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Board of Trustees of South Seas Club v Chung Lee [2022] FJHC 90; HBC101.2021 (4 March 2022)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION


HBC 101 of 2021


BETWEEN:


THE BOARD OF TRUSTEES OF SOUTH SEAS CLUB
PLAINTIFF


AND :


CHUNG LEE of Simla, Lautoka; MANSUR KHAN of Waiyavi Stage II, Lautoka; RAJENDRA

SWAMI of Naviyago, Lautoka; JOHN MAHENDRA, of Malamala Street, Simla, Lautoka; SANJAY

PRASAD of Simla, Lautoka; HAROON MOHAMMED of Vomo Street, Lautoka; BEN SINGH of

Kuata Street, Simla, Lautoka; CECIL JAMES of Malamala Street, Simla, Lautoka; KANDA SAMI

MUDALIAR of Lautoka; BRIJESH CHAND of Banaras, Lautoka; ANIL KUMAR of Lautoka;

RAYMOND SINGH of Drasa, Vitogo, Lautoka; RAMESH CHAND of Simla, Lautoka; NARENDRA

SAMI of Rifle Range, Lautoka.
1ST TO 14TH DEFENDANTS


Appearances:Mr. Aman Ravindra Singh in person as a member of the Board of Trustees
Mr.Wasu Pillay & Mr. R. R. Gordon for the Defendants
Date of Hearing: 03 February 2022
Date of Ruling: 04 March 2022


R U L I N G


(This amends the earlier Ruling dated 18 February 2022 at paragraph 26 under Order 20 Rule 10 of the High Court Rules 1988).


INTRODUCTION


  1. Some background to this case is set out in my earlier Ruling in Board of Trustee of South Seas Club v Chung Lee [2021] FJHC 397; HBC101.2021 (21 December 2021).
  2. South Seas Club (“SSC”) is a club registered under the Registration of Clubs Act. The SSC owns and occupies State Lease No 11965. This piece of land is located along a part of the foreshore in Lautoka. On this land, is erected a building. This building functions as the SSC’s premises.
  3. Because registration under the said Act does not, per se, confer a juridical personality on a Club, I assume that SSC is an unincorporated association.
  4. As I had noted earlier, for some time now, there has been great tension between the SSC’s Board of Trustees on the one hand and its Management Committee on the other. Their tension arises from what appears to be an internal power struggle. The disputing factions justify their position by pointing to various parts of the SSC’s constitution to vindicate their respective standpoint, as they try to derail the other with allegations and cross-allegations of corruption and improprieties.
  5. One might say, generally, that the constitution of an unincorporated club should endeavor to set in place a governance structure where there is a clear demarcation between the powers of a Board of Trustees and a Management Committee.
  6. The SSC’s constitution however appears to set in place a structure where power is shared between the “Board of Trustees” arm of the club and the “Management Committee” arm. Perhaps the idea is to create a system of checks and balances to ensure that each arm is accountable to the other and that they will both toe the line accordingly.
  7. Whatever the merits or demerits of the SSC’s constitutional arrangement are, the instrument embodies the rules of the organization which form the contract or bargain between the members and which bind them as such. This Court must determine the dispute between the parties in terms of the SSC constitution and reach a solution designed to keep the parties to their contract or bargain therein.

23 DECEMBER 2020


  1. For the purpose of this ruling, I use the events of 23 December 2020 as my point of reference to put in context the chain of events which happened over the course of the following fourteen months up to February 2022.
  2. On 23 December 2020, the SSC’s Board of Trustees made the decision to dismiss the entire Management Committee. The Board took this action based on certain allegations of misappropriation of funds, financial mismanagement, fraud and infighting within the said Committee.
  3. Upon dismissing the Management Committee, the Board immediately took over management of the Club. It did so under clause 114 of SSC’s constitution which provides as follows:

In addition to powers conferred on the Board by Rule 108 hereof it shall also have the power to suspend the Committee if it finds that the Committee is not managing the affairs of the Club in conform it with the rules and/or in manner detrimental to the aims and objects of the Foundation Members. Upon suspension the Board shall assume full control of all the affairs of the Club and shall act in the place of the committee with all the powers conferred on it until a new committee is elected. Election procedure for a new committee shall be the same as provided in this constitution for the election of the committee. Such election shall be held as soon as reasonably practicable (and in any case not later than 3 months) from the date of the Board assumes control of the affairs of the Club.

.............................................................................................................................................................................................................................................................................................................................................................................................................................................................


DOES BOARD HAVE POWERS TO DISMISS THE MANAGEMENT COMMITTEE?


  1. Clause 114 says what it says. I must agree with Mr. Pillay that clause 114 does not give the Board power to dismiss the Management Committee. All that clause 114 gives to the Board is the:

...power to suspend the Committee if it finds that the Committee is not managing the affairs of the Club in conform it with the rules and/or in manner detrimental to the aims and objects of the Foundation Members


  1. Clause 114 must be read together with clause 108 which provides as follows:

It shall also have the power to suspend the Committee if it finds that the Committee is not managing the affairs of the Club in conformity with the rules and/or in a manner detrimental to the aims and objects of the foundation members. Upon suspension the Boar shall assume the full control of all the affairs of the club and shall act in the place of the committee with all the powers conferred on it until a new committee is elected. Election procedure for a new committee shall be the same as provided for a new committee as in this constitution for the election of the committee. Such election shall be held as soon as reasonably practicable (and in any case not later than 3 months) from the date the Board assumes control of the affairs of the Club”


  1. In this case, after dismissing the defendants, the Board then actually went ahead and stopped them from entering the Club premises. The word “suspend” according to the Oxford Advanced Learners Dictionary means inter alia:

To officially stop something for a time; to prevent something from being active, used etc for a time....


To officially delay something; to arrange for something to happen later than planned


  1. The word “dismiss” is defined inter alia as:

to officially remove somebody from their job; to send somebody away or allow them to leave.


BOARD ONLY HAS POWERS TO ACT IN THE PLACE OF THE MANAGEMENT COMMITTEE FOR THREE MONTHS


  1. It appears to be a non-issue between the parties that the constitution only allows a maximum of three months to the Board to take over interim management of the Club. This is provided for under clause 108 of the SSC constitution.

“...Election procedure for a new committee shall be the same as provided for a new committee as in this constitution for the election of the committee. Such election shall be held as soon as reasonably practicable (and in any case not later than 3 months) from the date the Board assumes control of the affairs of the Club”


21 MARCH 2021 AGM

  1. The constitution appears to entrench tremendous powers in the foundation members. Mr. Pillay would submit that the Board was ever mindful of this, and the three-month requirement under clause 108, and that under the constitution, the foundation members, most of whom are represented in the Management Committee, have powers to remove any Board member without cause. Mr. Pillay contextualizes the Board’s actions up to 21 March 2021 against this internal power struggle as he puts it. And so he submits that, with all the above in mind, and given the fact that the relationship between the Board and the Management Committee seemed to be at its worst, the Board would call an AGM on 21 March 2021.
  2. According to Mr. Singh, at this meeting, the Board presented the Trustees Internal Audit Report to the Foundation Members and the AGM also unanimously voted that the Trustees’ time to manage the affairs of the SSC be extended for further two years. This is to allow time for a thorough investigation into the allegations against the Management Committee.
  3. Mr. Pillay argues that the AGM cannot validly pass a resolution to extend the term of the Board to two years when the constitution only allows a maximum time of three months. He further submits that what the Board ought to have done at that stage was invoke the procedures for the election of a new Management Committee before the three months was up instead of convening an AGM which the Board did not have powers to do..
  4. In response, Mr. Singh argues that since the Management Committee was dismissed at the time along with the Secretary, someone had to be able to call an AGM. Since the Board had taken over the interim management of the SSC, the Board, impliedly, has the power to call an AGM. Clause 108 of the SSC’s constitution, in its relevant part, provides as follows:

“...Upon suspension [of the Committee] the Board shall assume the full control of all the affairs of the Club and shall act in the place of the Committee with all the powers conferred on it until a new Committee is elected”


  1. Be that as it may, Mr. Pillay argues that the Board must still comply with all the usual provisions about calling an AGM, including the setting of the agenda and the associated relevant notice requirements.

AMENDING THE CONSTITUTION


  1. Apparently, at the 21 March 2021 AGM, a resolution was also passed to amend clause 106 of the SSC constitution. The old clause 106 provided:

The Board shall remain in office until death, resignation or removed by the Foundation Members.


  1. The amendment to clause 106 which was passed is at the AGM is as follows:

The Board shall remain in office until death, resignation or by a motion that is duly passed by the Foundation Members at the AGM for abuse of office which would constitute a criminal offence.


  1. Mr. Pillay argues that the SSC constitution has embedded at various points the overriding powers of the foundation members. This entrenching of power in the foundation members is evident in clause 106 as it was, in how it gave power to the foundation members to remove any trustee without cause.
  2. Clause 104 is another provision which demonstrates how power is more concentrated in the foundation members rather than the Board as follows:

There shall be a Board of Trustees of the Club and shall constitute of 5 Foundation Members. The Board shall be answerable to the Foundation Members whenever called upon to do so.


  1. Clause 105 sub-clauses (a) to (j) set out the powers of the Board. I observe that these powers are administrative in part in the sense that some constitutions of other unincorporated clubs would vest in a management committee (e.g. sub-clauses (b), (c) and (d)).
  2. Mr. Pillay submits that the overall effect of the amendments is to wrench power away from the foundation members and to then vest it in the Board. While I do not wish to impute any improper motive in the Board’s actions, there is no denying that this is the effect of all that was unfolding.

FOUNDATION MEMBERS – MEETING OF 07 APRIL 2021


  1. In reaction to the above developments, the foundation members then convened a Special Meeting between themselves on 07 April 2021, some seventeen days after the AGM. This meeting was convened pursuant to clause 103 of the constitution which provides as follows:

A special general meeting of Foundation Members shall be called by the Secretary/Manager as provided by the Constitution or upon the instructions of a Committee, the Board of upon receipt of a requisition setting for the object of such meeting and signed by 20% of financial Foundation Members and no other business except for which the meeting has been called shall be transacted.


PROCEEDINGS BEFORE STUART J


  1. The Board, upon learning of the above meeting, filed, on 08 April 2021, an ex-parte Notice of Motion pursuant to Order 29 rules 1,2 and 3 of the High Court Rules 1988 seeking the following Orders:

(1) That the purported removal of the Board of Trustees of the South Seas Club by the Defendant’s by the meeting held on 7th April 2021 at 6pm was unconstitutional and therefore null and void.

(2) That the purported removal of the Board of Trustees of the South Seas Club by the Defendant’s letter dated 7th April 2021 was unconstitutional and therefore null and void.

(3) That an interim injunction restraining all the Defendant’s whether by themselves or through their servants and/or agents or otherwise howsoever from hindering or interfering in any way with the management, running, control and operations of the South Seas Club until determination of the within action or until further orders or determination by this Honorable Court.

(4) Than an interim injunction restraining all the Defendant’s whether by themselves or through their servants and/or agents or otherwise howsoever from the use of physical or oral threats, intimidation, abusive and malicious behavior towards the Board of Trustees, staff and members of the South Seas Club until determination of the within action or until further orders or determination by this Honorable Court.

(5) That an interim injunction removing all the Defendant’s from the premises of South Seas Club until determination of the within action or until further Orders or determination by this Honorable Court.

(6) That the Defendant’s return all keys and all properties belonging to the South Seas Club House to the Plaintiff.

(7) That Lautoka Police Officers do act and render all assistance required by the Plaintiff in the service of Orders and render assistance necessary in the enforcement of the Orders.

(8) That costs of this application be paid by all Defendants on a full indemnity basis and;

(9) Such further and/or other reliefs or Orders as this Honorable Court may deem just and expedient.


  1. The Motion is supported by an affidavit of Aman Ravindra-Singh sworn on 08 April 2021. Singh is a trustee of the South Seas Club. He appears in this case not as counsel for the Board, but in person in his capacity as one of the trustees of the Club. Notably, no Originating Process was filed with the Motion as required under Order 29 Rule 1(3) of the High Court Rules 1988. However, Singh eventually filed an Originating Summons on 03 February 2022 (see below).
  2. On 08 April 2021, Stuart J did grant the following Orders but did not give a returnable date.

SUSPENSION OF THE FOURTEEN MEMBERS & THEIR SUMMONS TO SET ASIDE STUART J’S ORDERS


  1. Meanwhile, as it happened, on 09 April 2021, the very next day after Stuart J made the above Orders, the Board decided to suspend the fourteen members who are named as the defendants herein. This, notably, after the Board had purportedly “dismissed” them earlier in March 2021.
  2. Because Stuart J had not given a returnable date on 08 April 2021, but had indicated that the defendants were at liberty to apply to set aside his ex-parte Orders, the defendants, after being served all the Court documents, would instruct Gordon & Company to file a Summons To Set Aside the Orders of Stuart J. The said Summons was filed on 14 April 2021 seeking the following Orders:

(1) That the Orders granted to the Plaintiff Ex-Parte by the Honorable Mr. Justice Stuart in Court on Thursday the 8th of April 2021 be dissolved and/or set aside unconditionally.

(2) That the action and/or proceedings and/or matter be set aside and/or struck out with costs to the Defendants since no originating process was invoked by the Plaintiff under Order 5 of the High Court Rules and/or that the Plaintiff has no locus standi to commence this action.

(3) That time for the service of this application be abridged to one (1) day.

(4) That the Court Sheriff and/or the Fiji Police Force do render any and all assistance in the enforcement of the Orders herein which may include but is not limited to, explaining these orders to security officers, office holders and/or patrons of South Seas Club.

(5) That Costs of this action be costs in the cause.

(6) Such further or other order(s) that the Honorable court may deem fit, just, expedient and necessary in the circumstances.


  1. The said application was supported by an affidavit of Cecil James sworn on 13 April 2021 and filed on 14 April 2021.
  2. At some point shortly after, the Covid-19 lockdown intervened which resulted in a period of inactivity in this matter.

FOURTEEN MEMBERS ALLOWED BACK INTO THE CLUB


  1. On 01 November 2021, Gordon & Company also filed a Summons seeking an Order that the fourteen members be allowed back into the Club. The application was supported by an affidavit of Cecil James sworn on 27 October 2021.
  2. I heard this application on 26 November 2021. My ruling is reported in pacllii (see Board of Trustee of South Seas Club v Chung Lee [2021] FJHC 397; HBC101.2021 (21 December 2021)).
  3. Meanwhile, on 05 November 2021, the Board’s 08 April 2021 Motion was called before the Master inter-partes wherein the Master granted twenty eight days to the Respondents to file and serve an affidavit in opposition and fourteen days thereafter to the Board to file and serve a reply. The Master then adjourned the matter to 11 January 2021 for hearing on the Motion.
  4. As for the application to allow the defendants into the Club, I note that at some point between 17 November 2021 to 26 November 2021, the Board would uplift the suspension of nine out of the fourteen members in question. The Board had refused to uplift the suspension of the five other members. I gathered from a brief hearing on this matter before me on 26 November 2021 that the reason why the Board wished to have these five to remain suspended was because of a perceived risk that they may stir things up.
  5. Why their suspension was uplifted is a mystery to this Court. In fact, why they were suspended at all in the first place is still shrouded in mystery. In fact, when the Board decided that the action taken was a “suspension” rather than a “dismissal” – is all shrouded in mystery as well. One can only imagine that the decision was made after Mr. Pillay had raised the point in his submissions earlier.
  6. There has been no affidavit filed to set out in detail the suspicions and the allegations against the Management Committee which led to the decision of the Board to dismiss/suspend them.
  7. In my ruling of 21 December 2022, I ordered that the suspension of the membership of the five members in question be uplifted, that the Board continue in its interim management position until further Orders, and that the Parties to bear their own costs. I then adjourned the two matters to 11 January 2022 for hearing at 10.30 a.m. – that is- firstly, the Board’s Motion dated 08 April 2021 and secondly, the defendant’s application to set aside Stuart J’s Orders of 08 April 2021.

11 JANUARY 2022


  1. On 11 January 2022, the hearing could not proceed because Mr. Singh had not filed a Motion and Affidavit seeking amendment or filed any Originating Summons. Mr. Pillay consented to the amendment of the intituling so that the trustees are named in person rather than the Board.
  2. I also granted leave to Mr. Singh to file and serve an affidavit which of course will be intituled accordingly. I also gave the defendants seven days to reply. I then adjourned the matter to 20 January 2022 for hearing at 10.30 a.m.
  3. The plaintiff would file the affidavit of Jan Nissar Mohammed. I note that the said affidavit was sworn on 02 January 2022 but was filed on 19 January.

20 JANUARY 2022


  1. On 20 January 2022, the hearing was again vacated on account of the late filing of Nissar Mohammed’s affidavit. I then directed seven days to the defendants to file and serve an affidavit in reply and then adjourned the matter to 03 February 2022 for hearing.
  2. The affidavit in reply of Cecil James sworn on 28 January was filed on the same day.

03 FEBRUARY 2022


  1. On 03 February 2022, it came to light that at some point between 20 January 2022 and 03 February 2022, Mr. Singh had filed an application seeking leave to file an Originating Summons. As it turned out, Mr. Pillay would consent to the filing of the Originating Summons so that the Court can deal with the real issues in this case.
  2. I then stood down the matter for Mr. Singh to file the document which he did later that day. The hearing then resumed at 2.00 p.m.
  3. Mr. Singh said that his instructions were to seek that the ex-parte Orders of Stuart J be dissolved because in December, elections were held wherein a new Management Committee was elected. This means that the Board is no longer managing the Club.
  4. I make a mental note to myself that Mr. Singh’s meandering scattergun approach in the manner in which he appears to be stage-managing the affairs of the Club as well as his conduct in Court, leaves much to be desired. He seems to have easily forgotten the Order I granted on 21 December 2021 that the Board should continue in its interim management position until further Orders. Those Orders were made to maintain the status quo before I determine the substantive issues. When I asked Mr. Singh in Court as to why, after having purportedly been given the greenlight at the March AGM to manage the SSC for two years, the Board then decided to step down, Mr. Singh answered as follows:

“...once we had steered the ship into clam waters then the role of the Committee was to return. That’s what it was. And its how it is made out to look in certain sections of the Affidavit in Response. So we have continued as mandated under the Constitution and normalized the affairs of the club and carried on. We have now taken a back seat with the Committee.


  1. I find this disrespectful. Regardless of his reasons, once the matter was in the hands of the Court, Mr. Singh, as an officer of the Court, and as a counsel of some seniority, should know better than to just simply orchestrate matters in complete defiance of the interim orders made. What he should have done was apply to this Court for leave before the elections were held so that the Orders of 21 December 2021 could be properly disposed of or set aside or varied.

ISSUES


  1. Considering that Mr. Singh has now abandoned prayers 3,4 and 5, the two remaining issues are:

WHETHER THE PURPORTED REMOVAL OF THE BOARD OF TRUSTEES OF THE SOUTH SEAS CLUB BY THE DEFENDANTS AT THE MEETING HELD ON 07 APRIL 2021 AT 6.00 P.M. WAS UNCONSTITUTIONAL AND THEREFORE NULL AND VOID?


  1. As I have said above, the meeting of 07 April 2021 which was held at 6.00 p.m., was convened by seventeen (17) of the twenty-four (24) foundation members in response to all that had transpired up to 21 March 2021. The agenda items were stated in the requisition signed by the seventeen members pursuant to clause 103 of the SSC constitution. They were:
  2. The Minutes of the above meeting states:

The founder members unanimously decided and removed the entire board of trustees fro the club, nullified the annual general meeting of 21st March 2021 and appointed an interim administration committee of the club consisting of chairman, Mr. Raymond Singh alongside Mr. Cecil James and Mr. Sanjay Prasad.


The committee endorsed that full control and administration of the club lies under the control of the foundation members as per appointed by the founder members.


The former trustees of the club namely Mr. Aman Ravindra Singh, Mr. Jan Nissar Mohammed and Mr. Sheik Irsad Sahib no more holds (sic) the trusteeship and any control of the club matters with effect immediately.


Furthermore, they are to handover all the club properties and the keys.


Sgd.


Mr. Raymond Singh

Interim Chairman of the committee


  1. Mr. Singh submits that the said meeting was unconstitutional because:
(a)
It was purportedly convened and held pursuant to clause 103 of the SSC constitution.
(b)
Clause 103 provides:

A special general meeting of Foundation Members shall be called by the Secretary/Manager as provided by the Constitution.
(c)
At the point when the meeting was convened, there was no longer a Manager or Secretary of the SSC because the Board had then taken over interim management of the SSC.
(d)
The meeting was therefore not properly constituted.
(e)
The meeting was also in breach of clause 94 which provides that a twenty-one day notice convening a General Meeting shall be given to all Foundation Members showing the day and hour of such meeting.

  1. When pressed about why the Board terminated the Management Committee, Mr. Singh conveniently submitted that it is not an issue in this Court as he has not raised it.
  2. Mr. Pillai submitted as follows:
(a)
Clause 103 provides (reads the part omitted by Mr. Singh):

A special general meeting of Foundation Members shall be called by the Secretary/Manager as provided by the Constitution or upon the instructions of a Committee, the Board or upon receipt of a requisition setting for the object of such meeting and signed by 20% of financial Foundation Members and no other business except for which the meeting has been called shall be transacted.
(b)
20% of financial Foundation Members can call a meeting if they have signed and presented a requisition for such a meeting
(c)
on this instance, 20% of Foundation Members did requisition a meeting (17 out of 24 Foundation Members signed the requisition and attended the meeting and also unanimously agreed to the resolutions passed which were on the agenda).
(d)
The objects of the desired meeting was stated in the said requisition which is marked Annexure 11 in the affidavit of Cecil James and which were:

  1. Nullification f the AGM held on the 21st day of March 2021
  2. Removal of Trustees
  3. Establishment of Interim Committee to run the day-to-day affairs of the Club.
(e)
Hence, the 21-day notice requirement under clause 94 does not apply to clause 113 as suggested by Mr. Singh
(f)
The reason is because clause 103 is designed to enable the Foundation Members to call a snap meeting in matters requiring their urgent attention – so long as 20% of the members have signed a requisition.
(g)
The urgency involved here began on 23 December 2020 when the Board invoked clause 114 to dismiss the Management Committee on an alleged mismanagement of the affairs of the SSC and then took over management of SSC while investigations are carried out.
(h)
To date, there has been no evidence of mismanagement placed before the Court, let alone what the exact allegations are, who has misappropriated funds, what investigations have been carried out. If an audit has been carried, where are the audit reports? Why are these not placed before the Courts?
(i)
As for the Board’s decision to dismiss the Management Committee, once the Board invokes clause 114, it can only suspend the Management Committee. It cannot dismiss the Committee. Also, the Board can only manage the SSC for up to 3 months and must invoke the process of electing a Committee before the end of the three months.
(j)
Yes, once the Board takes over management, the Board may indeed call and convene meetings. But if the Board calls an AGM, then it must convene the AGM in the month of February as provided for by the Constitution. The AGM must not only be held in February, it must also be held at the Clubhouse. The AGM in question was not called in February. And if they call an AGM, not only must it be held in February, but the 21-day notice requirement under clause 94 will apply.
(k)
The above were not complied with for the 21 March AGM.
(l)
This is exactly what the Foundation Members moved in haste to declare null and void on 07 April 2021.
(m)
The Board apparently has had an Internal Audit Report dated 04 March 2021 which was tabled at the 21 March AGM. That Internal Audit Report has not been placed before this Court.
(n)
That Report was purportedly the basis upon which the allegations against the defendants were based.
(o)
There is a second Audited Report which is placed before an AGM held in December 2021. This too has not been placed before the Court.
(p)
The fact that Mr. Singh has deliberately not placed the Audit Reports before the Court, must be contextualized against the Board’s invocation of clause 114 on 23 December 2020, and the Board’s subsequent calling of the AGM of 21 March to extend its term of interim management to 2 years in defiance of the 3-month maximum allowable under the SSC constitution, all lead to the conclusion that the Board’s actions were stage-managed to camouflage a “power grab”.
(q)
The “power grab” is even more accentuated by the fact that the Board had then stage-managed the 21 March 2021 AGM to pass the amendment of clause 106 of the constitution
(r)
To amend any provision of the constitution, clause 116 of the Constitution provides:

No amendments, additions or alterations in the constitution shall be valid unless –

(a) Motion for such amendment, addition or alteration are duly submitted to the Annual General Meeting of Foundation Members.
(b) Such amendment, addition or alteration are passed by two-thirds majority of financial Foundation Members present at such Annual or Special Meeting.
(s)
The Minutes of the 21 March 2021 are not placed before the Court so there is no evidence that the special majority required under clause 106 was complied with.
(t)
In any event, even if clause 106 was complied with (which it was not), the AGM of 21 March 2021 was not properly constituted in terms of clause 94.

COMMENTS


  1. Again, I say that the SSC is an unincorporated association. The bond of union between the members of the SSC is contractual, the terms of which are embodied in the SSC’s constitution.
  2. In Conservative and Unionist Central Office v Burrell [1980] 3 All ER 42, Lawton LJ said as follows:

I infer that by "unincorporated association" ...[means] two or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings, each having mutual duties and obligations, in an organization which has rules which identify in whom control of it and its funds rests and upon what terms and which can be joined or left at will. The bond of union between the members .... has to be contractual.


  1. Hence, in dealing with any dispute between members of an unincorporated association, the Court’s primary role is to keep the parties to their contract or bargain (see Dawkins v Antrobus [1881] UKLawRpCh 28; [1879] 17 Ch D 615.

What Approach Should the Courts Adopt in “Keeping the Parties to their Contract of Bargain” (i.e. in Interpreting the Rules of an Unincorporated Association)?

  1. Obviously, context is key as it is in most (if not all) things in law.
  2. Mr. Justice Clarke of the Irish Supreme Court in Dunne & Ors -v- Mahon & Anor [2014] IESC 24 said as follows after reviewing some English cases on the question:

5.5 It has often been said that the modern approach to the construction of all documents which have an effect on legal rights and obligations is to analyse the text of the document but in its proper context by reference to the so called factual matrix within which the document was produced. It seems to me that this "text in context" approach applies across the board to all documents designed to affect legal relations. However, part of the "context" in which the "text" is to be viewed is the nature of the document itself. As was pointed out by Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1981] 1 W.L.R. 896, we do not, for example, expect mistakes to have been made in carefully drafted contracts. Likewise, we expect statutes to mean what they appear to say. On the other hand, there is authority for the proposition that the rules of a club should not be approached with the same degree of rigor. In In re GKN Bolts & Nuts Ltd Sports and Social Club [1982] 1 W.L.R. 774 at p. 776, Megarry V.-C. observed:


“In such cases, the court usually has to take a broad sword to the problems, and eschew an unduly meticulous examination of the rules and resolutions. I am not, of course, saying that these should be ignored; but usually there is a considerable degree of informality in the conduct of the affairs of such clubs, and I think that the courts have to be ready to allow general concepts of reasonableness, fairness and common sense to be given more than their usual weight when confronted by claims to the contrary which appear to be based on any strict interpretation and rigid application of the letter of the rules. In other words, allowance must be made for some play in the joints.”


  1. The rules of an unincorporated association are relatively informal. As Clarke J said:

5.6 It is not that the underlying principle is different. Rather it is that the context of a carefully drafted legal contract between two major corporations entered into after detailed negotiations is very different from the context of the relatively informal rules adopted by a members club to govern their business.


  1. Clarke J continues thus:

5.7 While a club is, therefore, in one sense, no more than a set of interlocking mutual contractual relations between its members, it does have a form of existence which goes beyond that and which is subject to the jurisdiction of the courts. Also, those contractual terms or rules need to be viewed against the background that they are not to be found in a carefully drafted legal document but rather represent the view of the members of the club as to the rules by which they are to be bound.


  1. I am mindful of the special manner in which the SSC constitution distributes power between the foundation members and the Board. It appears to be a tailor-made system of checks and balances to ensure that each arm is accountable to the other and that they will both toe the line accordingly. Notably, there is some concentration of power vested in the foundation members. As Mr. Pillay had suggested, whatever its peculiarities are, this structure has served the SSC very well since 1963 for nearly 60 years now.
  2. Whether the distribution of power is good or bad, is not for this court to determine. Suffice it to say that, in order to change the manner in which that power is distributed, members will have to amend the relevant provisions of the constitution and abide by the special mechanism provided for in the SSC constitution must be adhered to. As M. Gordon had pointed out, this is provided for in clause 116 of the constitution.
  3. Generally, the rules (constitution) of an unincorporated association can only be amended in accordance with the specific amending mechanism prescribed therein the rules. This is in accordance with the view (see Conservative & Unionist Central Office v Burrell (supra) that the rules constitute the contract and the members are bound by contract to abide by any amending mechanism stipulated in the rules.
  4. In my view, assuming that the Foundation Members had not been suspended or dismissed, the meeting of 07 April 2021 was properly constituted in terms of clause 103 of the constitution.
  5. The only issue that remains is whether or not they had been validly dismissed.
  6. I agree with the submissions of Mr. Pillay and Mr. Gordon that the defendants were not validly dismissed because the Board does not have power to dismiss the Committee, although it has the power to suspend.
  7. What the Board should have done was suspend the Committee whilst it completes the investigations against the members. Depending on the result of the investigations, the Board should then take appropriate action.
  8. One would imagine that the appropriate action to take if the investigations do not implicate the defendants is to restore them to the management position. One would also imagine, as a basic rule of natural justice, that any investigation carried out would entail inter alia giving an opportunity to the defendants to be heard on the allegations against them.
  9. There is no evidence of any of these before this Court – let alone, what the results of the investigation were or what methodology was carried out. What is before this Court though are the actions taken by the Board which appear to all be premised on some adverse findings.
  10. I agree with Mr. Pillay’s submissions that when these are considered together with the resolution at the AGM to amend clause 106, the actions taken by the Board were intended to entrench the position of the Board members at the expense of the power structure which the SSC’s constitution provides and which contractually binds the members.
  11. That amendment is unconstitutional in any event, because there is no evidence before this court that the amendment was passed in compliance with the special mechanism provided for under clause 116.
  12. In any event, even if the SSC constitution had not provided for the special mechanism under clause 116, the better and more popular view is that the unanimous agreement of all members is required before the constitution can be amended (see Supreme Court of Victoria (as per Brooking J) in Master Grocers’ Association of Victoria v Northern District Grocers’ Co-Op Limited [1983] 1 CR 195 for an insightful discussion, see also Harington v Sendall, [1903] UKLawRpCh 46; [1903] 1 Ch 921; In Re Unley Democratic Association, [1936] SAStRp 47; [1936] SASR 473, at pp. 477-8; PS Marwaha & Ors v Singh & Ors [2013] EWHC B6 (Ch); Dunne & Ors v Mahon & Anor [2014] IESC 24;).
  13. Hence, if the rules do not specify any amending mechanism, the majority decision of the membership, regardless of percentage, will not be able to change the constitution or the rules of the association, without unanimity.

CONCLUSION


  1. As of now, all I am prepared to make is a declaration that the meeting held on 07 April 2021 at 6.00 p.m. by seventeen of the twenty four foundation members was validly constituted and perfectly constitutional in terms of clause 103.
  2. In saying the above, I am also saying that the dismissal of the defendants was unconstitutional.
  3. Accordingly, the resolutions passed at the meeting of 07 April 2021 meeting were perfectly within the powers of the foundation members to make.
  4. The purported amendment to clause 116 of the constitution is hereby declared to be invalid and unconstitutional with the result that the original clause 116 shall remain in force.
  5. I also order the plaintiff to pay costs to the defendants which I will summarily assess at $5,000-00 (five thousand dollars only).
  6. Parties are at liberty to apply for further orders.

............................................

Anare Tuilevuka

JUDGE

Lautoka

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