The Fulton Hogan (Canterbury) Collective Benevolent Organisation Registry No 43-846 HC Christchurch CIV 2009-409-2745

[2010] NZHC 1268

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2009-409-002745

UNDER  the Declaratory Judgments Act 1908

IN THE MATTER OF     the Friendly Societies and Credit Unions

Act 1982

ANDIN THE MATTER OF  the Fulton Hogan (Canterbury) Collective Benevolent Organisation Registry No 43-846

THE FULTON HOGAN (CANTERBURY) COLLECTIVE BENEVOLENT ORGANISATION REGISTRY NO 43-846

Applicant

Hearing:         On the papers

Appearances: MAL McDonald for Applicant

Judgment:      13 July 2010

JUDGMENT OF HON. JUSTICE FRENCH

[1]      This is an application under the Declaratory Judgments Act 1908. [2]           It is made against the following factual background.

[3]      In 1993, a group of employees of Fulton Hogan (Canterbury) Limited formed a benevolent society.  The purpose of the society was to promote the welfare of its members and to provide financial relief for assistance to members in the event of industrial action.

[4]      The fund was created by imposing an annual levy on members.

[5]      The organisation was not registered until 1998, when it was registered under the Friendly Societies and Credit Unions Act 1982.

THE FULTON HOGAN (CANTERBURY) COLLECTIVE BENEVOLENT ORGANISATION REGISTRY NO 43-846 HC CHCH CIV-2009-409-002745  13 July 2010

[6]      The rules that were registered contained the following provisions:

6.    ADMISSION OF MEMBERS

(a)   All  full-time  employees  of  Fulton  Hogan  (Canterbury)  Limited shall be eligible to apply for membership of the society.

…

7.    TERMINATION OF MEMBERSHIP

(a)   The society shall terminate the membership of any member who:

(i)Ceases  to  be  an  employee  of  Fulton  Hogan  (Canterbury) Limited; or

(ii)  Is  in  arrears  of  subscriptions  for  more  than  three  months without a reason acceptable to the management committee; or

(iii) Fails to pay any arrears of  subscription on request by the management committee; or

(iv) Is guilty of a breach of these rules or a failure to abide by a lawful decision properly made by the society.

(b)   Termination of membership under rule 7(a) shall not entitle the former member to a refund of any subscription paid while a member, and nor shall it relieve the former member of the liability to pay any subscription owing in relation to the period of membership.

[7]      Unfortunately,  the  reference  in  the  rules  to  Fulton  Hogan  (Canterbury) Limited has proved highly problematic.

[8]      This is because three years prior to registration the Fulton Hogan group of companies had been re-structured.  The shareholders had decided that Fulton Hogan would no longer carry on business under separate provincial organisations, but rather under a single entity.  Fulton Hogan (Canterbury) Limited along with a number of other Fulton  Hogan  companies was  accordingly amalgamated  to become Fulton Hogan Limited. Companies Office records show the status of Fulton Hogan (Canterbury) Limited as struck off.

[9]      At the time the benevolent society was registered, no one turned their mind to the legal effect of Fulton Hogan (Canterbury) Limited having been struck off and amalgamated.   That was understandable, because for all practical purposes the reorganisation  of  the  company  in  real  terms  had  had  little  or  no  effect  on  its

employees.  The employment changed from one company to the other in seamless fashion, and it was the intention at that time of all members that the benevolent society would continue exactly as before, as indeed it did.

[10]     The difficulties caused by the reference to a non-existent company were only realised in 2005 when a decision was made to dissolve the benevolent society and transfer its assets to a new employee entity called the Combined Employees Association Incorporated.

[11]     The   current   members   of   the   new   entity   (the   Combined   Employees Association Incorporated) are either members of the benevolent society or persons whom the benevolent society was intended to benefit.

[12]     The Registrar of Friendly Societies has however taken the view that Rule

7(a)(i) means the society does not have any members, and as such a vote to wind-up the society cannot occur, nor can there be a transfer of the assets of the society to any other person.

[13]     The Registrar also takes the view that the society cannot avail itself of the amalgamation provisions of the Companies Act 1993 because the registration of the society and its rules occurred after the amalgamation, and not before.

[14]     The resulting impasse has prompted the application to the Court for relief.

[15]     The Court proceedings have been publicly advertised, with any member or former member of either the benevolent society or the Combined Employees Association who wishes to be heard being invited to file a notice of appearance at the High Court.

[16]     No notices of appearance have been filed, and no objections to the proposed dissolution and transfer have been received.

[17]     I  am  satisfied,  following  the  principles  summarised  in  Social  Tonics

Association of New Zealand Inc v Manukau City Council HC Auckland CIV-2007-

404-5613, 20 December 2007, Andrews J that this is an appropriate case for the application of the Court’s jurisdiction under the Declaratory Judgments Act.

[18]     In interpreting the rules, the Court is entitled to look at the factual matrix and should adopt a commonsense purposive approach that gives meaning to the rules. The parties cannot be taken to have intended a nullity.

[19]     In my view, the reference to Fulton Hogan (Canterbury) Limited was clearly intended to be a reference to that company or its successors, in other words it was a reference to the relevant employing entity.

[20]     The words “Fulton Hogan (Canterbury) Limited” as they appear in clauses 6 and 7 of the rules of the society are therefore to be interpreted as meaning “Fulton Hogan Limited” for the purposes of enabling the members of the society to vote upon its dissolution and disposal of its assets.

[21]     There will accordingly be a declaration to this effect.

[22]     Because of the view I have taken regarding the interpretation of the rules, it is not necessary for me to consider the correctness of the Registrar’s position regarding the amalgamation provisions under the Companies Act.

[23]     The Registrar of Friendly Societies has indicated he will abide the decision of the Court.

[24]     There is no issue as to costs.

Solicitors:

R A Fraser & Associates, Christchurch