Thomas v Equestrian Australia Ltd

Case [2022] SASC 151

Supreme Court of South Australia

(Civil)

THOMAS v EQUESTRIAN AUSTRALIA LTD

[2022] SASC 151

Judgment of the Honourable Justice Stanley  

CORPORATIONS - MEMBERSHIP, RIGHTS AND REMEDIES - MEMBERS' REMEDIES AND INTERNAL DISPUTES - OPPRESSIVE OR UNFAIR CONDUCT - RELIEF

ASSOCIATIONS AND CLUBS - INCORPORATED ASSOCIATIONS - MEMBERS

The applicant is a member the South Australian Branch of Equestrian Australia Ltd and, thereby, a member of the respondent company, Equestrian Australia Ltd. Equestrian Australia Ltd is a corporation limited by guarantee for the purposes of the Corporations Act 2001 (Cth).

Pursuant to Equestrian Australia Ltd’s rules, which are promulgated by the South Australian Branch, Equestrian Australia Ltd has the power to investigate charges laid against members and to impose disciplinary sanctions.

Throughout his membership, the applicant has been the subject of multiple complaints that have alleged misconduct in contravention of Equestrian Australia Ltd’s rules. Accordingly, Equestrian Australia Ltd has responded and acted upon these complaints. Arising from this exchange, in these proceedings, the applicant challenges two decisions and a notice of charge: 

1)      On 18 February 2022, Equestrian Australia Ltd informed the applicant of their intention to conduct an investigation, through an independent body, in response to three complainants. This investigation substantiated the complaints. Accordingly, the Chief Executive Officer of Equestrian Australia Ltd wrote to the applicant on 25 July 2022 informing him of the substantiation and imposed a three-month suspension on his membership (the first decision).

2)      The applicant filed an appeal against the decision of the Chief Executive Officer of Equestrian Australia Ltd on 28 July 2022, which was heard on 25 August 2022. The applicant relied on 10 grounds which, fundamentally, contended that he was denied natural justice in the decision made by the Chief Executive Officer of Equestrian Australia Ltd to suspend his membership for three months. The Appeal Board ultimately confirmed the decision of the Chief Executive Officer of Equestrian Australia Ltd (the second decision).

3)      Concurrently, a Notice of Charge was laid against the applicant on 28 July 2022 in relation to complaints alleging misconduct.

The applicant seeks declaratory remedies that the two decisions and notice of charge are in breach of contract and/or contrary to ss 140, 232 and 233 of the Corporations Act 2001 (Cth).

Distilled from counsel’s submissions, there were three issues to be determined by the Court:

1)      Whether the decision of the Chief Executive Officer of Equestrian Australia Ltd to suspend the applicant for three months was contrary to the applicable rules and by-laws of Equestrian Australia Ltd;

2)      Whether any defect of the decision by the Chief Executive Officer of Equestrian Australia Ltd was cured by the appeal hearing; and

3)      Whether Equestrian Australia Ltd’s Disciplinary By-Laws and rules limited Equestrian Australia Ltd’s power to investigate and sanction breaches of its rules to complaints that have been charged within 14 days of the conduct subject of the charge.

Held per Stanley J:

The decision of the Chief Executive Officer of Equestrian Australia Ltd to suspend the applicant for three…

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AGLC
Thomas v Equestrian Australia Ltd [2022] SASC 151
Case
[2022] SASC 151
Decision Date

CaseChat Overview and Summary

In Thomas v Equestrian Australia Ltd, the court was called upon to determine the validity of decisions made by Equestrian Australia Ltd (EA) regarding the suspension of a member, Mr. Thomas. The primary issue was whether the CEO's decision to suspend Mr. Thomas was contrary to EA's rules and by-laws. A secondary issue was whether the Appeal Board's confirmation of the suspension decision cured any defect in the initial decision. Additionally, the court had to determine whether EA's Disciplinary By-Laws limit its power to investigate and sanction breaches of its rules by members to complaints charged within 14 days of the conduct.

The court found that the CEO's decision to suspend Mr. Thomas was invalid as it was not in accordance with EA's Disciplinary By-Laws. The CEO does not have the authority to impose penalties on members; this power is exclusively vested in the Disciplinary Tribunal. The court noted that the Disciplinary Tribunal did not conduct a hearing, thereby breaching the contract between EA and its members. The court also rejected EA's argument that Mr. Thomas's appeal to the court constituted acquiescence in the CEO's decision, stating that the appeal did not signify acceptance of the decision's validity. The court further held that the Disciplinary By-Laws impose obligations that must be observed, and section 125 of the Corporations Act does not validate any breach of these by-laws.

The final orders of the court were that the CEO's decision to suspend Mr. Thomas was invalid and that EA's Disciplinary By-Laws do not limit its power to investigate and sanction breaches of its rules to complaints charged within 14 days of the conduct.

Orders

Orders of the court

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Background

Background to the litigation

The issues for determination by the Court are first, whether the decision of the CEO of EA on 25 July 2022 to suspend the applicant was contrary to the applicable rules and by-laws of EA (‘the first decision’). This is not seriously contested by EA. Second, whether any defect in the first decision was cured by the hearing before the Appeal Board which, on 25 August 2022, confirmed the first decision (‘the second decision’). Third, whether EA’s Disciplinary By-Laws limit EA’s power to investigate and sanction breaches of its rules by its members to complaints that have been charged within 14 days of the conduct the subject of the charge.The factual background On 18 February 2022, a letter signed by the National Integrity and Complaints Officer of EA was sent to the applicant. The applicant was advised that formal complaints had been received from Mark Lindh, Michael Haese and Sophie Crauford regarding alleged actions which might have breached the EA Member Protection Policy, EA Code of Conduct, EA Social Media Policy and ESA State Squad Agreement. Those complaints were:1.Mr Mark Lindh (Complainant) alleges that you bullied, harassed, verbally abused, humiliated or victimized him when on 17 August 2021 you sent a private electronic message to Mr Clive Reed belittling Mr Lindh. These allegations, if founded, may constitute breaches of EA’s Member Protection Policy, Code of Conduct and/or Social Media Policies. 2.Mr Michael Haese (Complainant) alleges that social media posts concerning him, particularly a Facebook post on 17 September 2021, was false and misleading or abusive, and potentially breached Social Media Policies. 3.Ms Sophie Crauford (Complainant) alleges that social media posts written by you contain false and misleading information which may be defamatory and vilifying and potentially breached the Code of Conduct, Social Media Policies, and the State Squad Agreement. The applicant was further advised that an independent investigation in relation to the allegations would be conducted by Rogan Consultancy. On 23 February 2022, the applicant’s solicitors sent a letter to the National Integrity and Complaints Officer of EA. The letter stated that the applicant believes the complaints detailed in the letter of 18 February 2022 are malicious and vexatious and part of an ongoing campaign to discredit him and damage his reputation. Further, it stated that the applicant is entitled to be provided with details of the complaints, the actions said to give rise to the complaints, and the rules or policies that are alleged to have been breached. The letter sought provision of those particulars. On 16 March 2022, 22 March 2022, 23 March 2022 and 29 March 2022, Rogan Consultancy unsuccessfully attempted to contact the applicant seeking a response in relation the allegations being investigated. On 19 May 2022, Rogan Consultancy provided EA with its final report following their investigation into alleged misconduct of the applicant. Rogan Consultancy found that the allegations of Mark Lindh, Michael Haese and Sophie Crauford were substantiated.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The first decision is in breach of the rules of EA. It was made by the CEO of EA. Pursuant to EA Disciplinary By-Laws 5 and 6, the power to impose any penalty on a member is conferred exclusively upon the Disciplinary Tribunal unless it is a strict liability offence.[7] The CEO of EA is not empowered to impose any penalty on a member. There is no power of delegation by the Tribunal to the CEO of EA. As a matter of fact, the Disciplinary Tribunal did not conduct a hearing. Accordingly, the first decision is in breach of the contract that binds the EA and its members, including, in particular, the applicant. That makes it unnecessary to consider the submission that the decision of the CEO of EA is invalid, in any event, on the ground that the decision of the CEO of EA was made in breach of the requirements of procedural fairness enshrined in the Disciplinary By-Laws. It is sufficient to observe that the Disciplinary By-Laws contain a highly prescriptive regime for the conduct of proceedings before the Disciplinary Tribunal.[8] In this case, that regime was not followed. So much is conceded by EA.[9] [7] It is common ground that these were not strict liability offences.[8] EA Disciplinary Bylaws and the EA Disciplinary Tribunal Procedures and Protocols. [9] Respondent’s outline of submissions paragraph 29.The second decision The applicant received the decision of 25 July 2022 in writing. It set out a summary of the conduct of the investigation of the complaints of 18 February 2022, the findings made by the investigator engaged by EA, and EA’s findings in relation to the alleged breaches of its Code of Conduct, Social Media Policies and ESA State Squad Agreement as well as its decision on penalty. Importantly, the notice of decision was in the following terms:Investigation1. Mr. Mark Lindh (Complainant)Allegation(s):Mr. Mark Lindh (Complainant) alleges that you bullied, harassed, verbally abused, humiliated, or victimised him when on 17 August 2021 you sent a private electronic message to Mr. Clive Reed (third party) belittling Mr. Lindh. These allegations if founded may constitute breaches of EA’s Member Protection Policy, Code of Conduct and/or Social Media Policies.Findings:‘It is the belief of the investigator that Mr. Thomas messages to Mr. Lindh were confronting to Mr. Lindh and he felt harassed to receive unsolicited messages at night.The message on 17 August 2021 read;[The Complainant] is a useless rider, extremely jealous person and this is his only way to win…I am hoping he is at Kadina Show, and he will be confronted in front of people…That same evening Mr. Lindh received two (2) messages from Mr. Thomas which are summarised below;‘I have heard you are supporting a number of people legally against me, is this true?’Around an hour later Mr. Lindh received a second text from Mr. Thomas, saying somethinglike, ‘The fact you haven’t replied must mean it is true. That’s all I needed to know’Mr. Lindh had not been in contact with Mr. Thomas previously, although they had spoken at events from time to time. This on top of the message Mr. Thomas sent to Mr. Reed belittling Mr. Lindh, his riding ability and promising to confront him in front of other people at the next event, caused Mr. Lindh concern and he has stopped attending events.Mr. Thomas’s actions toward Mr. Lindh with his messages may bring EA into disrepute and is likely to cause harm to the reputation of EA. Mr. Lindh is of the view this message was meant to stop him supporting 3 other complainants.These comments breach EA’s Code of ConductBased on the evidence provided, there is sufficient evidence to substantiate this allegation.2. Mr. Michael Haese (Complainant)Allegation(s):Mr. Michael Haese (Complainant) alleges that social media posts, particularly the Facebook post on 17 September 2021 was false and misleading or abusive, and potentially breached Social Media Policies.Findings:‘It is the belief of the investigator that Mr. Thomas’s post on 17 September 2021 not only impugns Dr. Haese’s integrity as the course designer, it implies the competitors attending that day were ‘…unfortunately a group of our leading high level riders decided to pay huge money to pay the State Championships builder, train over the courses and privately train the courses at a private venue and not get caught out…’These comments breach both EA’s Code of Conduct and Social Media Policy.Based on the evidence provided, there is sufficient evidence to substantiate this allegation.3. Ms. Sophie Crauford (Complainant)Allegation(s):Mrs. Sophie Crauford (Complainant) alleges that social media posts written by you contain false and misleading information which may be defamatory and vilifying and potentially breach the Code of Conduct, Social Media Policies, and the State Squad Agreement. Findings:‘It is the belief of the investigator that Mr. Thomas’s post of the 26 November 2021 Mr. Thomas questions the fairness of ESA judges, other than Mr. Gareth Heron. By saying what he did, even if it is not directed toward Ms. Crauford, he questions the integrity of judges involved in the sport by suggesting they are not fair toward every rider.In his post of the 26 November 2021 Mr. Thomas questions the fairness of ESA judges, other than Mr. Gareth Heron. By saying what he did, even if it is not directed toward Ms. Crauford,he questions the integrity of judges involved in the sport by suggesting they are not fair toward every rider.These comments breach EA’s Code of Conduct, Social Media Policy and ESA State Squad Agreement.Based on the evidence provided, there is sufficient evidence to substantiate this allegation.Based on the evidence provided for all three allegations you have breached the following provisions of EA’s Code of Conduct:• Respect the rights, dignity and worth of all people involved in equestrian (including all participants, officials, and administrators) regardless of gender, ability, sexual orientation, age, cultural background, or religion.• Be fair, considerate, honest and act appropriately in all dealings.• Be professional in, and accept responsibility for, your actions• Respect the spirit of the rules of the sport (including, without limitation, national and international guidelines which govern Equestrian Sport, the member associations and the affiliated clubs) and fair play and behave accordingly.• Refrain from any form of harassment, bullying, abuse, violence, intimidation, or vilification of others, including via the use of social media• Refrain from any behaviour that may bring EA, its member associations, its affiliated clubs, or the sport of equestrian into disrepute.• Not engage in conduct that is (in EA’s reasonable opinion) unethical, unbecoming, or likely to cause harm to the reputation of EA, its member associations or affiliated clubs or the sport of equestrian.• Contribute to a safe sporting environment and respectful culture which is accepting of individual differences and behave accordingly.• Condemn the use of violence or abuse in any form, whether it is by other spectators, participants, coaches, officials, volunteers, or athletes.Based on the evidence provided you have breached the following provisions of EA’s Social Media Policy;Clause 4d) You reflect EAEven if you don’t identify yourself on social media as being associated with EA (whether as an employee, member or otherwise), you can still be linked to EA. Think about what you say and how you’re saying it.Don’t engage in any conduct on social media that could directly or indirectly damage EA’s name or which may otherwise bring the reputation of EA or its member associations or affiliates into disrepute.Comments that are contrary to the spirit and integrity of the sport of equestrian will not be tolerated.Based on the evidence provided you have breached the following provisions of the ESA State Squad Agreement• Respect the rights, dignity and worth of fellow riders, coaches, officials, volunteers, parents, and spectators.• Be fair, considerate, and honest in all dealing with others including coaches, parents, and officials.• Learn and abide by the rules of our sport and respect the decision of the officials making all appeals through the formal process and respecting the final decision.• Always operate within the rules, if you are unsure or don’t understand, ask for help.

Ratio Decidendi

Legal Principle Established

I do not accept this submission. Strictly speaking, acquiescence indicates the contemporaneous and informed “knowing” acceptance or standing by, which is treated by equity as “assent”, that is, consent to what would otherwise be an infringement of rights. The term is commonly used to refer to acceptance of a past wrongful act in circumstances which give rise to an active waiver of rights or a release of liability.[31] In this case, there has been no standing by on the part of the applicant. On the contrary, the applicant has swiftly invoked his appeal right. In no sense can he have been said to have acquiesced in the wrong involved in the first decision. In any event, that is irrelevant once he had appealed the first decision. Neither can it be said that he has acquiesced in the asserted errors of which he complains in relation to the second decision. The proceedings in this Court were brought promptly. In no sense can the exercise of the applicant’s appeal rights constitute acquiescence in the first or second decisions. Neither can the applicant be found to have acquiesced in the “right” of EA to investigate and punish complaints that are made outside the 14-day time limit prescribed by the Disciplinary By-Laws. The abandonment by the applicant of that ground of appeal is only relevant to the first and second decisions. It precludes him from complaining about disciplinary action taken in respect of those matters that are the subject of the complaint of 18 February 2022 and were brought outside the 14-day time limit. However, it does not preclude him from objecting to disciplinary action being taken against him in respect of complaints made outside the 14-day time limit as set out in the Notice of Charge of 28 July 2022. His conduct does not constitute acquiescence in any subsequent breach of the 14 day time limit rule. [31] Orr v Ford (1989) 167 CLR 316, 337, per Deane J.Section 125 of the Corporations Act Contrary to the submission of EA, I do not accept that the terms of s 125(1) of the Corporations Act validates any breach by EA of its Disciplinary By-Laws. Section 125(1) provides:If a company has a constitution, it may contain an express restriction on, or a prohibition of, the company’s exercise of any of its powers. The exercise of a power by the company is not invalid merely because it is contrary to an express restriction or prohibition in the company’s constitution. In this case the Disciplinary By-Laws are not part of EA’s constitution. Even if the by-laws are considered to be authorised by EA’s constitution, s 125(1) is concerned with the exercise of a power by the company which it is expressly prohibited from, or restricted in, exercising. That is not this case. The relevant by-laws do not impose restrictions or prohibitions but impose positive obligations that must be observed in exercising disciplinary powers over the company’s members. Section 125 is not to be construed as frustrating the Court’s remedial powers. That would be contrary to s 232(e) of the Corporations Act which empowers the Court to provide a remedy to a member who is the victim of oppressive or unfairly prejudicial conduct by a company. In any event, s 232(e) empowers the Court to intervene in the conduct of a company’s affairs where the result of that conduct is to oppress or unfairly prejudice an individual member or his or her interests as a member.[32] Relatedly, in this case, EA’s Disciplinary By-Laws exist to protect it from conduct of its members prejudicial to its interests and to protect its members from the oppressive or unfairly prejudicial exercise of those powers conferred by the by-laws. [32] Wayde & Anor v NSW Rugby League Ltd (1985) 180 CLR 459.