Sanders v Hepatitis C Support Group (NZ) Incorporated HC Auckland CIV 2010-404-3560

[2010] NZHC 1845

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-003560

UNDER  the Incorporated Societies Act  1908

AND UNDER                  the Judicature Amendment Act 1972

IN THE MATTER OF     Constitutional Amendments to the Rules of the Hepatitis C Support Group (NZ) Incorporated

BETWEEN  JASON TUDOR SANDERS Plaintiff

ANDHEPATITIS C SUPPORT GROUP (NZ) INCORPORATED

Defendant

Hearing:         7 October 2010

Appearances: R S Pidgeon for Plaintiff

P J Andrew for Defendant

Judgment:      15 October 2010

JUDGMENT OF KEANE J

This judgment was delivered by Justice Keane on 15 October 2010 at 4.30pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

Solicitors:

Thorne Thorne White & Clark-Walker, Auckland.

Cook Morris Quinn, Westgate Shopping Centre, Westgate, Auckland.

SANDERS V HEPATITIS C SUPPORT GROUP (NZ) INCORPORATED  HC AK CIV 2010-404-003560  15

October 2010

[1]      On 27 March 2010 the Hepatitis C Support Group (NZ) Incorporated held its annual general meeting during a Wellness Weekend at Bethells Beach, Auckland. At the meeting the Society elected new officers and committee members and passed amendments  to  its  December  2000  Rules,  including  one  confirming  that  only financial members of the Society were eligible to vote at an annual general meeting.

[2]      At  the  meeting  the  chair,  Yvonne  Dufaur,  who  is  not  a  member  of  the Society, but who had been engaged by the president, Rosemarie Pritchard, to chair the meeting and to speak during the weekend on non-profit organisations and the roles and responsibilities of committee members, interpreted the December 2000

Rules to permit only members, who had paid subscriptions, to vote and stand for office.

[3]      Jason Sanders, who had been a member of the Society since 1992, and was then a committee member, sought to stand for the presidency. Ms Dufaur ruled him ineligible. Neither he nor the person who nominated him had paid any subscription. Yet, he contends, she permitted eight people to vote, who had paid subscriptions, but had not been approved as members by Society's governing committee.

[4]      Mr Sanders complains that the eight persons permitted to vote had been recruited by Ms Pritchard to obtain a majority of her persuasion on the critical resolutions at the annual general meeting, the election of officers and committee members and the proposed amendments to the rules. He and others left the meeting before those resolutions were passed; and he advances this application for judicial review on a series of related grounds.

[5]      First, Mr Sanders contends, Ms Pritchard, in breach of natural justice and his legitimate expectation, did not bring to the Society's committee, before the annual general meeting, the amendments to the rules. He and others only received them on

19 March 2010 as part of a mail-out two weeks before the annual general meeting. Second, at the committee meeting on 19 March, he contends, Ms Pritchard assured him that at the annual general meeting eligibility to vote and stand for office would not  depend  on  prior  payment  of  any  subscription.  It  is  with  that  legitimate expectation that he attended without paying a subscription, as did others. Third, at

the meeting itself, he contends, Ms Dufaur, in breach of the rules, ruled him and others, who had not paid subscriptions, ineligible to vote or to stand for office, yet she permitted non-members to vote because she had been assured they had paid their subscriptions and she presumed they were in good standing.

[6]      In these decisions at the annual general meeting, Mr Sanders contends, Ms Dufaur was not merely wrong, she was unreasonable. Her decisions, he contends, and more pointedly Ms Pritchard's conduct at committee meetings before the annual general meeting, and more generally, served an improper purpose; to assure Ms Pritchard of her majority. The effect, he contends, was dramatic. At a stroke the members of the Society were reduced from some hundreds to less than 20.

[7]      Mr Sanders seeks declarations that the annual general meeting was conducted contrary to the December 2000 Rules and is a nullity; and so too the decisions then taken, the election of officers and the passing of amendments to the December 2000

Rules. He seeks an order cancelling the registered status under the Incorporated

Societies Act 1908 of the amendments resolved upon.

[8]      In large part the  grounds on which Mr Sanders relies are  contested.  Ms Pritchard denies any impropriety. Her sole focus throughout her year as president, she says, was to put the Society on a proper footing and that had become a source of tension. Ms Dufaur is clear that as a neutral chair her sole concern was to give effect to what the rules required.

[9]      This application, I consider, as I told counsel at the outset, does not need to enter this wider controversy. It can and ought to be resolved on the obvious and more confined issue whether Ms Dufaur, as chair, was correct in her understanding of the rules or was not.

Sequence of events

[10]     The  tensions,  which  culminate  in  this  application  for  review,  began  to become evident during 2009 when Ms Pritchard, and the officers and committee elected with her in April 2009, inherited a society in some disarray. The Society had

been struck off by the Registrar of Incorporated Societies twice, in 2005 and again in

2009, because it had failed to file annual returns.  It was not re-registered until

November 2009.

[11]     This had to be of concern because the Society has depended since at least

1999 on funding from the Ministry of Health; in the vicinity of $140,000 each year. And there is evidence that, soon after she assumed office, Ms Pritchard, herself or with others, consulted with the Ministry and took advice from the Society's accountants and lawyers. The principal outcome was this. Ms Pritchard instructed the Society's lawyers to prepare amendments to the rules so that the Society could attain charitable status and become tax exempt.

[12]     The issue of subscriptions surfaced  at the 13 December 2009 committee meeting. The members present were Ms Pritchard, the vice-president William McLean, a committee member Andrew Joughin, and Mary Sherwood, the secretary and treasurer. Apologies were received from Bryce Hay, another committee member.

[13]     Under  the  agenda  item,  'Retreat/AGM  date'  the  minutes,  on  which  Ms

Pritchard relies, said this:

Membership fees were discussed and it was suggested that membership be part of the retreat fee, for tax and legal reasons, they have to be separate. $15 waged and $5 unwaged is for membership. Retreat costs $20 if paid before

31 January 2010, $30 after.

All agreed that the AGM be held at the retreat on the Saturday afternoon at

3 pm with dinner included. Only current paid members can be nominated, and have voting rights. ... Date being 24 - 26 March 2010.

[14]     At the 13 December 2009 meeting, Mr McLean says, the membership, the annual general meeting and the payment of members' subscriptions were discussed. To encourage as many as possible to attend and vote, he suggested, he says, that those attending receive a free membership. Also that subscriptions be split between waged and unwaged. He does not accept that, as the minutes say, it was agreed that

'only current paid members can be nominated and have voting rights'. Ms Pritchard suggested that, he recalls, but no vote was taken or decision made. That also is Mr Joughin's evidence. Membership payments, he says, had always been a matter of

'koha'. Payments were welcome but no-one was ever excluded. At this meeting at which he was present, he notes, no resolution requiring subscriptions was passed.

[15]     These  minutes  were  confirmed,  nevertheless,  at  the  2  February  2010 committee meeting at which Ms Pritchard, Ms Sherwood and Mr Joughin were present. At that meeting Ms Pritchard tabled the resignations of Mr McLean and Mr Hay with this gloss: 'reasons for resigning personal and weren't happy with decision processes.' It was agreed at that meeting that Mr Sanders should be appointed to the committee.

[16]     The next meeting was on 20 February 2010. Those present are not recorded. Mr Joughin is noted to be absent. It might be inferred that Mr Sanders was present. He is recorded as moving the motion approving the minutes of the 2 February meeting. At the next meeting on 19 March 2009, however, the minutes record, he disputed being present on 20 February:

Jason  denies  approving  minutes  from Feb  2  meeting  because  he  wasn't present. Kay explained that you don't have to be present to approve and you did approve. Andrew said there wasn't anything in that meeting that would cause conflict.

[17]     At  the  20  February  meeting  there  was  this  entry  under  the  heading

'Constitution Amendment', referring to the work then being done by the Society's lawyers:

Andrew Cook is still writing this up. Only financial members have voting rights, be nominated to committee and able to attend special meetings. Whether to have majority vote 50 or 70%. 3 officers and up to 4 other members, no VP or Immediate past president. Ask Andrew, can we specify roles of responsibilities of officers.

[18]     Then this entry under the heading 'Program for Camp', as to Mr Sanders' proposed part before and at the forthcoming weekend:

Agreed Jason organise and prepare for discussion by us and be ready to go out in the newsletter. Aiming for newsletter to go out, before conference if not the week after.

[19]     Then under the heading 'Meeting with MOH', referring to the interest the

Ministry was then taking in the reform of the Society, there was this entry:

Happy with progress made and would like a strategic plan put together as to where the Centre is going and what it would take to get it there. Kaye explained some things are already in place.

[20]     These minutes, and those earlier, do not fully reflect the extent to which Mr Sanders had been involved before he became a committee member. He had worked part-time in the Society's office between August - December 2009, updating the database of what he understood to be the Society's members and manning the telephone. On 26 January 2001, he, Ms Pritchard, Ms Sherwood and one other had taken advice  from  a  consultant to non-profit organisations, Mr Robbins, on the advantages of tax exempt status and how to obtain it. (Mr Robbins recommended that, if there were likely to be conflict at the annual general meeting, the chair should be someone neutral.)

[21]     On 8 March 2008 Mr Sanders sent Ms Pritchard an email. He had noticed that the quarterly newsletter, 'The Chronicle', then in draft, ended with a clip-out inviting members to renew their membership, because the Society's database was being updated. He had, he said, updated the database in August - December 2009. He suggested instead the proposed amendments be explained in this way:

All we need to do is say that we have implemented a new 2 tier membership system because we are aware that many people are happy just to receive newsletters and occasionally use the service. Those who want to take part in AGMs and have some say over the direction of the HCV resource centre will have to become financial members, for the nominal fee. All the rest will be called associate members and will have the same privileges, except to be able to have voting rights at the AGM. Unless they send in the slip with money we will assume that they are happy to remain as associate members (& they don't need to send the slip in).

We  ought  to  proceed  to  tell  them  why  it  can  matter  to  be  a  financial members, as I think you'll agree that most people can't be blowed being very active and will just be content to collect the newsletter and occasionally ring up to get advice or information, i.e. remain associate members. We ought to tell them that financial members can move motions at AGMs which can, within the framework of our constitution, have an important bearing on our direction and functions.

[22]     On 18 March 2009 the Society mailed out a newsletter, a brochure for the Wellness Weekend, and a notice of annual general meeting setting out the agenda and the full text of the amendments proposed to the December 2000 Rules. In the newsletter, under the banner 'From the President', Ms Pritchard said this:

It has been an extremely challenging time-consuming seven months. There have been many meetings, discussions, debates and decisions that had to be made to bring the Centre into line with legal and MOH requirements.

The Annual General Meeting (AGM) will be held at Karanga Camp Retreat on 27th March at 3pm. Dinner will be provided afterwards. We will also have a guest speaker and other speakers and activities throughout the day.

The AGM brings the election of Committee members and amendment of the constitution. In the amendment there are proposed changes to membership, that being associate members and financial members: there will be a nominal yearly fee of $15 waged and $5 unwaged.

[23]     At the end of the newsletter was a clip-out that said, reflecting Mr Sanders' suggestions, this:

FINANCIAL MEMBER APPLICATION FORM

For us to be truly representative of the Hepatitis C community, a strong membership of people affected by the Hep C virus is essential. Being a financial member is one way of extending your support, it also gives you the right to nominate, vote and have a say. It also gives you access to our library.

If you would like to become a financial member, please tick the appropriate boxes and send a cheque made out to: Hepatitis C Resource Centre - Auckland.

[24]     There  followed  a  series  of  boxes  enabling  members  to  elect  whether  to become financial members, either waged or unwaged; and, as well as seeking their names, addresses, ethnicity and contact details, it invited them to confirm whether they were Hepatitis C positive, or a support person, or a health care worker.

[25]     On 19 March 2010, the day Mr Sanders received that mail-out, there was a committee meeting in the afternoon at which he, Ms Pritchard, Mr Joughin and Ms Sherwood were present, as was a contract manager Graham Mita. And, as to the annual general meeting, the minutes noted two issues. One was whether workers at the camp during the weekend should have to pay. It was agreed they should not. The other was as to whether proxy votes were to be allowed. Mr Sanders and Mr Joughin voted 'yes' and Ms Pritchard and Ms Sherwood voted 'no'. Ms Pritchard understood the rules to allow only one vote a person.

[26]     Mr Sanders contends these minutes are incomplete. He asked Ms Pritchard, he says, whether subscriptions had to be paid before the annual general meeting or

would become payable after. She assured him, he says, that the latter was the case. As to that he has a digital recording in which there was this exchange:

JS:       I seek some clarification too ... at the AGM can anyone who is a current member or associate member ... are they going to be able to vote, because we have not changed the rules?

KP:     Yeah, they are ... the way the Constitution is.

JS:      We follow that constitution until after the changes are made? KP:  Yeah.

[27]     As a result of this exchange and another, which he also recorded Mr Sanders says, he did not pay any subscription. He did not advise anybody else to do so either. He expected to be able to vote and to stand for the office of president. Mr Joughin also says that at this meeting no mechanism for paying subscriptions was discussed or any decision taken. All that was discussed was the need for members to make some contribution in the future. Relying on that, he too did not pay any subscription. He only made a donation for the weekend. He too anticipated he would be entitled to vote.

[28]     Ms Dufaur, whom Ms Pritchard appointed to chair the meeting, was on the face of her curriculum vitae well equipped to do so. She had been for several years director of training and development for the New Zealand Crippled Children's Society. She had qualifications and experience in managing non-profit organisations. She had her own consultancy.

[29]     Ms Dufaur is clear that she chaired the meeting understanding the rules to permit only currently subscribing members to vote or stand for office; and that her understanding derived from her own reading of the rules. Under the rules, she noted, a membership lapsed if the member had not paid a subscription for the last year, and only  members  could  vote  at  annual  general  meetings.  And  so,  just  before  the meeting,  Ms  Dufaur  says,  she  obtained  from  Ms  Pritchard  a  list  of  financial members.

[30]     That  list  appears  to  record  every  payment  made  to  the  Society  by  an individual since 1997. Only eleven recent  entries record payments, after the 13

December 2009 committee meeting, that are recognisable as subscriptions. Six of the eleven had paid mostly $5 subscriptions on 19 February 2010, the remainder on 22

March 2010. Of these one had been a member since 1 November 2001. Four had joined on 17 February 2001. The list is silent as to when the others joined. Amongst these  eleven  persons  are  the  eight  whom  Mr  Sanders  contends  had  not  been approved as members by the committee.

[31]     Ms Dufaur says that Ms Pritchard had told her that anyone attending the weekend could attend the meeting even if they could not vote. So she encouraged everyone present to participate. Mr Sanders, she recalled, questioned whether some present could vote if they had not been approved by the committee. She assumed that if they had paid their subscriptions they were in good standing.

[32]     When the time came to elect  officers,  by contrast, and  Mr Sanders  was nominated, she ruled him ineligible because, as she says, he was not listed as a financial member. Nor was the person who nominated him. That, she says, caused

'considerable consternation'. She was asked to adjourn the meeting. She is equally clear as to why she did not. Before the meeting, she says, 'The Chronicle' had alerted members of the need to pay subscriptions. An adjournment was unjustifiable. Moreover, she says, she did not think it would have assisted. Any member whose membership had lapsed had to re-apply to the committee.

[33]     At that point, Ms Dufaur confirms, before any resolutions were passed, Mr Sanders  and  a  number  of  others  left.  Before  they  left,  the  minutes  record,  the numbers present apart from employees stood at around 20, and of these perhaps 13 remained, including the eight Mr Sanders had challenged. Those remaining, the minutes confirmed, passed the resolutions called for electing the officers and committee and making the amendments proposed to the December 2000 Rules.

[34]     Two  of  the  amendments  passed  have  proved  controversial.  Under  the December 2000 Rules an expelled member had a right to contest that not merely before the committee, but on appeal to a special general meeting, on 14 days notice, to be conducted in accord with the principles of natural justice. That appeal right was excised. The more topical change, the one to which I referred at the outset, was an

amendment permitting only those members to vote at an annual general meeting, who had paid their subscription in the year in which the meeting was held.

Jurisdiction and principles

[35]     No issue is taken by the Society as to this Court's ability to grant by way of judicial review the declarations sought or the consequent order. In Stratford Racing Club Inc v Adlam,[1]  where the applicant did not have standing as a club member, because he had been denied membership, the Court of Appeal held that he was entitled to and might well have been obliged to seek judicial review.

[1] Stratford Racing Club Inc v Adlam [2008] NZAR 329 (CA).

[36]     That remedy, the Court held also, was especially apt because the applicant's complaint  was  that  the  governing  body  had  acted  unfairly  or  for  an  improper purpose. The members of the governing body, the Court held, were accountable because:

... as stewards of the assets held by the incorporated society ... (they are) required to exercise their powers in the best interests of the club and for proper purposes. That obligation is expressed clearly in the analogous duties owed by the directors to a company: s 131(1) of the Companies Act 1993 provides that a director 'must act in good faith and in what the director believes to be the best interests of the company', while s 133 requires that a director 'must exercise a power for a proper purpose'.[2]

[2] At [58].

[37]     Mr Sanders, too, founds his claim on breaches of natural justice and of a legitimate expectation, on impropriety and unreasonableness; and so there can be no question, leaving aside the merits, that his application is proper. The wide front on which he has advanced his application is, however, wider than is essential and that is complicating; most especially perhaps his claim to a legitimate expectation.

[38]     The legitimate expectation Mr Sanders contends for, based on the assurance he says he obtained from Ms Pritchard, is that he and others would be entitled to vote at the annual general meeting without paying any subscription. Yet he was ruled ineligible. A legitimate expectation can certainly extend to a fair procedure.[3] But the

[3] Talleys Fisheries Limited v Cullen HC Wellington CP 287/00, 31 January 2002.

forms of expectation to which the Courts will give effect at public law normally rest on 'a public interest in holding a public authority to promises made in the interests of proper public administration.'[4] That is not this case.

[4] New Zealand Association for Migration & Investment Inc v Attorney-General [2006] NZAR 45.

[39]     That  apart,  this  ground  and  the  others  at  their  widest  involves  strongly disputed issues of fact. And while such issues can be resolved on judicial review by cross examination[5], in this case that did not happen. There was no application to cross-examine and those strong differences were reflected rather in the contrasting submissions made.

[5] Stratford Racing Club Inc v Adlam.

[40]     This application, as I have said, does not need to depend on findings as to those issues. It can and ought to be resolved on what is the obvious issue. The vital decisions at the annual general meeting, those going to the validity of the meeting and the resolutions passed, were made by Ms Dufaur. She is clear as to why she made them. All that needs to be resolved is whether her decisions were in accord

with the rules.[6]

[6] Antunovich v Dalmatinsko Kulturno Drustvo Inc [2001] NZAR 229.

December 2000 rules

[41]     The mission of the Society, as expressed in the December 2000 Rules, since amended at the 2010 annual general meeting, but not in this respect significantly, was, 'quality information, support and advocacy for those infected with or affected by Hepatitis C';[7]  and the objects of the Society then were and in large part still remain:

[7] Rule 3(a).

(i)To  provide  information  and  support  to  people  infected  with  or affected by hepatitis C

(ii)      To promote public awareness and assist in public understanding of hepatitis C

\(iii)     To obtain and distribute information on development and concerns of hepatitis C affected people

(iv)      To promote the interests of those affected by hepatitis C, insofar as this does not extend to matters of non-charitable purpose, including the availability of adequate treatment, ensuring that those affected are not victims of discriminatory rules or regulations and assisting with claims for compensation

(v)       To promote effective public health measures and undertake public health education programs in respect of hepatitis C infection and related matters

(vi)      To undertake such further activities as are necessary to achieve the above objects.

[42]     Rule 4, the principal rule governing membership, was only slightly amended at the annual general meeting. It then said and still nearly says:

(a)Membership of the Society shall be open to any person or corporate body that subscribes to the objects of the Society

(b)Application for membership shall be made either in writing to the registered office or verbally at a Committee meeting but the Committee at its discretion may decline to approve an application for membership for any reason it deems sufficient

(c)A   register   of   members   showing   the   names,   addresses   and occupations  of  members  and  the  date  at  which  they  became members shall be held in the registered office of the Society

(d)      The membership shall consist of

(i)       all persons who have been approved for membership by the

Committee

(ii)      individuals,    companies    or    organisations    who    have subscribed for yearly or life membership if approved by the Committee

(iii)     Client members

(iv)     Associate Members as hereinafter defined and

(v)       Life Members and Honorary Life Members as hereinafter defined.

[43]     The Committee could then invite bodies corporate or persons to be associate members.  Such  members  were  not  and  are  still  not  entitled  to  vote.[8]   Another pertinent membership rule, rule 8, governing members resigning, then said and still says that such a member 'shall not be liable for any subscription accruing after the

[8] Rule 5.

end of the current financial year'. It was not then and is not now, however, a ground under rule 9 for expelling a member that he or she has not paid any subscription. That rule reflecting rule 4(a), which renders eligible for membership 'any person or corporate body that subscribes to the objects of the Society', has always enabled members to be expelled, who have 'ceased to subscribe to any of the objects of the Society'. But that, as I shall say, has nothing to do with the payment of subscriptions.

[44]     The rule governing subscriptions and levies is the subject of a separate rule, rule 10, which then said this:

(a)The annual subscription of any member or type of member shall be such as the Committee may from time to time determine

(b)If the subscription of any member be more than one year in arrears their membership shall lapse provided that such member by complying with the provisions of rule 4(b) may once again become a member.

Rule 4(b), it will be recalled, requires in effect that application for membership be made to and approved by the Committee; and reserves to the committee a right of veto.

[45]     Amongst the 2010 amendments was the one made to rule 10, which I have describe as the most topical of the amendments made. It introduced a new rule 10(b), displacing by one place the existing rule 10(b) to 10(c); and the amendment introduced says this:

Only a member who has paid the annual subscription referred to in clause

10(a) above shall be entitled to vote at general meetings that occur during the year for which that annual subscription applies.

[46]     As to variation of the Rules, rule 20 then said and still says:

These Rules may be altered, added to or rescinded and new Rules made only by a  resolution  made  at  a  General  Meeting of  the Society PROVIDED always that such alteration, addition or rescission shall be valid and effective only if it does not alter the exclusively charitable nature of the Society or result in the application of the Society's funds to other than charitable purposes.

Eligibility rules misinterpreted

[47]     There are three pertinent features of the December 2000 Rules that remain largely constant and I shall speak of them as if they presently apply.

[48]     The first of these features is that to be eligible to become a member of the Society a   person or body corporate needs under rule 4(a) only 'subscribe' to the objects of Society. 'Subscribe' in this context, I consider, has its primary meaning, which the Oxford English Dictionary expresses in a variety of ways, the most nearly relevant  of  which  is  this,  'to  give  one's  assent  or  adhesion  to;  to  countenance, support, favour, sanction, concur in'. 'Subscribe' in this context does not carry its secondary meaning; to pay a sum of money.

[49]     The second feature is this. To become a member an applicant has to apply under rule 4(b) and the committee has to decide whether to accept the application or to exercise its right of veto. That calls for a formal decision. The evidence does not demonstrate, however, to what extent if at all this rule has ever been adhered to.

[50]     Mr Sanders is confident that there are as many as 300 - 400 members. There is a database of that order. Ms Pritchard contends that some only are members. The absence of any formal record complying with rule 4(c), founded on decisions made by the committee under rule 4(b), makes it impossible to say who are members and who are not. There has to be an issue about those who paid subscriptions this year. Their applications did not go to the committee before the annual general meeting. By that measure, however, it may be that large numbers of the 'members' including perhaps Ms Pritchard and Mr Sanders himself, would not survive scrutiny.

[51]     The third feature is this. The Society has under rule 10 the ability to levy members for subscriptions and if a levy is imposed and members do not pay their subscriptions for more than a year, their membership lapses. Again no evidence has been advanced to show that any such decision was taken before 13 December 2009 and, if a decision were taken then, an issue in dispute, that could only have been effective afterwards.

[52]     The result is that anyone, who was a member in December 2009 could not have ceased to be a member for failure to pay the subscription imposed until at least a further year had passed. Membership could not have lapsed on that account before the  March  2010  annual  general  meeting.  If  Mr  Sanders  and  others  were  then accepted to be members, whether or not rule 4(b) had been adhered to, they would have been entitled to vote and to stand for office despite their omission to pay subscriptions.

[53]     In effect Ms Dufaur interpreted the rules as to eligibility as if those rules  had been adhered to scrupulously by the Society when they had not. But that apart, unfortunately, she misinterpreted the rules. She gave them the effect that the new rule 10(b) now brings to them. The whole point of that new rule, however, is to bring rigour to the issue who is eligible to vote at annual general meetings and who is not. It was not to be anticipated. The decisions Ms Dufaur made, therefore, are not in accord with the rules as they were, indeed largely still are.

Consequent relief

[54]     There will, consequently, be a declaration that Ms Dufaur's decision, as chair at the annual general meeting on 27 March 2010, to rule ineligible from voting those members, who had not paid any subscription, was invalid. There will also be a declaration that, as a result, all decisions taken at that meeting were invalid.

[55]     Neither of these declarations extends to Ms Dufaur's decision to receive votes from the eight persons whom Mr Sanders challenged. I decline the declaration he seeks that they were not then members. There will, however, be an order requiring the Registrar of Incorporated Societies to cancel the registered status of the amendments made at the annual general meeting, accorded them on 16 April 2010.

[56]     There must now be a further annual general meeting and, though the literal effect of my decision may be that the present committee has no standing, and that only the old committee does, as to that I have a discretion. I am concerned that, if the old committee were to resume office all that would result would be a stalemate.

There is some evidence of that even before the annual general meeting. I direct, therefore, that the existing committee remain to arrange the meeting required.

[57]     The committee is, I direct, to take the following steps:

(a)Within seven days of the issue of this decision it is to convene to agree the time, date and venue of the annual general meeting, to settle the agenda, which I anticipate will be largely that at the 27 March

2010 meeting, to draft the notice of meeting, and to arrange for the meeting to be advertised.

(b)      Within 14 days of the issue of this decision the committee is to mail out the notice of meeting to all persons and organisations sent notice of the March 2010 annual general meeting, explaining why a further meeting is to take place. It is to invite recipients to respond within 14 days of receiving the notice by notifying the Society of any further resolution they wish tabled.

(c)      Within  14  days  of  the  issue of  this  decision  the committee is  to advertise in the New Zealand Herald inviting any person or organisation wishing to become a member to apply, or to confirm their status as members, by notice sent within 14 days of the date of the advertisement to the Society's registered office setting out their names and addresses.

(d)The annual general meeting is to be chaired by an independent chairperson to be appointed by the president of the Auckland District Law Society.

(e)       The cost of this process is to be borne by the Society.

(f)Leave  is  reserved  to  apply  on  three  days  notice  for  any  further direction called for, but any further application ought only to be by way of last resort.

[58]     There remains the issue of costs. Mr Sanders has succeeded, and though he is legally aided, he will have a residual liability. He, or more immediately the Agency, presumably, must then be entitled to costs. That entitlement would, I imagine, lie in scale 2B. But Mr Sanders has succeeded on a much more confined basis than that on which he applied. The merit of his wider grounds is not to be assumed. That may suggest something less than a full award is warranted.

[59]    If Mr Sanders and the Society cannot resolve that issue he is to file a memorandum within ten working days of the date of the issue of this decision and

the Society is to respond within the succeeding ten working days.

P.J. Keane J