Pettit v South Australian Harness Racing Club Inc - [2006] SASC 306

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
PETTIT v SOUTH AUSTRALIAN HARNESS RACING CLUB INC & ORS
[2006] SASC 306
Judgment of The Honourable Justice White
5 October 2006
ASSOCIATIONS AND CLUBS - OFFICERS, TRUSTEES, SERVANTS AND COMMITTEES
First defendant an association incorporated under the Associations Incorporation Act 1985 (SA) – plaintiff and second, third and fourth defendants members of the Committee of the first defendant – election of the Committee to be held in August 2006 – first defendant received a large number of applications for membership in July 2006 – in contravention of the constitution of the first defendant an election of candidates for membership was held at Committee meeting on 25 July 2006 – all applications rejected – applications considered as a bloc and not on an individual basis – plaintiff seeks relief pursuant to s 61 of the Associations Incorporation Act on the basis that the conduct of the first defendant by its Committee was oppressive and unreasonable in that it was contrary to the interests of the members as a whole – Held: Committee conducted the election of candidates when not authorised to do so – Committee did not consider applications by reference to their individual merits and having regard to the objects of the Club – Committee members approached the consideration of membership applications with a fixed attitude – failure of Committee to comply with requirements of the Constitution with respect to applications and application of a fixed attitude resulted in conduct contrary to the interests of the members as a whole – appropriate to make orders pursuant to s 61(4).
Associations Incorporation Act 1985 (SA) s 23, 61, referred to.
Millar v Houghton Table Tennis & Sports Cub Inc (2003) 225 LSJS 241; Peters American Delicacy Co Ltd v Heath (1939) 61 CLR 457; Wayde v New South Wales Ruby League Limited (1985) 180 CLR 459; Popovic & Ors v Tanasijevic & Ors (No 5) (2000) 34 ACSR 1, applied.
Howard Smith Ltd v Ampol Petroleum Ltd (1974) AC 821, considered.

PETTIT v SOUTH AUSTRALIAN HARNESS RACING CLUB INC & ORS
[2006] SASC 306
Civil

WHITE J: The first defendant (“the Club”) is an association incorporated under the Associations Incorporation Act 1985 SA (“the Act”). An election of its Committee members was to be held in August 2006.
In July 2006, the Club received an unusually large number (266) of applications for membership. Those applications were dealt with at a meeting of the Club’s Committee on 25 July 2006.
The plaintiff seeks an order that the conduct of the Club, constituted by the decisions of its Committee in relation to the applications for membership, was oppressive and unreasonable. The plaintiff seeks relief pursuant to s 61 of the Act.
The present proceedings were commenced in the Magistrates Court on 4 August 2006. On 11 August 2006, Mr Kleinig SM ordered, pursuant to s 61(7) of the Act, that the proceedings be transferred to this Court. Because the election of Committee members and the Annual General Meeting (“AGM”) of the Club have been stayed pending the determination of these proceedings, the Court was asked to deal with the matter as a priority.
The Parties
The Club promotes and carries on harness racing in South Australia. It owns and operates the trotting track at Globe Derby Park. The trotting track contains numerous improvements and facilities for the purposes of the training and racing of trotting horses.
The Club’s membership comprises several categories, including junior members, general members, life members and honorary members. The general membership category contains the largest number of members of the Club.
As at 25 July 2006, there were 409 members of the Club of whom, it seems, approximately 100 were life members and honorary members. The membership year within the Club runs from 1 October in each year to 30 September in the following year.
The objects for which the Club is established are set out in cl 3 of its Constitution and are as follows:
3.1 To promote, carry on harness racing in South Australia;
3.2To adopt and carry into effect rules for the conduct of harness racing in South Australia as laid down by the Controlling Body for the time being;
3.3To conduct, hold and promote harness race meetings at such places as the Committee may from time to time determine;
3.4 To promote the breeding of harness racing horses in South Australia;
3.5To support and to subscribe to any charitable or public body associated with harness racing;
3.6To conduct contests either between two or more horses or individual horses and to ensure that the By-Laws of the Committee or any rules of harness racing are obeyed;
3.7To provide and maintain services, facilities and accommodation for the Members, the Committee, the Officials and any person interested in harness racing;
3.8To establish and maintain grounds for harness racing and training or for any other kind of sport, recreation or amusement;
3.9To establish, maintain, manage and carry on a social Club for members or any persons interested in harness racing;
3.10To do all such things as are incidental or conducive to the attainment of the above objects or any of them.
The Constitution of the Club provides for a Committee of eight persons to have the management of its affairs and general business (“the Committee”). Each Committee member (other than those filling casual vacancies) holds office for two years, with four positions to be filled at an election in each year.
The plaintiff (“Mr Pettit”) is a member of the Committee, having been elected in August 2004. Each of the individual defendants is also a member of the Committee. The second defendant, Mr Giorgio, was elected in August 2005. He has been a Committee member for 10 years and has previously held the positions of Vice President and President. The third defendant, Mr Dyson, was also elected in August 2005. He has been a Committee member for five years. The fourth defendant, Mr Costello, is presently filling a casual vacancy on the Committee. He is a life member of the Club and has served, in aggregate, approximately 15 years on the Committee.
Mr Marshall is a fourth Committee member. He is a life member of the Club and has previously been President for a period of six years. The remaining members of the Committee are the President, Mr Sharpe, Mr A’Court and Dr Noble.
At the trial, the plaintiff’s evidence-in-chief was adduced by the tender of three affidavits and he was cross-examined. In addition, an affidavit from his solicitor, Ms Hynes, was tendered without her being required for cross-examination. The evidence of the defendants was led from each of Messrs Giorgio, Marshall and Dyson and from Mr Kramer, the Secretary of the Club. The evidence-in-chief of each of these witnesses was adduced by the tender of affidavits. Each was cross-examined.
The 2006 Elections
At a meeting in June 2006, the Committee fixed 28 September 2006 as the date for the AGM, and 29 August 2006 as the date upon which the ballot of members for election to the Committee was to close. Clause 22.3 of the Club’s Constitution requires the voting papers for such ballots to be sent to the members at least 10 clear days before the closing date of the ballot. It was common ground that the Committee had resolved that the ballot papers were to be posted by 15 August 2006.
The Committee had also resolved that nominations of candidates for election to the Committee were to be lodged with the Secretary of the Club by no later than 9 August 2006.
All members of the Club, other than honorary members, are entitled to vote in the election of Committee members. The Constitution does not contain any provision for a minimum period of membership before a member becomes eligible to vote.
Admission to Membership
Clause 11 of the Constitution provides for the eligibility for, and admission to membership of, general members. It provides:
11.1Any person who has attained the age of eighteen (18) years shall be eligible to apply for admission as a General Member.
11.2Candidates for admission as General Members of the Club shall be proposed by one Member and seconded by another, and shall be elected by the Committee. The proposal form shall be obtained from the Secretary and shall be signed by the candidate and the proposer and seconder of the candidate and the candidate’s full name, address and occupation together with such other information as is considered necessary by the Committee from time to time shall be stated therein. The proposal form shall be forwarded to the Secretary, together with the prescribed entrance fee (if any) and annual membership fee, which shall be repaid to the candidate in the event of his or her not being elected.
11.3No election of General Members shall be held unless at least two (2) days written notice thereof has been previously sent to each member of the Committee containing the names of the candidates and of the respective proposers and seconders. A record shall be kept by the Secretary of the result of any election.
11.4A candidate shall become a member as soon as:
11.4.1 He or she is elected by the Committee; and
11.4.2He or she has paid the entrance fee (if any) and annual membership fee.
In summary, cl 11.1 states the conditions for qualification as a general member, namely, any person of 18 or more years. Clause 11.2 prescribes the method by which an application for membership is to be made (on an application form, obtained from the Secretary and signed by the applicant, and the members proposing and seconding the application, and which contains the information required by the Committee) and the means by which a person becomes a member (election by the Committee). Clause 11.3 contains a restraint on the timing of any election of new members by the Committee. The Committee members must be given at least two days notice of the application, which notice is to include the names of the candidate, proposer and seconder. The Constitution does not, strictly speaking, require a copy of each application to be given to each Committee member but in practice that has been the means by which notice has been given.
Fourthly, cl 11.4 provides that a candidate becomes a member as soon as he or she is elected and has paid the entrance fee (if any) and the annual membership fee. The effect of the rules is that any new member becomes entitled, immediately upon admission to membership, to vote in any election in the Club.
It is to be observed that cl 11 is expressed in language indicating that compliance with its stipulations is mandatory.
The Subject Decisions
At its meeting on 25 July 2006, the Committee considered 266 applications for membership. Only one application was considered individually. The remainder were considered as a bundle. Mr Pettit contends that the Committee either rejected the applications, or alternatively, refused to consider each application on its own merits and having regard to the objects of the Club. He also contends that the Committee applied, in effect, a fixed attitude, namely, a determination not to deal further with the applications until after the completion of the election of members of the Committee. He seeks an order, pursuant to s 61(4) of the Act, that the Committee be directed to consider each application presented to the meeting on 25 July 2006 individually and having regard to its merits in relation to the objects of the Club.
Section 61 of the Associations Incorporation Act
Section 61(1) provides (relevantly) that a member of an incorporated association may apply to the Supreme Court or the Magistrates Court for an order under s 61 on the ground that the association has engaged in conduct which is oppressive or unreasonable.

Section 61(4) provides for the types of orders which may be made.
The Court hearing a proceeding under this section may, if satisfied that the association has engaged, or proposes to engage, in conduct that is oppressive or unreasonable, make one or more of the following orders:
(a)an order for regulating the conduct of the association's affairs in the future;
(b)an order directing the association to institute, prosecute, defend or discontinue specified proceedings, or authorising a member of the association to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the association;
(c)an order restraining a person from engaging in specified conduct or from doing a specified act or thing;
(d)     an order requiring a person to do a specified act or thing;
(e)     an order for the alteration of the rules of the association;
(f)    an order that a former member be reinstated as a member of the association;
(g)any other order that is, in the opinion of the Court, necessary to remedy any default, or to resolve any dispute.
Section 61(15) identifies the kind of conduct which will be regarded as oppressive or unreasonable for the purposes of s 61. It provides:
For the purposes of this section—
(a)an association has engaged, or proposes to engage, in conduct that is oppressive or unreasonable if—
(i)    it has taken action, or proposes to take action, to expel a member from the association in circumstances in which the action was, or would be, oppressive or unreasonable; or
(ii)     it has engaged, or proposes to engage, in conduct that was, or would be, oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or was, or would be, contrary to the interests of the members as a whole; or
(iii)     the rules of the association contain, or are proposed to be altered so that they will contain, provisions that are oppressive or unreasonable;
(b)a reference to engaging in conduct includes a reference to refusing or failing to take action.
In this case, Mr Pettit relies only upon the second limb of s 61(15)(a)(ii), ie, he alleges that the Club, by its Committee decisions on 25 July 2006, has engaged in conduct which was “contrary to the interests of the members as a whole”.
Relevant Principles
Both the plaintiff and the defendants relied very much upon the decision of Besanko J in Millar v Houghton Table Tennis and Sports Club Inc.[1] In that case, the committee of the defendant club had resolved to sell a hall owned by the club. Several residents of the Houghton area were opposed to the sale. Shortly after the committee’s decision, a large number of them applied for admission to membership to the club. It was plain that their purpose, if they were accepted as members, was to overturn the committee’s decision. The committee declined to admit them to membership. Besanko J found that the applications had been dealt with as a bundle, and not individually, and that the purpose of the committee in refusing the applications for membership was to avoid the possible reversal of its decision to sell the hall. In particular, Besanko J held that there had not been any consideration of the merits of the individual applications by reference to the objects of the Club, and that in failing to do so, the committee had acted in a way which was contrary to the interests of the club’s membership as a whole.
[1] [2003] SASC 1; (2003) 225 LSJS 241.
In the course of his decision, Besanko J reviewed a number of authorities and principles relating to proceedings of the present kind. The parties in the present proceedings relied very much on that review. From the decision in Millar, the authorities reviewed by Besanko J, and from the Act, a number of propositions relevant to the determination of the present proceedings can be drawn:
1.The constitution of an association binds the association and all of its members.[2] This means that the Committee was bound to apply the relevant provisions of the Club’s Constitution in its consideration of the membership applications.
[2]        Associations Incorporation Act 1985 s 23(1).
2.The requirement that an exercise of an association’s powers be for the benefit of the members as a whole is to exclude their exercise for “ulterior special and particular advantages”, ie,[3] it negatives “purposes foreign to the association’s operations, affairs and organizations”.[4]
[3]        Peters American Delicacy Co Ltd v Heath (1939) 61 CLR 457 at 511-12 per Dixon J.
[4] Ibid.
3.Other than in the limited circumstances of the kind outlined in the majority judgment in Wayde,[5] the courts are not concerned in applications of the present kind with reviewing the underlying merits of the management committee’s decision. The courts do not substitute their discretion for the discretion exercised in good faith by an association’s committee.[6]
[5]        Wayde v New South Wales Rugby League Limited (1985) 180 CLR 459 at 466.
[6] Ibid at 470 per Brennan J.
There is no appeal on merits from management decisions to courts of law: nor will courts of law assume to act as a kind of supervisory board over decisions within the powers of management honestly arrived at.[7]
[7]     Howard Smith Ltd v Ampol Petroleum Ltd (1974) AC 821 at 832, quoted by Brennan J in Wayde v New South Wales Rugby League Limited (1985) 180 CLR 459 at 469.
4.Conduct by a committee of an association will be contrary to the interests of the members as a whole if no committee, acting reasonably, could have engaged in that conduct.[8]
[8]     Wayde v New South Wales Rugby League Limited (1985) 180 CLR 459 at 468 per Mason ACJ, Wilson, Deane and Dawson JJ; Peters American Delicacy Co Ltd v Heath (1939) 61 CLR 457 at 481 per Latham CJ.
5.Conduct may be contrary to the interests of the members as a whole even though a committee does not act in bad faith. In Wayde, Brennan J said:
[I]f the directors exercise a power – albeit in good faith and for a purpose within the power – so as to impose a disadvantage, disability or burden on a member that, according to ordinary standards of reasonableness and fair dealing is unfair, the court may intervene …[9]
[9]    Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 at 472.
6.In order to succeed, it is not necessary for an applicant to show that any decision of the association was invalid.[10]
[10] Ibid at 470 per Brennan J.
7.However, proof of invalidity or non-compliance with an association’s rules may indicate that a decision is contrary to the interests of the members as a whole. This is because of the importance which the law attaches to adherence to the provisions of an association’s constitution. So much is apparent in the following passage in the judgment of Olsson J in Popovic & Ors v Tanasijevic & Ors (No 5):
Conduct complained of must be unjustly detrimental to either individual members specifically or, alternatively, members as a whole. It is not necessary to prove lack of bona fides, but conduct beyond power or in breach of statutory, legal or financial duty may well amount to oppression. The very provisions of s 61(7) reveal the importance which the legislature attaches to the proper adherence to the provisions of the constitution and rules of an incorporated association. This is because a failure to observe such provisions has the effect of depriving members of their right, as members, to have the affairs of the entity conducted in accordance with its constitution and rules. [Citations omitted][11]
8.The power to accept or reject membership applications must be exercised in good faith.[12]
9.The power to accept or reject membership applications must be exercised having regard to the objects of the association.[13]
10.A refusal of applications for membership without regard to the association’s objects may well be a decision which no reasonable committee could reach.[14]
11.It is not for this Court to determine as a matter of objective fact whether or not the membership applications are bona fide applications.[15]
12.An association may have many reasons for rejecting membership applications. It may determine that the aims and aspirations of an applicant are not consistent with the objects of the association. Even if the aims and aspirations of an applicant are consistent with the objects of the association, the application may be refused because, for example, the association does not have the ability to cater for an influx of members.[16]
Against the background of those propositions, I turn to the circumstances of the present case.
[11] [2000] SASC 87 at [505]; (2000) 34 ACSR 1 at 71.
[12] Millar v Houghton Table Tennis & Sports Club Inc [2003] SASC 1 at [193]; (2003) 225 LSJS 241 at 271.
[13] Ibid at [194], at 271.
[14] Ibid at [199], at 272.
[15] Ibid at [191], at 271.
[16] Ibid at [192], at 271.
The Timing of Committee Meetings

In ordinary circumstances, the Committee meets on the last Tuesday of each month. However, the Inter-Dominion Championship Finals are to be held at Globe Derby Park in January 2007. This has involved extra work for the Committee which has meant that from time to time in 2006 it has met twice monthly.
The scheduled regular monthly meeting for July 2006 was held on Tuesday 25 July 2006. Before the events in the meeting giving rise to these proceedings occurred, it was resolved that the next meeting of the Committee would be held on Tuesday 22 August 2006. At the time of that resolution, it seems that no intervening meeting was contemplated. Prior to the meeting on 25 July, it seems to have been understood by Committee members that, absent an adjournment of the meeting, or the calling of a special Committee meeting, the meeting on 25 July 2006 was the last meeting at which there could be an election of new members who would, on their election, be eligible to vote in the August Committee elections.
Events Before the Meeting on 25 July 2006
In early July 2006, a newsletter was published by the President to the Club’s members. This newsletter had not been approved by the Committee before its distribution. A notice to members attached to the newsletter indicated that only current 2005/2006 members would have priority to members’ grandstand seating and dining packages at the Inter-Dominion Championship Finals in January 2007. The notice encouraged persons to apply for membership so as to qualify for priority in relation to those seating and dining packages. There was therefore an incentive for persons to apply for membership, even though it was late in the membership year. The membership of those who did apply would, of course expire, unless renewed, on 30 September 2006.
Mr Pettit said that he relied on this notice in encouraging several of his family and friends to apply for membership in July 2006.
The Secretary prepared the agenda papers for the meeting on 25 July on the morning of Thursday 20 July 2006. These were provided to those Committee members whom the Secretary knew would attend the trotting meeting held on the Saturday night (22 July) by leaving them for collection in the Club’s office area, and provided to the others by posting them to their addresses on Friday 21 July 2006. The evidence did not disclose the method by which each member did in fact receive his/her agenda papers for the meeting on 25 July 2006.
In the period between the June Committee meeting and 20 July 2006, the Secretary of the Club received six applications for membership (on 28 June, 5 July, 14 July (two), and 20 July (two on one application form)). I will refer to these applications as “the Six Applications”. Copies of the Six Applications were provided to the Committee members with the agenda papers.
After he had prepared the agenda papers, the Secretary received a further 46 applications on 20 July 2006, (“the 46 applications”), a further nine applications on Saturday 22 July 2006 during the course of the trotting meeting, 60 applications on Tuesday 25 July 2006 and a further 145 applications which were brought to him by the President, Mr Sharpe, at about 3.30 pm on Tuesday 25 July 2006. Thus, prior to the meeting on 25 July, a total of 266 applications for membership had been received.
For no reason other than his usual administrative practice, the Secretary did not provide the 46 applications to the Committee members with the agenda papers. In other words, although the 46 applications were received well before the Committee meeting, the Secretary took no steps to ensure that notice of the applications, as required by the Constitution, was given to the Committee members before the meeting on 25 July 2006.
It seems that the 60 applications were delivered by, or on behalf of, a Mr Tapp. Mr Giorgio said that he recognised that Mr Tapp was the proposer of each of those applications and that most, if not all, of the applicants were his employees.
The Meeting on 25 July 2006
All of the 266 applications for membership were presented at the Committee meeting on 25 July. There is a dispute about some aspects of what occurred when they were presented. To some extent, the existence of the dispute is quite understandable. The meeting was a long meeting, having commenced at 6.15 pm and concluding at about 12.15 am on the following morning. The applications for membership were raised as items of general business, and as the last item of business at the meeting. It also seems likely that there may have been some misunderstandings as to the effect of certain resolutions proposed at the meeting in relation to the applications.
It is the usual practice at Committee meetings of the Club for an audio tape of proceedings to be kept. It is thought, apparently, that this facilitates the preparation of minutes. From that tape, a transcript of the discussion which occurred when the applications for membership were considered, has been prepared. The parties agree that insofar as the content of the tape could be transcribed, the transcription is accurate. No transcript of a discussion concerning the applications which occurred at an earlier point in the meeting has been made.
On the basis of the transcript, and the oral and written evidence, I make the following findings. Several members of the Committee were suspicious about the genuineness of the applications for membership. Their suspicions were enlivened by the very large number of applications late in the membership year, and only very shortly before the last Committee meeting at which persons could be elected to membership in time to be able to vote in the election of Committee members. They thought that persons were being recruited as members simply for the purpose of participating in, and thereby influencing, the election of Committee members.
Rumours that a large number of membership applications had been, or would be, received had been circulating for some days. Some members of the Committee, in particular, Messrs Marshall, Costello and Giorgio, had had the opportunity of considering the position. Mr Marshall, in particular, appreciated the requirements of cl 11 of the Club’s Constitution with respect to membership applications. He also appreciated that a number of the applications did not appear to have been made in the manner required by the Constitution. I do not regard it as necessary to make a finding as to the veracity of Mr Marshall’s assertion that he had only just become aware of the requirements of the Constitution in that regard. I am satisfied that Messrs Marshall, Giorgio and Costello had decided that because of the suspicions which they held about the genuineness of a number of the applications the requirements of the Constitution should be strictly applied.
At the meeting, the first application considered was that of a Mr and Mrs Catanzariti, who had made a joint application for membership. It was one of the Six Applications. Their application form did not include any proposer or seconder. A motion that they be accepted as members was lost, four all. The rejection of their application led to some discussion as some members of the Committee (in particular the Chairman and Mr A’Court) regarded it as inconsistent with the previous practice of the Committee by which two Committee members in such circumstances had acted as proposer and seconder. In the course of that discussion, mention was made of a practice in the past of dealing with applications for membership as a bloc. The following exchange then occurred:
Mr Giorgio:        Well do them as a bloc tonight, the whole lot as a bloc.
Chairman:Yes, do we do the whole lot as a bloc? Nominator Ash. Sorry nominator, Adrian, seconder, Robert. All those happy to agree that memberships will be passed. Okay.
Mr Giorgio:It’s lost.
Mr A’Court:Hypocrites.
Chairman:No it’s not lost. It’s not lost. I’m afraid that...
Mr Giorgio:Record it as lost 5/3.
Mr Marshall:      Mr Chairman, I think that it should be recorded as 5/3 and it should be [in] the minute book who voted for and against it.
Chairman:Oh, look anything, it can be put in the minutes.
Mr Marshall:      I am requesting that ..
Chairman:What you are requesting is quite right.
Mr Marshall:      I want it in the minute book.
Mr A’Court:And I also add to that minute that it has been done at every meeting that I have been involved in, in this Committee before, that’s the process we have gone through.
Chairman:The bottom line is that now we treat them individually. So, now we go through them. Are we accepting the first one – Yes or no?
Mr Giorgio:We’ve made a decision.
Chairman:No, no we haven’t made a decision.
Mr Marshall:      We have made a decision.
Chairman:We are going to move through them and decide on all of them.
…
Mr Pettit said that when the Chairman said the words in this exchange which I have italicised, only one motion was considered by the Committee. That was a motion that all the applications be considered as a bloc and he said that that motion was defeated 5-3. It having been defeated, the Chairman then indicated that each application would have to be considered individually. This was the basis of Mr Pettit’s complaint that the applications had not been considered at all.
The evidence of Messrs Giorgio, Marshall, Costello and Dyson was that the italicised words of the Chairman comprised, in effect, two motions. First, it was said that assent, tacit or indicated by nod of the head or by motion of the hand, was given to the Chairman’s question “Do we do the whole lot as a bloc?”. Having received that assent, the Chairman then put the motion proposed by Mr Pettit and seconded by Mr A’Court that all of the applicants be accepted (“memberships …be passed”). That motion was defeated five votes to three.
In short, the plaintiff’s evidence was that there was, in effect, a procedural motion put (which was lost) whereas the defendants’ evidence is that a procedural motion (to deal with the applications as a bloc) was passed but that the substantive motion (the applications be accepted) was lost. Mr Walsh QC who appeared with Mr Strawbridge for Mr Pettit, submitted that the Chairman’s later indication that the applications would have to be dealt with individually was an indication of his belief that a procedural motion only had been put. That is possible, but the Chairman’s later statements are also consistent, in my opinion, with a belief by him that unless a resolution to accept the applications in bloc was passed, it would be necessary for each application to be considered individually (or perhaps in sub-groups) before it could be rejected. The Chairman may have taken the view (reasonably in my opinion) that a decision not to accept all of the applications when considered as a bloc did not carry with it a rejection of each individual application. Just as Mr Walsh relied upon the Chairman’s later statements, Mr Riggall, who appeared with Ms Warley for the defendants, relied upon the later statements by the defendants in the meeting indicating a belief by them that a substantive motion had been defeated. Mr Riggall also drew attention to the fact that a letter of demand written by the plaintiff’s solicitors on 3 August 2006 suggested that the sequence of events as indicated by the defendants had occurred. I agree that the letter does have the effect for which Mr Riggall submitted. However, the significance of that is diminished by the fact that the Particulars of Claim in the proceedings instituted in the Magistrates Court the following day (and the plaintiff’s supporting affidavit sworn the same day) asserted a sequence of events consistent with the plaintiff’s evidence in this Court.
The potential for confusion and misunderstanding is obvious – especially as it was late at night and at the end of a long meeting. It is also evident that the meeting was conducted with a good deal of informality so that motions and voting may not have been articulated in the way in which one would ordinarily expect. Although there is much to be said either way, I have concluded that the evidence of the defendants and Mr Marshall on this topic is to be preferred. That is, I am satisfied that there was unanimous assent to the proposal that all of the applications be considered as a bloc, but that a motion to accept all applicants as members was defeated 5:3. I am also satisfied that rejection of the 266 applications as a bundle did not carry with it rejection of each individual application. In my opinion, the Chairman was correct in holding that the effect of the defeat of the motion was that each application should be considered individually.
When the Chairman indicated that the meeting would then proceed to deal with each application individually, the meeting became unruly. Mr Marshall asserted, in effect, that as a decision had been made, that was the end of the agenda item. Mr Pettit expressed disquiet that his family and friends were being regarded as unsuitable to become members, without any reasons having been given, and were thereby being deprived of the opportunity to obtain priority membership packages for the forthcoming Inter-Dominion. He foreshadowed court proceedings. The following exchange then occurred:
Mr Pettit:You are saying that my family are not worthy members of this club?
Mr Dyson:The club could basically be overthrown.
Chairman:Overthrown?
Mr Dyson:Yes.
Chairman:The Club won’t be overthrown.
Mr Dyson:There is a possibility that it could be done.
Chairman:I’m sorry, I beg your pardon.
Mr Marshall:      We have made our decision, that’s the end of it.
…
Mr Pettit:…These forms are all filled out correctly. They all [have] nominators, they have seconders, they are all signed by the applicants, they are all genuine people who want to become members of the club. Now, you cannot in a Court of law say that they are unworthy to be members.
Mr Costello:       I’m not saying that at all.
Mr Pettit:Yes you are.
Mr Costello:       No, we are not, we are just saying we are not going to vote for them tonight.
Mr Pettit:But you can’t give a reason. In a court of law, you should say why you can’t give a reason.
Mr Costello:       I will give a reason in two weeks’ time.
Mr Pettit:Why in two week’s time?
Mr Costello:       I’m not going to do it tonight. I will wait until after the Committee elections. This is just a farce.
Chairman:So you are saying that we are not going to accept any more members between now and the…
Mr Giorgio:I won’t be voting on any more members in for the rest of the season. I don’t know about the others.
Mr A’Court:So you are saying, there will be no members from now until… and that’s in the Constitution.
Mr Giorgio:Till the next new season. Tell all these people they can join up next season.
…
Chairman:So, we are not going to allow upgrades of existing members to doubles. We are not going to allow known people within the industry.
Mr Costello:       They can do it next year.
Chairman:No, no.
Mr Costello:       I’m not going to say anymore about it David, I’m so disgusted.
Mr Pettit:I can’t believe, I can’t believe this.
It can be seen that each of Messrs Giorgio and Costello made plain that their attitude was not to vote for the admission of any new members until at least after the Committee elections had been concluded and really, not until the new season, ie, after 1 October. At this point, Mr Marshall said that he was leaving and stood to pack his bag. The following exchange occurred between the Chairman and Mr Marshall:
Mr Marshall: Mr Chairman, just for the record, I’m leaving now, this is for the record, the only thing I can say is that I have never ever witnessed anything like this in a Committee.
Chairman:You are welcome to say what you like.
Mr Marshall: I’m going to. I have done this.
Chairman:You can put whatever you like on the record Peter but you know I will decide what you say on this matter having regard to where we are headed from here. Bottom line is we will close this meeting and we will adjourn it until we finish. So the meeting is not closed. We will take advice and we will follow through from here. Okay, if Mr Pettit or Adrian as he said wants to look into it, let him have a look into it, and then we will get his response and we will go from there.
I accept that in this passage the Chairman corrected himself and informed all present that the meeting was not closed but would be adjourned, so as to allow advice to be taken. I also find that shortly after the passage quoted, Messrs Giorgio, Marshall, Costello, Dyson and Dr Noble left the meeting room. Thus, although the Chairman had said that the meeting would proceed to consider each application individually, that did not occur. Instead the meeting was adjourned (not closed).
Mr Pettit said that after the five members left, the Chairman adjourned the meeting to 8 August 2006 at 6.15 pm. There was no challenge to that evidence. Further, letters written to each of the Committee members on 3 August 2006 by Phillips Fox on behalf of Mr Pettit asserted that “[the] meeting has been adjourned until Tuesday 8 August 2006 as you are aware”. I also note that on 8 August 2006 Mr Kleinig SM, having heard from the plaintiff and defendants’ respective counsel, made orders deferring the meeting scheduled for 6.15 pm that evening to a date and time to be fixed. In all these circumstances, I find that the meeting of 25 July 2006 was not concluded. Instead, it was adjourned to 8 August 2006 at 6.15 pm and, by reason of Mr Kleinig SM’s orders, has been further adjourned to a date and time to be fixed. It was not submitted that the absence of a quorum at the time that the adjourned meeting date and time was fixed had the effect that the Chairman’s action in that respect was ineffective. However, in the events which have happened, nothing seems to turn on this.
The meeting did not resume on 8 August 2006 because the present proceedings had been instituted and because of the orders made by Mr Kleinig SM on 8 August 2006.
Shortcomings in the Proceedings
A number of further conclusions can now be made about the proceedings of the Committee on 25 July 2006.
First, with the exception of the joint application of Mr and Mrs Catanzariti, none of the applications for membership was considered individually, or as part of a sub-group in respect of which there was no relevant differentiating factor between applications. That very much suggests that a general rule or attitude was applied, rather than the merits of each individual application having been considered for its genuineness and with regard to the Club’s objects.
Secondly, despite the express provisions in cl 11.3 of the Constitution that no election of members was to be held unless the requisite two days notice had been given to the Committee members, and despite the Committee having had two days notice of only the Six Applications, the Committee did hold an election in relation to the 266 applications as a bloc. By 5:3 majority it voted against a motion that all applications be accepted. Each of the defendants and Mr Marshall said that he voted against accepting the 266 applications for reasons which included the absence of two days notice. I have had my doubts about that evidence. If that evidence be correct, I would have expected that the two days notice requirement would have been mentioned in the meeting by Mr Marshall or one of the defendants. The transcript of the meeting shows that there was no mention at all of the requirement for two days notice. During the course of the meeting, Mr Pettit challenged the Committee members to give a reason for the rejection of the applications. Although the absence of two days notice would have been an obvious matter to raise then, it was not mentioned in any of the responses. Mr Marshall described himself as being insistent on compliance with the Constitution and with due process. I find it surprising that if he was relying on the requirement of two days notice that he did not mention it. I accept, however, that it may have been mentioned by Mr Marshall earlier in the meeting in the discussion which has not been transcribed. Another consideration which has given me pause is that I detected in much of the evidence of the defendants and of Mr Marshall a tendency to retrospective justification of the position which they had adopted at the meeting on 25 July, and it does seem to me that the absence of two days notice is now being given a prominence which it was not given at the time of the meeting.

In the end, I have decided that it is not necessary for me to resolve this issue. I am willing to proceed on the basis that the evidence of the defendants and of Mr Marshall on this topic is correct.
The effect of the evidence of the defendants and of Mr Marshall is that the absence of the two days notice at the election was used as a reason for rejecting all the applications, rather than as a factor precluding the holding of an election altogether (other than in respect of the Six Applications). Clause 11.3 of the Constitution did not authorise the Committee to proceed in that way.
If cl 11.3 of the Constitution had been properly applied, it would have been recognised at the meeting that no election of new members (other than those who had lodged the Six Applications) could be held. In that circumstance, the Committee would have had to consider whether to adjourn consideration of the applications to the Committee meeting scheduled for 22 August 2006, or whether to convene a special Committee meeting for the purpose of considering them, or whether to adjourn the completion of the business scheduled for 25 July 2006 to another date. The result of the Committee proceeding in non-compliance with the Constitution meant that none of those alternatives was considered.
The Committee may have decided, for example, that those who had lodged the 46 applications on 20 July 2006 should not be disadvantaged by the Secretary’s failure to give timely notice of those applications to the Committee members. It may have decided that those at least warranted the holding of a special meeting. The Committee may, in relation to the remaining applications, have decided that as they were not received by the Secretary in time to be distributed to them with at least two days notice that they should not be considered until the next scheduled meeting. Further examples could be given. The fact of the matter, however, is that none of these alternatives was considered because the Committee proceeded to an election in non-compliance with the Club’s Constitution.
Thirdly, the way in which the Committee proceeded meant that the Six Applications (apart from that of Mr and Mrs Catanzariti) in respect of which the appropriate notice had been given were rejected for a reason which was inapplicable in their case. There may, of course, have been other reasons for rejection of the remaining four applications in the Six Applications, but the course adopted by the Committee meant that those applications were not differentiated from those in respect of which the requisite notice had not been given.
Fourthly, several of the Committee members, because of their suspicions, applied an inflexible attitude to all applications and did not consider their merits by reference to the objects of the Club. Their attitude was that they would not vote for the acceptance of any new member until after the completion of the Committee election, or indeed until the next membership year (ie, after 1 October 2006). Mr Giorgio said that he would not be voting for the admission of any new members “for the rest of the season”. Mr Costello said that he would “wait until after the Committee elections” and that “they can do it next year”. In his evidence in this court, Mr Dyson said that he had decided not to vote in favour of any application at all at the meeting, and that was despite the fact that he recognised some of the applications as being genuine. Mr Marshall said in his evidence that he was not going to deal with any application for membership until after the Committee election.
There are some occasions in which it is permissible for an association to refuse to consider any further applications for membership at all, as for example, when the association has imposed a limit on the number of members it will take because of limitations on its physical capacity to accommodate members, and that limit has been reached. No such circumstances appear to exist in this case. The Club had not imposed any limitation on membership numbers, and indeed, in previous years its membership had been as high as 800.
The application of the fixed attitude of Messrs Giorgio, Marshall, Costello and Dyson at the meeting meant, in my opinion, that the Committee did not consider the applications by reference to their individual merits and having regard to the objects of the Club. It was inappropriate for a fixed attitude to be applied. It meant that applications from persons who may have been genuinely interested in obtaining membership of the Club for the purposes of pursuing the Club’s objects were simply not considered. It also meant that those who sought to join so as to qualify for priority in relation to the Inter-Dominion Finals were precluded from doing so.
In summary, my conclusion is that the failure of the Committee on 25 July 2006 to comply with the requirements of the Constitution with respect to applications for membership, and the application of a fixed attitude that there should be no admissions to membership until after the Committee election, has resulted in conduct which is contrary to the interests of the Club members as a whole. The non-compliance with the Club’s Constitution is conduct in which no reasonable management committee, in the Committee’s position, would have engaged. It has resulted in the Committee failing to discharge its responsibility to all members in accordance with the Constitution. Further, the application of an inflexible attitude to the admission of new members had the effect that persons who were potentially genuine members were denied the possibility of admission to membership. This was contrary to the interests of the membership as a whole. Each of the defendants acknowledged that it was in the Club’s interest to admit as members persons who are genuine.
In these circumstances, I am satisfied that it is appropriate to make orders pursuant to s 61(4).
General Matters
I propose to state some matters in order that the effect of this decision should not be misunderstood.
There is no entitlement to membership of the Club. Only those elected by the Committee as members, after having applied in the requisite way and having been proposed and seconded, become members. This implies that the Committee is to exercise some judgment as to who becomes members. This is consistent with the nature of the Club itself, and consistent with the protection and enjoyment by the members of the substantial assets of the Club. This suggests that the Committee is entitled to be concerned about the bona fides of those seeking to become members of the Club. As was said by Mr Costello, “[the Club] is about harness racing and people who enjoy harness racing, not people just turning up to have an influence on the forthcoming elections”.
It is understandable that the receipt of a large number of applications for membership late in the membership year, and only just before the last scheduled Committee meeting at which persons could be admitted to membership in time to vote in the Committee elections, and in circumstances in which a contest for the various Committee positions was likely, should give rise to suspicions about the bona fides of at least a large number of the applicants. It would naturally give rise to suspicions amongst Committee members acting reasonably that some at least of the applicants were seeking membership for the sole purpose of participating in the Committee elections, rather than because of any underlying interest in harness racing. I am not to be understood as holding that the existence of those suspicions was unreasonable, nor that the Committee was not entitled to investigate them. On the contrary, it was open to the Committee, acting responsibly, not to admit the applicants to membership until satisfied of their bona fides.
It was, however, inappropriate for the Committee to apply an inflexible rule to all the applications. Not all the applications had to be treated with the same suspicion. The Committee had to allow, in the procedures which it adopted for dealing with these applications, for the fact that some may be entirely bona fide. Mr Pettit, for example, said that he had proposed membership applications for his family and friends in order to qualify them for priority membership packages at the Inter-Dominion Championships. It is not necessary for me to express a view one way or the other about the genuineness of those claims. That is a matter for the Committee to assess.
When the Committee does consider the applications, it should do so having regard to the Constitutional requirements with respect to membership applications. It will need to consider, in relation to each application, whether it has been made in the manner required by the Constitution. This decision is not to be understood as indicating that insistence on compliance with the Constitutional requirements is inappropriate. This does not mean that trivial departures from those requirements may not be overlooked.
Nor is this decision to be understood as indicating that the Committee may not have regard to the physical capacity of Globe Derby Park to cope with an influx of members, as well as the extra patronage which can be expected to attend the Inter-Dominion Championships Finals.
As each of the Committee members has now had the two days written notice required by cl 11.3 of the Constitution, there is no longer any impediment on that account to the Committee holding over election of candidates for membership.
Relief
I am satisfied that it is appropriate to make orders pursuant to section 61(4) with respect to the consideration by the Committee of the 266 applications for membership, with respect to the election of Committee members, and with respect to the holding of the AGM. I will hear the parties as to the form of the orders, and as to costs. I note that Mr Pettit has not sought any relief against the individual defendants.