New South Wales Supreme Court CITATION : Goldsmith v Moore Park Golf Club Ltd [2006] NSWSC 1221 HEARING DATE(S) : 15/11/06 JUDGMENT DATE : 16 November 2006 JURISDICTION : Equity Division JUDGMENT OF : Barrett J DECISION : Summons dismissed with costs CATCHWORDS : ASSOCIATIONS AND CLUBS - members - rights and privileges of members - after disciplinary proceedings against a member, board suspends "privileges of membership" for fixed period - meaning of "privileges of membership" - whether affected member may be candidate for election to board LEGISLATION CITED : Corporations Act 2001, ss.249D, 249F Knight v Coffs Harbour and District Ex-Servicemen's and Women's Memoral Club Ltd (unreported, NSWSC, Young J, 13 December 1989) O'Byrne v Panegyres [2003] FCA 1328 CASES CITED : Re Davidson (1990) 22 FCR 449 Re Gibbs and Australian Insurance Employees Union (1984) 8 IR 133 R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277 Turner v Australasian Coal and Shale Employees' Federation (1984) 6 FCR 177 PARTIES : Bruce Goldsmith - Plaintiff Moore Park Golf Club Limited - Defendant FILE NUMBER(S) : SC 5818/06 COUNSEL : Mr C.B. Simpson - Plaintiff Mr R. Brender - Defendant SOLICITORS : Karp O'Neill - Plaintiff Thomson Playford - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J THURSDAY, 16 NOVEMBER 5818/06 BRUCE GOLDSMITH v MOORE PARK GOLF CLUB LIMITED JUDGMENT 1 Moore Park Golf Club Limited (which I shall call "the club") is a company registered under the Corporations Act 2001 (Cth). It is a public company limited by guarantee and does not have a share capital. 2 The plaintiff is a member of the club. He is within the class of members designated "Seven Day Playing Members". That class is one of 17 for which provision is made in the club's constitution. 3 By summons filed on 14 November 2006 which became the subject of an urgent final hearing on 15 November 2006, the plaintiff seeks the following declaration and order: "1. A declaration that the Plaintiff is eligible for nomination for election to the Board of Directors of the Defendant at the 2006 Election of the Board. 2. An order that the Secretary of the Defendant re-list the Plaintiff's name on the list of nominations for the election of the Board of Directors of the Defendant at the 2006 Election of the Board by 9.00am on 15 November 2006." 4 The claim arises in circumstances where, in accordance with the constitution, a list of the names of candidates for the purposes of an imminent election of the board of the club first included and then omitted the name of the plaintiff. It is not disputed that a written nomination of the plaintiff, endorsed with his consent, was signed and lodged in accordance with the constitution. Thereafter, on or about 8 November 2006, a list of the persons nominated for election to the board was posted on the club's notice board as required by the constitution. The plaintiff's name was included in the list. On 13 November 2006, however, the plaintiff was informed, by letter from the club's secretary, that he was "not eligible to be nominated for election to the Board of Directors" and that "an amended list of nominations for the 2006 election has been placed on the Club's notice board". The plaintiff's name was not included in the amended list. 5 It is common ground that the club's board determined, by unanimous vote of those members of the board present at a meeting held on 23 August 2006, that the plaintiff was "guilty" of a "charge" of "conduct unbecoming of a member". The board further determined that the plaintiff "be suspended from all privileges of membership for a period of six months", with a proviso that "the penalty" be "held in suspension if [the board] received letters of sincere apology" to persons named in the resolution "by close of business Monday 28 August 2006". It is also common ground that the condition predicated upon apology was not satisfied. 6 The board's power to proceed as it did on 23 August 2006 derives from article 49(a) of the constitution: "The Board has power to reprimand, suspend from any or all privileges of membership for such period as it considers fit, expel or accept the resignation of any full member if, in its opinion, that member: … (3) is guilty of any conduct which is unbecoming of a member; or …" 7 The hearing before me proceeded on the footing that, by force of article 49(a) and the board's determination of 23 August 2006, the plaintiff was, at the time of his nomination for election to the board some time shortly before 8 November 2006, in a situation where all "privileges" of his "membership" of the club were "suspended"; and that he would continue in that situation until after the completion of the election. It was accepted that the question for determination is, in essence, whether the "suspension" of "all privileges of membership" caused the plaintiff to be ineligible and unqualified for nomination and election to the board as well as incapable of becoming a member of the board. The answer depends upon the construction of the constitution. 8 Article 52 makes provision for a board of nine directors. Articles 53 and 54 are as follows: "53. Only financial members in the classes of Life membership, Seven Day Playing membership, Members for Life membership and Senior membership are eligible to be nominated for, elected to and hold office on the Board. 54. A member is ineligible to be nominated for or elected to the Board if that member: (a) has at any time been convicted of an indictable offence; or (b) is a former employee of the Club whose services were terminated by the Club for misconduct." 9 It is contended on behalf of the plaintiff that article 53 contains an exhaustive specification of the persons eligible for election to the board. The defendant, by contrast, contends that article 53 does not confer eligibility on all members within the several specified classes of membership but, rather, serves the purpose of making it clear that members within those classes are eligible to be nominated, to be elected or to hold office on the board only if they are financial members. 10 In relation to article 54, it is the contention of the plaintiff that the provision contains an exhaustive specification of the members who are ineligible. The defendant says that article 54 does not cover the field, so far as ineligibility is concerned. 11 It seems to me that articles 53 and 54 are concerned to delineate the group of members from whom, in the ordinary course of events, members of the board may be chosen. Every member within that group may look to those articles as a source of an assurance that he or she will not be excluded from the processes of nomination and election and, if elected or appointed, will not be excluded from membership of the board. A member not within the defined group may not look to those provisions as a source of such an assurance. The provisions themselves are the source of the assurance or the source of its denial. And the assurance, if it exists, is one that arises because a particular person has attributes placing the person within the group. 12 I have deliberately chosen to use the word "assurance" in what I have just said. I have done so because I do not wish, at this point, to be seen to be making a judgment about whether the thing I am describing is a "privilege" or a "right" or, perhaps, neither. 13 There was significant debate before me about the meaning of "privileges", being the word central to the revised basis of the relationship between the plaintiff and the club that has pertained since the board's determination of 23 August 2006. 14 I was taken to numerous provisions of the constitution using the word "right" (or "rights") and "privilege" (or "privileges"). In article 18, there is reference to "the right to vote at the election of the Board". Article 24(a)(2) refers to Seven Day Playing Members having "unrestricted playing rights on all days of the week and full use of the Club's facilities". There are numerous references to the "playing rights" of other classes of members. There are also, in this context, references to "the social privileges of the Club" and to "playing privileges": see, for example, article 24(l)(7). Article 26 declares that a Life Member has "all the entitlements, rights and privileges of a Seven Day Playing Member". Article 27 refers to members in certain classes of members and says that they "are entitled to attend and to vote" in certain ways at general meetings. Article 29(a) says that the "rights of members to use the Club's facilities and amenities are as the Board may from time to time by By-law or otherwise". Article 33(b), dealing with temporary members, says that they are "entitled only to those facilities and amenities of the Club as the Board may determine from time to time". Article 35(a) says that a member aged 18 or more "will have the privilege of introducing guests to the Club". Article 60 empowers the board to make by-laws, including with respect to "the privileges to be enjoyed by members". Article 59(k) empowers the board to "impose limitations on the rights and privileges of members relating to their use of the premises or relating to their conduct, behaviour and dress while on the premises". 15 I was also taken to a number of provisions about expulsion and suspension. I need not go through them in detail. It is sufficient to note that they proceed on concepts variously reflected by words such as "ceases to be a financial member" (article 46(1)), "will lose all privileges of membership and will cease to be a member of the Club" (article 46(c)), "suspend from any or all privileges of membership" (article 49(a), already noticed), "expel" (also article 49(a)), "power to suspend any person's membership and remove that member from the Club's premises" (article 50(a)), "ceases to be a financial member" (article 80(i)) and "ceases to be a full member" (article 80(j)). 16 The plaintiff's contention is that a member's "privileges" are distinct from his or her "rights" and "entitlements" and that suspension of "privileges" leaves "rights" and "entitlements" undiminished, unfettered and intact. The plaintiff characterises as "privileges" matters such as ability to use the golf course and club house and, no doubt, facilities such as bars and dining rooms. A member's "rights", on the other hand, are characterised by the plaintiff as pertaining to matters going to the relationship between corporation and corporator – in essence, I suppose, the things that company law secures to him by virtue of his membership. 17 The defendant's contention is twofold: first, that in ordinary parlance and according to dictionaries, there is, in relation to membership of a club or company, no distinction between "rights" of a member and "privileges" of a member; and, second, that this particular constitution, taken as a whole, demonstrates an intention that draws no such distinction, with the result that its reference to "all the privileges of membership" extends to every right, entitlement and benefit that accrues to a person by reason of membership of the club. On that approach, suspension of "all the privileges of membership" puts a member in a position where the member continues to be invested with all rights, privileges and benefits that membership entails but is disabled for the time being from exercising or enjoying them. 18 As far as dictionary definitions of "privilege" are concerned, I merely note the meanings given in the "Shorter Oxford English Dictionary". The first is: "A right, advantage, or immunity granted to or enjoyed by a person or a class of people, beyond the usual rights or advantages of others". The second meaning is: "Such a right or immunity attaching to some office, rank, or station". The third meaning is: "A privileged position; the possession of special advantages or rights". These meanings are consistent with the submission made on behalf of the defendant, particularly when it is remembered that the "privileges" concerned are those pertaining to ("of") "membership". It is membership of the club that is the relevant "office, rank or station". And, on the dictionary definition, rights, immunities or advantages "attaching to" membership are the "privileges of" membership. 19 The impression that "privileges" connotes all forms of rights, entitlements and advantages produced by or attached to membership is consolidated when one looks at the constitution as a whole. The several provisions to which I have referred show that there has been, in the drafting, no real attempt to draw the distinction for which the plaintiff contends. 20 I am of the opinion that the lack of differentiation and distinction in the various provisions of the constitution tells strongly against the construction for which the plaintiff contends, based on a distinction between "rights" and "privileges". References to "unrestricted playing rights" are obviously references to access to and use of the golf course. This is something that, on the plaintiff's approach, would be a "privilege", but the constitution itself uses the word "rights". The same observation applies to the reference to the "rights of members to use the Club's facilities and amenities". Again what would be, on the plaintiff's approach, a "privilege" is defined by the word "rights". Article 35(a) refers to a member's "privilege" of "introducing guests to the Club" but article 35(b) then imposes a prohibition upon introduction of a person of a certain type as a guest, thus implying that the "privilege" could, but for the prohibition, be exercised in relation to a person of that type. There is thus a strong inference that the "privilege" is a right or entitlement. 21 I am not satisfied that, in light of the provisions of the constitution as a whole, any distinction of the kind for which the plaintiff contends is drawn between "rights" and "privileges". I think that, in the context, the "privileges of membership" are all of the rights, entitlements, benefits and advantages that accrue to a person by reason of that person's being a member. 22 It is to be remembered, however, that the temporary deprivation (or temporary disentitlement to assert and exercise) effected by article 49(a) operates only to the extent that a provision of the club's constitution is capable of effecting deprivation. As was pointed out in the course of argument, certain rights, entitlements, benefits and advantages accrue to the members of public companies by virtue of legislation. The "right" (if I may call it that) of a member to join with others of the requisite number or strength in requisitioning the convening of a general meeting under s.249D of the Corporations Act 2001 (Cth) or actually convening such a meeting under s.249F is an example of a right, entitlement, benefit or advantage accruing to a member by virtue of membership which is not sourced in the constitution. It was accepted by counsel for the defendant that a provision of the constitution could not displace the operation of those statutory provisions. Indeed, it was pointed out that article 3 states that, to the extent that any of the provisions of the constitution are inconsistent with the Corporations Act or the Registered Clubs Act 1976, the provisions "are inoperative and have no effect". 23 As regards election of directors by members, there can be no real doubt that the right of a member to vote in the election is one of the "privileges of membership". I say this because so much was assumed without question by Dixon CJ in R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277: "It is enough to say that the complaint against the rules is that they have the effect of requiring the payment of annual subscriptions during the month of December of each year or, if the subscription is paid in half-yearly instalments, during the months of June and December, on pain of loss of all privileges of membership, including of course the right to vote at the election of office bearers ". [emphasis added] 24 In Re Gibbs and Australian Insurance Employees Union (1984) 8 IR 133, Lockhart J took it as read that "the usual rights and privileges of membership" of a union included "the holding of office in the union". Likewise in Re Davidson (1990) 22 FCR 449, Wilcox J accepted as a matter of course that all "the privileges of membership" included "the right to stand for elected office in the organisation". 25 In Turner v Australasian Coal and Shale Employees' Federation (1984) 6 FCR 177, Northrop, Keeley and Gray JJ made it clear that deprivation of the "privileges of membership of" a body left the affected person in a position where he or she "remains a member and continues to be liable to pay contributions and dues". To similar effect is the observation of R D Nicholson J in O'Byrne v Panegyres [2003] FCA 1328 that an unfinancial member declared by the rules not to be entitled to "any of the benefits and privileges of membership" nevertheless "continues as such [ie, as a member] although not entitled to benefits and privileges of membership". 26 There is some suggestion in the last-mentioned case (at [34]) that qualification to contest a particular office at an election is not lost by disentitlement to benefits and privileges of membership. That brings me back to articles 53 and 54. 27 As outlined at [11] above, I am of the opinion that article 53 serves the purpose of identifying the "only" persons who are "eligible" to be nominated for, elected to and hold office as a member of the club's board and thereby delineates a group of eligible persons. Those persons are the "financial members" within the four specified classes. By declaring that particular group of members to be "eligible" in the way prescribed, the constitution confers on them a particular status that is enjoyed neither by members outside the group nor by non-members. From the perspective of a person who is a member of the type (or, more accurately, one of the types) described in article 53 and therefore within the group, the constitution is thus the source of a particular benefit, advantage or status, being the eligibility that comes with the person's membership. It follows, in my opinion, that, for such a person, that eligibility is part of the totality of the "privileges of membership". But for, first, his or her membership, second, the type or quality of that membership and, third, the effect of the constitution, the person would not enjoy the eligibility. 28 I do not consider it correct to view article 54 as the only provision detracting or capable of detracting from article 53. It is true that article 54 denies the particular eligibility to certain members upon whom that eligibility would otherwise be conferred by article 53. But there is nothing in either article to suggest that provisions dealing on a wider front with denial of "privileges of membership" cannot impinge upon the particular privilege with which they are concerned. 29 It was submitted on behalf of the defendant that the form of temporary denial of the "privileges of membership" suffered by the plaintiff through article 49(a) would mean that he could not enter the club's premises and that this was an added reason for thinking that suspension of membership privileges entailed exclusion from consideration for membership of the board, given that the functions of board members (including, no doubt, attendance at meetings) of necessity entail entry upon the premises. I need not decide whether suspension of the relevant kind entails exclusion from the premises. It is sufficient to observe, as Young J did in Knight v Coffs Harbour and District Ex-Servicemen's and Women's Memorial Club Ltd (unreported, NSWSC, Young J, 13 December 1989), that there is always an implied right for a member of a company's board to enter the company's premises for the purpose of attending a board meeting, even if the privilege of entering as a member has been suspended or abolished. 30 In summary, I am satisfied that the suspension of the plaintiff's "privileges of membership" which is current and will continue for some months to come by virtue of article 49(a) means that his right, privilege, benefit, licence, ability or eligibility – it matters not how it is described – to be considered, as a member, for election to the board is, for the duration of the suspension, not exercisable by or available to him. He is accordingly not qualified or entitled to be considered for election to the board in the forthcoming ballot. 31 The summons is therefore dismissed with costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.