Healy v The Real Estate Institute of Western Australia Incorporated - [2005] WASCA 219

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: HEALY & ORS -v- THE REAL ESTATE INSTITUTE OF WESTERN AUSTRALIA INCORPORATED [2005] WASCA 219

CORAM: WHEELER JA
PULLIN JA
MURRAY AJA

HEARD: 11 OCTOBER 2005

DELIVERED : 17 NOVEMBER 2005

FILE NO/S: FUL 118 of 2004

BETWEEN: MAXWELL RAYMOND HEALY
First Appellant
COUNTRY AND METRO REAL ESTATE PTY LTD
Third Appellant
JENNIFER ANNE STAGEMAN
Second Appellant
AND
THE REAL ESTATE INSTITUTE OF WESTERN AUSTRALIA INCORPORATED
Respondent

ON APPEAL FROM:
For File No              :  FUL 118 of 2004
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :COMMISSIONER ODES QC
File No  :CIV 2830 of 2001

Catchwords:

Incorporated associations - Contractual relationship between member and association - Effect of changes to rules as to membership and rights of appeal - Estoppel - Turns on own facts

Action for declaration - Abuse of process - Discretionary considerations

Legislation:

Nil

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

First Appellant               :     Mr M J McPhee
Third Appellant             :     Mr M J McPhee
Second Appellant          :     Mr M J McPhee
Respondent:     Mr G R Donaldson SC & Mr P G Donovan

Solicitors:

First Appellant               :     Michell Sillar McPhee
Third Appellant             :     Michell Sillar McPhee
Second Appellant          :     Michell Sillar McPhee
Respondent:     McCallum Donovan Sweeney

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

Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656
Bailey v NSW Medical Defence Union Ltd (1995) 184 CLR 399
Brothers v Park [2004] NSWCA 241
Gra‑ham Australia Pty Ltd v Perpetual Trustees WA Ltd (1989) 1 WAR 65
Hall & Ors v Job & Ors (1952) 86 CLR 639
Healy & Ors v The Real Institute of Western Australia Incorporated [2003] WASCA 32
Mahoney v Lindsay (1980) 33 ALR 601
Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235
The Commonwealth v Verwayen (1990) 170 CLR 394

Case(s) also cited:

Nil

WHEELER JA: I have had the advantage of reading in draft the reasons for decision of Murray AJA. I agree with those reasons and have nothing to add.
PULLIN JA: I agree with Murray AJA's conclusion that the appeal should be dismissed.
The respondent erroneously applied the new rules instead of the old rules when considering the appellant's application for membership. This was an appellable error but no appeal was instituted.
Neither of the parties to this appeal gave consideration to whether the appeal clause was an "arbitration agreement" within the meaning of the Commercial Arbitration Act 1985 (WA) in which case the appellants could have applied for an extension of time in which to commence the arbitration under s 48. If that were so, these proceedings could be dismissed on the basis that an alternative remedy was open and should have been pursued.
As the parties did not address this point, I will not consider it further because that process would not have availed the appellants. This is because even if they succeeded in an arbitration, they would have been instantly rendered ineligible for membership by reason of the operation of r 39.1.
Apart from those few observations, I agree with the reasons of Murray AJA.
MURRAY AJA: This was an action for a declaration brought by the three appellants against the respondent. The action concerns the attempts of the appellants to become members of the respondent, attempts which have thus far been unsuccessful. The declaration sought is effectively that a particular appeal process sought to be instituted by the appellants to an independent arbitrator against the respondent's refusal to admit them to membership is legally effectual and remains open to them to pursue.
The respondent is an association incorporated under the Associations Incorporation Act 1987 (WA). Under s 16 of the Act, an association has rules which must contain provisions dealing with various matters prescribed by the Act. The rules must deal with any qualifications for membership of the incorporated association: the Act, Sch 1 cl 3. Under s 17, the association may alter its rules, but only by special resolution. Within a month thereafter or any extended time which is allowed, the association is to lodge particulars of the alteration made with the

Commissioner for Consumer Affairs. The administration of the Act is committed to that official. The purpose of lodgement is obviously to give the Commissioner oversight of the changes made to the rules so as to ensure that they continue to conform to the requirements of the Act. Any alteration made to such rules will not take effect until lodgement takes place.

The facts

So far as relevant for the purposes of this appeal, the facts are those found by the learned Commissioner, Odes QC, who tried the action and dismissed the appellants' claim.
On 3 December 1998 a Special General Meeting of the respondent was held. It was unanimously resolved to amend the rules of the association to more precisely express the qualifications prescribed for membership and to remove discretionary elements from the relevant rules. At the same time, new rules were made to deal, among other things, with cessation of membership and expulsion of members.
Under r 29, before and after it was amended, various classes of membership were prescribed. Relevantly they included ordinary or individual members, corporate members and associate members. Both before and after the rules were amended, the principal form of membership was the corporate membership of a licensed real estate agent. There are various particular rules which are applicable to this form of membership, but the one to note for present purposes is that the directors, partners and branch managers of the corporation must be either ordinary or associate members. Both before and after the change to the rules, ordinary membership is available to natural persons who are licence‑holders carrying on business as real estate or business agents. An associate member, both before and after the change to the rules, is a person employed by a corporate member who is the holder of an agent's licence or has some subsidiary qualification in relation to real estate as approved by the Council of the REIWA.
The old r 30(b) provided:
"No person shall be eligible for membership of any class unless he is a person of good character and good business reputation … ".
The matter of eligibility for membership was dealt with differently under the new r 30, which provided that no person should be eligible for membership of any of the classes stipulated in r 29, relevantly for present purposes under r 30.1.2(d), if that person "has been convicted of an indictable offence". There are other disqualifications prescribed, but the important thing is that qualification for membership no longer depends upon establishing that the applicant is of good character and good business reputation and there is a specific disqualification upon conviction of an indictable offence.
The old r 32 prescribed the procedure for making and dealing with applications for membership. They were to be in writing in the form prescribed and accompanied by payment of a nomination fee which immediately became the property of the REIWA, returnable to the applicant if not elected. Notice of the application was to be given to members who could object, giving grounds for their objection. The application and objections were considered by a membership committee which would make its recommendations. The Council or its Executive Committee could then elect the applicant to membership or reject the application. Whichever way the decision went, under r 33 the applicant was to be informed in writing by the Executive Director of the REIWA, the Council or Executive Committee. Rule 32 was replaced in amended form as r 31 . Rule 33 became effectively r 32.
As I have said, both under the old and new rules, corporate membership was subject to the requirement that the directors, partners and branch managers of a corporate member must themselves be ordinary members or associate members. By an amendment to the new rules at a Special General Meeting held on 8 July 1999, an additional element was added to that requirement which would prevent a person being entitled to be an ordinary member unless the person was a director or partner of a corporate member or was himself or herself a corporate member because they were the sole proprietor of a real estate business. In other words, it then became possible to refuse ordinary membership to a person who was otherwise entitled to membership of that class because the corporation of which they were a director or partner was refused corporate membership.
In the meantime, on 22 January 1998, each of the appellants applied for membership of the REIWA. The third appellant applied for corporate membership, giving the address of its principal place of business at Guildford. Mrs Stageman applied for individual membership as a licensed agent and director of the third appellant.
Mr Healy applied for associate membership as an employee of the third appellant and the manager of its Bindoon branch. His application form reveals that he answered "yes" to the question "Have you ever been criminally convicted?" He revealed a conviction for an attempt to pervert the course of justice, an indictable offence of which he had been convicted in 1995. As it turned out, objections were received by the REIWA to his application upon the ground of that conviction.
Each application form contained a declaration agreeing, "to abide by and be bound by the Rules, Code of Ethics, and directions of the Council of the Institute for the time being in force so long as it is a member of, or an applicant for membership of" the REIWA. The learned Commissioner found that upon the acceptance of those applications and the tendered nomination fees, then in terms of that declaration a contract was made between each of the applicants and the REIWA by which, in consideration of their fees and their undertaking to abide by the rules, etc, the REIWA agreed, while they remained applicants, to deal with their applications in accordance with the rules "for the time being in force" as the declaration in the application forms provides: Hall & Ors v Job & Ors (1952) 86 CLR 639, 649.
Although that conclusion was in contention below, the matter is no longer in issue. What is in contention is the meaning of the term binding both the appellants and the respondent to the rules "for the time being in force". For the appellants it is contended on appeal, as it was at first instance, that the fate of their applications was properly governed by the rules as they were in force at the time when their applications were dealt with.
The learned Commissioner rejected that submission. His Honour considered that the natural meaning of this phrase was that the parties agreed to be bound by the rules as they existed from time to time. The phrase, his Honour thought:
" … deals not only with the rights and obligations of the parties at the time of the application for membership, but also with their subsequent rights and obligations as members. The rules and regulations referred to in the application form are intended to govern the conduct of prospective members not only in relation to the time at which they apply for membership but to regulate their conduct for the duration of their membership.": [2004] WASC 163; 27 July 2004, at [60].
It is evident that by "membership" in this context, his Honour means to include the appellants' status as applicants for membership in terms of the contract made with the REIWA, a status they assert they possess even today. It is evident that following their applications for membership, the appellants were treated provisionally as members. There were exchanges between the parties, but I think they need not be referred to here.
The changes to the rules to which I have referred, having been made on 3 December 1998 and having been amended on 8 July 1999, were not lodged with the Ministry as required by the Act. They therefore did not take effect, although within the administration of the REIWA they were treated as if they were in operation. Odes C found that the failure to register was an oversight not discovered until July 1999. They were lodged on 14 July 1999, but that was not accepted and the Ministry advised the REIWA that it was not prepared to extend time. Again, the new rules in their finally amended form were put and unanimously passed at a General Meeting held on 15 September 1999. They were then registered and took effect on 27 October 1999.
Meanwhile, on 8 July 1999 the Council of the REIWA rejected the application by Mr Healy on the ground that it was "inconsistent" with the rules, at the same time taking the view that that meant that the third appellant's application could not succeed. It also was rejected. On 12 July 1999 the Executive Director of the REIWA wrote to Mrs Stageman as the principal of the third appellant. The letter informed her, and therefore the third appellant, that the corporate application had been rejected because Mr Healy, a director of the company and a designated branch manager, was "ineligible for membership". It advised her that her application for individual membership would now be considered in accordance with the new rules which would appear to dictate its rejection. But she was invited to attend the next meeting of the Council and in the meantime to amend her application as she saw fit. The letter advised:
"In terms of the Institute's Articles, applicants for membership have two weeks in which to appeal against a Council decision of rejection; and that appeal period will expire two weeks from the date of this letter."
That advice was obviously taken on behalf of the REIWA to be effective in relation to all three applications.
In due course, on 3 August 1999, applying the new rules, the application by Mrs Stageman for individual membership was rejected on the ground of the prior rejection of the application for corporate membership. In the meantime, prompted by a letter dated 14 July 1999, from the appellants' then solicitors, the membership officer of the REIWA wrote to Mr Healy by letter dated 16 July 1999 in the following terms:
"Despite recent advice to your company principal, REIWA is given to understand that you are still not sure of the status of your application.
In that respect, please note that the Institute's Council, at a meeting on 8 July, found that your application was inconsistent with the Articles of REIWA; and accordingly the application by S.B. Devenish & Sons, and your personal application for Ordinary Membership, were rejected."
For the appellants it is pointed out that there was no advice in that letter of a right of appeal. But in light of the terms of the previous letter that is, to my mind, of no moment. It is, of course, clear, as Odes C found, that throughout, the REIWA erroneously applied the new rules, although the old rules remained in effect until 27 October 1999. His Honour found that on the view of the evidence most favourable to the appellants, they must have been aware of the true position at least by 1 June 2000 when they were given that information by their then solicitor. That was a charitable view of the evidence because, as his Honour noted, Mr Healy and Mrs Stageman both agreed in evidence that they had become aware in December 1999 that the new rules were not in operation at the time of their application for membership. Even so, in June 2000 counsel's opinion was sought. It was provided by 17 July 2000. Nonetheless, the appellants' appeals were not instituted until 11 May 2001. They were then instituted pursuant to the old rules.
The rights of appeal provided under the amended new rules and the old rules are quite different. Under the present r 31.9, an applicant for membership who is aggrieved by a decision of the Council to reject an application for membership may appeal against that decision pursuant to r 45. Rule 45 provides that the appeal may be instituted by notice in writing within 14 days from the date of the decision appealed against. The appeal is to be heard by an Appeals Board appointed by the Council. There is no power to extend the time within which an appeal may be brought.
The former rules provided by r 86 that a person aggrieved by a decision of the Council might appeal against that decision either to the Board of Management of the REIWA or to an independent arbitrator appointed by the President of the Institute of Arbitrators. In that event the appeal was to be conducted as an arbitration in accordance with the Institute of Arbitrators Rules for the Conduct of Commercial Arbitrations. The REIWA Rules of Practice, r 14.16(b) provided the procedure for an appeal. The appeal was to be instituted by written notice, nominating whether it was to the Board of Management or an independent arbitrator. The appeal was to be brought within 14 days, not of the decision appealed against, but of the notification to the appellant of the decision or determination to be appealed against.
As appears from the above, the appellants take the view that the notification given to them by the letter dated 12 July 1999 was ineffective, being in respect of the right of appeal conferred after amendment of the rules so that they have never in fact been advised formally of their true right of appeal with the consequence, as I understand the argument, that time has never commenced to run against them. In any event, it is again to be noted that there was no capacity under the old rule to extend the time for the institution of an appeal. In the notice of appeal lodged by the appellants they seek to have the appeal determined by an independent arbitrator. Hence the terms of the declaration sought in the prayer for relief.

The contractual issues

I have mentioned the central finding of the learned Commissioner that upon making their applications for membership and while they retained the status of applicants for membership, the relationship between the appellants and the REIWA was a contractual one, the essential term of which, for present purposes, was that the parties undertook to be bound by the rules "for the time being in force". I have mentioned that the existence of that contract and its essential terms are not now a matter of controversy between the parties.
I think the learned Commissioner was undoubtedly right to hold that the rules "for the time being in force" were those applicable when a controversy arose between the parties. It follows that, as it is now rightly conceded for the REIWA, the rules which governed the appellants' entitlement to membership as at the times when their applications were dealt with, were the old rules prior to their amendment. It is also clear on the evidence that their applications for membership were rejected without being considered in the context of those rules, but simply upon the grounds provided in the new rules in their finally amended form.
To put it shortly, there was never any consideration of the question whether Mr Healy, despite his 1995 conviction for the indictable offence of attempting to pervert the course of justice, was, when the application was made and rejected, a person of good character and good business reputation. As has been seen, no such consideration was given to the application by Mrs Stageman. Her application was finally rejected simply upon the ground that under the amendment made by special resolution on 8 July 1999, she could not be an ordinary member because she was not a director of a corporate member, and the third appellant could not be admitted to corporate membership because Mr Healy was a branch manager employed by the third appellant. There is no doubt, therefore, that the appellants' applications were wrongly dealt with.

However, the relevant contractual question is whether the appellants had the rights of appeal which they purported to exercise on 20 May 2001, under the old r 86 and the relevant provisions of the Code of Practice. The appellants argue that those provisions continued to apply to their situation because they were the provisions applicable when their applications for membership were wrongly rejected. But in my view, as was the view of the learned Commissioner, that is the wrong time. The relevant question which might ground the making of the declaration sought is whether, under the rules "for the time being in force" the appellants had the right of appeal they in fact purported to exercise on 11 May 2001.
Of course, the old rules ceased to be operative on 27 October 1999. I have mentioned that under those rules, the right of appeal they conferred upon an applicant for membership, having regard to r 14.16(b) of the Code of Practice, was to be exercised within 14 days of the notification to the appellant of the decision or determination to be appealed against. As has been seen, there might be controversy as to when, if ever, that occurred, at least in relation to the individual applications of Mr Healy and Mrs Stageman.
But it cannot be argued, in my view, that the old rules survived the amendments made with effect from 27 October 1999. Thereafter, while the appellants might retain the status of applicants for membership aggrieved by the decision of Council to reject their applications so as to confer upon them a right of appeal, that could only be under the new rules, specifically r 45, conferring a right exercisable within 14 days from the date of the decision appealed against. This is not the right of appeal which the appellants purported to exercise and not, of course, within 14 days of the decision appealed against. For this reason alone, the learned Commissioner rightly found that the declaration sought could not be made.
The appellants seek to prevent this result by saying that the proper view is that the conduct of the REIWA prevented the appellants from receiving the benefit of their contract to have their applications dealt with under the old rules "and that all aspects of the contract so prevented by the respondent should be regarded as having been completed by the appellants". As I understand the argument in its elaboration it is that the REIWA, having wrongly dealt with the applications for membership under the new rules, deprived the appellants of the capacity to have their applications dealt with under the old rules. And the advice given in relation to their rights of appeal, by referring to Mr Healy's ineligibility for membership, the consequential rejection of the third appellant's application for membership, and the consequential rejection of Mrs Stageman's application for membership, effectively prevented the exercise of their rights of appeal by implying that it would be futile to appeal, given the grounds of rejection of the applications for membership. In those circumstances, it is contended that the REIWA cannot rely upon the failure of the appellants' to lodge their appeals within 14 days of the communication of the decisions appealed against.
The appellants rely upon what they assert is the leading authority for those propositions, the High Court's decision in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235. The case concerned an F.O.B. contract for the sale of oats to be loaded on a ship on a date to be nominated by the buyer of the oats. The seller told the buyer that it could not deliver the oats in Sydney as required, but could do so in Melbourne. And so there was a repudiation of the contract by the seller which, however, was not accepted by the buyer who, however, failed to nominate a ship in Sydney and a date upon which delivery was required. It did so because the seller had given it to understand that to do so would be futile. The buyer sued for damages. The seller pleaded in defence that the buyer had breached the contract by failing to make its nomination. By majority, the High Court held that the buyer was entitled to succeed because the repudiation by the seller "dispensed" with the obligation to make a nomination.
As Dixon CJ put it, at 246‑7:
"Now long before the doctrine of anticipatory breach of contract was developed it was always the law that, if a contracting party prevented the fulfilment by the opposite party to the contract of a condition precedent therein expressed or implied, it was equal to performance thereof. But a plaintiff may be dispensed from performing a condition by the defendant expressly or impliedly intimating that it is useless for him to perform it and requesting him not to do so. If the plaintiff acts upon the intimation it is just as effectual as actual prevention."
Essentially, the view taken by the Court was that there was sufficient performance of its part of the contract by the buyer, who remained ready and willing to perform it throughout, but was prevented from complete performance by the conduct of the seller.
The doctrine is not a novel one. It has a very respectable lineage in English authority and has been applied a number of times in this country, eg, Mahoney v Lindsay (1980) 33 ALR 601, and there are a series of cases in NSW. No doubt today it would be regarded as a form of estoppel: Brothers v Park [2004] NSWCA 241 per Giles JA at [79]. But in my opinion, the doctrine cannot be applied in the way sought by the appellants in this case. It is one thing to say that the conduct of one party to a contract may lead to a dispensation in favour of another party's failure to comply with the terms of the contract. But it is quite another to say that that dispensation may be treated as the actual performance of the obligation prevented.
In this case, the appellants would have it that the conduct of the REIWA described above should be taken to create a situation in which the appellants are treated as having brought their appeals in a timely way under the old rules while their right of appeal still subsisted and before it was lost by effluxion of time, appeals grounded upon the contention of error in the application of the wrong set of rules in the determination of their applications for membership and leading, presumably, to an order setting aside the decisions to reject their applications and directing the Council of the REIWA to again examine those applications and deal with them in accordance with the rules as they were framed at the time when the original applications were determined. In my opinion, to state the outcome in that way, as must be done if a declaration of the kind sought by the appellants was to be made, amply reveals the fallacy in seeking to apply the principle in the Peter Turnbull case to the circumstances of this case.
In any event, Odes C held that the appellants were not prevented by the conducted of the REIWA from exercising their rights of appeal in a timely way. His Honour held that the REIWA was under no contractual obligation to advise the appellants of the correct criteria for membership, the right of an appeal to an independent arbitrator and the procedural requirements for instituting the appeal. In my respectful opinion, that is undoubtedly correct. There is nothing in the discernable terms of the contract derived from the application forms and the applicable rules in the Code of Practice which expressly or by implication may be said to import a duty to give advice of the kind pleaded by the appellants.
In any event, his Honour accepted, as I think on the evidence it was open to him to do, that the conduct of those acting on behalf of the REIWA did not in the relevant sense prevent the appellants from exercising their rights. The appellants were advised by a solicitor (not the solicitors acting for them in the appeal) and there seems to have been no impediment to their ascertaining what the true position was in relation to the rules and the right of appeal provided thereunder. Nothing done on the part of the respondent prevented the appellants from ascertaining the true position and exercising their rights of appeal in a timely way.
Their solicitor conceded (AB135) that inquiry could have been made of the registry at the Ministry of Fair Trading. Instead, he sought the information from the REIWA on affidavit, the information to be provided by the close of business on the day after the facsimile seeking the information was sent. The Executive Director of the Institute responded by refusing to supply the information and the matter seems to have gone no further. There is no contractual basis upon which the declaration sought could be made.

Abuse of process

The respondent renews, by the first paragraph of its notice of contention, a matter raised by way of defence, but with which Odes C did not find it necessary to deal. Nor, strictly speaking, is it necessary for me to do so, having regard to the conclusion to which I have come upon the issues already discussed. But the point may be dealt with shortly and I will do so in case I am wrong in the views expressed thus far.
It is put for the REIWA that if it should be the case that the correct view is that the declaration sought should be made and the appeal pursued before the independent arbitrator upon the view that the old rules continue to have application, and if Mr Healy was able to establish, either before the arbitrator or on a reconsideration of his application for membership by the Council of the institute, that he was a person of good character and good business reputation, and if he was admitted to membership, thereby clearing the way for membership to be conferred on Mrs Stageman and the third appellant, nonetheless the appellants could not ultimately succeed.
The reason why that would be so, it is put, is that upon ceasing to be an applicant for membership and actually becoming a member, the case of the appellants would be governed by the new rules as now in force. Rule 30.1.1 provides that it is a condition of eligibility for membership of any of the classes of membership stipulated in r 29 that the person agrees in writing "to abide by the rules, articles, codes, regulations, by‑laws, resolutions and policies of the Institute".
So far as Mr Healy is concerned, as has been seen, he would immediately be deemed ineligible for membership by r 30.1.2(d) on the ground of his conviction of an indictable offence. By r 39.1.1, a member ceases to be a member of the REIWA upon, "the member ceasing to hold the qualifications stipulated in Article 30.1 as being required for membership". Therefore it is submitted that Mr Healy would, upon becoming a member, instantly cease to be so with the inevitable consequence that, the third appellant, having just become a corporate member, would, by force of r 30.2.2, cease to be eligible to be such a member because its branch manager, Mr Healy, would not then be an ordinary member or associate member of the REIWA.
Again, under r 39.1.2, the third appellant would, it is submitted, instantly cease to be a member of the institute because it would cease to hold the qualifications stipulated in Article 30.2 as being required for that particular class of membership.
Similarly, Mrs Stageman, upon successfully becoming an ordinary member under r 30.2.1, because she bore the qualification that she is a director of the third appellant, the corporate member, would, upon that corporate membership ceasing, cease to hold the qualification for her particular class of membership and would therefore, it is argued, also cease to be a member of the REIWA pursuant to r 39.1.2. And so, it is submitted, the appellant's action for a declaration should be seen as an abuse of the process of the Court because it could not lead to the declaration sought being made in circumstances where, putting the situation for the appellants at its highest, the process sought to be advanced by the declaration could result in their being members of the REIWA. It is submitted that in the exercise of its discretion the Court would decline to make the declaration sought in circumstances where it can be seen that the process would entirely lack utility.
In their reply, and before us, the appellants argue against these submissions by asserting that the eligibility criteria, set out relevantly in r 30.1 and 30.2, should be taken only to have application to persons who apply for membership, whether as individuals or as corporations, after the rules came into effect on 27 October 1999. That being the case, the contention is that r 39.1.1 and 39.1.2 cannot have application to this case because a member cannot be said to cease to hold the qualifications stipulated in r 30.1 or 30.2 unless, upon obtaining membership they had the qualification in question and ceased to do so after becoming members.
The capacity to rely on these propositions at trial was preserved to the appellants by the decision of this Court, Healy & Ors v The Real Institute of Western Australia Incorporated [2003] WASCA 32, delivered on 7 March 2003. That was an appeal from a decision of a Master, striking out the relevant paragraph of the reply upon the basis that the plea was manifestly groundless. The Court held the propositions advanced by the appellants to be arguable, but that conclusion carries no implication against the conclusion that the appellants' submission may nonetheless be wrong, as I think it is.
In support of the submission that the new rules could not be applied to the appellants so as to ultimately disqualify them from membership, the appellants rely particularly upon a line of cases, commencing perhaps with Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656, 672‑4, and culminating in the decision of the High Court in Bailey v NSW Medical Defence Union Ltd (1995) 184 CLR 399. The submission is that, "the contract dealing with membership itself is an accrued right which will not be changed by a mere change in the Constitution" of the REIWA. However, in my opinion, Bailey does not support the proposition stated in those terms.
That case arose out of an action for damages brought by a patient against a medical practitioner for negligence. The doctor was a member of the respondent company whose objects included the indemnification of members against professional negligence claims. But this was done by way of arranging insurance policies provided by the respondent under its Articles of Association. Having initially undertaken to indemnify the medical practitioner pursuant to that contract of insurance, the respondent, relying on a provision in the Articles of Association which permitted it, in its absolute discretion, to terminate any grant of assistance or indemnity, withdrew its support.
It was held that, although the respondent might take that course legitimately pursuant to its Articles of Association regulating the dealings between members and by members with the respondent, nonetheless the respondent was prevented from doing so by the terms of the policy of insurance, a special contract having a force and effect of its own, made between the doctor and the respondent, under which contract the respondent was obliged to continue to indemnify the medical practitioner against any liability which might be incurred for professional negligence.
The Companies Act 1961 (NSW), s 33(1), provided that the articles of association bound the association and its members as if they contained covenants on the part of each member to observe the provisions of the articles which might, of course, be changed from time to time. The ratio of the decision was put by Brennan CJ, Deane and Dawson JJ, at 410‑1 as follows:
"Whilst the articles of association of a company regulate the relations of the members amongst themselves as members and with the company, they do not preclude a member from contracting individually with the company upon terms which may or may not be defined by reference to the articles. Such a contract has been called a special contract to differentiate it from the deemed covenants to which s 33(1) refers, which regulate the position of a member as a member and not as an individual. Even if the terms of a special contract are to be determined by reference to the articles, an alteration to those articles will not necessarily mean an alteration to the terms of the contract. It will depend upon the intention of the parties to the contract, namely, the member and the company. Thus, a special contract may import as a term one or more of the articles upon the basis that they may be altered by the company and an alteration of the articles in those circumstances will alter the terms of the contract. On the other hand, a special contract may be concluded upon the basis of the articles, but with the intention that the terms of the contract are not to be varied by an alteration to the articles. … Put another way, a company cannot unilaterally vary its contracts by altering its articles unless that is the basis upon which the contract was made."
If that case is applied to this, it makes the simple point that there is a clear factual distinction between the two. In this case, the contract between an applicant for membership and a member with the REIWA contains the express term that the parties will be bound by the Articles or Rules of Association as they may be expressed from time to time. For that reason, members will be affected by changes in the rules which change their eligibility for membership.
In that sense, this case is very like the decision of the Full Court in Gra‑ham Australia Pty Ltd v Perpetual Trustees WA Ltd (1989) 1 WAR 65. The case concerned the terms upon which unit holders in a unit trust fund could require the trustee to repurchase their units. After requests for repurchase had been made, but before they were required to be complied with, an ordinary resolution passed at a meeting of unit holders altered the terms of the trust deed to amend the basis upon which the trustee could be required to repurchase the units in a way which was less favourable than originally applied. The Court held that as a matter of construction the provisions of the trust deed conferred that power so as to allow the vested or accrued rights of the unit holder to be modified in the way described.
In my opinion, for those reasons, the argument presented for the REIWA in relation to this aspect of the notice of contention correctly describes the process by which, if it was possible by or upon the process of appeal which they seek to undertake for the appellants to acquire membership of the REIWA, they would instantly be rendered ineligible for membership by the operation of r 39.1 and their membership would cease because, on becoming members they would cease to hold the qualifications stipulated in r 30.1 and 30.2 as being required for membership. Upon that ground also, in the exercise of discretion, it would seem to me to be inevitable that this Court would decline to make the declaration sought so as to initiate a process which could not but be nugatory in its final outcome.

The relevance of delay

The notice of contention raises the question of delay, correctly, as being one going to the exercise of the discretion to make the declaration sought, if I am wrong in my view as to the lack of contractual entitlement to that relief. As has been seen, the delay in the initiation of the appeals was very considerable. On the view of the evidence most favourable to the appellants, they delayed some 11 months before lodging their appeals. Odes C reviewed a body of evidence which ought to have alerted the appellants to the limited nature of their right of appeal in about the middle of 1999, about a year before, on the most favourable view, they became aware of the true position.
From the bar table counsel for the appellants said there was much activity in the interim, concerned to investigate their position, form a view as to what their rights were, and consider how they should be pursued. But counsel for the respondent rightly pointed out that there was little evidence about this beyond Mr Healy's evidence that upon the rejection of his application for membership and the consequent rejection of the other applications, he did not appeal, not because he did not know that he could, but:
" … because of my understanding at the time that the rules were black and white as they stood. In particular, because of my criminal conviction it would not be possible for myself or the company to be granted membership of REIWA." (Statement par 79, and see his responsive statement dated 15 June 2004, par 5 and Mrs Stageman's statement of the same date, par 17).

Nonetheless, it seems to me that the delay remains very considerable and substantially unexplained. If it were necessary to consider this matter in relation to the exercise of the Court's discretion to grant or refuse the declaration sought, to my mind it would be a powerful factor militating against the grant of relief.

Estoppel

In the reply to the assertion of the REIWA by way of defence that the appellants' claim was defeated because the new rules would apply to govern any appeal process, and because any right of appeal would be lost under the old rules or the new rules by the failure to comply with the time limit provided in each case, and because the application of the new rules would lead to any appeal process being nugatory, the appellants raised a plea of estoppel. The plea was that the REIWA was estopped from relying upon any matter which would defeat the application of the old rules as to membership qualifications because of unconscionable conduct in mistakenly dealing with the applications for membership under the new rules and in failing to advise the appellants of their true rights and the true nature of their right of appeal so as to enable it to be exercised in a timely way. At least that is a perhaps robust interpretation of what I conceive to be the way in which the question of estoppel was dealt with at the trial.
I think a fair summary of the view of Odes C is that the contention was without merit because the errors made, particularly in the terms of notification by the REIWA, were genuine mistakes and not of a kind which were incapable of remedy by proper inquiry on behalf of the appellants themselves. In any event, the learned Commissioner noted Mr Healy's concession that he was given a copy of the old rules when, with Mrs Stageman, the appellants' application forms were lodged with the REIWA in January 1999. Odes C held that there was no obligation, contractual or otherwise, upon the REIWA to provide advice in any form to the appellants and his Honour could find nothing in the conduct of the REIWA which could be described as unconscionable in this context of the law. Further, his Honour considered that if the estoppel plea could be made out in the circumstances of this case, the defence could not operate indefinitely. Indeed, on the view of the evidence most favourable to the appellants, his Honour thought the defence could not be available very shortly after the appellants discovered the true position, at the latest on 1 June 2000.
For the respondent, it is further put in argument that the evidence was that the appellants did not in fact rely upon the terms of the notifications and advice to them by the officers of the REIWA or their solicitors. In any event, it is submitted, if the appellants did fail to institute their appeals in a timely way because they were misled into thinking that the process would be hopeless and could not lead to a successful outcome, then the detriment they suffered in reliance upon that assumption could not be held to continue after the appellants discovered the true position, at the latest, on 1 June 2000. So if it was the case that the appellants were misled into not appealing to an independent arbitrator, it could not be said that their failure to do so until May 2001 was the detriment consequent upon their being misled: see generally The Commonwealth v Verwayen (1990) 170 CLR 394.
In my opinion, in this case the appellants were rightly held to have failed to have established the estoppel. They were not found to have relied upon any misleading elements in the advices provided to them on behalf of the REIWA. But if, and to the extent that they did so, with the consequence that they lost a right of appeal formerly available to them, the relevant detriment was their failure to institute their appeals, and that could not be said to be a detriment caused to the appellants once their failure was seen to persist long after the expiry of a reasonable time following their discovery of the true position.
For all those reasons, in my opinion the appeal by each of the appellants should be dismissed.