Case Brief: Middeldorp v Avondale Jockey Club Incorporated

October 12, 2021

The issues between Mr Vincent Middeldorp and Avondale Jockey Club resulted in five judgments over a two and a half year period.

 

Mr Middeldorp sought judicial review of the Club’s decisions to suspend him from the committee, to decline 14 membership applications, and for breaching the Club's rules in relation to elections to the committee. Two judgments deal with these substantive issues and there are a further three judgments dealing with costs, including one from the Supreme Court.

 

Substantive case: Middeldorp v Avondale Jockey Club Incorporated [2020] NZCA 13

 

Summary

Mr Middeldorp claimed the Club made three reviewable errors by suspending him from the committee, declining 14membership applications and not following the Club rules for committee elections. The High Court found the committee did not have the power to suspend Mr Middeldorp from the committee, but otherwise dismissed the application and declined to grant relief.

 

Mr Middeldorp appealed the decision to the Court of Appeal.

 

Background

Mr Middeldorp has been a member of the Club since 1982 and a committee member since 2013. He strongly objected to a proposal to close its training track which was supported by the majority of the committee and Club officers.

 

The Club had been in financial strife since the 1990s and is on the brink of closure. The Club President claims Mr Middeldorp is 'making trouble' by refusing to accept and undermining decisions of the majority of the committee. Mr Middeldorp claims he always acted with the Club's best interests in mind.

 

The Case

Incorporated societies are amenable to judicial review but courts are usually reluctant to intervene in their internal affairs. In this circumstance, both the High Court and the Court of Appeal agreed they should consider the issues.

 

Power to suspend committee members

The Court of Appeal upheld the High Court's ruling that it was not appropriate to read into the Club's rules a power to suspend committee members. The general provision allowing the committee to determine cases not provided for in the rules did not extend to a power as significant as the power to suspend its members.

 

Membership applications

The Committee rejected 14 applications that it considered were made by associates of Mr Middeldorp to support his objections to committee decisions to close training operations, rather than genuine prospective members. The Court of Appeal agreed with the High Court finding that these concerns were valid.

 

Election of Committee members

Both parties accepted the committee had between five and eight members, instead of the 10 members required by the Club rules, throughout the relevant period. This had been the case since 2014 and the committee adopted a pragmatic approach to retirement and (re-)appointment over the years, including when Mr Middeldorp retired and was re-elected in 2015. The High Court accepted the Club's submission that there is an implied term in the Club rules allowing for adaptations where there are fewer than 10 members.

 

The Court of Appeal agreed the committee acted lawfully, but for different reasons. It found there was nothing in the Club rules to prevent the committee from operating with fewer than 10 members. Provided that a quorum of five is present, the committee can meet and make decisions. An implied term was not necessary.

 

Approach to relief

The High Court judge adopted a nuanced approach to relief to justify refusal. The judge did not think Mr Middeldorp has been seriously prejudiced by the decision, which had already been given effect to and could not be reversed. Mr Middeldorp also acted against the Club’s best interest in the lead up to suspension and delayed in filing proceedings.

 

The Court of Appeal found the High Court was wrong to refuse a declaration. Declarations are different to other remedies and will not normally be refused because of a delay in filing. They provide vindication and deter future breaches and are useful. The delay was not material and did not prejudice the Club. The defect was fundamental and relief is justified.

 

However, the Court of Appeal did not consider the terms of the declaration sought were appropriate. The declaration should not extend to the validity of committee decisions made during the suspension period and should be limited to a declaration that the decisions to suspend were not authorised by the Club Rules.

 

Result

The Court of Appeal overturned the decision to refuse relief, but the declaration was more limited that the one sought. It upheld the High Court's decision to dismiss the two remaining challenges. Overall, no party was a clear winner or loser and the Court of Appeal decided not to order costs.

 

Costs Proceedings – Middeldorp v Avondale Jockey Club Incorporated [2021] NZSC 117

 

Background

After the first hearing, the High Court awarded the Club scale costs with a 15% reduction to account for Mr Middeldorp's partial success, which added to $18,955. Following the Court of Appeal's judgment, Mr Middeldorp asked the High Court to reevaluate the costs order in light of the appeal.

 

The Cases

In this second costs judgment, the High Court considered the Club to be the overall 'winner' of the appeal. Mr Middeldorp only succeeded on one ground of appeal (the declaration), and even then in more limited terms than he originally sought. To account for this, the High Court adjusted the reduction in scale costs to 25%, reducing the costs payable to $16,725.

 

Mr Middeldorp appealed the second costs decision to the Court of Appeal. Appeal courts will not usually interfere with the costs awarded by a trial judge unless the judge was wrong in principle or considered the wrong factors. The Court of Appeal endorsed the High Court's approach to costs and dismissed the appeal. The Club was awarded further costs for the appeal on a standard band A basis, plus disbursements.

 

Mr Middeldorp then applied for leave to appeal the costs decision to the Supreme Court. He argued that the appeal would raise matters of general or public importance and commercial significance which would have a significant impact on the costs regime, and that the decision to award costs was a substantial miscarriage of justice in circumstances where he successfully obtained a declaration. The Supreme Court rejected these arguments and dismissed the application, awarding the Club a further $2,500 in costs.

 

Result
The Court of Appeal and Supreme Court upheld the High Court’s second costs decision. Mr Middeldorp was ordered to pay further costs in respect of each failed appeal.

 

The Incorporated Societies Bill is currently being considered by the Select Committee. Franks Ogilvie made a submission against the Bill because it would make life much harder for committee members of Incorporated Societies. It will encourage and enable more court proceedings from disaffected members that can drag societies through court for years on end.

If you would like to understand more about Incorporated Societies, please contact Senior Solicitor Aimee Dartnall.

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