Middeldorp v Avondale Jockey Club Incorporated

• Jurisdiction: New Zealand
• Judge: Goddard J
• Judgment Date: 12 February 2020
• Neutral Citation: [2020] NZCA 13
• Docket Number: CA237/2019
• Court: Court of Appeal

Between

Vincent Jacob Middeldorp

Appellant

and

Avondale Jockey Club Incorporated

Respondent

[2020] NZCA 13

Court:

Goddard, Brewer and Gendall JJ

CA237/2019

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

Incorporated Societies — unlawful suspension from club — appeal against refusal to grant declaration to the effect because of delay and conduct

Counsel:

P W David QC and C D Boswell for Appellant

G M Coumbe QC and D A C Bullock for Respondent

• A The appeal is allowed in part. We make a declaration that the decisions to suspend Mr Middeldorp from the Committee of the Avondale Jockey Club Inc were not authorised by the Club's Rules and were unlawful.

• B The appeal is otherwise dismissed.

• C The respondent must pay the appellant usual disbursements. Apart from that, we make no order as to costs.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Goddard J)

Introduction

1 Mr Middeldorp is a member of the Avondale Jockey Club Inc (the Club). He has been a member of the Club since 1982. He was elected to its Committee in October 2013. Mr Middledorp was a vociferous opponent of decisions made by the Club in relation to the closure of its training track, among other matters. This brought him into conflict with the Club's officers and the majority of the Committee. That conflict in turn led to Mr Middeldorp filing judicial review proceedings in the High Court raising three issues in relation to the governance of the Club:

• (a) He challenged decisions made by the Committee on two occasions, in November 2016 and December 2017, suspending him from office as a Committee member.

• (b) He challenged decisions made by the Committee in July/August 2017 declining 14 applications for membership of the Club.

• (c) He sought declarations that the Committee has operated from 2014 onwards without the required number of members and has breached the Club's Rules (Rules) in relation to elections to the Committee.

2 In the High Court Gordon J found that the Committee did not have the power to suspend a Committee member under the Club's Rules. 1 The suspensions of Mr Middeldorp were therefore unauthorised and unlawful. However, the Judge declined to grant a declaration to that effect, having regard to a number of factors including delay in seeking judicial review, and Mr Middeldorp's conduct. Mr Middeldorp appeals from the refusal to grant a declaration.

3 Mr Middeldorp also appeals from the findings made by the High Court that:

• (a) the Committee acted lawfully in declining the 14 membership applications; and

• (b) the Committee did not breach the Rules by operating with fewer than 10 members, and conducting elections for Committee membership in a manner that departed from the requirements of the Rules.

Summary of outcome on appeal

4 We have concluded that the High Court erred in declining to make a declaration that the suspensions of Mr Middeldorp were not authorised by the Rules, and were unlawful. The Committee purported to impose a sanction on Mr Middeldorp that it had no authority to impose under the Rules. The factors relied on by the High Court in declining to grant a declaration were not sufficient to displace the starting point that relief should normally be granted in such circumstances.

5 We are not persuaded that the High Court erred in dismissing Mr Middeldorp's challenges to the decisions made by the Committee in relation to the 14 membership applications, the operation of the Committee with fewer than 10 members, and the process adopted for conducting elections for Committee membership.

Background

6 The Club was established in 1889. It is an incorporated society under the Incorporated Societies Act 1908. It is one of three thoroughbred racing clubs in the Auckland Region registered with New Zealand Thoroughbred Racing Inc (NZTR), which oversees thoroughbred racing.

7 We adopt with gratitude the High Court Judge's summary of the difficult circumstances facing the Club, and the tensions that has generated:

[6] The Avondale Racecourse was formerly one of New Zealand's premier racing venues. However, the Club has faced serious financial difficulties since the early 1990s. It even suspended racing for over two years from July 2010 to consolidate its financial position. Whilst it has managed to return to a sound financial position in 2015 under the current president Allan Boyle, who was elected to the Committee in October 2006 and as president in 2012, there are still significant challenges. The Club has been supplementing its income by leasing some of its facilities to the Auckland Council for use as sports fields and to the operator of the Avondale market.

[7] Even more significantly, Avondale Racecourse faces a prospect of closure. A report dated 31 July 2018, commissioned by the Minister of Racing, recommended the closure of a number of venues, including Avondale, as from the 2020/2021 season. On 29 January 2019, NZTR released an industry consultation paper proposing that Avondale be closed from and including the 2024/2025 season, with the Club to then race at Ellerslie Racecourse. However, the Committee remains dedicated to promoting racing at Avondale.

[8] The Club's position is that during these difficult times, Mr Boyle and the Committee have been trying to bring about positive change, while Mr Middeldorp has been making trouble by refusing to accept decisions of the majority of the Committee and has gone behind the Committee's back in order to undermine the Committee's decisions.

[9] Mr Middeldorp disputes the Club's characterisation of his conduct and says that he has always acted with the Club's best interests in mind.

Judicial review of decisions by an incorporated society

8 In its statement of defence the Club pleaded that the challenged decisions are not amenable to judicial review. At the hearing in the High Court, and on appeal before us, the Club accepted that decisions of this kind made by an incorporated society are amenable to review. However, the Club submitted that the court should be hesitant about intervening in the affairs of a club that is not a public body, and that does not perform public functions.

9 The High Court Judge acknowledged that it is well established that the Court will exercise restraint in intervening in the internal affairs of an incorporated society. However, having regard to the subject matter of the allegations, Her Honour considered that it was appropriate for the Court to consider the issues raised. 2 We agree. 3

The Club's Rules

10 Before turning to the specific complaints made by Mr Middeldorp in relation to the operation of the Club, we set out the relevant provisions of the Club's Rules as they stood at the relevant time.

11 Rule 3 sets out the objects of the Club:

3 The objects for which the Club is established are:

• (a) To hold race meetings and promote, regulate and assist the sport of horse racing

• (b) To do all such other things as the Club or Committee think desirable for the purpose of furthering the objects of the Club or incidental or conducive to the attainment of the objects.

12 Rule 6 governs election of new members. It provides that the election of members is by decision of the Committee following the procedure set out in the Rules. A candidate for membership must sign a nomination paper on a form prescribed by the Committee, and must be proposed in writing by two members of the Club. An eligible candidate is then balloted at a Committee meeting. 4 Three adverse votes at the ballot exclude the applicant. A ballot is not valid unless at least seven votes are recorded. The procedure at the ballot is under the control of the Committee.

13 Cessation of membership is governed by rr 16–19. Rule 17 provides for removal of members in certain circumstances:

17 The Committee may erase from the list of Members any person who has been convicted by a Court of Law of a criminal offence, or in its opinion is guilty of grossly improper or dishonourable conduct or riotous behaviour or drunkenness or of conduct prejudicial to the interests of the Club, whether this shall happen at any race meeting or otherwise.

Before the Committee shall exercise the power herein given, the Secretary shall post to such member at the address shown in the Register of Members not less than seven days notice of the meeting at which his/her conduct or behaviour is to be the subject of inquiry under this rule and requiring such member to attend the meeting of the Committee with such evidence as he/she may consider necessary, and to answer the charge or complaint, and in the event of such member failing to attend or to answer the said charge

or complaint the same may be heard and determined by the Committee in his/her absence.

14 Rule 25 provides for the officers of the Club and the composition of the Committee:

25

• (a) The Committee shall consist of the President, Vice-President and ten members as hereinafter elected.

• (b) The President and Vice-President shall be elected annually. In the event of the President for any reason being unable to continue in office, then the office shall be assumed by the Vice-President in an acting capacity until such time as a new President is elected.

• (c) No person shall bold the office of President for more than five years from the time of such election.

15 Rule 26 provides for Committee members to retire by rotation. It assumes that there will normally be 10 Committee members, as contemplated by r 25(a). It reads as follows:

26 The present Committee of the Club, excepting the President and Vice-President shall hold office until the next annual meeting of the Club when five members shall retire and five shall continue in office. The first five members to retire shall be the members of the Committee not elected at the annual meeting of 1998. At every subsequent annual meeting the five members who have been longest in office since...