Reeves v Pauanui Sports and Recreational Club Inc HC Hamilton CIV 2010-419-1599

[2010] NZHC 2338

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2010-419-1599

BETWEEN  THOMAS QUENTIN ST LEDGER REEVES AND WARWICK JOHN HARTSTONE

Plaintiffs

ANDPAUANUI SPORTS AND RECREATIONAL CLUB INC Defendant

Hearing:         16 December 2010

Appearances: C Gates for Plaintiffs

K Cornege and M Crocket for Defendants

Judgment:      16 December 2010

ORAL JUDGMENT OF ALLAN J

Solicitors:

Phillips Fox, Auckland crossley[email protected]

Tompkins Wake, Hamilton [email protected]

REEVES AND HARTSTONE V PAUANUI SPORTS AND RECREATIONAL CLUB INC HC HAM CIV

2010-419-1599  16 December 2010

[1]      The  plaintiffs  are  members  of  the  defendant,  the  Pauanui  Sports  and

Recreational Club Inc, an incorporated society.

[2]      The defendant owns certain properties at Pauanui, including a block of land at Gallagher Park Lane, upon which four tennis courts have been constructed.  The defendant proposes to sell the Gallagher Park Lane property and to use the net proceeds in order to provide funding for the refurbishment of its principal building, situated elsewhere in Pauanui.

[3]      The board of the defendant gave to its members notice of a special general meeting to be held on Sunday 24 October 2010 at the defendant club’s premises. The purpose of the meeting was to consider a resolution approving the sale of the tennis court property.   The necessary resolution was passed at the meeting by the requisite majority and the defendant thereafter sought to sell the tennis court property by tender.  Tenders close tomorrow, 17 December 2010.

[4]      The plaintiffs allege that, for various procedural reasons the defendant’s members were not given proper notice of the meeting.   They say also that the meeting itself was not fairly conducted.  In the result, they claim that the resolution to sell the tennis court property was invalid.  They now seek an interim injunction restraining the defendant and any agent or officer on its behalf, from accepting any tender pending the determination of this proceeding.

[5]      The case has necessarily been brought on for hearing on short notice.  The defendants have had a relatively limited time within which to prepare;  nevertheless they were able, this morning, to file a number of affidavits setting out aspects of the background to the case.   Those affidavits have provided a great deal of important factual material.

Factual background

[6]      The defendant is a well established incorporated society which exists in order to foster sporting, recreational and cultural activities in Pauanui.  Mr Hartstone has been a member for 15 years, and Mr Reeves for 11 years.

[7]      The tennis court land was purchased by resort to funds paid initially for the purchase  of  sections  at  Pauanui  in  the  early  days  of  the  development  there. Originally the land was designated for recreational use only by the Thames Coromandel District Council, although it does seem, on this morning’s affidavits, that prior to that there may have been a residential zoning.   More recently, the defendant has obtained a residential zoning for the land.

[8]      For some time the defendant has desired to refurbish its principal clubrooms. In order to fund that project, consideration was given to the sale of other land.  It was intended that four properties known as the Ajax Head properties would provide the greater part of the funding, although Mr Reeves says that to date none has actually been sold.

[9]      The defendant proposes  to sell the tennis court land in order to provide further funding for the refurbishment programme.  Those who are promoting the sale believe that the tennis courts have recently fallen into disrepair and that they are subject to vandalism. Further, although they have been available free of charge in recent times, they are used only sporadically.   Those contentions are vehemently denied by the plaintiffs and a number of members who support them.  They claim that the tennis courts are an important facility in the immediate area and are well patronised.

[10]     At the meeting of 24 October 2010, the motion for the sale of the tennis court property was passed.  170 members attended in person, of whom 85 were in favour and 65 against.  There were five proxy votes on each side.  Postal votes were 207 in favour and 48 against, bringing the total to 297 in favour of the sale, with 118 opposed.  The total number of votes cast was therefore 415, which the court is told amounts to about 28% of all members.  There is a constitutional requirement that on

a resolution of this sort at least 15% of the members must vote, so that requirement was easily met.  The total membership of the club seems to be between 1400 and

1500 members.

[11]     The plaintiffs allege that the proceedings at the meeting of 24 October 2010 were invalid on three separate grounds.  First, it is alleged that insufficient notice of the meeting was given to members, and that in consequence, the motion ought not to have been put to the meeting at all.   Second, they say that the explanatory memorandum sent with notice of the meeting was misleading in that:

a)       The percentage of votes required to enable the motion to be passed was misstated; and

b)The memorandum misrepresented the position concerning the state of the tennis courts and the degree to which they are currently used.

[12]     The third ground relied upon concerns the proceedings of the meeting itself. It is alleged that:

a)       Some  members  who  attended  the  special  general  meeting  were improperly denied the opportunity to speak against the motion;

b)The chairman proposed the names of scrutineers before the motion was put to the vote, but did not seek prior approval of the meeting to the appointment of those scrutineers, so denying those opposing the motion the opportunity to have their own representative independently check the voting, including the proxy votes.

[13]     In their statement of claim the plaintiffs seek:

a)       A declaration that the resolution of 24 October 2010 is of no legal effect;

b)An injunction prohibiting the defendant from selling the tennis court land until the sale is approved at a further general meeting of the

defendant which complies with its constitution and is conducted in accordance with the law.

Interim injunction principles

[14]     It is common ground that the principles discussed in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd[1] apply in general terms.  The orthodox inquiry is as to whether there is a serious question to be tried, and if there is, as to the balance of convenience.   Ultimately the Court must stand back and consider the overall justice of the case.

[1] Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).

[15]     Further, in cases where the grant or refusal of an interim injunction will, in truth, amount to a final judgment in the case, it is usual to refer to the judgment of the English Court of Appeal in Cayne v Global National Resources Plc.[2]The thrust of the judgment in that case is accurately incorporated in the headnote, which reads:

[2] Cayne v Global Natural Resources Plc [1984] 1 All ER 225 (CA).

Where the grant or refusal of an interlocutory injunction will have the practical effect of putting an end to the action, the court should approach the case on the broad principle of what it can do in its best endeavour to avoid injustice, and to balance the risk of doing an injustice to either party.  In such a case the court should bear in mind that to grant the injunction sought by the plaintiff would mean giving him judgment in the case against the defendant without permitting the defendant the right of trial.  Accordingly, the established guidelines requiring the court to look at the  balance  of  convenience  when  deciding  whether  to  grant  or  refuse  an interlocutory injunction do not apply in such a case, since, whatever the strengths of either side, the defendant should not be precluded by the grant of an interlocutory injunction from disputing the plaintiff’s claim at a trial.

[16]     There is, in my view, a measure of substance in Ms Cornege’s submission that in this case, given the ultimate relief sought in the statement of claim, the court is in effect being asked to determine the proceeding in the course of making a decision on this interim injunction application, and that therefore the considerations in Cayne must be borne in mind.

Was valid notice given?

[17]     The constitution and rules of the defendant make provision for the calling of a special general meeting in r 14.2:

14.2     Special General Meeting

The  Board  may  at  any  time  for  any  purpose  not  inconsistent  with  the

Constitution and Rules call a Special General Meeting and shall do so within

14 days upon the requisition in writing of any fifty (50) members stating the purpose for which the meeting is required.  Only the business for which the

meeting was convened may be dealt with.

[18]     The requirements for the giving of notice are set out in r 14.3.1 and 14.3.3 which relevantly provide:

14.3     Notice of Meeting

14.3.1 …twenty-one (21) clear days before any Special General Meeting a notice thereof and the business to be transacted thereat shall be sent to every Ordinary/Senior and Life member and no business other than that of which notice has been so given shall be brought forward at such meeting.  Provided that as long as notice calling the meeting has been placed on the Club notice board within the necessary clear days  hereinbefore  required  then  non  receipt  of  such  notice  or omission to give such notice to any member shall not invalidate proceedings at any such meeting.

14.3.3 Every notice to be given to the members or any of them shall be deemed to have been duly delivered if posted in a prepaid letter addressed to the last known address.

[19]     Mr Hartstone says that he himself did not receive his notice until Monday

11 October 2010.  He had left his home at Ohaupo for Pauanui on 4 October 2010 and by reference to his diary (which makes no mention of a letter or notice from the defendant) does not believe he received it before leaving Pauanui.  A further diary note for Saturday 9 October 2010 makes reference to Mr Hartstone having been told by a Mr Craig Williams of the proposal to sell the tennis court land.  Mr Hartstone says this is the first time he became aware of the defendant’s intention to sell the tennis courts.

[20]     Mr Hartstone says that upon his return to Ohaupo he received his mail from the rural mail delivery contractor on Monday 11 October 2010, and because, by

reference to his diary, he is able to say he spent much of Tuesday 12 October 2010 sending e-mails about the affairs of the club, he believes he would actually have received the notice on the Monday.  He points out that many of the club’s members own holiday homes at Pauanui and do not live there permanently.   The truncated notice limited the time within which members opposed to the motion could consult with each other and make preparations for the meeting.

[21]     Margaret McDougall has been a member of the defendant for 13 years.  She says she received her copy of the notice of special general meeting in the mail on

5 October 2010.

[22]     Mr Reeves is unable to say when he received his notice in the mail.

[23]     The first question concerns the state of the evidence concerning the timing of the giving of notice.

[24]     Today, among the affidavits filed by the defendant, was an affidavit by Ms Kettlewell, who lives in Whitianga and is the acting club manager of the defendant club.  She says that she was instructed on 20 September 2009 that there would be a special general meeting of the club to vote on the proposed sale of the Gallagher Park tennis courts and that the special general meeting was to take place on Labour Day.   She was told, also, that the notice of the meeting had to be posted out on Friday 1 October 2010 in order to comply with the requirement of the rules.  Her evidence is that she, along with the office staff, prepared the envelopes for posting. That was a large time-consuming job.

[25]     On Friday 1 October 2010 the Rural Post delivery person picked up several hundred envelopes from the club directly.  At 3.00pm on Friday 1 October 2010 she took a sack with several hundred more envelopes to post at Whitianga.  She said she posted them at the Post Office there that day.

[26]     But not all of the envelopes were posted on 1 October.  About 150 were not posted because the secretariat of the club had insufficient details or, in some cases, no address details at all.   Ms Kettlewell and her assistants conducted a search for

correct address details on the New Zealand Post website and in the club’s physical membership records.  The result is the remaining 150 letters were posted on Monday

4 October 2010.

[27]     The contention for the plaintiffs is that the notice was inadequate, in that notices were not received by members at least 21 clear days prior to the date of the meeting.   The plaintiffs’ argument turns upon the proper construction of r 14.3.1 which requires that: “… twenty-one (21) clear days before any Special General Meeting a notice thereof … shall be sent to every … member”.  The language used departs somewhat from  the form often used in documents which set out notice requirements.  Often the relevant rule is that the party serving the notice must give a stipulated number of clear days’ notice.  In such circumstances the obligation clearly lies on the giver of the notice to ensure that the recipient of the notice receives it

before the period of notice commences to run.[3]

[3] Re Railways Sleepers Supply Co (1885) 29 Ch D 204

[28]     The language used here is different.  The obligation is to send the notice to every member, and it is that obligation which must be undertaken at least 21 clear days before the meeting.

[29]     In my opinion, that obligation will be discharged provided that the notice was dispatched by the club before time commenced to run.  The rules plainly contemplate the giving of notice by posting it in a pre-paid letter:  r 14.3.3.  Accordingly, if the notices were posted prior to the commencement of the period of 21 clear days, then that would in my view constitute good notice.

[30]     The evidence here is to the effect that posting occurred on 1 October 2010 in respect of most of the club’s members;  that is, more than 21 clear days prior to the date of the meeting.

[31]     A reading of r 14.3 suggests that the person drafting the rules was concerned to ensure that the club not become bogged down in legal niceties arising out of the requirement to give notice.   That would be especially important where an incorporated society had so many members, the majority of whom did not reside in

Pauanui.  So there was a need to provide in the rules an element of certainty over the giving of notice.   That was no doubt the reason for the proviso to r 14.3.1 which provides that so long as notice calling a meeting has been placed on the club notice board in advance of the stipulated notice period, then the fact any member might not receive the notice, or that the defendant has omitted entirely to give a notice to a particular member, shall not invalidate the proceedings at any meeting.

[32]     Here, notice was placed on the notice board on 1 October 2010, so that the proviso was duly engaged.

[33]     In my view, the proviso is to be read alongside r 14.3.3 which provides that every notice to a member is deemed to have been duly delivered if posted in a pre- paid letter addressed to that member’s last known address.

[34]     The argument for the plaintiffs is that the proviso cannot save the defendant because it does not apply to a late notice, as distinct from a complete failure to give a notice, or where a member fails to receive it.

[35]     Mr  Gates’  argument  is  that  the  proviso  does  not  apply to  save  the  late dispatch of the notices to the 150 members on 4 October 2010 because they are simply late notices and do not fit within the proviso which is limited to the case of a failure to give a notice at all or to cases of non-receipt of notices which were given in time.

[36]     But this provides an absurd result.   For example if one or two envelopes containing the notice had slipped out of the mail bag and accordingly were not posted on 1 October but were found and posted early in the following week, that circumstance would not fall within the proviso on Mr Gates’ argument and the meeting would be invalidated.  On the other hand, if the notices, having been found, were simply destroyed, the proviso would be engaged and the validity of the meeting would not be affected.

[37]     It is necessary, in my view, to construe r 3.4.1 to avoid an absurdity of that sort.  I consider that the answer is to consider the expression “omission to give such

notice” as referring to an omission to give notice within the time prescribed by the rules.   That would cover the present case, save for the consideration that here we have a failure to despatch notices in time to approximately 150 members.

[38]     As to that, I accept Mr Gates’ argument to the effect that the purpose of the proviso is to cater for inadvertence in individual cases.  In other words, it is a slip rule, designed to cover minor omissions in the notice procedure.   It is not, in my view, designed to operate where there has been substantial non-compliance with the primary obligation of the club set out at the commencement of r 14.3.1, which is to give a stipulated period of notice to all members.  Here, the club did not send notice of the meeting to all of its members.  In the case of the 150 to whom notices were not sent  until  Monday  4  October  2010,  the  period  of  clear  days  for  those  was significantly less than the prescribed period.

[39]     I am satisfied that the circumstances outlined by Ms Kettlewell may be relied upon  by  the  court,  but  what  has  occurred  here  amounts  to  a  degree  of  non- compliance with the rules that cannot, in my view, be overcome by reference to the proviso.   The primary obligation on the part of the club is to send out notices to members at least 21 clear days before the date of the meeting.  While the proviso will assist in coping with minor discrepancies, it does not, in my view, extend to validating a failure to give notice to no fewer than 150 members.

[40]     For those reasons I am satisfied that the plaintiffs have established a serious question  to  be  tried  in  respect  of  the  period  of  notice  given  to  a  significant percentage of the club’s members.

Misleading memorandum

[41]     The club sent to members, along with the notice of special general meeting, an explanatory document with which the plaintiffs take issue in two respects.  First, they complain of the following sentence in the memorandum:

This is best done by Special General Meeting timed for Labour Weekend to gain maximum attendance (at least 100 in numbers) and voting (15% in numbers of all members supporting).

[42]     The complaint is that the document incorrectly implied that the motion would be passed if only 15% of members attending the meeting, either in person or by proxy,  supported  it,  whereas  the  correct  position  is  that  a  simple  majority was required.

[43]     The reference to 15% is to r 15.1 which provides:

Quorum

15.1At  any  General  Meeting  of  Club,  fifty  (50)  and  at  any  Board Meeting, four (4) members shall form a quorum.  For a decision on the sale or long term lease of Club land a quorum of one hundred (100) members must be present and the total number of votes including proxy votes must be no less than fifteen percent (15%) of total eligible voting members.

[44]     This rule provides that at any meeting called to consider a motion to make a decision on the sale or long-term lease of club land, a quorum of 100 members must be present.  It further provides that the total number of votes cast, including proxy votes, must be no fewer than 15% of total eligible voting members.

[45]     A notice of general meeting must fairly disclose the purpose for which the meeting is convened.  It must not mislead members in fact or in law as to matters which are to be called and voted upon in the meeting.  The test is whether the notice was written so that ordinary minds can fairly understand its meaning.[4]

[4] See Roger J Pitchforth Meetings: Practice and Procedure in New Zealand (4th ed), CCH, Auckland, 2010) at [2-055]. 

[46]     In Floral Holdings Ltd v Rothmans industries Ltd [5] Chilwell J stated:

[5] Floral Holdings Ltd v Rothmans Industries Ltd (1986) 3 NZCLC 99,817 (HC) at 99,822-99,823.

A question of law, upon which the submissions of counsel differ, relates to the test of the adequacy of a notice calling a general meeting and of accompanying documents.   Counsel for the defendants, relying upon Gower 4 Ed 533 and Pennington 5 Ed 702, contended that it is sufficient if the documents convey to ordinary minds sufficient information as to what is  proposed to enable the recipients to decide whether they should attend and vote.  Counsel for the plaintiff contended that the test is more comprehensive than that:  he submitted that the test is whether shareholders  have  been  fully  and  fairly  informed  to  the  point  where  they  can properly determine whether they should vote in person or by proxy in favour of the resolutions to be put at the meeting.  I am persuaded that the latter is the correct test for it recognises the situation that those who vote by proxy do so on the information supplied.   See  Re  Dorman,  Long  & Co  Ltd [1934] 1 Ch 635, 657; Re Marra

Developments Ltd (1976) 1 ACLR 470, 478-480, Bain & Co Nominees Pty Ltd v

Grace Bros Holdings Ltd (1983) 1 ACLC 816, 819-820; Garvie v Axmith (1961) 31

DLR 2d 65, 85-86; Rudkin v British Columbia Automobile Association (1968) 70

WWR  649,  655-656.    Corollary  rules  which  flow  from  that  test  are  that  the information supplied should not be in any degree misleading, that a notice is not

adequate if, whilst strictly true, it distorts or is, in other words, a “tricky notice” and

that a collateral benefit to a director must be fully disclosed as a matter material to a decision on a resolution.  For such corollary rules in operation see Kaye v Croydon

Tramways Co [1898] 1 Ch 358; Baillie v Oriental Telephone & Electric Co [1985] 1

Ch 503; Tiessen v Henderson [1899] 1 Ch 861; Bain & Co Nominees Pty Ltd v

Grace Bros Holdings Ltd (supra).

[47]     The argument for the plaintiffs is that members who may have taken an active role at the meeting, or by way of proxy,  and who support or may have supported the plaintiffs’ position, may have been deterred by the suggestion that the motion could be passed by just 15% of those present and voting.

[48]     The genesis of the relevant provision in the notice is obvious.  By that I mean it  refers  back  to  r  15.1.    There  is  no  doubt  it  could  have  been  phrased  less awkwardly.  But I do not consider that any reasonably intelligent member of the club would have been misled.  A requirement for a 15% majority which, as Ms Kettlewell points out, is a misnomer, is virtually unheard of.  It would be absurd for the rules to provide for the formality of a special general meeting called on 21 days clear notice, at which a motion to sell or lease the club’s land could be passed by a majority of just 15%.  In my opinion the expression “all members” sufficiently advised members that the reference was to all members of the club, rather than to those members who were present at the meeting in person or by proxy.

[49]     The second complaint concerns statements in the explanatory memorandum to the effect that “the courts remain largely unused”, and that the proposal “ … seeks to add value to a core asset from the sale of a little used surplus asset”.

[50]     The  argument  for  the  plaintiffs  is  that  these  statements  were  misleading because, at least in their view, the tennis courts are used regularly, constitute an important facility for those residing or staying in the immediate area, and could not be said to be “little used”.

[51]     In my opinion it is not possible to elevate the plaintiffs’ dissatisfaction with the language complained of into a serious question for trial.  The statement appearing in the explanatory memorandum plainly represents the opinion of those responsible for the document.   Of course there is room for other opinions.   It was for the plaintiffs and their supporters to ensure that those other opinions were heard at the meeting.   In my view the statements complained of amounted to no more than an explanation of the board’s reasons for promoting the sale of the tennis courts.  They are  statements  of  opinion  rather  than  fact,  and  would  be  so  read  by  members receiving the notice.

Procedural unfairness

[52]     It  is evident,  as Mr Reeves  explained, that the chairman of the meeting advised that all speakers could speak once only and would be limited to two minutes so that everybody had an opportunity to speak.  Mr Reeves’ evidence is corroborated by that of Mr Courtney and Mr Iles filed by the defendants today.

[53]     After about an hour the chairman ruled that he would take no more speakers, and that the motion would be put.  According to Mr Reeves, that was at a time when it was clear that there were further members who had not spoken, but wished to do so.

[54]     As a matter of general practice, the chairman has a discretion to set rules around speaking procedure at a meeting.[6]     This includes a discretion to set time limits on speaking, particularly when there are numbers of people who wish to be heard.  The chairman’s role is to ensure that the debate is fair, allowing all sides fair opportunity to present their views.

[6] See Pitchforth at [3-055]; Mark von Dadelszen Members’ Meetings (2nd ed, LexisNexis, Wellington,

2004) at [6.7.2], [6.10.1].

[55]     If speeches become repetitive and there are no new points to be raised by members, it may be appropriate for the chairman to terminate the debate and put the motion to a vote.  For instance, the Model Standing Orders for Meetings of Local

Authorities and Community Boards[7] provide that after three consecutive speakers for or against a motion, where no contrary speaker wishes to be heard, the chairman must put the motion to a vote (notwithstanding that others may wish to be heard).

[7] Model Standing orders for Meetings of Local Authorities and Community Boards (Standards New Zealand, NZS 9202; 2003) at [3.8.3].  See also Model Standing Orders for Meetings of Public Bodies (Standards New Zealand, MP 9204: 1993) at [2.21.4].

[56]     Although the Model Orders are only an example, they demonstrate that a meeting can be conducted fairly even though all who wish to speak are not heard. The dominant consideration is whether all sides were given a fair opportunity to present their views.  The chairman permitted a number of members to speak, both for and against the motion.  The debate lasted about an hour, which was sufficient time for both sides to present their views.

[57]     Finally,  the  plaintiffs  complain  that  they  and  those  who  joined  them  in opposing the motion were not given the opportunity of electing or appointing their own scrutineer; nor did the chairman permit the meeting to approve the scrutineers already selected.

[58]     Unless the constitution states otherwise, the chairman retains a discretion to appoint scrutineers.[8]    Here there is contested evidence as to whether any member attending the meeting requested the appointment of scrutineers.   I am unable to resolve the question as to whether there was such a request.    What is apparent is no motion was in fact put.  I am not able to discern from the evidence before the court anything which would suggest actual unfairness or duplicity at the club meeting. There was a very significant majority in favour of the motion and Mr Gates does not press the argument that the appointment of a scrutineer acceptable to the plaintiffs

[8] See Pitchforth at [3-195]; Von Dadelszen at [6.10.5]

may have led to the identification of something which could have reversed the outcome of the meeting.  I am not satisfied that the complaints about what occurred at the meeting raise a serious question to be tried either.

Conclusion

[59]     Accordingly,   I   have   reached   the   conclusion   that   the   plaintiffs   have demonstrated there is a serious question to be tried in respect of the club’s failure to comply with the requirements of r 14.3.1, but not otherwise.  The question then is what the outcome of this application ought to be.

[60]     Here, as is set out in Cayne, the question is to be determined in cases like this by balancing the risk of doing an injustice to either party.  A significant factor in the plaintiffs’ favour is their entitlement to have the rules of the club complied with. That is of particular importance, in my view, in respect of a requirement to give appropriate notice.  It cannot be said that the failure to give notice in time to 10% of the members was in any respect minor.  The plaintiffs say that they are entitled to have the club determine the issue at a properly convened meeting at which all members have been given appropriate notice.

[61]     Against that I must consider the position of the club, and therefore all the membership as a whole.   Here I must take into account the fact that 70% of the voting members have voted for the motion and so it cannot be said that the plaintiff cannot call on the support of the majority of the members.

[62]     Having said that, the plaintiffs have, as I have indicated earlier, a vested entitlement in securing compliance with the rules of the club which are of procedural importance.   If an interim injunction is granted, the club will be precluded from accepting any tender following the closing of tenders tomorrow.  That may or may not be a significant detriment to the club.   One simply does not know.   I must, however, consider all the steps the club could take in the reasonably near future if an injunction is granted.

[63]     The court is told that the annual general meeting of the club generally takes place on Auckland Anniversary weekend, which is at the end of January each year.  I understand that will occur this year as well.  That is expressly provided for in the rules.  There remains sufficient time, looking at the matter today, for the issue of the sale of the tennis courts to be revisited at the annual general meeting.  That is, there

is plainly time for fresh notice to be given in a way that complies with the requirements of r 14.3.1.

[64]     Viewed  in  that  light,  the  club  will  suffer  little  prejudice  if  it  is  simply required to revisit the issue in the context of fresh notice to its members.

[65]     Against  that  there  are  perhaps  two  primary  considerations.    The  first  is financial.  There is evidence to the effect that the club has re-negotiated its banking arrangements on a temporary basis in anticipation of carrying into effect the resolution passed on 24 October 2010.  The court is told the club cannot be confident that its re-negotiated short term arrangement will necessarily be rolled over if an injunction is granted.  However, if there is, as appears to be the case, an opportunity for the club to return to the issue in a few weeks, one would have thought that the financial detriment likely to be suffered by the club would be relatively minor.

[66]     The second issue concerns the fact the plaintiffs have been active in recent times in garnering support and have been partially responsible for a great many new members, a number of whom have been motivated to join the club by reference to the current dispute over the fate of the tennis courts.   I do not regard that as a particularly weighty issue.   As Mr Gates submits, any domestic club is subject to changes in membership.  It is simply a consideration to be taken into account in a general way.

[67]     Having said that, the very significant numbers of members who supported the resolution in the first place will take some overcoming by a body of new members and it cannot be said with any confidence that any result will not be the same as it was on the first occasion.

[68]     I want to say something about the new members.  There is evidence before the court that the sudden surge of membership applications has necessarily been considered  on  short  notice  by  the  board  of  the  club,  which  has  determined  to convene a special meeting in order to approve the new memberships, so conferring on new members rights to vote and speak at any future meeting of the club.  It might well have been open to the board to decline to convene an early board meeting and

simply to stick to its ordinary meeting programme.  The fact that it chose to meet at short notice in order to admit new members to the club does the members of the board considerable credit.  It must be said that, despite the difficulties which have arisen in this particular case, there is not the slightest suggestion to my mind that the defendant has acted other than honourably and fairly.   What has occurred is the result of a simple mistake.

[69]     I should say also that I am satisfied that Ms Kettlewell’s evidence may be relied upon.  Mr Gates was inclined to caution against over-ready acceptance of her evidence because, he submitted, her contention that the bulk of the postings occurred on Friday 1 October was inconsistent with evidence that suggested that one member living in Pauanui had not received a letter until the following Tuesday.  In my view there is no inconsistency.  I believe I can take judicial notice of the fact that the post becomes slower as Christmas approaches and the delay does not give rise to any such inference as Mr Gates says can be drawn.  More particularly, Ms Kettlewell has set out the detail of what occurred at the beginning of October and she has volunteered information which, in the end, underpins the only question on which I have determined the plaintiffs to have an arguable case.  I am perfectly satisfied her evidence is correct in every respect.

[70]     Against that background I have concluded that the proper course is to grant the injunction sought by the plaintiffs.   Even on a prima facie basis, the plaintiffs have established a material failure to give timeous notice to 150 of its members.  The injunction  will  prevent  the  defendant  from  giving  effect  to  the  resolution  of

24 October 2010.  If the club so chooses, it would also prevent the club from further promoting a resolution for the sale of the tennis court land until the resolution of this proceeding.  But in my view, given the pending annual general meeting, it is much more likely that the club, and in particular the board, will decide to revisit the issue at the forthcoming annual general meeting, given that notice can still be given of their intention to do just that.

[71]     Accordingly, the prejudice to the club is relatively limited and is insufficient to outweigh the entitlement of the plaintiffs to have the club comply with the notice requirements set out in the club’s own rules.

[72]     There will accordingly be an injunction.   The terms of the injunction will, however, be a little different from that sought in the plaintiff’s interlocutory application.  The club must remain free to revisit the issue at a forthcoming meeting.

[73]     There will therefore be an injunction prohibiting the club from giving further effect to the resolution for the sale of the land at Gallagher Park Lane, Pauanui passed at the special meeting of the club held on 24 October 2010, pending further order  of  the  court.    As  will  become  clear  from  what  I  have  said  earlier,  that injunction does not in any way impinge upon the discretion of the club to organise a further  meeting  aimed  at obtaining the  consent  of  members  for  the sale of  the relevant land, whether at the forthcoming annual general meeting or at some other time.

[74]     The plaintiffs are entitled to costs.  Counsel may file memoranda if they are unable to agree.

[75]     I make an order directing that the affidavit of Mr Christie not be searched without the leave of a Judge.  That direction does not, of course, apply to the parties to this proceeding or to their solicitors or counsel.

[76]     At the conclusion of this judgment I discussed with counsel the issue of whether there ought to be any consequential case management direction.  Counsel and their clients will each need to consider their positions.  For the time being it is agreed there is no need for any further directions.  Depending on what steps, if any, are taken in respect of a further meeting, the proceeding may not progress any further.

C J Allan J