Applicant Disputes Termination of Membership in Incorporated Association
Shipton v South East Queensland Sport Aircraft Club Incorporated [2022] QSC 5 (28 January 2022)
The applicant was a member of the respondent club. The respondent terminated the applicant’s membership in it. The applicant applied for an order that the respondent comply with its rules. The Court, in determining whether the application should be entertained assessed whether the respondent failed to provide the applicant with natural justice.
Facts:
The respondent is an incorporated association maintaining an airfield at Kilcoy. Mr Shipton, a director of a company, Orthonyx Pty Ltd (Orthonyx), has been a member of the respondent since 2000. The land on which the Kilcoy airfield is located is now leased to the respondent. The lessor of the land is the Queensland Bulk Water Supply Authority (SEQWater). On 14 March 2017, an assignment of the lease to the respondent as lessee was entered into (Lease).
Mr Shipton subleases Hangar L at the airfield (Sublease) from the respondent. In 2004 SEQWater wrote to the former lessee, Kilcoy Shire Council, indicating that they consented to Mr Shipton making an application to CASA for a Certificate of Approval to use his leased hangar at the airfield for the sole purpose of maintaining a personal special interest aircraft and with no commercial activities being carried out. The Kilcoy Shire Council similarly wrote to CASA stating that the Council had no objections to the use of the hangar on the same basis as SEQWater had given its consent. Mr Shipton does not pay Orthonyx.
According to Mr Shipton the only maintenance activity undertaken at “temporary locations” is of Mr Shipton’s son’s planes. Evidence was provided to the Committee by way of its tax returns for 2017, 2018 and 2019 years to demonstrate that Orthonyx does not trade or carry on any business activity which is supported. Plane Loopy Pty Ltd, a company operated by Mark Gallety, uses Orthonyx’s certificate of approval to carry out maintenance work on planes but that does not extend to Mr Shipton’s places in Hanger L. Orthonyx receives no payment for the use of its certificate.
On 7 July 2021, the respondent’s Committee issued a show cause notice to Mr Shipton. The show cause letter included ten allegations regarding Mr Shipton’s conduct. Mr Shipton submits that the ten allegations were not particularised in any meaningful way, and did not indicate how the concerns were said to contravene rule 11.3.4 which states that the Management Committee may terminate a member’s membership if the member conducts themselves in a way considered to be injurious or prejudicial to the character or interests of the Association. On 30 July 2021, the respondent sent a further show cause letter to Mr Shipton, setting out ten allegations which were: (a) the role of Orthonyx; (b) alleged access of club bank account; (c) alleged failure to notify the Committee that Hangar L had previously been uncertified; (d) that the Committee was unsure how the certification for Hangar L changed from Class 10 to Class 7; (e) alleged public statements made about Mr Gilpin, another club member; (f) allegedly having contacted SEQWater directly, despite a purported requirement not to do so; (g) an alleged failure to cooperate with an internal investigation undertaken by the Committee; (h) alleged construction of a dwelling over the lease boundary; (i) allegedly overseeing the incorrect placement of a boundary fence while a member of the Committee; and (j) allegedly exposing the club to significant and undue costs relating to legal costs.
On 15 August 2021, the respondent purported to terminate Mr Shipton’s membership in the respondent pursuant to rule 11.3.4 of the Rules. Mr Shipton submits that the letter did not set out the reasons for the termination other than to state the conclusion that his conduct was injurious or prejudicial to the respondent. On 10 September 2021 Mr Shipton gave notice of his intention to appeal against the decision to terminate his membership.
Issue:
I. Whether or not the respondent gave the applicant a full and fair opportunity to respond to show cause letters issued as required by the respondent’s rules.
II. Whether or not the respondent failed to provide the applicant with natural justice – whether the applicant has standing.
III. Whether or not the Court should refuse to entertain the application.
IV. Whether or not the application is unmeritorious.
Applicable law:
Associations Incorporation Act 1981 s 71 - specifies that the rules of an incorporated association constitute the terms of a contract between the association and members.
Associations Incorporation Act 1981 s 72 - provides for an application to be made to the Supreme Court by a member, including for orders giving directions for the performance and observance of the rules and declaring and enforcing the rights and obligations of members and associations.
Associations Incorporation Act 1981 s 73 - states that "the Supreme Court may, on an application brought pursuant to section 72, grant such relief as is appropriate in the circumstances.”
Associations Incorporation Regulations 1999 - provides for a person to give written notice of the person’s intention to appeal against a decision where the membership has, inter alia, been terminated.
Goldber v NG (1994) 33 NSWLR 639 - provides that a party should be found to have waived privilege “if the party has conducted himself or herself that the law imputes to that party an intention to waive the privilege and such imputation will occur when the party (or his or her agent) intentionally performs a deliberate act which renders it unfair to another party that the privilege be maintained."
Gould v Isis Club Incorporated [2015] QSC 253 - McMeekin J considered an application where a member’s membership had been terminated on the basis of the same rule that was relied upon by the management committee in the present case
Hall v NSW Trotting Club Ltd [1977] 1 NSWLR 378 - where it was not possible for him to have “a fair opportunity to make any relevant statement which he may desire to bring forward and a fair opportunity to correct or controvert any relevant statement brought forward to his prejudice”.
Kenney v Shailer Park Netball [2006] QSC 403 - Philippides J accepted the Court had jurisdiction to hear the application under s 71 and s 72 of the Act where the membership of the applicant had been terminated although her Honour refused to grant relief under s 73(2) of the Act.
Kioa v West [1985] HCA 81; (1985) 159 CLR 550 - provides that natural justice does not require a decision maker to provide every piece of evidence relied upon.
Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 - provides that a party may waive privilege by asserting the effect or conclusion of a privileged communication on the basis of inconsistency between the conduct of the party and maintenance of confidentiality of the communication.
Miller v Soroptimist International of the South West Pacific [2020] QSC 242 - where Henry J made a declaration under s 72 of the Act that the termination of membership was void where his Honour found the decision to terminate Ms Miller’s membership was not validly made because it was not, as s 71(3) required made in accordance with the rules of natural justice.
Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 - provides that the scheme of the Act supports the fact that a decision denying natural justice would generally be found to be legally ineffective.
Russell v Duke of Norfolk [1949] 1 All ER 109 - provides that the requirements of natural justice are not inflexible and depend on “the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter being dealt with and so forth.”
Analysis:
Mr Shipton submits that the application should be allowed because the respondent refused to provide Mr Shipton with natural justice by refusing to give him documents and other information necessary for him to respond to allegations made against him. It was further submitted that the material included legal advice which the respondent referred to in the show cause notice; that there was no reasonable or rational basis for the Committee to reach the required state of satisfaction set out in rule 11.3.4 that Mr Shipton’s conduct was injurious or prejudicial to the character or interests of the respondent, the management and operation of the airfield or to the members of the respondent; and that the purported notice of termination did not provide the reasons required by rule 11.5. The respondent submits that the application should be dismissed because Mr Shipton does not have standing to apply to the Court and the Court does not have jurisdiction to make the orders sought because Mr Shipton is not a member of the respondent and because the application is unmeritorious as the respondent gave Mr Shipton a full and fair opportunity to show why the membership should not be terminated.
The respondent further submit that if the Court does have jurisdiction, it should refuse to entertain Mr Shipton’s application on the basis that it was unreasonable for Mr Shipton to make the application. The respondent submits that Mr Shipton does not have standing to apply to the Court and the Court does not have jurisdiction to make the orders sought, because Mr Shipton is not a member of the respondent within the meaning of s 72(1) of the Associations Incorporation Act 1981 (Cth) (the Act) as his membership was terminated. According to the respondent, “member” refers to a “current member”. Mr Shipton submits that the Court has jurisdiction to enforce the rights and obligations of members and associations by virtue of sections 72 and 73 of the Act.
To the extent the question of whether Mr Shipton is a member of the respondent or not, Mr Shipton submits that it is a jurisdictional fact to be determined by the Court, with the onus lying on the respondent to prove the absence of the fact. Mr Shipton contends that the fact that there is an appeal right which permits the general meeting to determine “why the membership should not be terminated” further supports the fact that he remains a member until the matter is determined by the general meeting as is the case where it is a matter the Court is asked to determine. Under rule 11.3 Mr Shipton had a right to be given “a full and fair opportunity to show why the membership should not be terminated.” The termination of membership through a misapplication of the rules or failure to accord natural justice would be a significant deprivation of right.
Mr Shipton has been a member of the respondent since 2000 and had the benefit of a Sublease over Hangar L since 2001. Section 73 of the Act recognises that it is not appropriate for the Court to intervene in the internal affairs of an incorporated association. While the respondent contends the present case involves a number of factual issues, the application raises a number of legal issues in relation to the termination of Mr Shipton’s membership, not simply factual matters, which cannot be resolved by a general meeting.
Conclusion:
The Court ordered the termination of the membership of the applicant made by the Committee of the respondent on 15 August 2015 was void. The decision to terminate the applicant’s membership by the Committee of the respondent is set aside. The respondent is to pay the applicant’s costs of the application.
