Healy v The Real Estate Institute of Western Australia (Inc) - [2002] WASC 161

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: HEALY & ORS -v- THE REAL ESTATE INSTITUTE OF WESTERN AUSTRALIA (INC) [2002] WASC 161

CORAM: MASTER BREDMEYER

HEARD: 30 MAY 2002

DELIVERED : 21 JUNE 2002

FILE NO/S: CIV 2830 of 2001

BETWEEN: MAXWELL RAYMOND HEALY
First Plaintiff
JENNIFER ANNE STAGEMAN
Second Plaintiff
COUNTRY AND METRO REAL ESTATE PTY LTD (ACN 084 788 563)
Third Plaintiff
AND
THE REAL ESTATE INSTITUTE OF WESTERN AUSTRALIA (INC)
Defendant

Catchwords:

Pleadings - Strike-out applications - Whether pleas arguable

Legislation:

Associations Incorporations Act 1987, s 17(2)

Supreme Court Rules, O 20 r 19(1)

Result:

Applications allowed

Category: B

Representation:

Counsel:

First Plaintiff                :     Mr M J McPhee
Second Plaintiff            :     Mr M J McPhee
Third Plaintiff               :     Mr M J McPhee
Defendant:     Mr P G Donovan

Solicitors:

First Plaintiff                :     Michell Sillar McPhee
Second Plaintiff            :     Michell Sillar McPhee
Third Plaintiff               :     Michell Sillar McPhee
Defendant:     McCallum Donovan Sweeney

Case(s) referred to in judgment(s):

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Walton Stores (Interstate) v Maher (1988) 164 CLR 387

Case(s) also cited:

Bailey v NSW Medical Defence Union Ltd (1995) 184 CLR 399
Charlie Carter Pty Ltd v SDAE (1987) 13 FCR 413
Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334
Coe v Commonwealth (1979) 24 ALR 188
Greenhalgh v Mallard [1947] 2 All ER 255
Morrison Rose & Partners v Hillman [1961] 2 All ER 891
Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41522
Peruvian Guano Co v Bockwoldt (1883) 23 Ch D 225
Ramsay v Pigram (1968) 118 CLR 271
Williams v Spautz (1992) 174 CLR 509

MASTER BREDMEYER: I have before me two applications. The first is by the defendant dated 1 March 2002 to strike out the plaintiffs' reply under O 20 r 19(1) of the Supreme Court Rules, or alternatively to strike out pars 4(b), 4(d), 4(e), 6(b), 11 and 12 of the reply. The second application is that of the plaintiffs dated 20 March 2002. That is an application to strike out pars 16(n), 16(o) and 16(p) of the defendant's amended defence (the defence) as embarrassing. I will consider the defendant's application first.
A pleading should not be struck out unless it is obviously untenable, or manifestly groundless, or discloses a case which the court is satisfied cannot succeed: General Steel IndustriesInc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. When I use the words "not arguable" in these reasons, I use them in the sense of those phrases mentioned in that case.
The background facts as taken from the statement of claim are as follows: the first and second plaintiffs are real estate agents, licensed to practice under the provisions of the Real Estate and Business Agents Act 1978 (WA) as amended. The third plaintiff is a company operating as a real estate agent company under the management of the second plaintiff. That company is also licensed under the Real Estate and Business Agents Act. The defendant, REIWA, is an association incorporated in WA under the Associations Incorporation Act 1987. The three plaintiffs applied to join REIWA. One of the requirements for membership is that a person must be of good character and good business reputation. Their applications for membership of REIWA were rejected in mid‑1999. Each of the plaintiffs has purported to appeal against that decision. An appellant may elect to have his appeal heard by the Board of Management of the Institute or an independent arbitrator appointed by the President for the time being of the Institute of Arbitrators (WA Chapter). The plaintiffs have chosen to have their appeal heard by and arbitrator, and a barrister, Mr C D Raymond, has been nominated as the arbitrator. The plaintiffs seek a declaration that the appointment of Mr Raymond as arbitrator to determine their appeals, is valid, and that his decision on appeal will be valid and binding on the parties.
There is a dispute between the parties on the pleadings as to which set of REIWA rules applies to these plaintiffs. According to the plaintiffs, when they applied for membership of REIWA in January 1999, the relevant rules were those of February 1986 (the old rules). The defendant states in its defence that those old rules expired on 3 December 1998, or on 15 September 1999 and have since been replaced from one or other of those dates by the new rules which are currently in force. Under article 30.1.2(d) of the new rules, a person who has been convicted of an indictable offence is not eligible for membership. Under article 39.1.1, a member shall cease to be a member of the institute upon him ceasing to hold the qualifications stipulated in article 30.1 as being required for membership. Under article 41.1(a), a member may be expelled or suspended from the institute should the council or executive committee determine that the member no longer holds the qualifications stipulated in article 30.1 as being required for membership.
Under s 17(1)of the Associations Incorporations Act 1987, an incorporated association may alter its rules by special resolution, but not otherwise. By s 17(2), within one month of the passing of the special resolution altering the rules, or within such further time as the Commissioner may allow, the incorporated association shall lodge with the Commissioner notice of the special resolution setting out particulars of the alteration, together with a certificate given by a member of the committee certifying that the resolution was duly passed as a special resolution and that the rules of the association as so altered conform to the requirements of the Act. Under subs (3), an alteration of the rules of an incorporated association does not take effect until the notice required by subs (2) has been given to the Commissioner. The reason for the uncertainty in the pleadings as to when the new rules came into force is as to when the resolution passing the new rules was notified to the Commissioner, as required by s 17(2).
The plaintiffs' case as pleaded is that they have lodged the appeals as required by the old rules and have chosen to go to arbitration. The arbitrator has been appointed, and the court should declare his appointment valid and let him get on with the arbitration. The defendant in its defence says that there was a 14‑day appeal period under the old rules and that the plaintiffs are way out of time. The plaintiffs respond to that in their reply. They say that the 14‑day time limit does not apply to their appeals against rejection of their applications for membership. Alternatively, if there is a 14‑day appeal period, the plaintiffs say the defendant should be estopped from relying on it because the defendant had informed them that the new rules were in force. In order to examine these arguments, I need to quote the rules in some detail.
The plaintiffs say that their right of appeal is given by r 86 of the old rules which reads:
"86.RIGHT OF APPEAL
(a)Any person aggrieved by a decision or recommendation of the Council, Executive Committee, an Arbitration Committee, a Special Committee or an Appeals Committee as defined in Rule 3 of these Rules may appeal against any such decision or recommendation to either:
(i)The Board of Management of the Real Estate Institute of Western Australia as defined in Rule 3 of these Rules, or
(ii)An Independent Arbitrator appointed by the President for the time being of the Institute of Arbitrators (Western Australia Chapter), such appointment and arbitration to be in accordance with and subject to the Institute of Arbitrators (Australia) Rules for the Conduct of Commercial Arbitrations.
(b)The reference of any complaint or dispute shall be in accordance with the Institute's Rules of Practice."
Subrule (b) of r 86 refers to the Institute's Rules of Practice. They are different from both the old rules and the new rules. Rule 14.16 of the Rules of Practice provides:
"14.16 (a)In accordance with Rule 86 of' the Institute Rules a final appeal may be made to either:
(i)a Committee appointed by the Board of Management of the Institute; or
(ii)an independent arbitrator appointed by the Chairman or the time being of the Institute of Arbitrators Australia (Western Australia Chapter), such appointments with and subject to the Institute of Arbitrators (Australia) Rules for the conduct of commercial arbitrations except in so far as those Rules are inconsistent with Sub‑rule (b) of this Rule in which case Sub‑rule (b) shall apply to the extent of the inconsistency.
(b) Procedure on Rule 86
(i)An Appellant may institute proceedings by way of appeal by lodging with the Executive Director of the Institute a Notice of Appeal setting out the grounds for such appeal and nominating the Board of Management or an Independent Arbitrator as the Body or person before whom the appeal will be heard and determined.
(ii)A Notice of Appeal must be in writing and served upon the Executive Director of the Institute within fourteen (14) days of the notification of the Appellant of the decision or determination to be appealed against.
(iii)Upon receiving a Notice of Appeal from an Appellant the Executive Director of the Institute shall forthwith refer the Notice of Appeal to the Board of Management or Independent Arbitrator as the case may he and thereafter the Appellant shall be invited to appear before the Board of Management or Independent Arbitrator upon fourteen (14) days notice of the date, time and place of the appeal.
(iv)If any Appellant or Respondent should fail to appear before, or alternatively, submit a written statement for consideration by the Board of Management or Independent Arbitrator as the case may be, then the Board of Management or Independent Arbitrator may proceed to Finally determine the matter in the absence of the Appellant or Respondent.
(v)The Board of Management or Independent Arbitrator as the case may be may dismiss or uphold the appeal, or substitute such lesser or greater penalty as it in its absolute discretion may determine.
(vi)(a) Where the Appellant is appealing against
expulsion from membership he/she shall be deemed to be under suspension pending the outcome of the appeal.
(b) Where the Appellant is appealing against
refusal of application for membership the Board of Management or Independent Arbitrator is entitled to examine any relevant documentation but no Appellant shall be entitled to view or receive confidential objections (either original or copy) from agents supplied under Rule 32 of the Institute Rules (Emphasis mine).
(vii)Every Appellant shall have the right to appear before the Board of Management or an Independent Arbitrator.
(viii)The Board of Management or Independent Arbitrator as the case may be shall have power to summon in writing through the Executive Director of the Institute any agent to appear before it where it believes on reasonable grounds that such agent has knowledge or information which may assist the hearing and/or determination of any matter before it.
(ix)No party shall he entitled to legal representation at any hearing of an appeal under Rule 86.
(x)The decision of the Board of Management or Independent Arbitrator shall be final and binding on all parties.
(xi)Every Appellant shall, in consideration of the exercise of the right to appeal under these Rules be deemed to agree to abide by the Rules and Rules of Practice of the Institute and shall, in so doing, be precluded from pursuing any common law action against any agents, employee or office of the Institute in respect of such appeal proceedings or confidential documents provided by members in connection therewith."
Paragraph 13(d)(i) of the defence states that on or about 16 July 1999, the defendant notified the first plaintiff of its decision to reject his application for membership of REIWA. Paragraph 13(d)(ii) states that, on or about 4 August 1999, the defendant notified the second plaintiff that her application for membership of REIWA had been rejected. Paragraph 13(d)(iii) pleads that, on or about 12 July 1999, the defendant notified the third plaintiff of its decision to reject the third plaintiff's application for membership of REIWA. These pleas are admitted in par 8(b) of the plaintiffs' reply. Paragraph 13(e) of the defence pleads that the plaintiffs sought to appeal against those decisions by having an arbitrator appointed in or about May 2001. Clearly, if the 14‑day appeal period applies, these plaintiffs are about one year eight months out of time. The defence also pleads in par 13(g) that, as from 3 December 1998 or alternatively, as from 15 September 1999, the rules of the defendant are not the old rules but the new rules. The defendant further pleads in 13(h) that, as from 3 December 1998 or alternatively, as from 15 September 1999, the old rules are functus [sic] and of no legal force or effect.
Paragraph (4)(b) of the reply should be struck out. It says that the relevant rule of the old rules is r 87 and not r 86. It is now conceded that r 87 has been renumbered as r 86, so the reference to r 86 in the defence is correct.
The plaintiffs plead in par 4(d) of their reply that the provision in the applicable Rules of Practice relating to the reference of any complaint or dispute, is in relation to a complaint or dispute between or against existing members, and not in relation to appeals from a decision of the council of the defendant to refuse an application for membership.
I do not consider that plea is arguable. Rule 14.16 of the Rules of Practice commences:
"14.16(a) In accordance with Rule 86 of' the Institute Rules a final appeal may be made to either:
(i)a Committee appointed by the Board of Management of the Institute; or
(ii)an independent arbitrator appointed by … "
Rule 86 of the old rules headed "Right of Appeal", which I have quoted in full above, provides that "any person aggrieved by a decision of the executive committee may appeal against such decision to the Board of Management or an Independent Arbitrator". That reference to "any person aggrieved" means that an appeal is not limited to a member.
Rule 86(b) provides:
"The reference of any complaint or dispute shall be in accordance with the Institute's Rules of Practice."
Those are limiting words suggesting that the Institute's Rules of Practice only apply to any complaint or dispute. But the Rules of Practice are wider than that. The first rule 14.16(a) refers to r 86 of the old rules and virtually repeats it. On the face of the wording of r 14.16 of the Rules of Practice, they apply to all kinds of appeals under r 86. The detailed procedure set out in 14.16(b) is not limited to appeals against decisions on complaints or disputes between members of REIWA. The matter is put beyond doubt by r 14.16(vi)(b), which I quote again:
"Where the Appellant is appealing against a refusal of application for membership the Board of Management or Independent Arbitrator is entitled to examine any relevant documentation but no Appellant shall be entitled to view or receive confidential objections (either original or copy) from agents supplied under Rule 32 of the Institute Rules."
That is precisely the situation here. The plaintiffs are appealing against a refusal of their applications for membership. I consider pars 4(d) should be struck out as not arguable. The 14‑day appeal period imposed by r 14.16(b)(ii) of the Rules of Practice clearly applies, inter alia, to an appeal from the Council's refusal of an application for membership. The same reasoning applies to par 6(b) of the reply. It, too, will be struck out.
Paragraph 4(e) of the plaintiffs' reply pleads that a reference to an appeal under r 86 of the old rules relating to a complaint or dispute is a reference to a further appeal after a decision of the Arbitration Committee or a Special Committee set up under the old rules pursuant to r 60 of the old rules; and does not refer to and has no application to an appeal by an applicant for membership against the decision of the council to refuse membership to such applicant.
Order 60 of the old rules provides:
"60.APPEALS
(a)Any party to a complaint or dispute being aggrieved by the decision of an Arbitration Committee or a Special Committee may, subject to the Institute's Rules of Practice, by notice in writing within fourteen (14) days from the date of receipt of such decision, lodge a Notice of Appeal with the Executive Director.
(b)The appeal shall at the request and cost of the Appellant be heard by a properly constituted Appeals Committee.
(c)Any Appellant who is aggrieved by a decision under sub‑rule (b) of this Rule, may further appeal under Rule 86."
I agree that the reference in r 86(b) to any complaint or dispute is a reference to a second appeal after a decision of an Arbitration Committee or a Special Committee set up under r 60 to hear the first appeal. But r 86 is wider than that. It does more than simply provide a second appeal to a party to a complaint or dispute aggrieved by a decision of an Arbitration Committee or Special Committee given under r 60. Rule 86 provides a general right of appeal. Rule 32 (c)(vii) specifically provides that an applicant for membership whose application is rejected, may appeal under r 86. That appeal does not arise out of a complaint or dispute. It is a direct right of appeal to the Board of Management or an arbitrator. The person whose application for membership is rejected, does not first have to appeal to one of the two committees mentioned in r 60.
Also Practice Rule 14.16, which I have quoted above, has a special rule relating to an appeal against a refusal of an application for membership. It is r 14.16(vi)(b) quoted above which covers the situation of these plaintiffs exactly.
The first part of that plea in par 4(e) of the reply is correct. Rule 86 of the old rules does provide a further appeal from a decision of an Arbitration Committee or a Special Committee set up under r 60 of the old rules. That part of the plea is correct, but so what? It is not a relevant plea to the plaintiffs' pleaded factual situation. They are not appealing against a decision of one of those committees. Thus, it is an idle plea.
The second part of 4(e) is not correct. Rule 14.16 of the Rules of Practice - the rule which imposes the 14‑day appeal period - applies for the reasons given above to an appeal against a refusal of an application for membership. It applies also to a second appeal from a decision of one or other of the two committees set up under r 60 of the old rules to hear a complaint or dispute. But it is not limited to that kind of appeal. It applies to all appeals under r 86. I will strike out 4(e).
The next attack is in par 11 of the reply, which is in response to par 16 of the defence. Paragraph 16 of the defence is a long plea covering two pages, but it can be summarised as follows. The first plaintiff was tried and convicted in 1995 of an indictable offence of conspiracy to pervert the course of justice. Accordingly, even if his appeal is within time, and if he wins his appeal under the old rules, he would immediately cease to be a member of REIWA under the new rules which came into force on 3 December 1998 or on 15 September 1999. That is because under 30.1.2(d) of the new rules, a person is not eligible for membership if he has been convicted of an indictable offence. Also, under r 39.1, a member shall cease to be a member of the Institute upon him ceasing to hold the qualifications stipulated in article 30.1 as being required for membership. So, the defendant pleads in 16(d) of the defence that, if the first plaintiff was deemed to be a member as from 3 December 1998 or as from 15 September 1999, he would, by reason of that conviction, "instanta cease to be a member". Thus, his application for a declaration in this action is theoretical, abstract and hypothetical.

Under the old rule 30(b) no person shall be eligible for any class of REIWA membership unless he is a person of good character and good business reputation. Under that rule, the first plaintiff had a chance of being elected to membership despite his conviction in 1995. Under the new rule 30.1.2(d), his conviction of an indictable offence makes him ineligible for membership. What happens in this case if the first plaintiff wins the appeal under the old rules? Is he then dismissed from membership of REIWA automatically under 39.1.2(d) of the new rules as the defendant contends, or is he immune from disqualification or expulsion, as the plaintiffs contend? The plaintiffs' plea in pars 11(a) to (c) of the reply is as follows:
"11.In further Reply to paragraphs 16(b) and 16(e) of the Amended Defence the Plaintiffs say as follows:
(a)The proper construction of the New Rules relating to the cessation of membership (Article 39) and expulsion of members (Article 41) results in such articles having no application to the Plaintiffs or any of them in the event of their Appeal to the arbitration being successful because:
(i)the First Plaintiff would have been admitted to membership in circumstances where the criteria for membership were those under the provisions of the Old Rules namely, notwithstanding the disclosed existence, then, of a conviction for an indictable offence the First Plaintiff will have been considered to be a person of 'good character and business reputation'.
(ii)the First Plaintiff will have had the conviction at all material times and would thus not fall within the provisions in Articles 39 or 41 of the New Rules which require the person concerned to have 'ceased to hold' the qualifications stipulated in Article 30.1 as being required for membership (per Article 39) or is a person who 'no longer holds' the qualifications stipulated in Article 30.1 as being required for membership (per Article 41); because the Plaintiff will have at all material times had the conviction and could not have 'ceased to have' such conviction nor will it be able to be said of him that he "no longer has no conviction";
(iii)in any event such Rules will not apply to the Second Plaintiff who has never had such a conviction.
(b)Alternatively, and in any event, if the Plaintiffs Appeal before the Arbitrator is successful and as a result the Plaintiffs or any of them are admitted to membership of the Defendant and a question then arose as to the applicability of Articles 39 and 41 of the New Rules to the Plaintiffs or any of them once they have been admitted to membership (as pleaded in paragraph 16(b) and (d) of the Defence) it will be implied into the terms of those Articles that may then be the basis of legal relations between the Plaintiffs and the Defendant that a person said to be caught by such provisions will have received the conviction after being admitted to membership, so that on the normal meaning of the words in Articles 39 or 41 of the New Rules such a person will have 'ceased' to hold the qualification of not having such a conviction or 'no longer hold' that qualification. Accordingly such articles will have no application to any of the Plaintiffs so as to affect their membership, ipso facto, instanter or otherwise.
(c)Such an implication will arise between members and the association because the implication:
(i)is reasonable and equitable;
(ii) is necessary to give business efficacy to the contract;
(iii)is so obvious that "it goes without saying
(iv)is capable of clear expression; and
(v)it does not contradict any express term of the Rules."
Article 30 of the new rules is headed "Eligibility for Membership" and provides, relevantly, that no person shall be eligible for membership of any of the classes of membership in REIWA if that person "has been convicted of an indictable offence".
Article 39 is headed "Cessation of Membership" and I quote from part of it:
"39.1A member shall cease to be a member of the Institute upon:
39.1.1The member ceasing to hold the qualifications stipulated in Article 30.1 as being required for membership;
39.1.2The member ceasing to hold the qualifications stipulated in Article 30.2 as being required for membership of that member's particular class of membership;
39.1.3The member dying;
39.1.4The lapsing of Corporate Membership pursuant to the provisions of Article 35;
39.1.5The member resigning pursuant to the provisions of Article 40; or
39.1.6The member ceasing to be a member pursuant to the provisions of Articles 41 or 42.
39.2Upon the occurring of any of the factual events referred to under Article 39.1 the member concerned, if possible, shall give immediate notice of that factual event to the Chief Executive Officer of the Institute."
Article 41 of the new rules is headed "Expulsion and Suspension of Membership and Disciplining of Members" and I quote from part of it:
"41.1AA member may be expelled or suspended from the Institute should the Council or Executive Committee determine that:
(a)the member no longer holds the qualifications stipulated in Article 30.1 as being required for membership;
(b)the member ceases to hold the qualifications stipulated in Article 30.2 as being required for membership of that member's particular class of membership;
(c)the member's entitlement to Corporate membership has lapsed pursuant to the provision's of Article 35; or
(d)the member has breached one or more of the rules, articles, codes, regulations or by-laws of the Institute."
Article 39.1.1 of the new rules refers to a member "ceasing to hold" the qualification stipulated in article 30.1. Article 41.1(a), dealing with expulsion and suspension of members, refers to a member who "no longer holds" the qualifications stipulated in article 30.1. It is arguable that those two phrases are prospective; that they refer to a member who, in the future, ceases to hold, or no longer holds, the qualification. So, the plaintiffs have an argument, based on those two articles, that, as the first plaintiff had his disqualifying conviction for an indictable offence prior to his membership (if he gets membership as a result of the appeal), rr 39 and 41 do not apply to him. It is a very technical argument, and is one which should not be accepted because the rules must be read as a whole. I consider articles 39 and 41 must be read with article 30.1 and that clearly provides that no person shall be eligible for membership of REIWA if he "has been convicted of an indictable offence". In the absence of a carry‑over provision in the new rules providing that a member of REIWA under the old rules is automatically deemed to be a member under the new rules - and there is no such provision - I consider the plaintiffs' plea in par 11(a) of the reply is not arguable.
I also consider that the implied term pleaded in pars 11(b) and (c) of the reply is not arguable. It contradicts the express term of article 30.1, that a person convicted of an indictable offence is not eligible for membership. I will strike out pars 11(a), (b) and (c) of the reply.
The defendant also challenged par 12 of the reply which pleads estoppel in accordance with the principles laid down by Brennan J in Walton Stores (Interstate) v Maher (1988) 164 CLR 387 at 428 ‑ 429. The first objection to this pleading is that it is a substantive pleading which raises a new cause of action and should be in the statement of claim rather than in the reply. I do not consider this plea is out of order for being found in the reply. Mr McPhee, for the plaintiffs, has referred me to vol 6 Atkins' Court Form, Form 175. In that case, the plaintiff evidently sued the defendant on a document signed by him. The defendant in his defence pleaded that his signature was forged. Form 175 is the plaintiff's reply to that defence and pleads that the defendant is estopped from setting up forgery on the basis that the defendant represented to the plaintiff that the said signature was genuine and that the plaintiff relied on that representation, and took no proceeding against his endorser, JK, until after the maturity of the bill of exchange, when he discovered that JK had disappeared and he was unable to sue JK. Mr McPhee has quoted other forms from vol 8 Atkins page 125, Form 31 and vol 20 Atkins pages 81, Forms 15 and 16. In each case, the reply sets up an estoppel in response to a particular defence pleaded by the defendant.
The second attack on the pleading of estoppel in par 12 of the reply is that the matters pleaded there do not give rise to an estoppel as a matter of law. The plea of estoppel in summary is as follows. Although the defendant notified the third plaintiff by letter dated 12 July 1999 of a period of 14 days within which the third plaintiff could lodge an appeal against the refusal of its application for membership, the defendant, in so advising the third plaintiff, was referring to the provisions of the new rules relating to appeals. The plaintiffs say those new rules were invalid and of no force and effect at the time because they had not been registered with the Commissioner of Corporate Affairs, as required by s 17(2) of the Associations Incorporation Act 1987. The new rules only provided a right of appeal to the Executive of REIWA, whereas rule 86 of the old rules allowed an appeal, at the option of the appellant, to an independent arbitrator. Moreover, the application for membership was said to have been rejected under the new rules which make an applicant with a criminal conviction ineligible for membership. Whereas, if the applications had been treated under the old rules, the criteria for membership was different; namely, whether the applicant was of "good character and good business reputation".
I consider that the estoppel plea is arguable.
So far, I have been concentrating on the pleaded case relating to the first plaintiff. He is the one with the prior conviction of an indictable offence. The other two plaintiffs fall with him because of the rules. Article 30.2.2 of the new rules provides that a corporation can become a corporate member of REIWA if all its "directors, partners and branch managers" are ordinary members or associate members of REIWA. As the first plaintiff is a director of the third plaintiff and he is ineligible for ordinary membership, then the third plaintiff is not eligible for corporate membership. The second plaintiff, Ms Stageman, can only be a member of REIWA if she is a director or branch manager of a corporate member. She is a director and manager of the third plaintiff, but, because it is ineligible for membership, she, too, is ineligible for membership.
To summarise, I propose to strike out pars 4(b), (d), (e), 6(b) and 11 of the reply. On my reasoning, the 14‑day appeal period applies to these appeals, but the estoppel plea in par 12 is arguable and may be able to surmount that obstacle. On my reasoning, the ineligibility of the plaintiffs to become members under the new rules means that the pursuit of the appeals under the old rules is frivolous in a legal sense and doomed to failure. But I have been asked to give an opportunity to amend, so I will do that.
The second application before me is that of the plaintiffs' chamber summons of 20 March 2002. That is an application to strike out pars 16(n), (o) and (p) of the defendant's amended defence which plead:
"(n)in or about 6 March 2001 the first named Plaintiff commenced proceedings in this Honourable Court against various officers of the Defendant alleging, inter alia, tortious conspiracy arising out of the matters the subject of the within action,
(o)on 12 November 2001 this action was dismissed by order of this Honourable Court and the first named Plaintiff was ordered to pay the defendants' costs of such action on an indemnity basis,
(p)by reason of the matters pleaded at (m)-(o) hereof, this proceeding is an abuse of the process of this Honourable Court."
The first action was brought by Mr Healy against 16 individual defendants. One was the Executive Officer, another the Assistant Executive Officer of REIWA; the other defendants were councillors of REIWA at the time. It is Supreme Court action CIV 1314 of 2001. The plaintiff prepared the writ and the statement of claim without the assistance of counsel. The writ was struck out by Master Sanderson on 12 November 2001 as not disclosing any reasonable cause of action. The writ was brought by Mr Healy only. It recites how on 19 July 1999 he received a letter from REIWA advising them that, at a meeting held on 8 July 1999, his application for membership was rejected as it was in breach of the "articles", which is a reference to the new rules. The relief claimed in the writ is as follows:
"(1)Damages as set out in the preceding particulars.
(2)Exemplary damages for conscious wrongdoing in contemptuous disregard of the plaintiff's rights.
(3)General damages for stress or other relief as to the Honourable Court may seem fit.
(4)An injunction to restrain the defendants and each of them by themselves from causing the publishing of any further false or defamatory material with any reference to the plaintiff.
(5)Costs."
I consider pars (n) and (o) of the defence should be struck out as not pleading an arguable defence. The first court proceedings, brought by Mr Healy, were not in the nature of an appeal from REIWA's rejection of his application for membership. They were for damages, etcetera, as seen. The case was not heard on its merits. The case was not properly founded in the sense of pleading proper causes of action. It is not in any way a bar to relief for Mr Healy in this action. It does not provide a basis for saying that the plaintiffs' present action is an abuse of process. Paragraphs 16(n) and (o) of the defence only introduce irrelevant issues which would only take up unnecessary court time. I propose to strike out pars 16(n) and (o). Paragraph 16(p) can remain as it follows 16(m). It will need some minor amendment following the deletion of (n) and (o).
I will hear the parties on the orders that should be made and on costs.