HOPPER V NORTH SHORE AERO CLUB INCORPORATED HC AK CIV 2005 404-2817

HOPPER V NORTH SHORE AERO CLUB INCORPORATED HC AK CIV 2005 404-2817 6 December 2005IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2005 404-2817UNDER the Judicature Amendment Act 1972 IN THE MATTER OF of the constitution of the North Shore Aero Club Inc. BETWEEN PAUL ANTHONY HOPPER Plaintiff AND NORTH SHORE AERO CLUB INCORPORATED Defendant Hearing: 6 December 2006 Counsel: Nick Carter and Dale Smith for plaintiff Graham Kohler for defendant Judgment: 6 December 2005[ORAL] JUDGMENT OF WILLIAMS JSolicitors:Carter & Partners, P O Box 2137 Auckland, for plaintiff Parker Rhodes (Colin Parker) P O Box 47-555 Ponsonby, Auckland, for defendantCopy for:G J Kohler, P O Box 4338 Auckland Stewart Scorgie, Case Registry Officer, High Court Auckland[1] The plaintiff, Mr Hopper, is a long-standing member of the defendant, the North Shore Aero Club Incorporated. On 28 October 2004, however, the Club sent Mr Hopper a letter in the following terms:The Committee revisited your application to place EZY on the airfield for the third time on Tuesday night. I have to advise you that the aircraft has not been accepted to operate from North Shore Airfield and you will need to remove it from the field as soon as you are able to.[2] As a result of his receipt of that letter, Mr Hopper has commenced these judicial review proceedings seeking in effect the reversal of the directions contained in that letter so as to enable him to base one of his aircraft at the Dairy Flat airfield owned by the Club. [3] The Club's formal legal status is as an incorporated society under the Incorporated Societies Act 1908. The paramount document therefore affecting the outcome of the judicial review proceedings is the Club's constitution and associated Flight Orders. [4] For present purposes it is pertinent to note a number of the provisions in the constitution. [5] Before doing so, however, it is also pertinent to note that as incorporated societies go, the North Shore Aero Club is a large society. It apparently has about 600 members and has an annual income exceeding $1m from training and classes and from rental of its hangars and airfield space. The evidence shows there are about 137 aircraft based at the Dairy Flat airfield, some 10 of which are home-built aircraft and another 6 of which are microlights. It would appear that most of the aircraft are housed in hangars at the airfield. [6] The principal objects of the Club are set out in cl 3 which reads:3.1 To promote and encourage aviation in every way including any art, craft, trade, or profession connected with or incidental to aviation and in particular but without limitation in any of the following modes: 3.1.1 by carry out instruction and training in aviation and any matter connected with or incidental to the same,3.1.2 by acquiring, establishing and operating aerodromes, airfields, landing grounds workshops, repair shops and any other facilities for the use or benefit of the Club and its Members, 3.1.3 by acquiring and operating aircraft of every description, 3.1.4 by promoting and arranging for displays, pageants, competitions, lectures and discussions, 3.1.5 by establishing or arranging for the printing and publication of magazines, articles, newsletter and reports, 3.1.6 by monitoring and promoting general or local legislation, 3.3 To purchase, hire, take on lease or otherwise acquire, and to sell, lease, mortgage, charge, exchange or otherwise deal with any real or personal property. 3.4 To do all or any of the things authorised by these rules alone or in conjunction with another or others.[7] It is also of importance to note cl 10 relating to the fact that members are bound by the rules of the Club :10 Members bound by the RulesMembers shall be held to consent to and be bound by these rules and by any flight orders, by-laws and regulations issued pursuant to these rules. The decision of the Committee as to the interpretation and application of any such flight orders, by-laws or regulations shall be final and conclusive.[8] As with most societies and clubs, the Aero Club is run by a committee whose powers appear in cl 14.1 :14 Committee14.1 The administration and management of the Club shall be governed by a Committee of ten Members which shall consist of the President, Vice President, Treasurer, Secretary, Club Captain (all of whom shall be ex officio members) and five Members elected in accordance with the ;provisions of rule 16. 20 Powers of Committee20.1 The Committee shall exercise the entire administration and management of the Club and the control of its property and funds and is hereby empowered on behalf of the Club to doexecute and carry out all the matters and things which the Club is authorised to do, execute and carry out except such as are expressly by these rules or by any statute for the time being in force required to be exercised or done by the Club in General Meeting. 20.2 Notwithstanding the provisions of rule 20.1 the power to sell, transfer or otherwise dispose of the whole or any part of the Airfield in any manner which would substantially reduce the Club's use and occupation of the Airfield shall be exercised by Special Resolution of Members at a General Meeting of the Club. 20.3 Nothing in rule 20.2 shall affect or derogate from the exercise by the Committee of the Club's 20.3.1 borrowing powers contained in rule 29, and 20.3.2 power to enter into leases, licences or other occupancy agreements or parts of the Airfield to Members or other persons. 20.4 The Committee may by Special Resolution make, alter, or cancel the Club's flight orders, by-laws and regulations from time to time provided however that such flight orders, by- laws and regulations are not repugnant to these rules or to any statute for the time being in force. All Members shall be deemed to have notice of and shall obey such flight orders, by-laws and regulations copies of which shall be kept at the registered office of the Club for the inspection of Members. 38 Matters not provided forAny matters not provided for by these rules shall be determined by Resolution of the Committee whose determination shall be final.[9] The constitution provides for Finance and Administration and Club Activity sub-committees and such others as may be appointed all of which are subject to the Committee's decision. In the usual way, and as required by the Act, the rules provide in detail for the election of officers and a committee, and the special and annual general meetings which the Club can convene. It is also pertinent to note that cl 19.1 gives the committee full power to regulate its own procedure. [10] It is agreed that allied with the Aero Club's constitution are the Club's Flight Orders. They comprise two closely-typed pages largely of technical detail, as might be expected, relating to the operation and flight rules of the Club. For presentpurposes it is unnecessary to deal with those in any detail save to note that they are authorised and approved by the committee and cl 1(b) requires them to be complied with by all members of the Club and all pilots of aircraft and all pilots operating at, into, or out of North Shore Airfield. Under the heading "Pilot Rules" para 1(b) and (c) make clear that failure to comply with the Flight Orders constitutes a breach of the Club rules which can lead to disciplinary action. There are then a number of detailed operational rules relating to flights in and out of the aerodrome. [11] Mr Hopper owns two aircraft. One is a Cessna 172 which has been based at North Shore airfield now for some time and apart from the fact that it is owned by the plaintiff nothing further arises in relation to this case. The basing of that aircraft at the airfield and its use and operations are not in contention. [12] However, Mr Hopper and a friend of his, a Mr Swensen, purchased a kitset aircraft called the "Terrier 200" and built it and it is with that aircraft and its operation that the judicial review proceedings are principally concerned. [13] In the course of its construction Mr Hopper and Mr Swensen carried out significant modifications to the aircraft to the point where it is now regarded as the first of its type. It is heavier than the average microlight and is accordingly now in a Special Category Experimental Options aircraft under the registration mark ZK- EZY. [14] The airworthiness certificate for that aircraft also contains, as might be expected, a number of operating limitations. Phase 1 relates to initial flight tests in a restricted area and Phase 2 the operating limitations. Again it is unnecessary to do more than note the more salient of those provisions. They include debarring the use of the aircraft for hire or reward, requiring, as might be expected, all operations to be conducted in accordance with applicable air traffic control and general operating rules and certain other requirements including, as was discussed in the evidence, a debarring of the use of the aircraft over congested areas of cities or towns.[15] The facts with which the case is mainly concerned really begin at a committee meeting on 26 July 2004. Prior to that time Mr Hopper and Mr Swensen had completed ZK-EZY and were considering basing it at the North Shore airfield. There is a slight difference of view between the witnesses as to when the formal application by Mr Hopper to base ZK-EZY at North Shore was first submitted to the committee but for present purposes it is important only to note that at the 26 July 2004 meeting there was a change to what might previously have been the Club's requirements for aircraft based at the airfield. It was that aircraft would need to meet the Club's performance criteria and aircraft based at the airfield could only be based there on behalf of members of not less than 12 months' standing. [16] On 5 August 2004, he says at Mr Hopper's request, Mr Kimpton, the manager of the airfield, faxed him an application form to base the aircraft at North Shore, together with the rules. The fax included a number of operational queries including technical specifications, the availability of hangar space, the aircraft's performance and, at the foot, Mr Kimpton made a note that one of the persons who was proposed to be a pilot of the aircraft may not have been a member of the Club. There was also a question as to whether the others all had their private pilots' licence. [17] Mr Kimpton makes clear that an application to base an aircraft at Dairy Flat is the usual route by which members obtain access to the airfield. He says, as seems to be borne out by a list of other applications put in evidence, that the committee does not operate as what he calls a "rubber stamp" but each of the applications is considered on its merits: some are granted, some declined and some deferred. [18] Mr Hopper's actual application to base ZK-EZY at the North Shore airfield is dated 26 August 2004. It, too, contains a submission to certain requirements for the application to be successful. Of present note is that the application lists a number of other proposed private users in addition to Mr Hopper. It ultimately described the aircraft as "experimental" – something which was added after a committee meeting on 23 August 2004 - and in terms of the place to hangar the aircraft, the answer was that Mr Hopper had space "if we keep it there Waklin or Hopper hangar". The attached terms and conditions make clear they are the minimum requirements foraircraft operating at North Shore aerodrome. They include an obligation to use the aircraft for training purposes only with an instructor of the Aero Club or some other approved instructor, and with the pilot in all cases being the holder of a private pilot's licence. The signed addition includes a note "I agree to abide by the terms and conditions for operation and private use of an aircraft on the North Shore airfield". [19] Mr Kimpton said that application, in incomplete form, was considered and declined by the sub-committee on 23 August 2004. Mr Hopper apparently did not attend the meeting on that occasion but the two discussed the matter later and Mr Kimpton told Mr Hopper that there were some committee concerns as to the training and membership of some of those who proposed to use ZK-EZY. The application was then completed and re-submitted to the October meeting, and it is that with which the matter is principally concerned. [20] In the meantime, however, on 29 September 2005, Mr Kimpton had again written to Mr Hopper in essence recording the contents of a previous conversation between them as to the committee's wish to have further information regarding the potential pilots, where they were going to train, whether the aircraft would operate out of North Shore or somewhere else, and whether every pilot held a current licence. The letter acknowledged some concern about microlight and experimental aircraft and said that "We will be critically examining every application." [21] At about that time, it appears Mr Hopper started test-flying ZK-EZY and in the evidence there were some concerns expressed by Mr Maynard, the Chief Flying Instructor for the Club, as to Mr Hopper's flying. It is probably unproductive to try and assess the merits of that aspect of the evidence on affidavit evidence alone. Mr Maynard expressed the view that he had some safety concerns with matters reported to him at about that time concerning Mr Hopper's flying of ZK-EZY but he had a discussion with Mr Hopper and was it seems entirely satisfied as a result of that discussion. [22] The application to base ZK-EZY at North Shore came back before the committee on 26 October 2004. Mr Hopper attended. He said that immediately themeeting opened it went into committee and as a result all persons other than the committee members and invited officers and the secretary were required to leave the room. [23] It is clear that the result of Mr Hopper's application to that meeting was as set out in the 28 October 2004 letter. Mr Kimpton said that the committee was also concerned that Mr Hopper had been flying ZK-EZY before that date despite the fact that his application had previously been declined. [24] For Mr Hopper, Mr Carter, leading counsel, made the point that the letter dated 28 October apparently took nearly a fortnight to arrive, it only being received by Mr Hopper by courier on 9 November. If the Club's concerns were genuinely based on safety reasons, he queried, it would be expected that urgency would have been accorded getting the letter to Mr Hopper. Once he had received the letter Mr Hopper apparently flew ZK-EZY a couple of times from the North shore airfield before removing it - although has flown back since for maintenance purposes. [25] He consulted his solicitors. Over the ensuing months they made stout efforts to try and obtain from the Club the precise reasons which lay behind the 28 October letter. In large part they were unsuccessful, and that is one of the main reasons why the judicial review proceedings have been issued. [26] On the documentary evidence before the Court, the only reasons given for the letter and for the Club's refusal to provide additional detailed reasons is that Mr Hopper was in breach of the Club's rules, in part by leaving the aircraft on the airfield after receipt of the letter. On 30 May 2005 a legally-qualified member of the committee is recorded in the Minutes as responding to Mr Hopper's solicitor's request for reasons. The Minutes read that there were concerns for safety as the pilots listed on the application did not hold private pilots' licences and there was ambiguity about those who were to be trained on the aircraft, with reference to the constitution. A certain amount of additional information can be gleaned from the president's report to the Club's annual general meeting on 13 July 2005 where he discussed the fact that these judicial proceedings were then on foot. However, what is said there largely fleshes out what has already been noted.[27] Turning to the legal questions, the first issue is whether, under the Judicature Amendment Act 1972, the Club committee's decision of 26 October 2004 was a "statutory power" under s 2 and a "statutory power of decision". Although there may be some doubt on the issue for present purposes it is sufficient to adopt the view that the committee's decision was under the constitution of the Club and it was the exercise of a power or right to require Mr Hopper to refrain from doing any act or thing that he would not be required to do, or to do something which was in breach of his rights or affected his powers, privileges immunities and duties. [28] It is clear, however, from the law that courts have been diffident about interfering in the actions of incorporated societies. Incorporated societies have been an important part of the history of New Zealand and the way in which New Zealand society operates for very many years. Some are small, some are large, they affect all aspects of New Zealanders' life, principally their pleasures and pastimes. But the courts have been cautious about involving themselves in the management of incorporated societies. The reason for that is, first, that it is now well established that the rules and constitution of an incorporated society are a binding contract between the society and its members and thus in the usual course of events remedy for breach of the constitution or associated rules is the same as for breach of contract: Byrne v The Auckland Irish Society Incorporated [1979] 1 NZLR 351, 362. [29] The extent to which courts are prepared to involve themselves in the affairs of incorporated societies is, broadly put, to ensure that the societies comply with their rules and constitutions as far as their members are concerned, but not to interfere to any great extent beyond that. One of the expositions as to the manner and extent of the Court's interference with incorporated societies' affairs is in the judgment of Casey J in Turner v Pickering [1976] 1 NZLR 129 at ll.16-37 :I am of the view that the court's right to intervene in the affairs of a voluntary society is now to be assessed rather more liberally than the cases suggested to Haslam J in 1963. They have gone past the limitations of financial, commercial or employment interests which earlier authorities required the plaintiff to show before being entitled to the court's assistance. It seems to be now established that the plaintiff can have enforceable rights of a contractual nature brought about by his membership of a voluntary association, including the right that its affairs will be conducted honestly and bona fide in accordance with its rules. It is no longer necessary for him to be protecting a private right of a proprietary character before he can ask thecourt to intervene; but public policy still suggests some limitation to exclude interference with associations of a wholly social nature, or where it is clear that no legal relationships of any sort were intended between members. In my view, it would be unrealistic for the courts to refuse assistance to ensure proper conduct of the affairs of a voluntary association, which may have an important part in the life of the community, simply because a concerned member is unable to point to an interference with his own private rights. A member who lends his name to a society and has devoted time, effort and interest to its affairs has a right to ensure that they are properly conducted in accordance with its rules, to the same extent as another member who might be able to show nothing more than a remote proprietary interest in its assets in the event of a winding up.[30] Another and slightly more contemporary description of the ambit and powers of courts to involve themselves in the affairs of incorporated societies appears inFinnigan v New Zealand Rugby Football Union (No.2) [1985] 2 NZLR 181 at 185 where the following appears :There are two possible tests in determining whether the Council acted properly in reaching its decision. The first corresponds with that adopted on questions of ultra vires in company law, requiring no more than that Council members act honestly and in good faith in furthering the Union's objects. I accept this as the test for all normal situations involving incorporated societies and other voluntary organisations, and in those circumstances the Court will not interfere to usurp the Council's functions in making the decision. This obvious fact has been freely recognised by the Government and in the resolution of Parliament to which I have referred, where it is acknowledged that the decision is for the Council alone. But it must still be a decision made genuinely in furtherance of the fundamental Union objects stated in rule 2(a). The plaintiffs allege that it was not; that the majority of the Council were set in their desire to have the tour for reasons unrelated to those objects and stubbornly persisted in that attitude, in a way that demonstrated rule 2(a) was given no genuine attention.[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 in issue is a licence or a right to make a livelihood with or in association with an incorporated society. [32] But it is clear that the precise limits of a court's involvement by way of judicial review into an incorporated society's affairs remains limited and imprecise.(See Ian Millard QC Incorporated Societies and Other Associations Laws NZ para [33] pp 39-40. The decision itself has no particular intrinsic merit but this Court endeavoured to describe the metes and bounds of the Court's rights as far as incorporated societies are concerned in Chamberlain v The Speedway Control Board of New Zealand Incorporated (HC New Plymouth CP21/92, 9 December 1992 pp 7ff). [33] The claim in this case is brought on several fronts, principally that the committee's decision is ultra vires or that it was arrived at in breach of natural justice or that it was contrary to Mr Hopper's legitimate expectations. [34] Turning to the ultra vires ground. The submission is that the committee had no power to arrive at the decision it did on 26 October. The submission was that any member, Mr Hopper and all 600 of his fellow members, can operate their aircraft form the North Shore airfield subject only to compliance with all relevant rules, regulations, flight orders and the like on their behalf or on behalf of their aeroplane. Mr Carter relied strongly on the Aero Club's constitution and submitted it was clear the decision in this case did not "encourage aviation in every way". He made the point that Mr Hopper had little if any opportunity to know precisely what the committee's concerns were, still less any opportunity to respond to the committee's concerns in order to try and ensure that their decision would be different from that at which they arrived. [35] In that regard, however, it is clear from a reading of cl 3.1 of the constitution that encouraging aviation in any way in the inclusive manner described in cl 3.1 inevitably requires a balancing by the committee of the objects and interests of Club members and their aircraft and the means of achieving the encouragement of aviation. A reading of the constitution makes clear that it provides no legal basis for saying that the committee must prefer the interests, or applications of one member to other members and the interests of the club generally. Of course, the committee's decisions and determinations for an Aero Club must be underpinned at every step by safety concerns and there is a fair point to be made in Mr Hopper's case that ZK- EZY has an airworthiness certificate and he is obviously a pilot of considerable experience.[36] However, it is clear that it was within the committee's powers under the constitution to arrive at the decision they did on 26 October. The constitution gave them that power. It required them to consider the overall interests of the Club and its members, all of whom agreed to be bound by the rules. The committee has power to set its own procedure. It clearly has powers, as part of its administration and management of the Club, to make all the necessary decisions concerning the Club's operation including the decisions as to who may use the airfield, with what aircraft and by what means. It could not possibly be said that the decision was beyond the committee's powers and accordingly there is no basis for saying the decision wasultra vires. [37] Mr Hopper submits – and this lapses over into later causes of action –that the likelihood is that the decision was reached on the basis of a personal conflict or dislike by committee members of himself. He points to a commercial development surrounding the airfield in which his company was involved and some disagreement which became litigation between the parties in relation to that matter. There is also some weight in Mr Carter's submission that no committee member of the Club has chosen to make an affidavit in justification of the Club's position and that, even now, there are no details given for the reasons of the 26 October decision. [38] Even so, and giving those matters appropriate weight, does not disturb the conclusion that it could not be said that the 26 October decision was ultra vires the committee's powers. [39] The next ground is that the decision was reached in breach of natural justice and was in effect equivalent to disciplinary action against Mr Hopper, despite the fact that the disciplinary provisions of the constitution have never been invoked. He makes the point that he had no opportunity to be told beforehand what was concerning the committee and no opportunity to address the committee. That, again, involves the lack of reasons given by the committee for its actions and the lack of affidavits. [40] Whilst it may have been preferable if the committee and the Club had been somewhat more expansive as to the reasons which led them to the 26 Octoberdecision, the real question, as a matter of law, is whether they were under any obligation to give detailed reasons. The answer must be "No". It is clear from the decisions of the Court of Appeal in The Queen v Awatere [1982] 1 NZLR 644 at 648-649 and Lewis v Wilson & Horton Ltd [2000] 3 NZLR 546, 565-567 paras [74]- [87] that even though reasons may be desirable not even courts are required to give reasons or full reasons on all occasions. This, it may be remembered, is an incorporated society and, like most incorporated societies, its affairs are conducted relatively informally within the bounds of the constitution. As mentioned, it may have been desirable had reasons been given. But the Club has taken the stance, plainly, that it had nothing to answer for as regards the failure to give reasons to the plaintiff and in the Court's view, as a matter of law, they were justified in taking that stance. [41] The legitimate expectation cause of action is based on rather similar factors. It was submitted that as long as the pilot and the aircraft and its operations complied with all Club rules, Civil Aviation Rules, Flight Orders and the like, then they were entitled to base themselves at the North Shore airfield and fly in and out. That, of course, cannot be necessarily right. All the Club members' rights in respect of their operations must be balanced by the Club, one against the other, to ensure that the appropriate operations are safely undertaken. [42] Again it was suggested that the committee failed to take relevant considerations into account or took irrelevant considerations into account particularly concerning the suggested personal differences or that the decision was unreasonable in the Wednesbury sense, being one to which no reasonable committee could have come. [43] As regards that last, it is clear that submission fails. The Club in its constitution has given its committee the power to make the decision which was made. It has already been held it was not ultra vires and certainly not a decision that is so unreasonable that no committee considering the matter in accordance with the precepts in Turner and Finnigan could have come to that decision.[44] As regards relevant and irrelevant considerations, while Mr Hopper naturally has his concerns and suspicions as to the reasons for the committee reaching its decision, there is insufficient proof in that regard to reach the conclusion that the committee's decision was flawed. [45] It is also pertinent to recall in that respect that applications to base aircraft at the North Shore airfield are considered on its merits; there is no blanket grant or refusal and accordingly it must be inferred it was the merits of the application which led the committee to its views. [46] In terms of this cause of action and others, and the exercise of discretion, it is also pertinent to keep in mind that Mr Hopper remains a member of the Club, he still has his membership rights and he still has the Cessna and the ability to use that and base it at North Shore airfield. It may even be possible, in terms of the various rules cited, to him to fly ZK-EZY into and out of North Shore airfield even if he is unable to base it there. [47] That conveniently leads on to the question which is the exercise of discretion which would have been pertinent had the various causes of action been made out. [48] In that regard again, although Mr Hopper has spent a lot of time and money and effort on ZK-EZY he still, as mentioned, retains his rights and powers as a member. And although Mr Carter described the Club's committee as being "stubborn" in its refusal to give reasons in the exercise of a discretion, what also needs to be balanced against that is that Mr Hopper continued flying after he received the delayed 28 October letter. [49] The final matter to be considered is that Mr Carter submitted that the exercise of discretion should be in favour of Mr Hopper since he had no alternative form of recourse than judicial review. With respect to counsel – and he was constrained to acknowledge during the course of discussion – that submission cannot be right. Mr Hopper remains a member of the North Shore Aero Club, he still has one of his aircraft there, he is entitled to exercise all his rights of membership. That includes his promoting either a special general meeting or promoting a motion at an annualgeneral meeting designed to overcome the committee's decision of 26 October. There are several ways in which that could be done, and if he were able to persuade a majority of his fellow members present then he would have the recourse that he seeks by way of judicial review. The exercise of membership rights in that respect is conventionally regarded by the Courts as a powerful factor militating against the making of judicial review orders other than in the limited circumstances discussed earlier in this judgment. Mr Hopper has declined to exercise those rights but they remain open to him. [50] Overall, therefore, even had the causes of action been found in Mr Hopper's favour as an exercise of discretion, the Court may very well have found that this was not an appropriate case to grant the relief he sought which was effectively to quash the committee's decision of 26 October. [51] The application for judicial review is accordingly dismissed. [52] As to costs, Mr Kohler seeks an order for costs on the usual 2B basis. Mr Carter seeks leave to file a memorandum having regard to the circumstances of this matter. I have Mr Kohler's application. Any memorandum in response by Mr Carter is to be filed and served by 13 December 2005. If Mr Kohler wishes to respond he is to do so by 19 December 2005 and a decision will then be made. It may, at that stage, be simply a Minute with any reasons to follow. ..WILLIAMS J6 December 2005