Middeldorp v Avondale Jockey Club Inc
[2019] NZHC 901
•26 April 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-1900
[2019] NZHC 901
UNDER Judicial Review Procedure Act 2016 IN THE MATTER OF
an application for Judicial Review
BETWEEN
VINCENT JACOB MIDDELDORP
Applicant
AND
AVONDALE JOCKEY CLUB INCORPORATED
Respondent
Hearing: 8 March 2019 Appearances:
P David QC and C Boswell for the Applicant
G M Coumbe QC and D Bullock for the Respondent
Judgment:
26 April 2019
JUDGMENT OF GORDON J
This judgment was delivered by me on 26 April 2019 at 2 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: Wilson Harle, Auckland
Lee Salmon Long, Auckland
Counsel: P David QC, Auckland
G Coumbe QC, Auckland
MIDDELDORP v AVONDALE JOCKEY CLUB INC [2019] NZHC 901 [26 April 2019]
Introduction
[1] The plaintiff, Vincent Middeldorp (Mr Middeldorp), is a member of the committee of the defendant, Avondale Jockey Club Inc (the Club). Mr Middeldorp has been a member of the Club since 1982 and was elected to the Committee in October 2013.
[2] Mr Middeldorp brings judicial review proceedings seeking declarations that decisions of the Committee were made without a legal basis under the Rules and Regulations of the Club (Rules) and/or in breach of the Club’s legal obligations. Mr Middeldorp says that the Committee suspended him from office as a committee member on two occasions, in November 2016 (first suspension) and December 2017 (second suspension), when it had no power to do so under the Rules. He alleges, alternatively, that the Committee breached its legal obligations to act fairly, with proper basis and in good faith when making the two decisions to suspend him and had “no objectively supportable factual foundation” for those two decisions.
[3] Mr Middeldorp further alleges that the Committee did not act in good faith or for a proper purpose in the best interests of the Club in declining applications for membership by 14 applicants.
[4] Finally, Mr Middeldorp alleges that the Committee has operated from 2014 onwards without the required number of members and, in terms of elections to the Committee, in breach of the requirements of the Rules.
Background
The Club and Mr Middeldorp
[5] The Club was established in 1889. It is an incorporated society under the Incorporated Societies Act 1908. It is one of three thoroughbred racing clubs registered with New Zealand Thoroughbred Racing Inc (NZTR), which oversees thoroughbred racing. The objects of the Club as set out in the Rules are:1
3 The objects for which the Club is established are –
1 The Rules were adopted at a special general meeting of members on 29 June 1999.
(a)To hold race meetings and promote, regulate and assist the sport of horse racing
(b)To do all such other things as the Club or Committee think desirable for the purpose of furthering the objects of the Club or incidental or conducive to the attainment of the objects
[6] The Avondale Racecourse was formerly one of New Zealand’s premier racing venues. However, the Club has faced serious financial difficulties since the early 1990s. It even suspended racing for over two years from July 2010 to consolidate its financial position. Whilst it has managed to return to a sound financial position in 2015 under the current president Allan Boyle, who was elected to the Committee in October 2006 and as president in 2012, there are still significant challenges. The Club has been supplementing its income by leasing some of its facilities to the Auckland Council for use as sports fields and to the operator of the Avondale market.
[7] Even more significantly, Avondale Racecourse faces a prospect of closure. A report dated 31 July 2018, commissioned by the Minister of Racing, recommended the closure of a number of venues, including Avondale, as from the 2020/2021 season. On
29 January 2019, NZTR released an industry consultation paper proposing that Avondale be closed from and including the 2024/2025 season, with the Club to then race at Ellerslie Racecourse. However, the Committee remains dedicated to promoting racing at Avondale.
[8] The Club’s position is that during these difficult times, Mr Boyle and the Committee have been trying to bring about positive change, while Mr Middeldorp has been making trouble by refusing to accept decisions of the majority of the Committee and has gone behind the Committee’s back in order to undermine the Committee’s decisions.
[9] Mr Middeldorp disputes the Club’s characterisation of his conduct and says that he has always acted with the Club’s best interests in mind.
Background to first suspension
[10] The Club’s most valuable asset is the race track. The land is said to have an estimated value of more than $250,000,000 with re-zoning. The need for a
rationalisation of the Club’s landholding has been acted on by the Club on and off for over 30 years.
[11] In 2014, the Club and NZTR jointly sought a high level initial report from a United Kingdom consulting company, Turnberry Consulting (Turnberry), for a possible redevelopment of parts of the Club’s property, principally the Club’s racing footprint. Paul Roberts, an executive-director and co-founder of Turnberry, and a strategic racecourse consultant said to be of international repute, was asked to do the report, which was presented to the Committee in November 2014 (the first Turnberry report).
[12] The first Turnberry report was met with mild support from the Committee. Mr Middeldorp was strongly opposed to the proposals.
[13] In April 2015, Mr Boyle received a phone call and an email from Campbell Moncur, the Deputy CEO of NZTR. Mr Moncur expressed concern that a Club committee member, or someone closely connected with the Club’s management, had posted confidential information relating to the Club on the online thoroughbred racing chat site, RaceCafe, using the pseudonym “Klinger”. The posting also said that NZTR had been “meddling in Avondale’s affairs to an unprecedented extent” and that the results of that meddling “are absolutely bizarre”.
[14] A second post by Klinger, also in April 2015, was of “serious concern” to NZTR as the author appeared to be trying to undermine the credibility of Mr Roberts and NZTR and to undermine the Turnberry redevelopment project.
[15] It was suspected that Mr Middeldorp was Klinger. Mr Boyle met with Mr Middeldorp on 16 April 2015 to attempt to resolve the issue and find a practical solution rather than taking the NZTR complaint to the Committee. Mr Middeldorp refused to say anything about the identity of Klinger. A second attempt by Mr Boyle to resolve the matter directly with Mr Middeldorp was similarly unsuccessful.
[16] The matter was therefore put before the Committee on 20 April 2015. The Committee passed a resolution warning Mr Middeldorp that if Klinger were to post
subsequent material on the internet containing negative or disparaging statements about the Club, NZTR or Mr Roberts, then the Committee would institute a formal investigation under cl 17 of the rules with a view to determining whether Mr Middeldorp was the person responsible for the postings, and if so, whether he should be expelled as a member of the Club on the grounds that his conduct was prejudicial to the Club. At the committee meeting, Mr Boyle also reminded Mr Middeldorp about the confidentiality of Club business and the importance of exercising judgement in his public statements about Club matters.
[17] It was not until his pleading in this proceeding that Mr Middeldorp formally acknowledged, for the first time, that he was Klinger.
First suspension
[18] In September 2015, the Club received a second report from Turnberry (the second Turnberry report). The report was again subject to a cost sharing arrangement between the Club and NZTR. Mr Roberts of Turnberry was to be in New Zealand the following year in November 2016. So, a meeting was arranged with Mr Roberts, those committee members who could attend and Mr Moncur of NZTR. The meeting was scheduled for 10 November 2016.
[19] On 9 November 2016, Mr Boyle received a telephone call from Mr Moncur telling him that Mr Middeldorp had sent a number of emails (between 25 November 2015 and 9 November 2016) to William Derby, the CEO of York Racecourse (York) in England, making comments about Mr Roberts and Turnberry. It seems that Mr Derby had sent a copy of the emails to Mr Roberts who then complained to NZTR.
[20] Mr Middeldorp had sent the emails in his capacity as a Club committee member but without the Committee’s knowledge or approval. The emails included the following statements:
When I look at the proposed layout I am astounded at how flawed it is …
Because the work produced for Avondale is of such poor quality, I am wondering if the claims made on the Turnberry website as regards the York racecourse are factually correct.
Turnberry claim they are currently working on making improvements to the Pre-Parade Ring, Parade Ring and Saddling Box areas of the York racecourse.
… Has York actually commissioned Turnberry to make improvements?
[21] Mr Roberts then spoke to Mr Boyle by telephone and informed him that he would not attend the meeting on 10 November 2016 with the Club if Mr Middeldorp was present. Mr Boyle says that Mr Roberts was very annoyed and considered that Mr Middeldorp had acted unfairly and inappropriately in implying, in his communications with Mr Derby, that Mr Roberts may have lied to York, a Turnberry client.
[22] Mr Boyle informed Mr Middeldorp of the complaint and, given the seriousness of the stance taken by Mr Roberts, requested that Mr Middeldorp meet with him that afternoon.
[23] At this point in the narrative I will not go through detail of events that followed as I will address them in the context of Mr Middeldorp’s claim of unfair process in relation to the first suspension. I simply mention that Mr Roberts followed up his telephone complaint with a formal letter of complaint.
[24] At the next committee meeting on 16 November 2016, the second Turnberry report was considered. The Committee, by a majority, adopted the second Turnberry report and aspects of the first Turnberry Report. The development was to be incremental and was to be financed in part by the sale of small portions of surplus land owned by the Club. Mr Middeldorp remained strongly opposed to the proposals. He set out his views in detail in three documents which the Committee considered at its meeting on 16 November 2016 before voting.
[25] Following an oral hearing on 28 November 2016, the Committee suspended Mr Middeldorp from attending the next three committee meetings which took place on 16 December 2016, 13 February 2017 and 27 March 2017. There was no meeting in April 2017. Mr Middeldorp began attending committee meetings again on 1 May 2017.
[26] As part of its decision on 28 November 2016, Mr Middeldorp was given another warning of possible expulsion from the Club in the event of further misconduct. Mr Middeldorp accepted the decision and tendered a letter of apology to which I refer later in this judgment.
Closure of the training facilities
[27] This issue provides relevant background to Mr Middeldorp’s complaint that the Committee improperly rejected applications for membership of the Club.
[28] The Club had been providing horse training facilities at its venue for over 70 years for both professional and hobby trainers licensed under NZTR Rules. However, training activity had steadily declined over the preceding 18 or so years. The question of whether the training facility should be closed had been considered by NZTR in 2011 and was also raised at the Club’s Annual General Meeting (AGM) in October 2013. In November 2013, the Committee resolved to retain the training operation for the foreseeable future.
[29] In February 2016, Mr Boyle asked the treasurer to begin preparing a report assessing the viability of the Club’s training facility and the likely non-financial impacts of closure. The treasurer reported to the Committee on 27 June 2016 that the paper was underway. A draft report was tabled at the committee meeting on 16 December 2016. The Committee agreed to make the decision on the training track issue at the next meeting which was scheduled for 13 February 2017.
[30] A final report was presented by the treasurer to the Committee at its meeting on 13 February 2017 (which was not attended by Mr Middeldorp as his suspension was still in place). Mr Boyle says that after a lengthy discussion, a consensus emerged that the Club had no choice but to take the hard decision to close down its training facility. The closure date was to be 29 July 2017.
[31] Mr Boyle’s evidence is that the decision to close the training facility was taken after a consultation process with local trainers and NZTR. None of the local trainers responded to the Committee’s invitation to make a submission on the question of closure, and the senior executives of NZTR supported closure.
[32] Although not forming a separate ground for review, Mr Middeldorp complains the decision to close the training facility was taken while he was suspended from the Committee and unable to take part. Mr Boyle’s position is that the decision needed to be made in the Club’s best interests and Mr Middeldorp’s absence did not have any influence on the timing of the decision. Because the decision was unanimous, even if Mr Middeldorp had been present and eligible to vote that would not have affected the outcome.
[33] Mr Boyle says there was also the question of conflict of interest on Mr Middeldorp’s part as he wished to use the Club’s facility to train his own horse. In advance of the 13 February 2017 committee meeting, Mr Middeldorp wrote to the Club’s solicitors saying that now he had retired and had the time once again to train a horse, the Committee was to be closing the training facility. Mr Middeldorp went on that he thought it was grossly unfair that the President was taking advantage of his being stood down from the Committee to push through a proposal that had a major impact on him personally and to which he would be totally opposed. Mr Middeldorp also wrote to Mr Boyle on the same day saying that if it were to be decided that training at Avondale was to be closed, then in order to train his mare he would be faced with either having to drive to Pukekohe or sell his property and move to an area where horses were still trained.
[34] On 27 March 2017, the Committee considered a letter from George Merkulov, a trainer using the Avondale training facilities from time to time, asking the Committee to reconsider its decision to close the training facility. The Committee considered that the letter had all the hallmarks of being written by Mr Middeldorp.
[35] On 26 May 2017, the Avondale trainers’ representative, Natalie Tanner,2 sent an email to the Committee asking that the closure date be extended to 31 March 2018. Mr Boyle replied on behalf of the Committee advising that the period would not be extended, that by the time of closure the affected trainers would have had a notice period of about 13 months, but he noted informal discussions that had occurred to the effect that the Club could provide an ancillary service for trainers relocating to
2 Ms Tanner was one of the applicants for club membership referred to in the next section of the judgment.
Helensville. Mr Boyle added that, on behalf of the Committee, he indicated that the Club would be willing to meet with the trainers with a view to supporting or assisting in some way with the proposed relocation to Helensville. The Committee later voted to provide the financial support to benefit the trainers at its meeting on 24 July 2017.
Membership applications
[36] In April and May 2017, 16 applications for membership of the Club were received. Mr Boyle’s evidence is that 14 of the applicants appeared to be associated with Mr Middeldorp, giving the timing and the cross-nominations within the group. All 14 applicants were eligible to be members under the Rules. However, Mr Boyle and some members of the Committee were concerned about whether the applications were genuine or whether their sole reason for joining was to try and oppose the training facility closure and then to let their memberships lapse. Following the committee meeting on 12 June 2017, each applicant was invited to tell the Committee why they wanted to join. Of the 14 applicants, only one responded.
[37]The Committee declined all 14 applications.
Reopening of matters
[38] Once his suspension had ended, and despite his apology, Mr Middeldorp sought to reopen matters. He sent a letter to the Committee on 6 June 2017 disputing the lawfulness of his suspension. He also sent his letter to the Chairs of NZTR and the New Zealand Racing Board.3
[39] Mr Middeldorp’s letter of 6 June 2017 was before the Committee at its meeting on 12 June 2017. The minutes record that “the matter is not being discussed”. Mr Middeldorp then sent an email dated 13 June 2017 to a group of trainers whose membership applications had been discussed at the 6 June 2017 committee meeting. The email stated:
I couldn’t believe what happened at the committee meeting. Allan Boyle, who is a Barrister and Solicitor, steered the committee in such a way that it refused
3 The New Zealand Racing Board is the overall governing body established under the Racing Act 2003.
to accept any of the applicants for membership nominated by Middeldorp, Merkulov and Waddell. It wasn’t a straight out refusal. Instead the secretary (Tracey Berkahn) has been instructed to write to all 14 filed applicants telling them that they needed to write a letter that persuades the committee as to why they should be admitted as members and to explain what prompted their application at this particular time.
[40] The Committee felt they could no longer trust Mr Middeldorp and that relations between him and other committee members, particularly the President, had broken down. On 24 July 2017, the Committee passed a vote of no confidence in Mr Middeldorp. The vote was passed seven to one, with Mr Middeldorp allowed to vote against.
Second suspension
[41] In October 2017, Mr Middeldorp sent an anonymous “Letter of Concern” purporting to be from “concerned members” of the Club, to Club members ahead of the Club’s AGM. In the letter, he set out his concerns about certain decisions the Committee had made or was planning to make. He sent the letter to third parties, including NZTR.
[42] The secretary of the Committee, Tracey Berkahn, wrote to the Committee on 18 November 2017 complaining about the anonymous letter. Mr Boyle wrote a memorandum in relation to the complaint which was sent to all committee members. At its meeting of 27 November 2017, the Committee decided that a complaint against Mr Middeldorp in relation to the letter would be heard by four members of the Committee. On 1 December 2017, Mr Middeldorp went to the room where the complaint was to be heard and tabled a set of written submissions. He then left the room. On 7 December 2017, he received a written decision from the “sub-committee” suspending him for four consecutive committee meetings (12 February, 26 March, 7 May and 8 June 2018) and removing his privileges as a committee member during that period.
[43] While suspended, Mr Middeldorp tried to force his way into two committee meetings. In an email to the Racing Integrity Unit of NZTR the day after the second of those two meetings, Mr Middeldorp said that he turned up for the committee
meeting again, adding “Not that I wanted to get in. I just thought I would have a bit of fun at their expense”.
[44] Neither the Racing Integrity Unit nor the NZTR has taken any action against the Committee or the Club (that the Court is aware of) in response to any of Mr Middeldorp’s complaints.
The claims
[45]The issues raised in the five pleaded causes of action are as follows:
First cause
(a)Did the Committee have power under the Rules to suspend Mr Middeldorp from his office as a member of the Committee on the two occasions in November 2016 and December 2017?
(b)Did the Committee have power to form a sub-committee (second suspension)?
Second cause
(c)Did the Committee meet its natural justice obligations in relation to both decisions to suspend Mr Middeldorp?
Third cause
(d)Did the Committee have an “objectively supportable factual foundation” for its decisions to suspend Mr Middeldorp?
Fourth cause
(e)Did the Committee act lawfully in declining the 14 membership applications?
Fifth cause
(f)Has the Committee operated lawfully in respect of its composition and election of committee members?
[46] Before addressing each of the above issues, there is a preliminary question: whether the Court should intervene.
Can Mr Middeldorp bring his claims in judicial review proceedings?
[47] In its statement of defence, the Club pleads that the Committee’s decisions suspending Mr Middeldorp, declining the 14 membership applications and the election of committee members and the operation of the Committee are not amenable to judicial review. However, in her submissions on behalf of the Club, Ms Coumbe QC approached issue on the basis that the Court should be hesitant about intervening.
[48] Ms Coumbe submits that the Club is not a public body and it does not perform public functions. It conducts the business of racing betting, a commercial activity, albeit regulated by statute. Ms Coumbe further submits that the specific decisions under challenge do not have a public or quasi-public element. They relate largely to the internal management of the Club. The Club’s rules constitute a contract between the Club and its members. The members have a remedy in contract and that should be the primary means of redress. Even in a contract context, the Court should still intervene only in limited situations.
[49] Ms Coumbe further submits that while the Court of Appeal, in both Hopper v North Shore Aero Club Inc4 and Stratford Racing Club Inc v Adlam5, mentioned “discipline” and “breach of natural justice” as a basis for intervention, given that the context of the rules of natural justice are variable, the Court’s willingness to intervene must depend on the circumstances. Ms Coumbe submitted that in the present case, unlike in Stratford, the challenged decisions lack sufficient gravity.
4 Hopper v North Shore Aero Club Inc [2007] NZAR 354 (CA) at [12]
5 Stratford Racing Club Inc v Adlam [2008] NZCA 92, [2008] NZAR 329.
Discussion
[50] Decisions of incorporated societies are amenable to judicial review.6 As the Court of Appeal stated in Stratford (in which the applicants’ complaint against the committee was that it was acting unfairly and for an improper purpose), such a claim “is quintessentially the stuff of judicial review”.7
[51] It is also clear that the jurisdiction extends to decisions for which an action in contract might also be brought.8
[52] In the earlier case of Hopper,9 the application concerned the decision of the Club committee to decline Mr Hopper’s application to base an aircraft at the Club’s airfield. In the High Court, Williams J noted the hesitation on the part of the courts about interfering in the actions of incorporated societies.10 The Judge continued:11
[31] Beyond ensuring compliance with the rules and requiring society and committee decisions to be arrived at honestly and bona fide in accordance with the rules, the courts have interfered in the running of incorporated societies only in a relatively restricted variety of cases. Membership issues have attracted the court’s intervention. Disciplinary proceedings or the like in a society’s constitution have attracted the court’s intervention. So, too, the courts have been prepared to involve themselves where what is in issue is a licence or a right to make a livelihood with or in association with an incorporated society.
[53] On appeal in that case, the Court of Appeal stated that while New Zealand courts have been prepared to intervene in the internal affairs of an incorporated society or club in cases involving a breach of contract constituted by the rules, this has normally been only in the limited circumstances as described in the High Court judgment referred to in [52] above. The Court of Appeal continued:12
A Club’s rules will be reviewable where they or the way in which they are applied, constitute a breach of natural justice.
6 Stratford Racing Club Inc v Adlam, above n 5. Section 3(2) of the Judicial Review Procedure Act 2016 has left this intact.
7 At [55].
8 At [55].
9 Hopper v North Shore Aero Club Inc (CA), above n 4.
10 Turner v Pickering [1976] 1 NZLR 129 and Finnigan v New Zealand Rugby Football Union Inc (No 2) [1985] 2 NZLR 181 at 185 as cited in Hopper v North Shore Aero Club Inc HC Auckland CIV-2005-404-2817, 6 December 2005 at [29], [30] and [43].
11 Hopper v North Shore Aero Club Inc (HC), above n 10.
12 Hopper v North Shore Aero Club Inc (CA), above n 4, at [11].
[54] In this case, the claims concern compliance with the Rules which govern the operation of the Club, the proper process in disciplinary proceedings and membership issues. The decisions, therefore, fall not only within the statutory jurisdiction under the Judicial Review Procedure Act 2016 but also within the circumstances referred to in Hopper (disciplinary proceedings and membership issues) where judicial review is available. Ms Coumbe may be on slightly stronger ground on the issue of the constitution of the Committee and the process of elections to the Committee. But I take into account that the Club undertakes a function of a quasi-public nature.13 Racing is organised on a national basis under a statutory framework. The Club is a part of the sport of racing and provides racing for the public under the rules of racing.
[55] While I acknowledge that it is well established that the Court will exercise restraint,14 having regard to the subject matter of the allegations, I propose to proceed to consider the issues raised. It does not necessarily follow that I will find in favour of Mr Middeldorp. Each of the allegations needs to be examined. Then, even if I make findings in his favour, there is the further question of whether I should order relief.
Is there a power under the rules to suspend a committee member?
[56]First, it is necessary to set out the relevant rules.
[57] Cessation of membership (as opposed to cessation of committee membership or suspension from the Committee) is set out in rr 16 and 17 as follows:
16Any member who shall be disqualified under the Rules of Racing, trotting or greyhound racing, shall upon such disqualification, cease to be a member of the Club
17The Committee may erase from the list of Members any person who has been convicted by a Court of Law of a criminal offence, or in its opinion is guilty of grossly improper or dishonourable conduct or riotous behaviour or drunkenness or of conduct prejudicial to the interests of the Club, whether this shall happen at any race meeting or otherwise …
13 See Graham Taylor Judicial Review: A New Zealand Perspective (4th ed, LexisNexis NZ Ltd, Wellington, 2018) at [2.15]–[2.16].
14 See, for example, Adlam v Stratford Racing Club Inc [2007] NZAR 543 (HC) at [80].
[58] Rule 27 sets out the circumstances in which a person shall cease to hold office as president or vice president or as a member of the Committee as follows:
27A person shall cease to hold office as President or Vice-President, or as a member of the Committee
(a)Upon ceasing to be a member of the Committee
(b)Upon accepting or permitting his/her nomination or appointment to any office in any other racing club, trotting club, greyhound club, or like organisation, or
(c)If being made a member of the Committee he/she is absent without the consent of the Committee from three consecutive meetings of the Committee
…
[59]There is a section on powers and duties of the Committee as follows:
Powers and Duties of the Committee
48 The Committee shall conduct, control and manage all the affairs, concerns and business of the Club in all things according to their discretion and in accordance with these rules. For this purpose and without prejudice to the generality of the foregoing, the Committee shall have the power –
…
(h)The Committee shall appoint annually a judge, starter, clerk of the course, clerk of scales and such other officials as the Committee may determine are necessary to conduct race meetings. The Committee shall determine the remuneration and duties of any person appointed. In the absence or disability of any person so appointed, the Committee shall make any necessary arrangements to appoint other persons to perform duties as it thinks fit.
(i)To appoint and at its discretion remove, discuss and suspend all such officers, agents and servants of the Club, whether permanent or temporary, or to fix and determine their duties, salaries and other terms and conditions pertaining to their respective appointments.
…
[60]Finally, there is a section on bylaws and general as follows:
Bylaws and General
54The Committee shall have the power from time to time to make, alter, amend or repeal any bylaws for carrying out these rules and for the regulation of its own proceedings as it may deem expedient, provided
however, that such bylaws shall be entered into a book to be kept for that purpose15
55If any case occurs which is not provided for in these rules, it shall be determined by the Committee
[61] Ms Coumbe submits that the Club did have the necessary suspension power either under r 55 or pursuant to an implied power under the Rules. First, in relation to r 55, Ms Coumbe notes that r 17 confers on the Committee an express power to expel a member from the Club and she accepts that the Rules do not expressly confer a power to suspend a committee member from attending committee meetings. However, Ms Coumbe submits that the ordinary principles of contractual interpretation apply, just as they do in any other contract.16
[62] Ms Coumbe therefore submits that r 55, on its proper interpretation, allows the Committee to impose lesser sanctions than expulsion from the Club, including removing or suspending a committee member. Ms Coumbe submits there is nothing in r 55 to suggest that it is limited to procedural matters. There is no reason to limit what is expressed as a general power. She submits it is unlikely that the Committee was intended to have no power to discipline its own members for impropriety having followed a fair process in furtherance of the proper governance and interests of the Club.
[63] In the alternative, Ms Coumbe submits that such a power can be implied as a term of the rules. Ms Coumbe submits this turns on the ordinary principles of contractual interpretation.17 Ms Coumbe refers to the approach adopted by the Supreme Court which implies a term where “although the instrument does not expressly say so, that is what a reasonable person would understand it to mean”.18 Finally, Ms Coumbe submits that the pre-conditions for implication listed by Lord Simon in BP Refinery (Westernport) Pty Ltd v Shire of Hastings,19 and applied
15 The parties were agreed that there are no bylaws relevant to this issue.
16 Citing, in support, Dawkins v Antrobus (1881) 17 Ch D 615 (CA) at 621.
17 Citing, in support, Mobil Oil New Zealand Ltd v Development Auckland Ltd [2016] NZSC 89, [2017] 1 NZLR 48.
18 Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988 at [25] adopted by the Supreme Court in Mobil Oil New Zealand Ltd v Development Auckland Ltd, above n 17, at [80].
19 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 (PC).
by the Supreme Court in Mobil Oil New Zealand Ltd v Development Auckland Ltd, are all met.
[64] Mr David QC, for Mr Middeldorp, on the other hand, submits that the Rules, on their proper construction, contain no power or process for the suspension of an elected committee member and there is no basis on which the power can properly be said to be implied into the Rules.
Discussion
[65] There are two judgments of this Court which provide assistance on this issue. I refer first to Solomon v Waikato Raupatu Trustee Co Ltd.20 The background was that at a meeting of the Board of the first defendant and the second defendant, the majority of those participating and entitled to vote purported to suspend the plaintiff, Haydn Solomon, from his co-chair commercial role and his role on the Board of the first defendant until certain investigations had been completed. Mr Solomon challenged the validity of the decision, seeking orders quashing it and reinstating him to his various offices. He also applied for an interim injunction granting the same relief. In giving his decision on the application for an interim injunction Harrison J stated as follows:
[21] Second and independently, those present at the meeting had no power to suspend Mr Solomon from office. Ms Berryman was right in her protest. Neither WRTCs constitution nor TKOWs empowered suspension. Originally, relying on Peters v Collinge (supra), Mr Majurey argued for an implied power to suspend in unusual circumstances provided the rules of natural justice were observed. He submitted that Mr Solomon’s suspension was substantially justified because that step “is a less punitive form of action than removal”, which the constitution and rules allow, and because of Mr Solomon’s conduct in what Mr Majurey described as “a highly controversial case” in circumstances where he was not denied natural justice.
[22] I disagree. Mr Majurey now accepts that Peters v Collinge does not stand for his proposition. Even if a power to suspend could possibly be implied, an argument that Mr Solomon’s suspension was substantively justified does not constitute an unusual circumstance requiring implication of the necessary power. The rules were clear in omitting an express power. …
20 Solomon v Waikato Raupatu Trustee Co Ltd HC Auckland CIV-2004-419-542, 3 May 2004.
[66] The second judgment is Tamaki v Māori Women’s Welfare League.21 The plaintiff, Hannah Tamaki, was nominated for the position of National President of the League. Shortly after her nomination, 10 new branches of the League were formed. There were a number of features common to each new branch, which raised questions as to their legitimacy. The defendant League convened a National Executive Committee meeting and determined to conduct an inquiry into the formation of the new branches. The nomination of Mrs Tamaki was not to be actioned pending the outcome of the inquiry. Her name was not included on the ballot papers. Mrs Tamaki sought judicial review of the decisions of the National Executive Committee, arguing that it was wrong to exclude her from the ballot papers and to exclude the 13 branches from voting.
[67]Allowing the judicial review in part, Kòs J said:
[58] Furthermore, I do not accept that a power to suspend a nomination (or a branch) pending completion of an investigation into constitutional compliance can properly be inferred in this case:
(a)First, it is not expressly stated in the constitution. The power to “dismiss” an individual member for misconduct, or bringing the mana of the League into disrepute, exists in Article 19. But that is all. That power has not been used in this case. Perhaps it could have been, but that is beside the point.
(b)Secondly, the law generally insists that a power to suspend, expel or otherwise discipline membership of a society be express, rather than merely implied. There is good sense in that requirement. An untrammelled, implied power to discipline members is a dangerous device. It is commonsense that its extent should be specified, so all members know what the consequences of their actions might be. And inasmuch as the presidential election is triennial only, the effect of the present “suspension” is more fairly characterised a disqualification.
… (Footnotes omitted)
[68] I consider the reasoning in those two cases is directly applicable here. Committee members are elected by the membership to serve on the Committee. The Committee has powers and duties under the Rules to conduct the affairs of the Club.
21 Tamaki v Māori Women’s Welfare League Inc [2011] NZAR 605 (HC).
Under r 17, the Committee has the express power to bring membership and its privileges to an end (by following a specified process set out in the Rules). It is also apparent from r 48(i) that the Committee has express power to suspend or remove judges, starters, clerks of the course, clerks of scales and other officials necessary to conduct a race meeting.
[69] There is no such express power or procedure for suspending an elected committee member from his or her office. When r 55 is read in the context of rr 17 and 48, I consider that r 55 is limited to procedural matters, rather than providing the Committee with the power to take disciplinary action against committee members. Construing r 55 in this way is consistent with those other rules which provide for a specified process for the removal of membership, for the election of committee members, for the power to remove certain Club employees, but where there is no provision for removal or suspension of elected committee members by the Committee.
[70] The Club and the Committee must act in accordance with the Rules and can only take actions which the Rules empower it to take in circumstances where sanctions are to be imposed.
[71] For the same general reasons, I do not accept that a power to impose the lesser sanction of suspending a committee member can be implied as a contractual term. That is not to say other terms cannot be implied; I discuss this in connection with the issues arising in the fifth cause of action.
[72] For all the foregoing reasons, I find that the Committee did not have power under the Rules to suspend Mr Middeldorp on the two occasions in November 2016 and December 2017.
[73]I therefore find in favour of Mr Middeldorp on the first cause of action.
Did the Committee have the power to form a sub-committee (second suspension)?
[74] Although I have determined that the Committee did not have power under the Rules to suspend Mr Middeldorp, I will nevertheless go on to consider this second claimed aspect of illegality.
[75] Mr David for Mr Middeldorp submits that there is no power or process in the Rules to suspend a committee member by a decision of a sub-committee. There is also no basis to imply a power or mechanism to suspend a committee member through the operation of a sub-committee.
[76] As will be recalled, the complaint against Mr Middeldorp related to the anonymous Letter of Concern. It was the Committee Secretary, Ms Berkahn, who had made the complaint. The President, Mr Boyle, had a “prosecutorial” role in supporting the complaint. In my view, it was proper for the Committee, applying ordinary principles of natural justice, to decide that those two committee members should not participate in the decision-making. Under those same principles, Mr Middeldorp, the person against whom the complaint was made, should also not participate in the decision-making.
[77] A further committee member, Ms McLeod, who was overseas for an extended period, was unavailable. Although the description “sub-committee” has been used, the decision was in effect a decision of the four remaining available committee members. Mr Boyle’s evidence was that the approach taken was a practical one designed to ensure the matter could be addressed reasonably promptly in the interests of the Club. Mr Boyle’s evidence is also that the Committee had routinely delegated to sub-committees and individuals between late 2014 and early 2016. The Club then hired a full-time general manager. There was no evidence of any issue having been taken with the validity of any delegations until this proceeding.
[78] The decision to delegate the task of hearing and deciding the complaint to the “sub-committee” was a decision made by a quorum of the Committee. In my view, this is a proper use of the procedural provision in r 55. It is a procedural matter which falls within that rule.
[79] Accordingly, I find that the Committee did have power to form a “sub- committee” to hear the complaint and to determine that Mr Middeldorp should be suspended (had there been the necessary rule in place enabling the Committee to suspend Mr Middeldorp).
Did the Committee meet its natural justice obligations (both suspension decisions)?
[80] In case I am wrong in my decision that the Committee did not have the power to suspend Mr Middeldorp, I will go on to consider this issue.
First suspension
[81] Mr Middeldorp pleads that the Committee failed to “act fairly and in accordance with the principles of natural justice” in three respects:
(a)On or about 10 November 2016, a member of the Committee, Ms McLeod, informed Mr Middeldorp that the Committee intended to suspend him. Ms McLeod formed part of the Committee which decided to suspend him from the Committee;
(b)The Committee failed to make any charge against him or give any adequate notice of a charge; and
(c)Mr Roberts’ letter of complaint was emailed to him on 27 November 2016, but the letter set out no charge against him whether by reference to the Rules of the Club or otherwise and failed to provide any or any proper particulars of the allegations which he faced.
[82] Paragraphs (b) and (c) above can be collapsed into an allegation of failure to give adequate notice of the charge or charges that Mr Middeldorp faced. I consider that allegation first.
[83] Mr Middeldorp says he received only one day’s notice of the complaint and, even if the allegations had been clearly stated, he did not have sufficient time to prepare a response. He says, as an elected committee member, he was given a lesser process than a member facing termination would have been given under the Rules.22
22 This is a reference to r 17 which provides that before the Committee exercises the power to erase a person from the list of members, the member must be given not less than seven days’ notice of the meeting at which his or her conduct or behaviour is to be the subject of inquiry and requiring the member to attend the meeting with such evidence as he or she may consider necessary, and to answer the charge or complaint.
Discussion — adequacy of notice
[84] The pleaded terms of “fairness and natural justice” are interchangeable.23 First, the substance of natural justice vary depending on the nature of the power in question and the gravity and consequence of the decision. They are flexible, not fixed, and must adapt to their context.24 As was said by Asher J in Pritchard v Evans:25
The concept of natural justice is essentially contextual, and has been described as a “flexible concept which aims to achieve across an infinite spectrum of situations both the actuality and the perception that things have been done justly and fairly”.26 When it comes to the assessment of whether the requirements of natural justice have been met in a judicial review context, there are no thresholds that must be crossed or rules that must be complied with. What is required turns on the role and functions of the body in question, the nature of the decision and the statutory, regulatory or constitutional framework that applies.
[85] Second, where the relevant rules or provisions do not describe a procedure, the rules of natural justice are implied. In the present case, the Rules do not expressly state a procedure to be followed before a decision is made suspending a member from attending committee meetings. Third, in determining whether natural justice has been complied with, a Court will look at what has occurred “in the round”.27 The question is whether overall, taking a broad view of the entirety of the process, a fair result has been reached by a fair hearing.
[86]I pick up the narrative from where I left off at [22] above.
[87] Mr Boyle, together with the then General Manager of the Club, met with Mr Middeldorp on 9 November 2016 to discuss Mr Middeldorp’s views about his communications with York in the light of the complaint that Mr Roberts had made to Mr Boyle. At Mr Boyle’s request, Mr Middeldorp agreed not to attend the meeting with Mr Roberts the following day.
23 Philip A Joseph Constitutional and Administrative Law in New Zealand (4th ed, Brookers Ltd, Wellington, 2014) at [25.1].
24 Carroll v Coroner’s Court [2013] NZHC 906, NZAR 650 at [35].
25 Pritchard v Evans [2013] NZHC 3150 at [35].
26 Director of Civil Aviation v Paterson (No 3) HC Wellington CIV-2005-485-606, 23 June 2005.
27 Joseph, above n 23, at [25.1].
[88] On the evening of 9 November 2016, Mr Boyle set out his position in an email to Mr Middeldorp. That email included the following:
The seriousness of the stance taken by Paul Roberts in response to seeing your email sent to William Derby meant that action was needed today, in advance of the Turnberry meeting scheduled for tomorrow afternoon, in my view. … Turnberry believes you acted unfairly and inappropriately in implying in your communication with Derby that Paul Roberts may have lied to York, a client of Turnberry.
I have said to you that in my opinion the unfortunate statement(s) in the offending email were unwise, inappropriate or uncalled for. The implication of dishonesty went beyond acceptable commercial standards relating to communication etc.
…
At this stage I have no intention of taking the matter that arose today to Committee unless you wish to have the committee deal with any aspect. …
In the event the dispute between you and Turnberry escalates from here, for any reason connected with your future actions, I reserve the right to open an investigation into the dispute and your status as a member of the Club.
[89] Mr Middeldorp responded by email the following day, 10 November 2016, saying that he had looked again at his questions and the reply from Mr Derby and generally sought to justify his comments in the emails in question.
[90] Mr Roberts then sent a letter, dated 25 November 2016, formally setting out his concerns about the email exchange between Mr Middeldorp and Mr Derby. Mr Boyle received the letter by email on 26 November 2016. Mr Roberts’ specific complaints about Mr Middeldorp were, in summary:
(a)Writing to one of Turnberry’s clients without consulting Mr Roberts to address any concerns he had;
(b)Communicating to others his deep-seated objection to the general Turnberry scheme for Avondale and Turnberry’s involvement, despite the resolution of the Committee;
(c)Misunderstanding the level of detail that would be expected at that stage of the process where there was only a concept rather than a detailed design with full consultation; and
(d)Of most concern, writing to one of Turnberry’s existing clients and indicating that Turnberry had not been completely honest with regards to their involvement at York.
[91] Mr Boyle had already listed Mr Roberts’ initial complaint as an agenda item for the committee meeting on 28 November 2016. The agenda is dated 3 November 2016. Mr Boyle believes the committee members would have received the agenda around 25 November 2016.
[92] Mr Boyle sent an email to Mr Middeldorp on 27 November 2016, attaching a copy of the formal letter of complaint from Mr Roberts. Mr Boyle sent a second email advising Mr Middeldorp and others on the Committee, that the complaint would be dealt with at the committee meeting the next day.
[93]Mr Boyle’s covering email contains the following:
While Monday’s agenda already contains an item about the matter the subject of the Turnberry letter dated 25 November, it may be the case that Vince feels he will not have had sufficient time to prepare for and address the Committee in relation to any complaint that the Committee may make against him, arising out of this letter from Turnberry. In that case the matter will not proceed to a conclusion on Monday and will have to be the subject of a further meeting(s).
So, to aid your preparation on this agenda item, as I see it, there will be three
initial steps for the Turnberry/Middeldorp issue –
1.Having considered the Turnberry complaint, does the Committee believe there may have been misconduct on the part of Vince Middeldorp or material damage to members’ interests? If so, does that give rise to a question under Clause 17 of the Constitution about possible expulsion from membership of the Club? If the Committee does not see the matter as sufficiently serious to warrant an investigation relating to Clause 17 (alleged prejudicial conduct by Vince), what is the specific complaint that the Committee is putting to Vince (if any) and what sanction is the Committee proposing if the complaint is upheld?
2.As the subject of a complaint, Vince has to have a fair opportunity to prepare any response and be heard on the matter. He will let us know tomorrow, I assume.
(Emphasis in original)
[94] Mr Boyle says that, at the committee meeting, he opened the topic by ensuring that Mr Middeldorp was prepared to proceed at that time. Mr Middeldorp said he was
and did not ask for more time. He declined an invitation to have the matter adjourned including to take legal advice if he wished.
[95] During the discussion, Mr Middeldorp apologised to committee members and said he saw error in his approach when he communicated with Mr Derby. In advance of the Committee making a formal decision, Mr Middeldorp said he would be happy to confirm his apology in writing and (at Mr Boyle’s suggestion) that he would provide Mr Boyle with a written assurance that he would not act on the Club’s behalf without express authority in the future. The discussion took about 90 minutes.
[96] The Committee resolved that they were satisfied that Mr Middeldorp, by his actions on or about 8 November 2016 when he was representing the Club, had brought the Club’s name into disrepute, that he had acted outside his authority and materially damaged members’ interests. As part of its decision suspending Mr Middeldorp, the Committee required an immediate written apology from him confirming the oral apology he had given at the meeting.
[97] I do not accept the submission made on behalf of Mr Middeldorp that there was an unfair process “because the Committee formulated the complaint at the meeting itself”. In determining what is adequate notice, the key elements are whether the affected party was taken by surprise and whether any potential prejudice was suffered as a result.28 Mr Middeldorp was not taken by surprise. He was well aware that his conduct, namely the email correspondence with the CEO of York, formed the substance of the complaint. He was aware of the substance of the complaint as from 9 November 2016.
[98] The email from Mr Boyle on 27 November 2016 made it clear to Mr Middeldorp that if he required further time to answer the complaint that would be afforded to him. Despite having sufficient notice and having previously communicated with a solicitor on the issue (by telephone and email on 11 November 2016), Mr Middeldorp neither arranged legal representation nor did he take up the Committee’s offer at the meeting on 28 November 2016 to give him more time.
28 Secretary for Justice v Simes [2012] NZCA 459, [2012] NZAR 1044 at [87].
[99] In my view, Mr Middeldorp had adequate notice of the substance of the complaint against him. The Committee observed the procedural requirements of fairness and natural justice in making its decision to suspend him.
Discussion — bias
[100] The pleadings are unclear as to whether Mr Middeldorp alleges actual predetermination or apparent bias. In his submissions, Mr David refers to both a requirement that a decision-maker approach a decision with an open mind rather than with a pre-determined view of the outcome and also apparent bias.
[101]In Muir v Commissioner of Inland Revenue, the Court of Appeal stated:29
[62] In our view, the correct enquiry is a two stage one. First, it is necessary to establish the actual circumstances which have a direct bearing on a suggestion that the judge was or may be seen to be biased. This factual inquiry should be rigorous, in the sense that complainants cannot lightly throw the “bias” ball in the air. The second inquiry is to then ask whether those circumstances as established might lead a fair-minded lay-observer to reasonably apprehend that the judge might not bring an impartial mind to the resolution of the instant case. This standard emphasises to the challenged judge that a belief in her own purity will not do; she must consider how others would view her conduct.
[102] The Supreme Court approved this approach in Saxmere Co Ltd v Wool Board Disestablishment Co Ltd, noting that the key question is whether a “fair-minded lay observer” would consider that a decision-maker might not bring an impartial mind to their decision.30 The test for bias extends to cases beyond judges.31
[103] Whether the issue is one of actual bias or apparent bias, either way, Mr Middeldorp fails on the onus of proof. There was disputed evidence on the issue and Mr Middeldorp did not seek leave to cross-examine the two relevant witnesses for the Club. Other documentation does not assist in determining the correct factual position. The evidence is as follows.
29 Muir v Commissioner of Inland Revenue [2007] NZCA 334, [2007] 3 NZLR 495.
30 Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2009] NZSC 72, [2010] 1 NZLR 35 at [3].
31 Taylor, above n 13, at [13.57].
[104] Mr Middeldorp says that on 10 November 2016 he received a telephone call from Ms McLeod, a member of the Committee. He says Ms McLeod told him that there had been discussions between Mr Boyle and Mr Moncur of NZTR that Mr Middeldorp was going to be stood down from the Committee. Ms McLeod, in her affidavit, says that she may have spoken to Mr Middeldorp on the particular day but she did not say that he was going to be stood down or suspended. She says she would not have told Mr Middeldorp that he was going to be stood down from the Committee and she could not have told him that because it had not been decided at the time. She further says that she did not tell Mr Middeldorp of discussions between Mr Boyle and Mr Moncur because she was not aware of any such discussions.
[105] Mr Middeldorp filed a reply affidavit in which he said that he is certain that Ms McLeod told him that he was going to be suspended. He says he was very upset by what she told him and after the conversation he called John Tannahill, a lawyer and a friend, telling him what he says happened and he later emailed Mr Tannahill about the call. In that email, Mr Middeldorp says:
Hi John
As per our phone call, earlier tonight I received a phone call to say that Campbell Moncur (NZTR) and Allan Boyle (Avondale President) were in discussion and I was to be kicked off the Avondale Jockey Club Committee. This requires that I get kicked out of the club because there are no provisions for forcing someone off the Committee.
[106] This statement is at odds with the allegation pleaded, namely that Ms McLeod told him he was going to be suspended.
[107]Mr Tannahill did not swear an affidavit.
[108] Mr Middeldorp did not refer to the alleged conversation with Ms McLeod at the committee meeting on 28 November 2016 or raise any objection on the basis of the alleged conversation. He raised it for the first time in his list of grievances in his letter to the Committee on 6 June 2017, over seven months after the hearing and over two months after his initial suspension had ended.
[109] Mr Middeldorp also pleads in his reply to the statement of defence that on 11 November 2016 another committee member, Ms Skinner, told him that he risked expulsion from the Club if he fought the suspension. However, he has not pleaded reliance on Ms Skinner’s alleged statement in support of the claim of breach of natural justice. But, in any case, there is a conflict of evidence. Ms Skinner has sworn an affidavit in which she deposes that she does not recall the conversation and does not believe that she said that. She continues that she would not have mentioned suspension as she did not believe that suspension had even been discussed in relation to the Turnberry incident at the time. She adds, however, that she expects Mr Middeldorp was aware that expulsion from the Club might have been a possible consequence of the complaint against him because the possibility of an inquiry under r 17 of the Rules had been raised by the Committee when dealing with the “Klinger” complaint in April 2015. That is recorded in the minutes of the committee meeting of 20 April 2015.
[110] In his reply affidavit, Mr Middeldorp deposes that he has a clear memory of his conversation with Ms Skinner and after the conversation, forwarded to her a copy of the email he had sent to Mr Tannahill.
[111] In the absence of cross-examination, I am not prepared to find that Mr Middeldorp has established that Ms McLeod (or Ms Skinner) made the statements alleged. The email Mr Middeldorp sent to Mr Tannahill recording what Mr Middeldorp claims was said is different from the statement he now claims that Ms McLeod made.
[112] For completeness, I refer to and accept the submission made by Ms Coumbe that concepts such as predetermination and bias must be applied cautiously to the disciplinary process of voluntary clubs. In Barrie v Royal Colwood Golf Club,32 Edwards J said this:
[70] Another reason the courts may be reluctant to order a social club to reconsider a member discipline case is that these decisions will inevitably be made by the member’s fellow club members, who are not likely indifferent to the outcome or uninfluenced by knowledge of the case. By the very nature of this sort of domestic tribunal there can be no unbiased decision makers. The standard of procedural fairness in respect of potential bias or the apprehension
32 Barrie v Royal Colwood Golf Club 2001 BCSC 1191.
of bias can therefore be no higher than the requirement that the decision makers approach the proceedings in good faith with open minds.
[113] In conclusion, I find against Mr Middeldorp on the allegation of actual predetermination or apparent bias. He fails on the onus of proof.
[114] I therefore find, in relation to the first suspension, that Mr Middeldorp has not established that the Committee failed to meet its natural justice obligations.
Second suspension
[115] Mr Middeldorp pleads that the Committee failed to act fairly and in accordance with the principles of natural justice in two respects as follows:
(a)The hearing was carried out in front of a sub-committee of four rather than the full committee; and
(b)The letter of complaint set out no charge against the applicant whether by reference to the Rules of the Club or otherwise and failed to provide any particulars of the allegation which he faced.
[116] Mr Middeldorp argued the first ground as a lawfulness issue. I have already addressed that issue and I have found against him. I turn to the second ground.
[117] Mr Middeldorp expands on the second ground by submitting that he left the hearing after tabling a set of written submissions. Thus, he was never informed of the specific allegations against him. He says he was given less than a week to prepare for the hearing and this was not adequate to respond to the allegations against him. He says that even if clear allegations had been made, a fair hearing was not possible as the Chair had sent a memorandum to the Committee which described him in highly prejudicial terms.
Discussion
[118] As will be recalled, the second suspension arose out of the anonymous “Letter of Concern” sent to members of the Club shortly before the 2017 AGM. Mr Middeldorp now acknowledges that he sent the letter.
[119] Mr Boyle convened an urgent committee meeting on 26 October 2017 just before the AGM was due to begin. The Committee resolved that various proposed motions for the AGM in the anonymous letter should be the subject of a special general meeting (SGM) and that the Chairman was authorised to reject any proposed motion that would fall within the category of “special matter” for the AGM under the Rules. At that committee meeting, Mr Middeldorp made no comment in response to the view expressed by Mr Boyle that it was highly likely he was one of the persons, if not the only person, responsible for the letter and its contents.
[120] Subsequently, the Secretary wrote to the Committee by way of a letter dated 18 November 2017 making a detailed complaint about the identified author(s) of the document. The complaint includes the following: that there are false and misleading claims in the letter; it contained financial information only available to committee members, some of which was misreported; the correspondence disadvantages the members greatly by running down the reputation of the Club and its members to the public; the impression the correspondence makes amongst important people within the industry must be bad for Avondale’s immediate future of prospects (the correspondence having been sent to NZTR); and if a committee member is associated with the document sent as a concerned expression of members/trainers then that has been done knowing the potential to compromise others on the Committee individually or to compromise the negotiating position or similar commercial interests of the Club. In conclusion, and in summary, the Secretary said she was complaining about dishonesty/disloyalty and that the correspondence had brought the Club’s membership into disrepute with other clubs or more widely with the governing body, NZTR.
[121] In addition to the detailed letter of 18 November 2017, full particulars of the allegations were orally communicated to Mr Middeldorp at the committee meeting on
27 November 2017. The resolutions of the Committee are set out in full in the minutes and, in summary, are as follows:
(a)To inquire into the complaint about Mr Middeldorp’s alleged involvement in the preparation and distribution of the anonymous letter to members in October 2017. In particular, the Committee would convene a disciplinary hearing into alleged misconduct by Mr Middeldorp as a committee member and/or conduct alleged to have been prejudicial to the interests of the membership of the Club. This would be heard by a sub-committee and Mr Middeldorp was advised that the sub-committee may decide to impose a sanction on him. The resolution set out the factors to be considered by the sub-committee in relation to any sanction.
(b)Not less than three committee members would make up the sub- committee to hear the complaint and decide the outcome. The Secretary, President and Mr Middeldorp would be excluded from the sub-committee.
(c)The hearing was to take place as soon as practicable in December 2017 and Mr Middeldorp was given no less than three clear days’ notice of the time and date of the hearing.
(d)The hearing date and time was confirmed as Friday, 1 December 2017, 11 am.
[122] Mr Middeldorp did not suggest at that meeting that he was unsure of what he was accused of. At that point he was still denying he sent the letter.
[123] If Mr Middeldorp was in any doubt as to the allegations against him, he could again have raised this at the 1 December 2017 meeting. He said that the meeting was unlawful but nothing further. He said he was not staying and threw down some papers which he said were written submissions from him. He then left the room.
[124] The hearing began at 12.05 pm. The Secretary made an oral statement speaking to her complaint. Mr Boyle made submissions in support of the complaint. He spoke to his memorandum which he had tabled at the previous committee meeting. He advised the members of the committee of the standard of proof (balance of probabilities) and that Mr Middeldorp’s papers should be considered by the sub- committee.
[125] The sub-committee closed the hearing at 1.50 pm, and the Secretary and Mr Boyle were excused. The sub-committee then deliberated.
[126] A five-page letter of 7 December 2017 from Ms Skinner, as convenor of the sub-committee, was sent to Mr Middeldorp advising him of the decision. In short, the sub-committee found that Mr Middeldorp had engaged in misconduct in his capacity as a committee member and, in addition, he had acted in such a way that the Club suffered reputational harm. As already noted, the decision was that he would be suspended for four consecutive committee meetings and his privileges as a committee member were removed during the period of suspension.
[127] In my view, Mr Middeldorp had fair notice of the complaint made against him, a fair hearing and a fully reasoned decision. The complaint Mr Middeldorp makes about the statements by Mr Boyle about him in Mr Boyle’s memorandum do not go to the issue of a fair hearing as Mr Boyle was not one of the decision-makers.
[128] I therefore find, in relation to the second suspension, that Mr Middeldorp has not established that the Committee failed to meet its natural justice obligations. Mr Middeldorp fails on his second cause of action.
Did the Committee have an objectively supportable factual foundation for its decision to suspend Mr Middeldorp?
[129] Mr Middeldorp formulates his third cause of action by pleading that the Committee of the Club lacked an “objectively supportable factual foundation” for asserting that he had exceeded his authority, misconducted himself or caused reputational or other damage to the Club and upon which it could properly suspend
him from attending meetings of the Committee and impose the further penalties on him.
[130] To support his submission that this is a proper ground for judicial review (as opposed to an appeal on its merits), Mr David relies on Waho v Olsen-Rātana.33 Mr Waho was a trustee of the Te Kōhunga Reo National Trust. A majority of his fellow Board of Trustees believed he had brought the trust into disrepute and removed him as a trustee. In the High Court, Mr Waho argued that his removal would be in breach of trust and sought interim relief restraining the Board from removing him. He was unsuccessful in the High Court and appealed to the Court of Appeal. The Court of Appeal said:
[36] We see merit in Mr Geiringer’s argument that the Judge erred in finding that the threshold requirement for considering removal – that a trustee has brought the Trust into disrepute – is one of judgment for the Board. In our view the wording of the Trust deed supports the view that the trustees must satisfy themselves that there is an objectively supportable factual foundation for asserting that a trustee has brought the Trust into disrepute before determining that question in exercise of their collective judgment. If that threshold is satisfied, then we accept that it is also a question for the Board’s judgment or evaluation whether the trustee should be removed on the ground that he or she is unfit or unsuitable to hold office. It is a two stage process.
[131] However, in that case, the Court of Appeal was concerned with the construction of the trust deed. That is not the case here.
[132] In my view, this cause of action should have been pleaded as an unreasonableness allegation or error of law. There is a helpful discussion of both by Palmer J in Hu v Immigration and Protection Tribunal:34
[23] Occasionally, however, courts also sustain substantive challenges to the merits of decisions by way of judicial review. The leading case to which reference is made, however often it is disparaged, is Associated Provincial Picture Houses, Limited v Wednesbury Corporation. ...
…
[24] … It was only as a rare exception that [Lord Greene] acknowledged that, in some circumstances, unreasonableness could be a ground of challenge:
33 Waho v Olsen-Rātana [2014] NZCA 612.
34 Hu v Immigration and Protection Tribunal [2017] NZHC 41, [2017] NZAR 508.
It is clear that the local authority are entrusted by Parliament with the decision on a matter which the knowledge and experience of that authority can best be trusted to deal with. The subject-matter with which the condition deals is one relevant for its consideration. They have considered it and come to a decision upon it. It is true to say that, if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it, then the courts can interfere. That, I think, is quite right; but to prove a case of that kind would require something overwhelming, and, in this case, the facts do not come anywhere near anything of that kind.
[25]Lord Greene summarised the principle in these terms:
The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or, conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority, it may be still possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere. The power of the court to interfere in each case is not as an appellate authority to override a decision of the local authority, but as a judicial authority which is concerned, and concerned only, to see whether the local authority have contravened the law by acting in excess of the powers which Parliament has confided in them.
[26] The phrases to which I have added italics in the above two extracts have come to be known as “Wednesbury unreasonableness”. This concept has often been criticised by academic commentators and by courts. This may be particularly because the concept could be deployed to allow a court to overturn a decision with which it simply disagrees. That is not often seen as a legitimate judicial function on judicial review in New Zealand. Ironically, this was Lord Greene’s expressed concern. But courts are reluctant to dispense with the potential, exceptional, use of unreasonableness without having something more satisfactory with which to replace it. No alternative has sustained sufficient attraction to recommend itself.
…
[28] The nature, rarity and high threshold for the success of unreasonableness as a ground of judicial review is reminiscent of, and conceptually related to, the nature, rarity and high threshold for the success of a factual determination constituting an error of law. In Edwards v Bairstow, a few years after Wednesbury, Lord Radcliffe identified three rare states of affairs which would constitute errors of law: where “there is no evidence to support the determination” or “the evidence is inconsistent with and contradictory of the determination” or “the true and only reasonable conclusion contradicts the determination”. In Bryson v Three Foot Six Ltd, the New Zealand Supreme Court explained that these were circumstances where:
… an ultimate conclusion of a fact-finding body can sometimes be so insupportable – so clearly untenable – as to amount to an error of law, because proper application of the law requires a different answer.
[29] The Court made it clear this is a “very high hurdle”. But it is well established and conceptually coherent. I consider the Supreme Court’s reformulation of Edwards v Bairstow offers a better account of unreasonableness constituting illegality in judicial review than the circular words used in Wednesbury. Where a decision is so insupportable or untenable that proper application of the law requires a different answer, it is unlawful because it is unreasonable.
[30] Lord Radcliffe’s three scenarios, encapsulated by the Supreme Court as an insupportable or untenable ultimate conclusion, also assist in identifying what constitutes a relatively narrow but usable concept of unreasonableness. A decision may be unreasonable if it is not supported by any evidence, or if the evidence is inconsistent with or contradictory of it …
(Emphasis in original; footnotes omitted)
[133] In my view, the facts do not come anywhere near establishing that the first suspension decision is “so unreasonable that no reasonable authority could ever have come to it” nor can it be said that “there is no evidence to support the determination”. In other words, Mr Middeldorp’s claim would fail had “unreasonableness” or “error of law” been pleaded.
[134]The available evidence in summary is that:
(a)Mr Middeldorp contacted the CEO of York without the approval or knowledge of the Committee after Turnberry had been engaged by the Committee and NZTR and the first report provided. Mr Middeldorp’s emails questioned Mr Roberts’ honesty and competence.
(b)Mr Boyle expresses the view in his affidavit that Mr Middeldorp’s behaviour in sending the emails to Mr Derby of York, irreparably damaged the relationship between Mr Roberts/Turnberry and the Club, and in Mr Boyle’s view was largely responsible for the ultimate disengagement between Turnberry and the Club in 2018. Mr Roberts had become less actively engaged and the project suffered as a result.
[135] Mr Middeldorp himself recognised that his conduct was not that which would be expected of a committee member evidenced by his written apology of 2 December 2016 to the Committee (before he sought to revisit his suspension):
This is an unreserved written apology to the President and Committee of the Avondale Jockey Club for my email of 8 November 2016 to William Derby Chief Executive and Clerk of the Course at York Racecourse UK.
In my email I wrote that I was astounded at how flawed the proposed layout for Avondale Jockey Club was from Mr Paul Roberts Director Turnberry Consulting and provided instances of what I saw as significant shortcomings in the architectural drawings he supplied.
I then stated that the work done by Mr Paul Roberts for Avondale Jockey Club was of poor quality …
I finished the email by asking for an urgent reply in the event that the representations made on the Turnberry project page were not “completely honest”.
It is an indisputable fact in my email I denigrated work done by Mr Paul Roberts for Avondale Jockey Club. To do so to a client of his in the United Kingdom was an incomprehensible and [sic] mistake on my part for which I am really sorry.
Asking if advice was actually sought by York Racecourse and if that advice had led to construction work being carried out were highly inappropriate questions because of the derogatory connotation if the questions were answered in the negative (i.e. the advice was not sought; the advice had not led to work being done). They were impertinent questions to ask and with hindsight I now wish I had never asked them.
… It would have been obvious to York by reading between the lines, that I was seeking information to reinforce my view of Roberts as a blowhard pandering useless advice. …
Finally I get to the issue of Mr Paul Robert’s [sic] honesty which I questioned and to which he took considerable exception. … Because there is an underlying inference in my question, Roberts retorted that his reputation had been impugned in no uncertain manner and that he had undoubtedly been called a liar. Again I should have seen that coming and avoided any use of the word honest in any context whatsoever. In this instance I regret using the word and acknowledge that using it was one big mistake.
… It has resulted in an absolute mess and I have to take all the blame for that
…
[136] In relation to the second suspension, Mr Middeldorp submits that he was entitled to distribute information to other club members before the 2017 AGM. He says circulation of such information does not provide a proper basis to discipline a committee member.
[137] Again, Mr Middeldorp would fail on either an unreasonableness allegation or error of law based on a no evidence allegation:
(a)He circulated anonymous documents with alleged prejudicial content as set out in the Secretary’s complaint at [120] above;
(b)He portrayed the letter as one from “concerned members” of the Club when he was the sole author;
(c)Mr Middeldorp used this process to undermine the Committee’s decisions with which he disagreed; and
(d)The letter was widely circulated allegedly causing reputational damage in the form of the Club’s standing with NZTR.
[138]I find against Mr Middeldorp on the third cause of action.
Did the Committee act lawfully in declining the membership applications?
[139] Mr Middeldorp pleads that the Committee “failed to act in good faith and for a proper purpose in declining 14 membership applications” in the following respects:
(a)The Committee was concerned to exclude from the Club anyone whose views were not shared by the majority of the Committee especially in relation to the closure of the Club’s training facilities; and
(b)The Committee was not entitled to consider applications for membership with a view to maintaining support for their individual views or positions within the Club.
[140] In opposition, the Club submits that the Committee’s concern was whether the 14 applicants had a genuine (bona fide) interest in becoming members of the Club and furthering its interests, or whether their sole reason for wishing to join the Club might be to further their own interests and support Mr Middeldorp’s threat to petition a SGM to challenge the decision to close the training track.
[141] The evidence is as follows. First, the process generally followed for dealing with membership applications is that each applicant must be nominated by two current members. At a committee meeting, each applicant is discussed to ensure the proposed member is suitable for membership, including that they meet the requirements for eligibility for membership set out in the Rules. The existence of unpaid debts to the Club is also a matter considered by committee members when considering membership applications. It is common ground that none of the applicants was automatically disentitled under the Rules. There was an issue in relation to unpaid debts for one applicant, to which I refer shortly.
[142]An applicant for membership is admitted if there is a majority in favour.
[143] In this case, in April and May 2017, a total of 16 applications for membership of the Club was received. Mr Boyle’s evidence is that 14 of the applicants appeared to be associated with Mr Middeldorp, given the timing and cross-nominations within the group. Mr Boyle says he and some other members of the Committee were concerned that these 14 applicants might not genuinely wish to be on-going members of the Club. That is, they wondered whether the applicants each had a bona fide interest in truly being members of the Club, or whether their sole purpose in applying was to support some agenda of a group of trainers and/or Mr Middeldorp in opposing the closure of the training operations.
[144] Of the two other applications before the Committee on 12 June 2016, one was accepted and, in relation to the other, the Committee resolved it should be sent back for a second signature.
[145] Mr Boyle says that it was his view that the mere fact an applicant might support a view opposed to that of the majority of the Committee would not of itself be reason to decline membership as long as the person was genuinely interested in being a member and was not, for example, intending to just let their membership lapse after taking the intended action.
[146] At the committee meeting on 12 June 2017, the Committee therefore decided to defer the applications and requested the Secretary to write to the 14 applicants
inviting them to provide their reasons for wanting to join the Club. Those letters were sent on or around 26 June 2017.
[147] Thirteen of the 14 applicants did not reply to the Secretary’s letter. In the absence of a response, the Committee voted by a majority (Mr Middeldorp voted against) at its meeting on 24 July 2017 to decline the membership applications.
[148] Letters were sent to the 13 unsuccessful applicants on or about 13 September 2017. They record that “On 24 July the AJC Committee declined the application, in view of there being no response to a request for further information”.
[149] The 14th applicant responded by email on 13 July 2017 confirming his interest in becoming a member and asked that his application be considered at the next committee meeting. That occurred. Ms Berkahn, in her affidavit, says that the 14th applicant’s brother (the brother) had significant overdue debt with the Club for the use of training facilities and one of the Committee believed that the 14th applicant may have acted as racing manager for the horses in question. The concern, Ms Berkahn says, was that the brother’s indebtedness went to the character of the 14th applicant because of his involvement in racing the brother’s horses.
[150] The minutes of the committee meeting on 24 July 2007 record a resolution that the 14th applicant’s application be adjourned again, due to the potential indebtedness of the brother to the Club. Mr Clydesdale was to investigate and report back to the Committee.
[151] This was against the background that the brother had failed to meet his debts to the Club on a number of occasions in the past. On one occasion, in mid-2015 when there was a debt of approximately $1,200 owed by the brother, the 14th applicant indicated at that time that he would meet the debt (and ultimately paid it) and that he would be taking over his brother’s accounts permanently.
[152] The minutes of the committee meeting for 28 August 2017 record, in relation to the 14th applicant’s application for membership, that Mr Clydesdale reported that his inquiries showed that the brother was indebted to the Club (and well overdue) in
connection with at least one horse trained at Avondale and had been the racing manager for the horse. The minutes record, “The application has to be declined on that basis”. The Secretary was requested to write to the 14th applicant to that effect.
[153] Although the minutes record only one reason for refusing the 14th applicant’s application, the letter written by the Secretary (dated 20 October 2017) in fact states that there were two factors that gave rise to the declining of the application as follows:
Your correspondence with the Club, relating to the application, implying support for a potential reopening of the now-closed horse training operation at Avondale and
Advice from one of our Committee, you have a co-liability to the Club for unpaid training fees relating to horse[s] that you and your brother, …, are involved with. The Club will not admit as a member a person who has a bad debt record with the Club.
[154] According to Mr Boyle, the 14th applicant sent an email to the Secretary on 20 October 2017 asking the Committee to reconsider his application and agreeing to look into the unpaid invoices owed to the Club by his brother.
[155] The 14th applicant’s application for membership came back before the Committee at its meeting on 12 February 2018. The minutes record a resolution as follows:
Given that applicant has not addressed the debt issue put to him relating to his involvement with training costs incurred at Avondale concerning [his] brother’s horses, or horses that [his brother] has an interest in, then [his] application to join is declined. Secretary to write to him.
[156] For completeness, I add that the brother continues as a member as at the date of Mr Boyle’s affidavit (10 December 2018) despite the unpaid training fees. Mr Boyle notes this anomaly and says that it seems to have been easier for the Committee to take a stricter approach to admitting new members for reasons relating to credit history while not solving an on-going loss of income due to members’ subscriptions or other defaults.
[157] Mr David submits that there is no evidential foundation for the Club’s belief that the applicants for membership were not “genuine”.
[158] This is not an appeal on the merits, but in any event, I reject that submission. There was a common link, recognised by the Committee, across the 14 applicants as trainers, associates of trainers or other people connected to Mr Middeldorp; this was a higher than normal number of applications received, and it was unusual for the Club to receive a bulk set of applications presented in an apparently coordinated way. Members of the Committee were concerned that Mr Middeldorp might be attempting to artificially increase the number of members who opposed the closure of the training track by encouraging people to apply for membership, solely to support his plan to requisition a SGM of the Club.
[159] There was a basis for that concern arising out of the following: Mr Middeldorp had informed the Committee at its previous meeting on 17 May 2017 that he intended to requisition a SGM with a view to reversing the training closure decision; under the Rules, a SGM required a requisition signed by 25 members; Mr Middeldorp had cross- nominated many of the applicants; Mr Middeldorp acknowledged at the committee meeting on 12 June 2017 that he had approached at least one of the applicants and asked him to join; he also acknowledged at the meeting that for one of the applicants he had prepared the form, signed as proposer and sent it for finalisation; and some of the applicants were well-known to the Committee but had never shown an interest in joining the Club despite opportunities to do so over the years and others had long since left the racing industry.
[160] The foregoing all provides an evidential foundation for the belief on the part of the committee members that the applications may not be genuine. Also, after the 12 June 2017 meeting and before a final decision was taken at the 24 July 2017 meeting, on 19 June 2017 Mr Boyle received an email, which included as part of the email trail an email of 11 June 2017 from Mr Middeldorp to Mr Merkulov, which included the following:
All our membership applications are going before the Committee on Monday night. We have 14 applications nominated/seconded by George Merkulov, Vince Middeldorp and Davina Waddell. … I also put in an application for Patrice Christensen … but was told she was already a member …
[161] In my view, the situation before the Committee, while not of the same scale, bears some resemblance to the position in Tamaki v Māori Women’s Welfare League
Inc,35 where Kòs J stated that the evidence regarding the formation of new branches gave him considerable disquiet regarding their legitimacy, as opposed to a device to maximise the number of votes potentially available to Mrs Tamaki as a candidate for the presidency of the defendant.36
[162] Mr David also submits that on the terms of the letters written to the applicants, the Committee rejected the membership applications of eligible applicants for the improper purpose of excluding from membership those who were opposed to the decision to close the training tracks. Mr David relies heavily on the decision in Stratford, in making that submission.
[163] I do not accept Mr David’s submission. I also consider that Stratford is distinguishable on the facts.
[164] First, in this case, the Committee did not simply resolve to refuse the application on the basis of their concerns. They asked the applicants to clarify their reasons for wishing to become members. As noted above, 13 of the applicants did not respond. There is no evidence that any of those 13 applicants disputed the decision. There is also no evidence that any of them subsequently reapplied for membership or otherwise corresponded with the Committee. None of them has given evidence in support of Mr Middeldorp’s application in this Court.
[165]Additionally, the minutes of the meeting on 12 June 2017 record:
In all cases if admitted in July 2017 the new members will be liable for both a 16/17 and a 17/18 subscription.
[166] This indicates that the Committee had an open mind about admitting new members should the applicants respond advising that they had a genuine intention as to ongoing membership.
[167] In relation to the 14th applicant, there was an unpaid debt. There is no evidence that he attempted to pay the debt and reapply for membership. Although the Secretary,
35 Tamaki v Māori Women’s Welfare League Inc, above n 21.
36 At [68]–[72].
in her letter of 20 October 2017, referred to his possible support for the re-opening of the training facility as a reason for declining his application, the two committee resolutions were on the basis of unpaid debts. That is a standard matter that the Committee takes into account when considering a membership application.
[168] By contrast, in Stratford, there was no evidence to support the contention that the applicants for membership had “no bona fide interest in joining the club”.37 This was in addition to other corrupt manoeuvres including refusing an attempt by an individual to stand for president and to nominate others to the committee.
[169] Secondly, in Stratford, the judicial review proceeding was brought against a background where the committee’s actions in relation to the transfer of its asset to a trust, the management of the course and the blackballing incidents had led to a committee of inquiry being established by NZTR. The committee delivered a very detailed report condemning the Club’s management and recommending that consideration be given to laying charges under the Rules of Racing.
[170] In this case, although Mr Middeldorp has made a number of complaints to NZTR, and NZTR has written to the Committee in response, there is no evidence of any further action by NZTR (apart from informal discussions with Mr Boyle).
[171] Thirdly, in contrast to the serious misconduct identified in Stratford, the background in this case was the decision to close the Club’s training course which was taken after a considered process. Also, as recorded in the minutes of the committee meeting of 12 June 2017, “NZTR fully support the closure initiative”. NZTR’s position is also stated in a letter of 12 April 2017 from Mr Boyle to Mr Merkulov, which includes the following:
The decision to close training at the end of July 2017 was taken after a consultation process relating to local trainers and the sport’s governing body, NZTR. None of the local trainers responded to our invitation to make a submission on the question of closure and, in the case of NZTR, senior executives of NZTR supported closure.
37 Stratford Racing Club Inc v Adlam, above n 5, at [65].
[172] Fourthly, unlike Stratford, there is no evidence to support any suggestion that the Committee was trying to protect its control over the Club or to oust potential dissenters.
[173]I therefore find against Mr Middeldorp on the fourth cause of action.
Has the Committee operated lawfully in respect of its composition and election of committee members?
[174]Mr Middeldorp pleads illegality in two respects:
(a)That the election of committee members was not in accordance with the Rules; and
(b)That the Committee had fewer than the number of members required under the Rules.
[175]The relevant Rules are, first r 25(a):
The Committee shall consist of the President, Vice-President and ten members as hereinafter elected.
[176]Rule 26 of the Rules provides that:
The present Committee of the Club, excepting the President and Vice- President shall hold office until the next annual meeting of the Club when five members shall retire and five shall continue in office. The first five members to retire shall be the members of the Committee not elected at the annual meeting of 1998. At every subsequent annual meeting the five members who have been longest in office since the last election, shall retire provided that every member so retiring shall be eligible for re-election. If at any time doubt shall arise as to the members of the Committee who should retire as aforesaid, such doubt shall be settled by lot.
[177]Rule 28 of the Rules provides that:
Any vacancy occurring within the Committee after the annual meeting, or by reason of the President or Vice-President being unable to continue in office, may be filled by the Committee. Any member so elected to fill the vacancy shall retain the office only until the next annual meeting. All vacancies not filled under these provisions shall be filled at the first annual meeting after the vacancy occurred. If at the annual meeting the vacancy is not filled the Committee shall appoint a person to fill it.
[178] As to the process for committee members retiring and standing for re-election at each AGM, Mr Middeldorp says the Club has breached r 26 because fewer than five members have been required to retire and stand for re-election.
[179] Ms Berkahn says that the practice adopted was that each member rotated every alternate year, regardless of how many committee members were serving each year. This rotation meant that the relevant members would need to stand again for their position, so that the positions could be contested by way of election if there were more people standing than there were vacant positions. She says this was rarely the case. Ms Berkahn says she believed the mechanism for committee rotation was sensible, equitable and did not give rise to any unfairness. There has been no known case of an eligible candidate for a committee position missing out on election. Ms Berkahn says her view they were operating according to the spirit of the process envisaged by the Rules and the realities they were facing as a Club. Ms Berkahn’s evidence is that Mr Middeldorp has been retired and re-elected according to this process. She does not recall him taking any particular issue with the process followed at the time, including when he was re-elected in this way in 2015.
[180] Mr Middeldorp also complains that since 2014/2015 the Committee has operated with fewer than 10 members without filling the vacancies. (There is also evidence that there were fewer than 10 members on the Committee in 2001, 2009 and 2012).
[181] The evidence for the Club is that the reason for this is that there were not enough members willing to stand for election to the Committee and members were also unwilling to be appointed. Mr Boyle’s evidence is that he and Ms McLeod have attempted to encourage members to stand for election to join the Committee or to be appointed to fill vacancies.
[182] Mr David submits that the Rules are clear and unambiguous. Even if the reasons given by the Club for lack of compliance were to be accepted, they do not provide a defence to the claim.
[183] Ms Coumbe submits that it is an implied term of the Rules that the Committee can continue to operate with fewer than 10 general committee members where the vacant positions are unable to be filled. Similarly, it must be an implied term of the Rules that if there are fewer than 10 members, then half the existing members must stand for re-election each year.
Discussion
[184] It is not in dispute that the relationship between an incorporated society and its members is contractual in nature.38
[185] I see no good reason for there being an exception to the general law of contract forbidding terms to be implied in cases involving the rules of an incorporated society or a club, for example. Implication of necessary terms would be consistent with general principles of contract law.
[186] In Mobil Oil,39 the Supreme Court applied the pre-conditions for implication from BP Refinery (Westernport) Pty Ltd.40 Those terms are: (1) the term must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”; (4) it must be capable of clear expression; and (5) it must not contradict any express term of the contract.
[187]I address each of the pre-conditions in turn:
(a)It is reasonable and equitable for a voluntary organisation to be able to operate with a committee of fewer members than prescribed, in circumstances where it has not been possible to fill the number of places at the AGM. It is similarly reasonable and equitable for the process for rotation of committee members to be adapted in circumstances where there are fewer than 10 members. The intention of the drafters of the Rules was to strike a balance between continuity and turnover. The
38 Adlam v Stratford Racing Club Inc, above n 14, at [77].
39 Mobil Oil New Zealand Ltd v Development Auckland Ltd, above n 17.
40 BP Refinery (Westernport) Pty Ltd v Shire of Hastings, above n 19.
pragmatic approach adopted by the Club when it had fewer than 10 committee members, accorded with this intention. The approach also ensured that many positions on the Committee are available for contest each year should people choose to run for a position on the Committee.
(b)Implication of the terms is necessary to give the contract business efficacy to enable the Club to continue to function administratively. It cannot have been the intention of the drafters of the Rule that the Club would be in a state of administrative limbo.
(c)To be able to operate in this way, “is what a reasonable person would understand [the contract] to mean”.41
(d)The two implied terms are capable of clear expression namely:
(i)In the event than fewer than 10 members are elected to the Committee at the AGM, the Committee may operate with the number of members who are so elected;
(ii)In the event there are fewer than 10 members of the Committee, at the next AGM, half the members (those who are longest serving) shall be required to stand for re-election.
(e)The two implied terms do not contradict express terms in the Rules. Rather, they provide provisos to express terms.
[188] I therefore consider it was lawful for the Committee to operate with fewer than 10 members and to follow the process it did for elections to the Committee at the AGM.
[189] This is not a case where the Committee has acted improperly or manipulated the election process in order to reduce the number of committee members so as to
41 Attorney General of Belize v Belize Telecom Ltd, above n 18, as cited in Mobil Oil NZ Ltd v Development Auckland Ltd, above n 17, at [80].
retain power and control in the hands of a small group of like-minded individuals. I accept the evidence of Mr Boyle that it has not been possible to achieve the number of committee members prescribed by the Rules. There is also the evidence from Ms Berkahn that there has been no known case of an eligible candidate for a committee position missing out on an election.
[190] Without implying the two terms in [187](d) above, the Committee would not have been able to operate.
[191] Although I was not prepared to find that a power to discipline could be implied, I consider that the two “operational” terms can be implied.
[192]I therefore find against Mr Middeldorp on the fifth cause of action.
Relief
[193] I have found in favour of Mr Middeldorp only on the first issue in the first cause of action, namely that the Committee did not have power under the Rules to suspend him from his office as a committee member on the two occasions in November 2016 and December 2017.
[194]The remedy sought in relation to that cause of action is:
A declaration that the Club acted illegally and without jurisdiction under the Rules in making the decisions to exclude the applicant from attending the Club committee as an elected member of the committee 28 November 2016 and 7 December 2017 and that the decisions are void and of no effect.
[195] Public law remedies are discretionary.42 The permissive language in s 16 of the Judicial Review Procedure Act 2016 allows a Court to exercise its discretion against granting relief to which an applicant would otherwise be entitled.
[196] In Minister for Canterbury Earthquake Recovery v Fowler Developments Ltd, the Court of Appeal commented on the exercise of the discretion in this way:43
42 Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139 at [59].
43 Minister for Canterbury Earthquake Recovery v Fowler Developments Ltd [2013] NZCA 588, [2014] 2 NZLR 587.
[164] Much has been said in recent years in this Court about the discretion to decline relief in judicial review cases. In Air Nelson Ltd v Minister of Transport, the Court recorded that public law remedies are discretionary, but added that there must be “extremely strong reasons” to decline to grant relief. However, in later cases, a more nuanced approach has been taken.
(Footnotes omitted)
[197] Two of those later cases cited by the Court of Appeal were Rees v Firth44 and Tauber v Commissioner of Inland Revenue.45 In the former, the Court of Appeal stated:46
… This Court has said that, although public law remedies are discretionary, there must be “extremely strong reasons” to decline to grant relief where a public decision-maker is shown to have erred in the exercise of his or her powers. That approach has been criticised as being insufficiently nuanced, although the Court seems to have had in mind situations where it could be shown that there was substantial prejudice to the claimant. In any event, given the discretionary nature of public law remedies, it may be that a more nuanced approach is necessary in the generality of cases. …
(Footnotes omitted)
[198]In the latter, the Court of Appeal stated:47
… We agree with the observation made in Rees that Air Nelson is directed towards situations where the claimant has suffered “substantial prejudice”. We also support the suggestion that a more “nuanced” approach than that set out in Air Nelson is likely to be appropriate in many cases. …
[199] I will follow the more nuanced approach. It is for this Court to determine in all the circumstances whether it should intervene and grant a remedy.
[200] In this case, Mr Middeldorp submits that there is no reason to decline to grant the declaration. Such a remedy will have significant utility for him and the Club and the future conduct of its business. Mr Middeldorp says that he has suffered serious prejudice in his long involvement and standing in the Club and the Committee’s breaches have caused him to lose involvement, standing and status.
44 Rees v Firth [2011] NZCA 668, [2012] 1 NZLR 408.
45 Tauber v Commissioner of Inland Revenue [2012] NZCA 411, [2012] 3 NZLR 549.
46 Rees v Firth, above n 44, at [48].
47 Tauber v Commissioner of Inland Revenue, above n 45, at [91]
[201] I do not accept those submissions. I exercise my discretion to decline to grant relief for the following reasons:
(a)Mr Middeldorp has not been seriously prejudiced. He has simply been excluded from attending some committee meetings. At all times he remained a club member. His livelihood and property interests have not been affected.
(b)Related to paragraph (a) above I consider that the error made by the Committee is not of sufficient gravity.
(c)As far as his standing and status are concerned, the Committee was content for the two suspensions to remain confidential to the Committee but Mr Middeldorp himself made the matter public.
(d)There is no practical utility in making the declaration. Both suspension decisions have been carried out. There is nothing further to be reconsidered as a consequence of my judgment.
(e)In relation to Mr Middeldorp’s submission that a declaration would have utility for the future conduct of the Club, there was evidence from Mr Boyle that the Club’s solicitors are in the process of developing a new and more modern constitution. The new constitution is based upon a template circulated to clubs by NZTR and the Club has also looked at the provisions of the Incorporated Societies Bill. That Bill, when enacted, will regulate voluntary organisations in a more up-to-date fashion than is currently the case with the 1908 Act. The current draft of the new Rules includes a power to remove committee members but the intention is also to have a power to suspend committee members. The project to review and revise the constitution was initiated by Mr Boyle in July 2018 before Mr Middeldorp commenced his proceeding. There was to have been a SGM in February 2019 to
consider the proposed new Rules. For reasons outside the control of the Club, there has been a delay in finalising the draft rules.48
(f)Mr Middeldorp has delayed in issuing this proceeding. The first challenged decision was made by the Committee on 28 November 2016. The second hearing occurred on 1 December 2017 and Mr Middeldorp was notified of the decision on 7 December 2017. He commenced this proceeding on 4 September 2018. Mr Middeldorp does not provide any explanation for the delay.
(g)There is no public interest in making the declaration.
(h)Finally, I take into account Mr Middeldorp’s conduct. As Mr Middeldorp himself recognised in his letter of apology to the committee, his conduct in emailing the CEO of York “… has resulted in an absolute mess …”. Mr Middeldorp may count himself fortunate that in relation to the first suspension decision, he did not face a hearing under r 17 to determine whether his membership of the Club should cease on the grounds that he had engaged in “conduct prejudicial to the interests of the Club”. He was also fortunate in avoiding a r 17 hearing in relation to the second suspension decision having regard to the alleged prejudicial conduct in circulating the “Letter of Concern”.
Costs
[202] Costs are reserved. My preliminary view is that the respondent is entitled to costs on a 2B basis.49 If parties are able to agree, a joint memorandum should be filed within 15 working days of the date of this decision. If agreement cannot be reached, the respondent may file submissions within 10 working days of the date for the joint memorandum. The applicant may file submissions in response within a further five
48 The Club’s solicitor suffered an accident over the Christmas period. Mr Boyle’s evidence was that it is his intention to convene a special general meeting at which the membership will be asked to adopt new rules as soon as practicable. That, however, is unlikely within the next few months because of a report released by NZTR in January 2019 which, if implemented, will see Avondale Racecourse closed. The Club is fully engaged on matters arising out of that report.
49 The proceeding has already been classified as category 2 for the purposes of costs.
working days. Submissions are not to exceed five pages. I will consider any application for costs on the papers.
Gordon J
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