PCRZ Investments Pty Ltd v National Golf Holdings Limited
[2000] VSC 104
•30 March 2000
| SUPREME COURT OF VICTORIA | |
| COMMERCIAL & EQUITY DIVISION | Not Restricted |
No. 6605 of 1999
| PCRZ INVESTMENTS PTY LTD | Plaintiff |
| v | |
| NATIONAL GOLF HOLDINGS LIMITED and NATIONAL GOLF CLUB INCORPORATED | Defendants |
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JUDGE: | McDonald J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 March 2000 | |
DATE OF JUDGMENT: | 30 March 2000 | |
CASE MAY BE CITED AS: | PCRZ Investments Pty Ltd v National Golf Holdings Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 104 | |
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Companies; interpretation of Article of Association: Annual Subscription payable by member of club distinct and different in nature and character from a food and beverage levee that may be imposed on such member.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr. P. R. Hayes, Q.C. | McMahon & Fearney |
| For the Defendants | Mr. J. L. Sher, Q.C. Mr. D. J. Batt | Arthur, Robinson, Hedderwicks. |
HIS HONOUR:
The first defendant, National Golf Club Holdings Limited ("the Company") is the owner of a golf course and associated club house and facilities at Cape Schank, known as The National. The second defendant National Golf Club Incorporated ("the Club") is an incorporated association which is incorporated under the Association's Act 1981 (Vic). Pursuant to the provisions of that Act, the golf club is governed by its "statement of purpose and rules" ("the Rules").
Pursuant to Article 3.1 of the Articles of Association of the Company, the authorised share capital of the Company is divided into six classes of shares, identified as classes "A" to "F". Pursuant to Article 5.1 of the Articles of Association, class "A", "C" or "E" shares may be issued to a person who has been approved for private membership of the Club in accordance with the Rules or to a person associated with such person for the purpose of the Rules. Further, pursuant to that Article of Association, class "B", "D" or "F" shares in the Company may be issued only to a body corporate which has been approved for corporate membership of the Club in accordance with the Rules or to a person associated with such body corporate for the purpose of the Rules. It is further provided by Article 5.1 of the Articles of Association that the directors of the company shall issue a share in the capital of the company to a person upon application being made, for such share if the purpose of the application is to qualify the applicant or a person with whom the applicant is associated for membership of the Club, in pursuance of an application for membership of the Club approved by the committee of management of the Club. Rule 5 of the Rules of the Club makes provision for a private person or corporate body attaining membership of the Club. It is provided by Rule 5(1)(a) that the qualification for private membership shall be the holding of one "A", "C" or "E" class share in the Company and that the qualification for corporate membership shall be the holding of one "B", "D" or "F" class share in the Company.
Rules 6(2) to 6(4) of the Club Rules make provision for a corporate member, including one who holds an F class share in the company, being able to nominate a natural person who has attained the age of 18 years. It is provided that on the approval of the nomination by the committee of the Club, that person, a "corporate nominee", "shall be entitled to use the premises and facilities provided by the Club". Rule 6(5) provides that a corporate member which has nominated a corporate nominee under the Rules shall be responsible for the acts and defaults of each of its corporate nominees and any act or default of a corporate nominee shall be deemed to be the act or default of the corporate member which nominated that corporate nominee.
Specifically it is provided by rule 6(1), headed "Rights of Members": "General Rights"
"(1)Subject to the provisions of these rules and any by‑laws for the time being in force made by the Committee as herein after provided all private members and corporate nominees shall be entitled to use the premises and facilities provided by the Club."
The plaintiff, at all material times is the holder of a number of "F" class shares in the company. Three of those shares were issued to it by the Company and acquired by it in April and May 1988. In August 1999 a further "F" class share was issued to it by the Company.
Pursuant to amendments made to the Articles of Association of the Company on 1 June 1987, Article 3.3 was introduced into such Articles of Association. It was and has remained as follows –
"3.3Each E or F class share shall confer on the member who holds such share or on whose behalf a person or body corporate associated with such member for the purpose of the Club Rules shall hold such share the right to use the premises and facilities of the Club in accordance with the Club Rules without paying any annual subscription fees as therein provided and also the right to nominate one or more family non-golfers and in the case of each E class share only one family golfer in accordance with the Club Rules."
Murray Dewar, a director of the plaintiff, is a corporate nominee of the plaintiff within the provisions of Rule 6 of the Rules of the Club. He has been involved in the development of the club and he is a frequent user of the premises and facilities of the Club.
In these proceedings which were commenced by Originating Motion, the plaintiff seeks a declaration – "that the bar and catering levee sought to be imposed on the plaintiff or a person associated with the plaintiff by the first and second named defendants is in breach of Article 3.3 of the first defendant's Articles of Association".
As appears from the originating motion, the plaintiff sought in the alternative, a declaration in another form. At the trial of the proceedings the plaintiff specifically did not pursue such alternate relief but sought only a declaration in the terms referred to.
In or about June 1989, Dewar received a circular letter from the club dated 14 June 1989. That letter stated, inter alia –
· That the club had been fully operational for the past six months.
· That the opening of the clubhouse had added significantly to the overheads of the club.
· That the bistro and bars were trading at budgeted levels or better however the members' support for the dining room had been disappointing.
· That "in order to achieve a satisfactory financial result in the coming year the Board and Committee had set the following subscription levels and other associated fees together with a minimum catering and bar charge".
There was set out in the letter the "subscriptions and fees 1989/90".
Under the heading "Minimum Catering and Bar Charge Details" the letter further stated in part –
· "This charge is being introduced in the expectation that a member should not find it too onerous to patronise the dining room, bar and bistro facilities to the extent of $40 per month on average".
· "Patronage will be assessed each six months and any shortfall against the minimum bar and catering charge of $240 for six months, will be billed on an exception basis only. Any spending in excess of the minimum, will be carried over as a credit against the next six months".
· "Arrangements are being made for bar and bistro purchases to be included in the $40 per month minimum charge so members using the club on a weekly basis will easily meet their commitment in that area alone".
· " … The Board and Committee feels the subscription package and minimum catering and bar charges are equitable to all members and should ensure a desirable financial outcome at the end of the next financial year".
In or about August 1990, Dewar received a further circular letter dated 31 July 1990 bearing the heading "National Golf Holdings Ltd". That letter was stated to be "re: Minimum Bar and Catering Levee 1990/91". In part it stated –
"This year's rules are as follows:
1.The levee is $480 on a per annum basis.
2.It will be billed in July 1991 on an exception basis only. (This means that ideally no-one is billed - but for those members who do not reach a level of $480 the difference will be billed).
3.A new option exists this year in that members may convert their obligation under (1) above by paying $240 as a one-off cost. If you choose this option the amount of $240 must be received by the club before 31 October 1990."
Rule 21(1) of the Club Rules provide that the affairs of the Club shall be managed by a Committee of Management. It is provided by Rule 23(1) that the composition of the Committee shall be the officers of the Club, three private members and three corporate nominees. It is further provided by Rule 21(3) that the Committee may make by‑laws, not inconsistent with the Rules, for the proper conduct and management of the club.
At a meeting of the Committee of the Club held on 23 April 1995 the committee adopted a by‑law entitled – "FOOD AND BEVERAGE BY-LAWS". Such by-laws were as follows –
"1. Definitions
Words and phrases used in these by-laws shall, unless inconsistent with the context or subject matter, have the same meaning as in the Rules of The National Golf Club Incorporated.
'Member' includes private members, private member or nominee, corporate members, corporate member nominees whose principal place of residence is within 150 km of the Club, but does not include family nominees.
2. Food and Beverage Levee
(i) The Committee shall from time to time determine a minimum amount which in the opinion of the Committee each member should be spending on food and beverages at the club during a specified period of time.
(ii) Each member who during a specified period of time has not spent the minimum amount on food and beverages at the club determined by the Committee shall pay a 'food and beverage levee' at such times and in such amounts as the Committee shall determine."
That By-Law has remained in force since being adopted by the Committee.
Since 23 April 1995, the minimum amount determined by the Committee under clause 2(1) of the By-Law has been $480 per year. Further, the amount of the "Food and Beverage Levee" determined by the Committee under clause 2(ii) of the By-Law has been the difference between $480 and the amount spent by a "member" on food and beverage at the Club during the period of 12 months ending 30 June of each year. Accordingly, by operation of the By-Law and the determinations of the Committee a member who spends more than $480 or more on food and beverages at the club in a 12 month period ending 30 June is charged no levee whereas a member who spends less than $480 on food and beverages at the club in a 12 month period ending 30 June is charged a levee being the difference between $480 and the amount spent to a maximum of $480 each calendar year.
In or about May 1999, Dewar received a circular letter from Ms Grace Rew, the Secretary of the Company and Manager of the Club. The letter was signed by Ms Rew as the Secretary/Manager. The latter was addressed to "Dear Member" and enclosed the annual subscription notice for the financial year commencing 1 July 1999. In part the letter further stated –
"The minimum bar and catering levee is unchanged at $480 per annum. As in previous years members who find it difficult to get down to the Club have the option of discharging their obligation by paying, at the beginning of the year, half the amount as a levee ($240) without receiving any benefit. Members who choose this alternative should forward their payment before 31 July 1999."
On 4 June 1999 solicitors acting on behalf of Dewar wrote to Ms Rew stating that they had been instructed that Dewar was receiving demands for payment of a bar and catering levee. The solicitors sought to be advised of the source of power or rule under which the levee was being imposed. The letter drew attention to the provisions of Article 3.3 of the Articles of Association of the Company.
In response to that letter Ms Rew replied on 20 July 1999 stating that she had been instructed by the Board of the Company that it did not consider the bar catering levee to be an annual subscription and that the Board took that view because the levee could not be characterised as a fee for membership. The letter further stated, "Rather the levee is used to make up the minimum expenditure on bar and catering services which it is expected that each member will enjoy during the year".
The plaintiff being the holder of a number of "F" class shares in the Club is a "corporate member of the club". Article 3.3 of the Articles of Association of the Company confers on the plaintiff "the right to use the premises and facilities of the Club in accordance with the Club Rules without paying any annual subscription fees as therein provided." It was common ground in these proceedings that the expression "as therein provided" had the meaning "as provided in the Club Rules".
Pursuant to Club Rule 6(1) in particular, Dewar, being a corporate nominee of the plaintiff, but subject to the provisions of the Club Rules and any By-Laws for the time being in force is entitled to use the premises and facilities provided by the Club. It is by its nominee, Dewar, that the Company as the holder of "F" class shares in the Company is able to enjoy the right to use the premises and facilities of the Club in accordance with the rules of the Club without "paying annual subscription fees" as provided in the Club Rules.
Rule 9(1) provides that each member who does not hold or on whose behalf a person or body corporate associated with such member does not hold either an "E" or "F" class share in the capital of the Company "shall pay an annual subscription". The rule further provides that no member who holds or on whose behalf a person or body corporate associated with such member holds either an "E" or "F" class share in the capital of the Company as such member's qualifying share shall be required to pay an annual subscription.
Sub-clause (a) of Rule 9(1) of the Club Rules provides for the amount of the annual subscription for the first subscription year of the Club and further provides that in each succeeding year the annual subscription shall be such amount as determined by the Committee in respect of each year. Sub-clause (b) of the Rule 9(1) provides for the fixing of the annual subscription payable by a corporate member by reference to the amount of the annual subscription payable by a private member.
It is pursuant to Rule 9(1) subsequent to the first subscription year that authority and power is vested in the Committee to fix and determine the annual subscription payable by a private member and accordingly that payable by a corporate member.
Rule 9(10) provides that –
"All annual subscriptions shall be payable annually in advance and shall be paid by each member within one month from the date on which the account thereof is sent to that member".
Rule 9(3) of the Club Rules provides that –
"Without affecting the generality of sub-rule 6(13) the right of a private member or corporate nominee or family golfer nominated under sub‑rule 6(11) to play the course at any time shall be subject to the due payment of the annual subscription (if any) and green fees (if any) payable under these rules."
In turn sub-Rule 6(13) provides that the provision of the Rules which purport to entitle members or others to play the course or to use any premises or facilities provided by the Club shall be subject to the course or facilities being established and made available to members by the Committee.
As it is provided by article 3.3 of the Articles of Association of the Company and also Rule 9(1) of the Club Rules the plaintiff as holder of "F" class shares in the capital of the Company is not required or obliged to pay annual subscription fees and has the right to use the premises and facilities of the Club and play the course at any time without paying annual subscription fees. That right is able to be exercised by Dewar as a corporate nominee of the plaintiff.
A number of Club rules demonstrate that other than annual subscription fees other moneys may be payable by a member of the Club and sanctions are provided for the non‑payment of the same. Rule 9(11) provides that if "any annual subscription" or other moneys payable by a member to the Club are not paid in full on or before the due date for payment the member shall pay the Club interest thereon at the rate provided by that rule. Again, Club Rule 6(14) provides that no member shall be entitled to exercise any right or privilege exercisable by a member under the rules if at any time any moneys whether for "annual subscription, green fees or on any other account whatsoever" are due by that member to the Club and are unpaid. Without setting out the specific text of the provisions I further refer to Club Rules 7(8), 11(1)(a) and 19.
In substance, the submission made by senior counsel on behalf of the plaintiff in support of the relief sought by the plaintiff in these proceedings, was that the use of the plural, "fees" in the expression "any annual subscription fees as therein provided" in article 3.3 of the Articles of Association of the Company meant that subscription fees which were not payable by the holder of an "E" or "F" class share in the capital of the Company, for it to enjoy the right to use the premises and facilities of the Club in accordance with the rules, was not limited to an annual subscription fee fixed by the Committee but also included other fees which were imposed by the rules of the club or by-laws made by the Committee and which were otherwise payable by a member of the Club. It was submitted further that the Food and Beverage Levee as determined by the Committee and evidenced by the letter of 14 May 1999,was by its terms, the imposition of an annual fee as it was fixed by reference to a year being the amount which a member had not spent on food and beverages at the club less than $480 per annum or the payment of $240 "up front" at the commencement of the financial year. Further, it was submitted that although the imposition of the Beverage Levee arose in consequence of the Food and Beverage Levee By-Laws being adopted by the Committee on 23 April 1995 it was of the same nature as the "minimum catering and bar charge" previously imposed on members of the Club which was for the purpose of increasing the revenue of the Club and supporting its financial position and was in nature and character no different to the annual subscription. It was submitted that therefore the Food and Beverage Levee was in nature and character an annual subscription and formed part of the "annual subscription fees" as referred to in Article 3.3 and that as the plaintiff was the holder of an "F" class share it was not required to pay the same by virtue of the provisions of Article 3.3. It was submitted that to seek to impose such fee on the plaintiff was in breach of Article 3.3 of the Articles of Association of the Company.
In substance it was submitted on behalf of the defendants that the Food and Beverage Levee as fixed by the Committee pursuant to the Food and Beverage By-Laws was in nature and character different to the annual subscription determined and fixed by the Committee and it did not and could not form part of "annual subscription fees" as referred to in article 3.3 of the Articles of Association of the company. It was submitted that to seek to impose such Levee on the plaintiff, the holder of an "F" class share in the Company did not breach Article 3.3
It is to be seen by reference to the Club Rules that whereas the power and authority of the Committee to fix from time to time the amount of the annual subscription to be paid by a member of the Club other than one holding an "E" or "F" class share in the capital of the Club, there is vested in the committee by Rule 9 of the Club Rules, the power to impose on members of the Club a Food and Beverage Levee from time to time which power in turn arises from the Food and Beverage By‑Law adopted by the Committee on 23 April 1995. These matters demonstrate, in my view, that under the Rules of the Club an annual subscription which a member other than one who holds an "E" or "F" class share in the capital of the Club, is obliged to pay is different in nature and character from the Levee determined by the Committee from time to time pursuant to that By-Law.
The annual subscription is in nature a contribution of money being a fee imposed on a private person or Company for membership of the Club other than a person or Company which holds an "E" or "F" class share in the capital of the Company. Distinct and different from that, in my view, is the Levee which is imposed by specific reference to purchases made or caused to be made of food and beverages from the Club by a member. If the member purchases food or beverages to an amount each year of $480 no levee is imposed on such member whereas if such purchases by a member or caused to be made by a member is less than that amount a levee is imposed or alternatively the member may discharge any obligation to pay the levee by paying an "up front" fee at the beginning of a year in the sum of $240. Although the payment of the annual subscription and the Food and Beverage Levee as imposed each contribute to the revenue of the Club they are in my view different in nature and character. The former is a contribution to the Club for membership of the Club whereas the latter is the imposition of a charge on a member by reference directly to the amount of purchases made or caused to be made by a member of food and beverages from the Club.
Even if it may be said that the imposition of the food and beverage levee on a member of the Club who did not make or cause to be made the specified amount of purchases of food and beverages from the Club, was a fee, that with which article 3.3 is concerned is "any annual subscription fees" and not "any annual fees". The Article specifically provides that a member who holds an "E" or "F" class share has the right to enjoy the premises and facilities of the Club in accordance with the rules without paying any annual subscription fees as distinct from providing that such right may be enjoyed by such member without paying any annual fees. Rule 9(1)(a) and (b) of the Club Rules provide for the Committee to determine the amount of the annual subscription to be paid by a private member and a corporate member other than one who holds an "E" or "F" class share. That rule, in my view, is consistent with article 3.3 for whereas in the Article the member who holds an "E" or "F" class share has the right to use the premises and facilities of the Club it does not provide that that is in respect of each year that such member may hold such class of shares. In my view "fees" in Article 3.3 is a reference to the period of time in which such class of share may be held by a person or corporation which may span a number of years during which an annual subscription fee may be fixed by the Committee with respect to each annual period that such shares are held by a member.
As part of the submissions made by senior counsel on behalf of the plaintiff it was contended that in interpreting article 3.3 of the Articles of Association of the Company, which articles constituted the contract between the Company and the plaintiff as a member, with respect to its rights and liabilities as a shareholder, the court ought to have regard to the publication exhibited to the affidavit of Dewar and entitled "The National Golf Club – A New Direction in Australian Golf" and which by its terms was published in July 1987. Although in his affidavit Dewar deposed that prior to the purchase of the "F" class shares in April and May 1988 he was provided with that brochure, when cross-examined he said that he had seen it so he must have received it but he could not recall when he had received it. In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Mason J at p.352 said –
"Generally speaking facts existing when the contract was made will not be receivable as part of surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed."
The facts and matters as stated in the brochure could not be said to be notorious, nor was it suggested that they were. Having regard to the evidence given by Dewar during his cross‑examination it cannot be concluded that he was aware of the facts, matters and statements set out in the brochure at the time when he first purchased "F" class shares in the company in 1988. No reference can be had to that brochure as an aid to the construction of Article 3.3 of the Articles of Association of the Company.
Although the Levee which may be imposed on a member of the Club pursuant to the Food and Beverage By-Law and particularly by determinations made by the Committee pursuant to that by-law is referable to purchasers of food and beverages made or caused to be made by a member during the period of a year, in my view the imposition of the Levee and the obligation that a member may have to pay the same is different in nature and character to annual subscription fees payable by a member as contribution for membership of the Club. The Food and Beverage Levee that a member may be obliged to pay by reference to the amount of food and beverages purchases made or caused to be made by the member from the Club in a year is distinct and different in nature and character from the annual subscription as determined by the committee pursuant to Rule 9 that a member other than one who holds an "E" or "F" class share is required to pay as a contribution for membership of the Club. The imposition or endeavoured imposition of such Levee on a member who is the holder of an "E" or "F" class share in the capital of the company is not an act by the Committee in breach of Article 3.3 of the Articles of Association of the Company.
By the Food and Beverage Levee By-Laws, the Committee of the Club, by its determination, is able to impose a "Food and Beverage Levee" on a member. By that By‑Law, "member" includes, inter alia, "corporate members" and "corporate member nominees".
It is not suggested in these proceedings that the Levee is sought to be imposed on both the plaintiff and Dewar, the latter being the corporate member nominee of the former. No point was raised as to the Levee being sought to be imposed by the Club on Dewar as distinct from the plaintiff. In order to determine these proceedings I shall assume that the Club seeks to impose the levee on the plaintiff. The imposition or endeavoured imposition of the Bar and Catering Levee on the plaintiff by the Club is not an endeavour to impose on it or to recover from it an annual subscription fee. The imposition or endeavoured imposition of such Levee on the plaintiff by the Club is not in breach of contrary to Article 3.3 of the Company's Articles of Association. For these reasons the declaration sought by the plaintiff is refused.
There shall be judgment for the defendants and it is ordered that the plaintiff's proceedings against the defendants be dismissed.
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