertising in the 12 August email (set out at [30] above (where it stated erroneously as occurring in 2016 rather than 2015) was included because it was a collaborative email and the other directors were in favour of it being in the email. Further, it is apparent from Ms McCarthy’s letter of 5 October 2015 set out at [13] above, that the OBA Board as a whole (and not just Ms Sonter) regarded Ms Benson’s approach to the advertising issue as inappropriate, and it is this perceived error on Ms Benson’s part which is being referred to in the 12 August email.

15. [110]

    It is also relevant that Ms Sonter’s initial response to Ms Benson’s first email on 12 August 2019 indicates that she had an open mind at that time: see [34] above.

16. [111]

    In these circumstances, there was no impediment to Ms Sonter acting as one of the directors in making the decision which led to the 12 August email being sent to Ms Benson. The decision making of the OBA Board falls within the principle accepted by Dixon J in the passage set out at [106] above: see also Maloney v New South Wales National Coursing Association Ltd [1978] 1 NSWLR 161 at 170–172; Bundagen Co-Operative v Battle at [30]–[52]; Young v New South Wales Radio Yachting Association Inc [2013] NSWSC 383 at [55]–`[61].

17. [112]

    For the same reason, in my view, there was no reason why Ms Sonter could not make the opening statement she made at the general meeting on 8 November 2019, which was balanced and did no more than explain why the OBA Board had proceeded as it had which was necessary background to the question required by the Constitution to be put to the meeting.

18. [113]

    For these reasons, in my opinion, the independent observer would not reasonably conclude that either Ms Sonter, or the OBA Board as a whole, might not bring an impartial mind to the decision-making process.

Ground 4: Failure to apply the Grievance Policy

1. [114]

   It was submitted for Ms Benson that she was denied procedural fairness because the OBA Board did not follow the procedures in the Grievance Policy.

2. [115]

   In my opinion, there is no substance to this submission. First, the Grievance Policy is not part of the Constitution. The Constitution contains the regime to be followed for the expulsion of a member, and does not require that the Grievance Policy be applied as part of that process. There is nothing in the evidence to indicate that the Grievance Policy in any way qualifies the procedure for expulsion contained in the Constitution.

3. [116]

   Second, the Grievance Policy sets out a procedure for the making of complaints against a member which could potentially lead to a recommendation by the Ethics Committee to the OBA Board, and ultimately a decision by the OBA Board under paragraph (b) of the definition of Expulsion Event. However, that was not an appropriate procedure to follow in a case such as this where it was the OBA Board, of its own initiative, which formed the opinion without a complaint being made by a member.

Damages

1. [117]

   Given my conclusion that the plaintiff’s expulsion from OBA is not invalid, the question of damages does not arise. However, I make the following brief observations in case my conclusion on validity is incorrect.

2. [118]

   It is established that damages may be awarded for a breach of natural justice or excess of power by an incorporated club or association, on the basis of damages for breach of the contract between the members and the association founded on its constitution: Rose v Boxing NSW Inc [2007] NSWSC 20 at [106].

3. [119]

   The plaintiff claims that she suffered loss of income from instructing/teaching as a consequence of no longer being a member of OBA. She seeks damages in the amount of $100,000.00 for the loss that flowed from the defendant’s breach of its constitution. The plaintiff submitted that her income fell from $29.590.00 to $1,050.00 between the year ended 30 June 2020 and 30 June 2021.

4. [120]

   Ms Benson accepted in cross-examination that her expulsion from membership of OBA had not prevented her from referring to herself as an advanced instructor of ortho-bionomy and that she continues to be a member of SOBI, the international peak body of ortho-bionomy. It appears that the only significance of her loss of membership of OBA is that when she teaches classes to trainee instructors in Australia, they will not obtain accreditation for those classes with OBA, with the potential for there to be a decline in her teaching income. However, the evidence does not establish clearly what, if any, decline in her revenue from teaching was attributable to her expulsion from OBA. Ms Benson admitted in cross-examination that even prior to her expulsion from OBA, her business was experiencing a decline in revenue from teaching and that the figures that she had claimed in her second affidavit as the amounts that she had earned from teaching in the 2019 and 2021 financial years were incorrect. She was given the opportunity to lead evidence to correct those amounts, but did not do so. In those circumstances, I accept the submission made by the defendant that Ms Benson has failed to establish the quantum, if any, of her loss arising from her expulsion as a member of OBA.

Conclusion

1. [121]

   For the above reasons the proceedings should be dismissed with costs.