PAUL ANTHONY HOPPER V NORTH SHORE AERO CLUB INCORPORATED CA CA11/06

PAUL ANTHONY HOPPER V NORTH SHORE AERO CLUB INCORPORATED CA CA11/06 14 November 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA11/06BETWEEN PAUL ANTHONY HOPPER Appellant AND NORTH SHORE AERO CLUB INCORPORATED Respondent Hearing: 23 August 2006 Court: William Young P, O'Regan and Ellen France JJ Counsel: N J Carter and D C E Smith for Appellant G J Kohler for Respondent Judgment: 14 November 2006 at 11 amat 11amJUDGMENT OF THE COURT A The appeal is dismissed. B We award costs of $3,000 to the respondent plus usual disbursements. REASONS OF THE COURT(Given by O'Regan J)Introduction[1] The appellant, Mr Hopper, is a member of the respondent, the North Shore Aero Club (the Club). The Club is an incorporated society under the Incorporated Societies Act 1908. Mr Hopper owns two aircraft, one of which is based at the Club's airfield. He applied to base the other aircraft, an experimental aircraft registered as ZK-EZY at the Club's airfield. The Club committee declined his application, and, when it was renewed, declined it again. [2] Mr Hopper applied to the High Court for judicial review of the committee's decision. The application was heard by Williams J, who dismissed it in an oral judgment: HC AK CIV-2005-404-2817 6 December 2005. [3] The issues raised by the appeal are: (a) Is the decision of the committee a decision which is amenable to judicial review? (b) If it is, are there grounds for review? (c) If there are, should the Court, in the exercise of its discretion, grant any remedy?Is the committee's decision a matter amenable to judicial review?[4] Williams J took the view that the decision of the committee was amenable to judicial review in terms of the Judicature Amendment Act 1972 (the Act). Under the Act, a reviewable decision is a "statutory power of decision". Williams J determined that the committee's decision was one made under the constitution of the Club, and it was the exercise of a power or right to require Mr Hopper to refrain from doing an act or thing that he would not be required to do, or do something which was in breach of his rights or affected his powers, privileges, immunities and duties. So it came within the definition of "statutory power of decision" in s 2 of the Act.[5] However, Williams J noted that the Courts have been diffident about interfering in the actions of incorporated societies. The Judge cited the well known authorities Turner v Pickering [1976] 1 NZLR 129 and Finnigan v New Zealand Rugby Football Union (No 2) [1985] 2 NZLR 181 at 185. Having done so the Judge summarised the position as follows (at [31]):Beyond ensuring compliance with the rules and requiring society and committee decisions to be arrived at honestly and bona fide in accordance with the rules, the courts have interfered in the running of incorporated societies only in a relatively restricted variety of cases. Membership issues have attracted the court's intervention. Disciplinary proceedings or the like in a society's constitution have attracted the court's intervention. So, too, the courts have been prepared to involve themselves where what is an issue is a licence or a right to make a livelihood with or in association with an incorporated society.[6] Having noted those limitations the Judge nevertheless went on to consider the grounds on which judicial review was sought, on the basis that the decision was amenable to review. [7] In this Court, Mr Kohler said the Judge should not have embarked on the exercise of reviewing the decision of the committee at all. He endorsed the Judge's comment reproduced above as to the traditional limits of review of decisions of an incorporated society. He said the present case did not come within any of those categories. What was at issue was not a matter affecting Mr Hopper's membership of the society (this was not under threat), was not a disciplinary matter, and was not a matter affecting Mr Hopper's livelihood. Rather, it was simply an application to base a particular aircraft at the Club's airfield. Mr Hopper was a member of another aero club and had access to an airstrip, so the ability to base his aircraft at the Club's airfield was not the only option open to him. [8] We do not propose to outline the factual background in any detail: the High Court Judge does so in a comprehensive and accurate manner, and reference should be made to that judgment if details are required. It is sufficient to note the following: (a) As a member of the Club, Mr Hopper was bound by its rules, as was the committee: r 10;(b) The administration and management of the Club is entrusted to the committee: r 14.1. It has power to regulate its own procedure: r 19(1). The committee is required to exercise the entire administration management of the Club and the control of its property and funds, and given the power to take action on behalf of the Club: r 20.1; (c) The principal object of the Club is to "promote and encourage aviation in every way": r 3.1. The Club also has Flight Orders which set out the requirements for pilots and aircraft operating at the Club's airfield; (d) Membership of the Club does not automatically entitle the member to base an aircraft at the Club's airfield: rather, permission must be obtained from the committee. It is this permission which Mr Hopper sought in relation to ZK EZY. [9] Mr Hopper's claim was essentially that the committee's decision in his case was not in accordance with the Club's rules. Whether that qualifies it for review under the Act is, in our view, doubtful. Neither Turner v Pickering nor Finniganwere cases founded on the Act. Byrne v Auckland Irish Society Inc [1979] 1 NZLR 351, another case relied on by the appellant, was a breach of contract case, based on failure to comply with the society's rules. This Court has indicated that a power of a private entity will not normally be amenable to judicial review under the 1972 Act unless it has a "public" aspect: Royal Australasian College of Surgeons v Phipps[1999] 3 NZLR 1 at 11-12 (CA). (The decision was appealed to the Privy Council but not on this point.) [10] Where the activities of a private entity are private in nature, the Courts have demonstrated a reticence to interfere with matters of internal management or regulation (see the rule in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189, and see also Porima v Te Kauhanganhui o Waikato Inc [2001] 1 NZLR 472 at [82] (HC)). Two cases are illustrative. In Chrippes v Society for the Prevention of Cruelty to Animals (1983) 4 NZAR 202 (HC) Hillyer J declined to review the respondentsociety's process for electing a new vice-president at its annual general meeting. And in M v Board of Trustees of Palmerston North Boys' High School [1997] 2 NZLR 60 (HC) Goddard J thought the decision of a board of trustees to expel a schoolboy from a boarding house was not a "statutory power of decision", even though the board was constituted under the Education Act 1989. The Judge characterised the board's relationship with the boy's parents as being a "purely private contractual arrangement". [11] The internal workings of incorporated societies with respect to members are primarily reviewable under the law of contract: Peters v Collinge [1993] 2 NZLR 554 at 566 (HC). While New Zealand Courts have been prepared to intervene in the internal affairs of an incorporated society or club in cases involving a breach of the contract constituted by the rules, this has normally been only in the limited circumstances described above at [5]. A Club's rules will be reviewable where they, or the way in which they are applied, constitute a breach of natural justice: Dawkins v Antrobus (1881) 17 Ch D 615 at 630 (CA). And the basis for intervention has not been the Court's power under the Act – rather, it has been on the basis of enforcing the contract constituted by the rules. [12] Although it is conceivable that the actions of the Club were, on a literal reading, pursuant to a "statutory power of decision", such a classification seems to strain the statutory definition. The Club committee was not exercising a quasi-public function, nor, for reasons we will come to, did it breach natural justice. In the absence of one or both of these features it is doubtful that a decision of a private body will be amenable to review, whether under the law of contract or under the Act. However, the amenability of the Club's actions to judicial review was not squarely before us in this case, and, given the view we take of the merits, it is not necessary for us to determine this point.Are there grounds for judicial review?[13] In the High Court, Williams J dealt with three different bases for the claim, as pleaded by Mr Hopper. These were:(a) Ultra vires: The essence of this argument was that the decision of the committee did not comply with r 3.1 in that it did not "encourage aviation in every way". This was decisively rejected by Williams J: he found that the constitution gave the power to the committee to determine applications of the kind made by Mr Hopper, taking into account issues such as safety and the rights of other users of the Club's facilities. He considered a submission that the decision was motivated by personal animosity. Apparently Mr Hopper is involved in some commercial development adjacent to the airfield which has led to some disagreement and litigation between him and the Club. Officials of the Club described Mr Hopper as confrontational and abusive, and as having made disparaging remarks about committee members. Mr Hopper said his relationship with some committee members was strained and complained of their treatment of him. The Judge noted that none of the committee members had made an affidavit to justify the Club's position, but even so determined that there was no basis to suggest that the decision made by the committee was ultra vires; (b) Breach of natural justice: The Judge also rejected a claim based on a breach of natural justice. He noted that the committee had no obligation to provide reasons for its decision, and Mr Carter realistically did not challenge that on appeal. The Judge noted that the Club's affairs were conducted on a relatively informal basis and the committee made frequent decisions of this kind. It was unrealistic to expect it to give formal reasons for every decision of this kind; (c) Legitimate expectation: The third cause of action was based on legitimate expectation, but the Judge noted that the committee's obligation was to balance the interests of all members, rather than meet the expectations of any one; (d) Unreasonableness: Finally, a claim based on unreasonableness was decisively rejected.[14] The focus of the submissions on behalf of Mr Hopper in this Court was on the ground that the committee had not acted honestly and in good faith, and that its decision was therefore ultra vires. Mr Carter was critical of the Judge for not having dealt with this point. In fact, the Judge did consider whether the decision was motivated by personal animosity, though he did not refer to a claim based on dishonesty or bad faith. However, as Mr Kohler submitted, the pleading of ultra vires was not founded on a lack of honesty or good faith, and the issue was not therefore before the Judge. On that basis, it should not be raised in this Court either, but we will deal with it because given the apparent acrimony between the parties it is appropriate that an allegation of this kind is not left up in the air. [15] The basis of the allegation of dishonesty and bad faith is that Mr Hopper's application was turned down only because he made it (ie because of the acrimony between him and members of the committee). Mr Carter said that, as the members of the committee had not made affidavits refuting this suggestion, we should infer that they have no response to make and that this was the real reason for their decision. The High Court Judge considered this factor, and declined to draw the inference which Mr Carter suggested. Mr Carter also argued that some potentially relevant documents were not disclosed by the Club. But if that was so, the appellant could have sought discovery but did not do so. [16] Mr Carter made extensive submissions on the merits of the committee's decision, having regard to Mr Hopper's experience as a pilot, the airworthiness of ZK-EZY, the substance of concerns expressed about Mr Hopper's conduct and the safety of his flying, and the fact that only a very small number of applications of a similar kind have ever been declined. There was, as Mr Kohler pointed out, a flavour that Mr Hopper was really seeking a merit review of the decision, of the kind that would be appropriate in an appeal, rather than a review of the process in the more traditional judicial review sense. [17] Mr Kohler said the decision was not dishonest, pointing out that the proposed aircraft was experimental, the airfield lacked an aircraft control service and Mr Hopper had shown his regard for the Club's rules and safety to be lacking. Thisinevitably strays into the merits of the decision as well, but we record that these points were made in support of the position of the committee. [18] We have considered the evidence to which Mr Carter referred, and the affidavits in response from the manager and the chief flight instructor of the Club. We can see no basis for reaching a different conclusion on this topic from that reached by the High Court Judge. We decline to infer dishonesty or bad faith on the part of the committee. Even if pleaded, therefore, such a cause of action would rightly have failed in the High Court. [19] Mr Carter did not challenge the other aspects of the High Court decision on the grounds of review. We conclude, therefore, as the High Court Judge concluded, that if judicial review had been appropriate in this case, the application would have failed.Would a remedy be granted?[20] It is not strictly necessary for us to determine this point, but we comment briefly on this aspect of the case. In the High Court it was submitted that Mr Hopper had no alternative recourse, and that any discretion in relation to remedies should be in his favour. The High Court Judge rejected this. He said Mr Hopper remained a member of the Club, and could use the processes of the Club such as calling a special general meeting or promoting a motion at an annual general meeting to overcome the decision of the committee. In the light of that he commented that the Court may well have found that it was not appropriate to grant relief by quashing the committee's decision. We endorse those comments.New evidence[21] Mr Carter sought leave to adduce new evidence from Mr Hopper, regarding the fate of a further application made by Mr Hopper after the High Court decision, which was declined. The application was strongly opposed on the basis that actions which occurred after the date of the decision which is challenged in the judicialreview proceeding cannot be relevant. In the present case the application was not only after the decisions of the committee to which the judicial review proceedings related, but after the High Court decision as well. We agree with Mr Kohler that this evidence has no relevance to the issues before us and we therefore refuse leave to adduce it in this Court.Result[22] We dismiss the appeal.Costs[23] We award costs to the Club of $3,000 plus usual disbursements.Solicitors: Carter & Partners, Auckland for Appellant Parker Rhodes, Auckland for Respondent