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Baldwin v Sanders [1967-68] PNGLR 95 (1 September 1967)

Papua New Guinea Law Reports - 1967-68

[1967-68] PNGLR 95 - Baldwin v Sanders

[1967-68] PNGLR 95

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

BALDWIN

SANDERS AND OTHERS

Port Moresby

Ollerenshaw J

14-15 August 1967

1 September 1967

COMPANIES - Limited by guarantee - Association of members interested in aviation - Expulsion of member - Injunction - Nature of member’s rights necessary to support injunction.

The foundation of the jurisdiction of the Court to grant an injunction to restrain the improper expulsion of a member of a company limited by guarantee and being an association of members with a common interest in aviation is the existence of the member’s right in money or property, present or prospective, to be protected. Macqueen v. Frackelton [1909] HCA 28; (1909), 8 C.L.R. 673; Edgar v. Meade [1916] HCA 70; (1916), 23 C.L.R. 29; Cameron v. Hogan [1934] HCA 24; (1934), 51 C.L.R. 358, followed.

The plaintiff was a member of a company limited by guarantee duly registered under the Companies Ordinance 1963-1966 and its members were an association of persons interested in aviation. It had considerable assets but its Memorandum of Association prohibited the distribution amongst members of any profits or of any surplus assets on winding up or dissolution under its Articles of Association. Its members were entitled to use its premises and other property, were entitled to vote at its meetings and at its general meetings upon questions of the management and disposition of its property; and in a winding up they were entitled to the intervention of the Court to see that its assets were properly administered.

Held

That the members’ interest in the company did not constitute such a right to property or money present or prospective.

Trial

On 2nd June, 1967, the defendants Vincent Tilney Sanders, Colin Woodward, Neville Wiles, Daryl Binning, Alan Woodcock, John Close and Chrystal Duggan were the directors of the defendant company The Aero Club of Papua when they resolved that the plaintiff, Henry William Baldwin be expelled from membership of the company. In the action the plaintiff claimed a declaration that the resolution was null and void and an injunction restraining the defendants from enforcing it or interfering with his enjoyment of the use and benefit of the facilities of the club. It was ordered (Frost J.) that the action be tried speedily and that the hearing of the plaintiff’s motion for an interlocutory injunction be treated the trial of the action. All relevant facts appear in the reasons for judgment hereunder.

Counsel

White, for the plaintiff.

Bayliss, for the defendants.

Cur. adv. vult.

1 September 1967

OLLERENSHAW J: This action is before me under an order for a speedy trial made by Mr. Justice Frost, who also ordered that the hearing of the plaintiff’s motion for an interlocutory injunction be treated as the trial of the action.

The plaintiff claims a declaration that a resolution expelling him from membership of The Aero Club of Papua and passed by its Board of Directors on 2nd June, 1967, is null and void and an injunction restraining the defendants from enforcing it or interfering with him in the enjoyment of the use and benefit of the club, as it is put in the prayer.

The plaintiff, until the passing of the resolution purporting to expel him, was, and he claims still to be, a flying member of The Aero Club of Papua.

The Aero Club of Papua, conveniently called the Club, is an association of persons interested in aviation. It is incorporated and registered as a company limited by guarantee. It has no share capital. Each member pays a nomination fee upon election to membership and thereafter annual subscriptions.

The liability of members is limited. Every member is liable to contribute to the assets of the Club, in the event of it being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the Club contracted before he ceases to be a member and of the costs charges and expenses of winding up and for the adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding twenty dollars. It may be observed here that a past member is not liable to contribute, as mentioned above, unless it appears to the Court that the existing members are unable to satisfy the contributions required to be made by them: see Companies Ordinance 1963-1966, s. 218 (1)(c).

The income and property of the Club whencesoever derived is to be applied solely towards the promotion of the objects of the Club as set forth in its Memorandum of Association. No portion thereof is to be paid or transferred directly or indirectly by way of dividend, bonus or otherwise howsoever by way of profit to the members of the Club: see cl. 4 of the Memorandum of Association, Ex. “C”.

It is also provided by this Memorandum of Association as follows:

“6. If upon the winding up or dissolution of the Club there remains after the satisfaction of all its debts and liabilities any property whatsoever the same shall not be paid to or distributed among the members of the Club but shall be given or transferred to some other institution or institutions having objects similar to the objects of the Club and which shall prohibit the distribution of its or their income and property amongst its or their members in the like manner as is imposed on the Club under or by virtue of Clause 4 hereof such institution or institutions to be determined by the members of the Club at or before the time of dissolution and if and so far as effect cannot be given to the aforesaid provision then to some charitable institution or object . . . ”

It is admitted that the Club has considerable assets. It appears from the evidence that these assets include an interest in premises that are used by the members—what the interest is does not appear—and it may be assumed that aeroplanes are included. There is no evidence of the value of these assets nor the amount of the Club’s liabilities.

The other defendants constitute the Board of Directors of the Club.

On 2nd June, 1967, they passed a resolution under article 13 of the Club’s Articles of Association, Ex. “D”, expelling the plaintiff from membership of the Club as from 3rd June, 1967. He subsequently was denied the services of the bar in the Club’s premises by the managing director.

At the stage of the hearing when the affidavits filed on behalf of the plaintiff had been read and before there had been any cross-examination of the deponents and before the affidavits filed on behalf of the defendants had been read their counsel took objection to the jurisdiction of the Court. He submitted that it was already cited and note the Companies Ordinance, 1963-1966, s. for the intervention of this Court in its equitable jurisdiction by way of the injunction sought. This question was then argued and I reserved my decision upon it.

Although incorporated the Club has the characteristics of what is known to the law as a “voluntary association” and it is not unlike associations commonly called social members’ clubs. It has its own rules and own tribunal for the determination of matters relating to membership and expulsion.

In such a case the foundation of the jurisdiction of the Court to interfere at the instance of a member improperly expelled, in order to reinstate him, is the right of property vested in the member of which he is unjustly deprived by the unlawful expulsion. The Club receives income and has other assets. However, in no circumstances, neither during its life nor upon its dissolution, can these be paid or applied for the financial benefit of its members. Therefore, submits counsel for the defendants, there is no proprietary right vested in the plaintiff for the Court to protect and he relies upon such well known authorities as Rigby v. Connol[cxlv]¹ and Baird v. Wells[cxlvi]²; see also Forbes v. Eden[cxlvii]³.

Counsel for the plaintiff submits: (a) That the Court has jurisdiction to protect the plaintiff’s right to use the premises and other property of the Club; (b) That the Court’s jurisdiction now is not confined to the protection of proprietary rights and is exercised to protect contractual rights; and (c) That the plaintiff’s right as a flying member to vote at meetings of the Club and so exercise some control over the management and disposition of the property of the Club is a proprietary right, and, that whether it is or not it a right sufficient for the invocation of the Court’s jurisdiction to interfere.

(a) No authority has been cited and I know of none to support this submission. The right to enter premises and use the property is said to be: “Too personal to be specifically enforced.” See Lee v. The Showmen’s Guild of Great Britain[cxlviii]⁴ and the fuller treatment of the subject in Baird v. Wells[cxlix]⁵; also, Macqueen v. Frackelton[cl]⁶. If it were otherwise then it seems that the decisions in the proprietary club cases must have gone the other way.

(b) Here plaintiff’s counsel says that the plaintiff has a contract of membership with the Club based upon its Articles and there is much authority for this contention: see (inter alia) the cases already cited and note the Companies Ordinance, 1963-1966, s. 33.

I apprehend that in its equitable jurisdiction the Court will protect by injunction rights of property that potentially may arise in the future under contract as well as present rights of property arising under contract. However, I do not think that they, as yet, have gone as far as giving this remedy for the mere breach of a contract to protect the bare right of membership in an association such as the Club and not involving the deprivation of a right of a proprietary nature. The Court does interfere to protect bare statutory rights. It does protect status, at least with its dependant emoluments of office, and in the trade union and professional association cases there is the protection of the right to earn a livelihood. I do not consider that its intervention by injunction in these instances is based simply upon a breach of contract impairing no more than a bare right of membership.

(c) Counsel relies for this submission firstly upon a passage in Amalgamated Society of Engineers v. Smith[cli]⁷: “The foundation of his action is property; for, as a member, he is a participant in the property held by the society and his right to vote is also property”, and see: Ariansen v. Bromfield[clii]⁸. What is meant, I think, is that the member was a participant in the property of the society in the sense that, in the event of unemployment, he was entitled under the rules to financial benefits payable to him from the funds of the society. If a right to vote may be regarded as property then such a conception, I think, should be confined to such a case or, at least, not extended to include the right the plaintiff had to vote in the case of this Club.

Secondly, counsel says under this submission that the right the plaintiff had by voting at general meetings to participate in the management and disposition of the property of the Club is a right sufficient to attract the Court’s interference by injunction.

Under its Articles the management and control of the property of the Club is vested in its Board of Directors. It may be said, however, that as a voter at a general meeting he would have had some slight say in relation to the property as well as the affairs of the Club. He was one of a number of members and I would have thought this to be a right too remote and insubstantial to invoke the jurisdiction: see Amos v. Brunton[cliii]⁹ and Murray v. Parnell[cliv]¹⁰.

However, counsel presses upon me this passage from the judgment of Fletcher Moulton L.J. in Osborne v. Amalgamated Society of Railway Servants[clv]¹¹: “If by the term ‘property’ the learned judge—his Lordship was referring to the judgment of Sir George Jessel M.R. in Rigby v. Connol[clvi]¹²—intended to mean a beneficial interest in land or chattels, I am of opinion that this dictum goes too far. There are many rights which in such a sense could not be called rights of property, which, nevertheless, the law will protect, as, for instance, if there was an association of men subscribing for a benevolent purpose, say for the endowment of a scientific institution, the whole funds of the association being dedicated to that charitable purpose on the terms that the administration should be under the control of the association, I can see no reason why membership of such an association should not have the same legal protection as would be given in the case of an association where the members had a beneficial interest in the funds.” See also Lee v. The Showmen’s Guild of Great Britain[clvii]¹³ and Schweikert v. Burnell[clviii]¹⁴; and also Aslatt v. Corporation of Southampton[clix]¹⁵, where the Court granted an injunction to protect a statutory right to vote in council as an alderman and so take part in the disposal of the property of the borough and in the government of its affairs.

It would ill become me to make any observation upon the obiter dictum cited from Osborne v. Amalgamated Society of Railway Servants[clx]¹⁶ (see also Abbott v. Sullivan[clxi]¹⁷), other than to say that I do not find it to be consonant with decisions of the High Court of Australia that are binding upon me. These are: Macqueen v. Frackelton[clxii]¹⁸; Edgar v. Meade[clxiii]¹⁹; and finally Cameron v. Hogan[clxiv]²⁰. See also Heale v. Phillips[clxv]²¹.

It is appropriate now to cite these passages from Cameron v. Hogan[clxvi]²², which I think dispose of the question before me:

“The foundation of the jurisdiction to grant an injunction is the existence of some civil right of a proprietary nature proper to be protected. The property under the control of the central executive and that under the control of the branches might, if all the members concurred in dissolving the association, be distributed among them, but if so, it would be by reason of a decision under the rules authorizing that distribution. Except for this, the respondent has no interest capable of enjoyment.”

“. . . But whatever view may be taken of the exact and technical situation of the legal and equitable property in the various assets ‘belonging’ to the Party, it is reasonably clear that membership of the association carries with it no tangible or practical proprietary right. The association must be conducted and money is needed to carry it on. There must be some margin of revenue over current expenditure, some continuing possessions for use by its officers, some rights incidentally acquired in process of fulfilling its objects. But the existence of such property is incidental and accidental. The organization is a political machine designed to secure social and political changes. It furnishes its members with no civil right or proprietary interest suitable for protection by injunction. Further, such a case is not one for a declaration of right. The basis of ascertainable and enforceable legal right is lacking. The policy of the law is against interference in the affairs of voluntary associations which do not confer upon members civil rights susceptible of private enjoyment.”

I should add that it appears from Macqueen v. Frackelton[clxvii]²³ that by “civil right” in this context is meant a right in money or property, present or prospective.

It will be observed from what I said early in this judgment that in the event of the Club being wound up within one year after his expulsion without sufficient assets for the payment of its debts and liabilities contracted before he ceased to be a member and the expenses of winding-up, the plaintiff would be liable to contribute, at most, the sum of twenty dollars provided that it appeared that the existing members were unable to satisfy the contributions required to be made by them.

This, of course, is a potential liability not a potential right. It may be, however, that in winding-up proceedings the plaintiff would have a right to the intervention of the Court to see that the Club’s assets were properly administered in order to protect him from this liability. It has not been suggested by his counsel that such a right would amount to a right of a proprietary nature sufficient to found his present claim. From a short consideration of the question I do not think that it is.

It follows from all that I have said that the plaintiff’s claim to an injunction must fail. A declaration without an injunction has not been sought nor do I think that it could be made: see Cameron v. Hogan[clxviii]²⁴ and Macqueen v. Frackelton[clxix]²⁵.

This may be a difficult decision for a layman to understand and it may be thought that it would be more in keeping with modern notions of the role of the Courts if they were not precluded from inquiring into and dealing with the merits of a claim by what would appear to be a matter of a technical nature. But this Court is bound, as are all Courts, by “a laboured connected system, governed by established rules and bound down by precedents from which its Courts do not depart” (Blackstone’s Commentaries on the Laws of England, vol. 3, p. 432).

Although there has not been a hearing on the merits I think that two comments are called for upon the evidence as far as it has gone. One, that it appears to me to be manifest that in requiring the plaintiff to deposit at the office of the Club the document he had circulated for the purpose of obtaining the signatures of not less than twenty-five members, the Directors put an untenable interpretation upon Article 17. The other, that in expelling the plaintiff, who was seeking thereby to obtain a requisition requiring a general meeting to discuss and vote upon a proposal: “That the Board of Directors . . . be dismissed from office and a new Board of Directors be elected by popular vote”, the Directors acted as judges in their own cause.

I would say also that it appears, at this stage, that the plaintiff believed that he was acting in the best interests of the Club. If all the persons who are parties to this action possess the interest in the welfare of the Club that they maintain they do, then I would hope that there may prevail the spirit of gentlemanly understanding that is expected in associations such as this Club and that proper consideration may be given to the restoration of the plaintiff to his membership.

I can but order that the motion be refused and the statement of claim be dismissed.

In all the circumstances of this case, including those upon which I have seen fit to comment, I would be surprised if there is an application on behalf of the defendants for an order for costs.

Counsel for the defendants indicating that he makes no such application, I order that the motion be refused and the statement of claim dismissed and that judgment for the defendants be entered without costs.

Judgment for the defendants.

Solicitors for the plaintiff: Norman White & Reitano.

Solicitor for the defendant: Colin Bayliss.

[cxlv](1880) 14 Ch. D. 482.

[cxlvi][1890] UKLawRpCh 41; (1890) 44 Ch. D. 661, at pp. 675, 676.

[cxlvii](1867) L.R. 1 Sc. & Div. 568 (H.L.), at p. 581.

[cxlviii] [1952] 2 Q.B. 329, at p. 342.

[cxlix][1890] UKLawRpCh 41; (1890) 44 Ch. D. 661, at pp. 676, 677.

[cl][1909] HCA 28; (1909) 8 C.L.R. 673, at p. 695.

[cli][1913] HCA 44; (1913) 16 C.L.R. 537, at p. 553.

[clii] (1956) 73 W.N. (N.S.W.) 499, at p. 503.

[cliii](1897) 18 N.S.W. L.R. Eq. 184.