MIDDELDORP v AVONDALE JOCKEY CLUB INCORPORATED [2020] NZCA 13

MIDDELDORP v AVONDALE JOCKEY CLUB INCORPORATED [2020] NZCA 13 [12 February 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA237/2019[2020] NZCA 13BETWEEN VINCENT JACOB MIDDELDORPAppellantAND AVONDALE JOCKEY CLUBINCORPORATEDRespondentHearing: 13 November 2019Court: Goddard, Brewer and Gendall JJCounsel: P W David QC and C D Boswell for AppellantG M Coumbe QC and D A C Bullock for RespondentJudgment: 12 February 2020 at 11.00 amJUDGMENT OF THE COURTA The appeal is allowed in part. We make a declaration that the decisionsto suspend Mr Middeldorp from the Committee of the Avondale JockeyClub Inc were not authorised by the Club's Rules and were unlawful.B The appeal is otherwise dismissed.C The respondent must pay the appellant usual disbursements. Apart fromthat, we make no order as to costs.____________________________________________________________________REASONS OF THE COURT(Given by Goddard J)Introduction[1] Mr Middeldorp is a member of the Avondale Jockey Club Inc (the Club).He has been a member of the Club since 1982. He was elected to its Committee inOctober 2013. Mr Middledorp was a vociferous opponent of decisions made bythe Club in relation to the closure of its training track, among other matters. Thisbrought him into conflict with the Club's officers and the majority of the Committee.That conflict in turn led to Mr Middeldorp filing judicial review proceedings inthe High Court raising three issues in relation to the governance of the Club:(a) He challenged decisions made by the Committee on two occasions, inNovember 2016 and December 2017, suspending him from office asa Committee member.(b) He challenged decisions made by the Committee in July/August 2017declining 14 applications for membership of the Club.(c) He sought declarations that the Committee has operated from 2014onwards without the required number of members and has breachedthe Club's Rules (Rules) in relation to elections to the Committee.[2] In the High Court Gordon J found that the Committee did not have the powerto suspend a Committee member under the Club's Rules.1 The suspensions ofMr Middeldorp were therefore unauthorised and unlawful. However, the Judgedeclined to grant a declaration to that effect, having regard to a number of factorsincluding delay in seeking judicial review, and Mr Middeldorp's conduct.Mr Middeldorp appeals from the refusal to grant a declaration.1 Middledorp v Avondale Jockey Club Inc [2019] NZHC 901, [2019] NZAR 738 [High Courtdecision].[3] Mr Middeldorp also appeals from the findings made by the High Court that:(a) the Committee acted lawfully in declining the 14 membershipapplications; and(b) the Committee did not breach the Rules by operating with fewer than10 members, and conducting elections for Committee membership ina manner that departed from the requirements of the Rules.Summary of outcome on appeal[4] We have concluded that the High Court erred in declining to make a declarationthat the suspensions of Mr Middeldorp were not authorised by the Rules, and wereunlawful. The Committee purported to impose a sanction on Mr Middeldorp that ithad no authority to impose under the Rules. The factors relied on by the High Courtin declining to grant a declaration were not sufficient to displace the starting point thatrelief should normally be granted in such circumstances.[5] We are not persuaded that the High Court erred in dismissing Mr Middeldorp'schallenges to the decisions made by the Committee in relation to the 14 membershipapplications, the operation of the Committee with fewer than 10 members, andthe process adopted for conducting elections for Committee membership.Background[6] The Club was established in 1889. It is an incorporated society underthe Incorporated Societies Act 1908. It is one of three thoroughbred racing clubs inthe Auckland Region registered with New Zealand Thoroughbred Racing Inc (NZTR),which oversees thoroughbred racing.[7] We adopt with gratitude the High Court Judge's summary of the difficultcircumstances facing the Club, and the tensions that has generated:[6] The Avondale Racecourse was formerly one of New Zealand'spremier racing venues. However, the Club has faced serious financialdifficulties since the early 1990s. It even suspended racing for over two yearsfrom July 2010 to consolidate its financial position. Whilst it has managed toreturn to a sound financial position in 2015 under the current presidentAllan Boyle, who was elected to the Committee in October 2006 and aspresident in 2012, there are still significant challenges. The Club has beensupplementing its income by leasing some of its facilities to the AucklandCouncil for use as sports fields and to the operator of the Avondale market.[7] Even more significantly, Avondale Racecourse faces a prospect ofclosure. A report dated 31 July 2018, commissioned by the Minister ofRacing, recommended the closure of a number of venues, including Avondale,as from the 2020/2021 season. On 29 January 2019, NZTR releasedan industry consultation paper proposing that Avondale be closed from andincluding the 2024/2025 season, with the Club to then race at EllerslieRacecourse. However, the Committee remains dedicated to promoting racingat Avondale.[8] The Club's position is that during these difficult times, Mr Boyle andthe Committee have been trying to bring about positive change, whileMr Middeldorp has been making trouble by refusing to accept decisions ofthe majority of the Committee and has gone behind the Committee's back inorder to undermine the Committee's decisions.[9] Mr Middeldorp disputes the Club's characterisation of his conductand says that he has always acted with the Club's best interests in mind.Judicial review of decisions by an incorporated society[8] In its statement of defence the Club pleaded that the challenged decisions arenot amenable to judicial review. At the hearing in the High Court, and on appeal beforeus, the Club accepted that decisions of this kind made by an incorporated society areamenable to review. However, the Club submitted that the court should be hesitantabout intervening in the affairs of a club that is not a public body, and that does notperform public functions.[9] The High Court Judge acknowledged that it is well established that the Courtwill exercise restraint in intervening in the internal affairs of an incorporated society.However, having regard to the subject matter of the allegations, Her Honourconsidered that it was appropriate for the Court to consider the issues raised.2We agree.32 High Court decision, above n 1, at [55].3 Stratford Racing Club Inc v Adlam [2008] NZCA 92, [2008] NZAR 329 at [53]–[56]; and Reay vAttorney-General [2019] NZCA 475 at [39].The Club's Rules[10] Before turning to the specific complaints made by Mr Middeldorp in relationto the operation of the Club, we set out the relevant provisions of the Club's Rules asthey stood at the relevant time.[11] Rule 3 sets out the objects of the Club:3 The objects for which the Club is established are:(a) To hold race meetings and promote, regulate and assistthe sport of horse racing(b) To do all such other things as the Club or Committee thinkdesirable for the purpose of furthering the objects of the Clubor incidental or conducive to the attainment of the objects.[12] Rule 6 governs election of new members. It provides that the election ofmembers is by decision of the Committee following the procedure set out in the Rules.A candidate for membership must sign a nomination paper on a form prescribed bythe Committee, and must be proposed in writing by two members of the Club.An eligible candidate is then balloted at a Committee meeting.4 Three adverse votesat the ballot exclude the applicant. A ballot is not valid unless at least seven votes arerecorded. The procedure at the ballot is under the control of the Committee.[13] Cessation of membership is governed by rr 16–19. Rule 17 provides forremoval of members in certain circumstances:17 The Committee may erase from the list of Members any person whohas been convicted by a Court of Law of a criminal offence, or in itsopinion is guilty of grossly improper or dishonourable conduct orriotous behaviour or drunkenness or of conduct prejudicial tothe interests of the Club, whether this shall happen at any race meetingor otherwise.Before the Committee shall exercise the power herein given,the Secretary shall post to such member at the address shown inthe Register of Members not less than seven days notice ofthe meeting at which his/her conduct or behaviour is to be the subjectof inquiry under this rule and requiring such member to attendthe meeting of the Committee with such evidence as he/she mayconsider necessary, and to answer the charge or complaint, and inthe event of such member failing to attend or to answer the said charge4 Eligibility for membership is addressed in Rules 12–15.or complaint the same may be heard and determined by the Committeein his/her absence.[14] Rule 25 provides for the officers of the Club and the composition ofthe Committee:25 (a) The Committee shall consist of the President, Vice-Presidentand ten members as hereinafter elected.(b) The President and Vice-President shall be elected annually. Inthe event of the President for any reason being unable tocontinue in office, then the office shall be assumed bythe Vice-President in an acting capacity until such time as anew President is elected.(c) No person shall bold the office of President for more than fiveyears from the time of such election.[15] Rule 26 provides for Committee members to retire by rotation. It assumes thatthere will normally be 10 Committee members, as contemplated by r 25(a). It readsas follows:26 The present Committee of the Club, excepting the President andVice-President shall hold office until the next annual meeting ofthe Club when five members shall retire and five shall continue inoffice. The first five members to retire shall be the members ofthe Committee not elected at the annual meeting of 1998. At everysubsequent annual meeting the five members who have been longestin office since the last election, shall retire provided that everymember so retiring shall be eligible for re-election. If at any timedoubt shall arise as to the members of the Committee who shouldretire as aforesaid, such doubt shall be settled by lot.[16] Rule 27 sets out the circumstances in which a person ceases to hold office asPresident or Vice-President, or as a member of the Committee:27 A person shall cease to hold office as President or Vice-President, oras a member of the Committee:(a) Upon ceasing to be a member of the Committee.(b) Upon accepting or permitting his/her nomination orappointment to any office in any other racing club trottingclub, greyhound club, or like organisation, or(c) If being made a member of the Committee he/she is absentwithout the consent of the Committee from three consecutivemeetings of the Committee.Provided, however, that rule (b) shall not apply to any office bearerwho may be elected or appointed to the New Zealand Racing IndustryBoard the New Zealand Thoroughbred Racing Board or the Board ofthe Totalisator Agency Board.[17] Finally in this group of provisions, Rule 28 deals with casual vacancies onthe Committee:28 Any vacancy occurring within the Committee after the annualmeeting, or by reason of the President or Vice-President being unableto continue in office, may be filled by the Committee. Any memberso elected to fill the vacancy shall retain the office only until the nextannual meeting. All vacancies not filled under these provisions shallbe filled at the first annual meeting after the vacancy occurred. If atthe annual meeting the vacancy is not filled the Committee shallappoint a person to fill it.[18] Rules 41–47 govern meetings of the Committee. Rule 44 provides thatthe quorum necessary for the transaction of business by the Committee isfive members.[19] The powers and duties of the Committee are set out in r 48. That rule provides,so far as relevant:48 The Committee shall conduct, control and manage all the affairs,concerns and business of the Club in all things according to theirdiscretion and in accordance with these rules. For this purpose andwithout prejudice to the generality of the foregoing, the Committeeshall have the power –(h) The Committee shall appoint annually a judge, starter, clerkof the course, clerk of scales and such other officials asthe Committee may determine are necessary to conduct racemeetings. The Committee shall determine the remunerationand duties of any person appointed. In the absence ordisability of any person so appointed, the Committee shallmake any necessary arrangements to appoint other persons toperform duties as it thinks fit.(i) To appoint and at its discretion remove, discuss and suspendall such officers, agents and servants of the Club, whetherpermanent or temporary or to fix and determine their duties,salaries and other terms and conditions pertaining to theirrespective appointments.(l) To enter into all such contracts and execute and do all suchacts and deeds and things in the name of the Club as it mayconsider expedient for the purposes of the Club.[20] Finally, under the heading "Bylaws and General", appear rr 54 and 55:54 The Committee shall have the power from time to time to make, alter,amend or repeal any bylaws for carrying out these rules and forthe regulation of its own proceedings as it may deem expedient,provided however, that such bylaws shall be entered into a book to bekept for that purpose.55 If any case occurs which is not provided for in these rules, it shall bedetermined by the Committee.The suspension decisionsThe facts[21] The events that led to the Committee deciding to suspend Mr Middeldorp as aCommittee member in November 2016, and again in December 2017, are describedin detail in the High Court judgment.5 In short, Mr Middeldorp strongly disagreedwith the advice the Committee was receiving in relation to options for addressingthe financial challenges it faced, and with the decisions the Committee was making inlight of that advice. He pursued a campaign against the strategy preferred bythe majority of the Committee in a manner that involved intemperate, and inthe Committee's view inappropriate, attacks on the Committee and on its advisers.High Court judgment[22] The Judge found that the Rules did not contain any express power forthe Committee to suspend one of its members, and that in the absence of an expresspower to that effect it would not be appropriate to imply such a power, or to readthe general provision in r 55 that cases not provided for may be determined bythe Committee as extending to a power to suspend Committee members.65 High Court decision, above n 1, at [18]–[26] and [38]–[44].6 At [65]–[72].[23] The Judge dismissed arguments that the Committee did not have the power toform a sub-Committee to hear the second complaint against Mr Middeldorp, andcomplaints about lack of natural justice and reasonableness of the suspensiondecisions.7 There is no appeal from those findings.[24] The Judge declined to grant the declaration sought by Mr Middeldorp, whichwas in the following terms:A declaration that the Club acted illegally and without jurisdiction underthe Rules in making the decisions to exclude the applicant from attendingthe Club committee as an elected member of the committee on 28 November2016 and 7 December 2017 and that the decisions are void and of no effect.[25] The High Court Judge said she would "follow the more nuanced approach" torelief adopted by this Court in Rees v Firth,8 in preference to the approach adopted bythis Court in Air Nelson Ltd where it was said that there must be "extremely strong"reasons to refuse relief.9 On this approach, she said, "[i]t is for this Court to determinein all the circumstances whether it should intervene and grant a remedy".10[26] The Judge summarised her reasons for declining to grant a declaration asfollows:11 I exercise my discretion to decline to grant relief for the following reasons:(a) Mr Middeldorp has not been seriously prejudiced. He has simply beenexcluded from attending some committee meetings. At all times heremained a club member. His livelihood and property interests havenot been affected.(b) Related to paragraph (a) above I consider that the error made byth Committee is not of sufficient gravity.(c) As far as his standing and status are concerned, the Committee wascontent for the two suspensions to remain confidential tothe Committee but Mr Middeldorp himself made the matter public.(d) There is no practical utility in making the declaration.Both suspension decisions have been carried out. There is nothingfurther to be reconsidered as a consequence of my judgment.7 At [79], [114] and [128].8 Rees v Firth [2011] NZCA 668, [2012] 1 NZLR 408 at [48].9 Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139 at [60].10 High Court decision, above n 1, at [199].11 At [201] (footnote omitted).(e) In relation to Mr Middeldorp's submission that a declaration wouldhave utility for the future conduct of the Club, there was evidencefrom Mr Boyle that the Club's solicitors are in the process ofdeveloping a new and more modern constitution. The newconstitution is based upon a template circulated to clubs by NZTR andthe Club has also looked at the provisions of the IncorporatedSocieties Bill. That Bill, when enacted, will regulate voluntaryorganisations in a more up-to-date fashion than is currently the casewith the 1908 Act. The current draft of the new Rules includesa power to remove committee members but the intention is also tohave a power to suspend committee members. The project to reviewand revise the constitution was initiated by Mr Boyle in July 2018before Mr Middeldorp commenced his proceeding. There was to havebeen a SGM in February 2019 to consider the proposed new Rules.For reasons outside the control of the Club, there has been a delay infinalising the draft Rules.(f) Mr Middeldorp has delayed in issuing this proceeding. The firstchallenged decision was made by the Committee on 28 November2016. The second hearing occurred on 1 December 2017 andMr Middeldorp was notified of the decision on 7 December 2017.He commenced this proceeding on 4 September 2018.Mr Middeldorp does not provide any explanation for the delay.(g) There is no public interest in making the declaration.(h) Finally, I take into account Mr Middeldorp's conduct.As Mr Middeldorp himself recognised in his letter of apology tothe committee, his conduct in emailing the CEO of York "has resulted in an absolute mess ". Mr Middeldorp may counthimself fortunate that in relation to the first suspension decision, hedid not face a hearing under Rule 17 to determine whether hismembership of the Club should cease on the grounds that he hadengaged in "conduct prejudicial to the interests of the Club". He wasalso fortunate in avoiding a r 17 hearing in relation to the secondsuspension decision having regard to the alleged prejudicial conductin circulating the "Letter of Concern".Mr Middeldorp's submissions on suspensions[27] Mr David QC, counsel for Mr Middeldorp, says that the Judge was plainlyright to find that the Club had no authority to suspend Mr Middeldorp fromthe Committee. The Judge was right to dismiss the argument that a power to suspendcould be found in r 55. The Judge was also right to decline to find that there was animplied term permitting suspension of Committee members.[28] But Mr David submits that the Judge erred in principle in declining to grant adeclaration. Where a disciplinary sanction has been imposed in breach of the rules ofan incorporated society, he says, the court should invariably declare that to be the case.[29] Mr David submitted that the fact that the conduct of Mr Middeldorp mighthave formed the basis for some different form of disciplinary action under the Club'sRules is irrelevant. The point is that what was done was unauthorised and unlawful.Where punitive sanctions have been imposed by an incorporated society withoutlawful authority, that cannot be dismissed as a minor or unimportant matter.The imposition of a sanction always has significant implications for an individual'sreputation. In this case Mr Middeldorp, who had been elected to the Committee ofthe Club, was deprived of the opportunity to participate in its decision-making.The members who voted for him were deprived of his voice at the table, and of hisvote on Committee decisions.[30] The courts have distinguished declarations from other remedies whenconsidering the effect of delay. A declaration is more likely than other forms of reliefto be granted where there has been delay.12 Relief will not normally be refused onthe grounds of delay where that delay does not cause any prejudice to the respondent.13Declarations always have utility. They provide vindication, and deter future breaches.[31] In this case, there was no good reason to decline to grant a declaration.There was no material delay. Any delay can be explained by Mr Middeldorp'sattempts to resolve the dispute through other channels. In particular raising the matterwith NZTR. There could be no prejudice to the Club from any delay in seeking adeclaration.The Club's submissions on appeal in relation to suspensions[32] Ms Coumbe QC, counsel for the Club, submitted that r 55 of the Club's Rulescan be interpreted as empowering the Committee to take disciplinary action inthe form of suspension against Mr Middeldorp. There is nothing in r 55 that limitsthat rule to procedural matters. Rather, it is of general application. Rule 17 addressesthe expulsion of Club members. But there is no express rule governing lesser sanctionsfor members, or discipline of Committee members. So this is a circumstance "notprovided for" in the Rules, and therefore within the ambit of r 55. The Committee can12 P F Sugrue Limited v Attorney-General [2004] 1 NZLR 207 (HC) at [73].13 BASF New Zealand Ltd v Commissioner of Inland Revenue [1994] 1 NZLR 172 (HC).fill the gap and impose lesser sanctions than expulsion from the Club, includingsuspending a Committee member from attending meetings. It would be unsatisfactoryif the Committee could not discipline its own members effectively for impropriety, infurtherance of the proper governance and interests of the Club.[33] Alternatively, Ms Coumbe submitted, a term providing for a power ofsuspension could be implied into the Rules on normal contractual principles. Sucha term is so obvious it goes without saying — it would be surprising if the Committeelacked power to discipline its own members. The term is necessary for businessefficacy, to enable the Committee to control members who act contrary to the interestsof the Club, other than by the extreme measure of expulsion from the Club. The termcan be clearly expressed as:The Committee may suspend members from attending meetings ofthe Committee.[34] Such a term is not inconsistent with any express term of the Rules.[35] If however the Judge was right to find that there was no power to suspendMr Middeldorp, she was also right to decline relief. Relief is a matter of discretion.It has not been demonstrated that the Judge erred in principle or was plainly wrong inexercising that discretion. The Judge was right to prefer the more "nuanced" approachto relief adopted by this Court in Rees v Firth.14[36] In any event, Ms Coumbe submitted, in this case there are compelling groundsto refuse a declaration. The error was not of sufficient gravity to justify intervention,and Mr Middeldorp has not been seriously prejudiced. The Committee acted in goodfaith, believing it had power to suspend as a lesser sanction than expulsion.[37] Granting the declarations sought by Mr Middeldorp would have no practicalutility, as the two suspension decisions have already been implemented andthe suspensions have been and gone. Mr Middeldorp remained a Committee member,14 Rees v Firth, above n 8, at [48]. Ms Coumbe also referred us to Tauber v Commissioner of InlandRevenue [2012] NZCA 411, [2012] 3 NZLR 549 at [89]–[91]; Secretary for Justice v Simes [2012]NZCA 459, [2012] NZAR 1044 at [117]; Minister for Canterbury Earthquake Recovery v FowlerDevelopments Ltd [2013] NZCA 588, [2014] 2 NZLR 587 at [164]; and Ngāi Tai ki Tāmaki TribalTrust v Minister of Conservation [2017] NZCA 613, [2018] 2 NZLR 453 at [60].and has since been re-elected to the Committee. A formal declaration "would achievenothing".15 A declaration would not provide useful guidance to the Club in the future,as new Rules have been adopted which do expressly provide for suspension ofCommittee members. There was undue delay in issuing these proceedings.The making of a declaration now would prejudice the Club by damaging its reputationand standing at a crucial time when the racecourse is threatened with closure.A declaration might also call into question the validity of decisions made bythe Committee during the suspensions, which have been acted on. The Judge wasentitled to have regard to the fact that the Club could, having regard toMr Middeldorp's conduct, have proceeded to expel him as a member.Mr Middeldorp's conduct also means that he does not come with "clean hands":he failed to meet his obligations as a Committee member to act in the best interests ofthe Club.Analysis[38] We agree with the High Court Judge that the Committee did not have the powerto suspend Mr Middeldorp.[39] There is no rule that expressly provides a power to suspend Committeemembers. There are express powers to expel a member, in certain prescribedcircumstances (r 17). The Committee is also expressly given the power to remove orsuspend officers, agents and servants of the Club (r 48(i)). But that suspension powerdoes not extend to Committee members. We do not consider that a power assignificant as the power to suspend a Committee member — a power that would affectthat individual, the representation of members of the Club who elected that individual,and the governance of the Club during the term of any suspension — can be found ina general provision such as r 55.15 Stratford Racing Club Inc v Adlam, above n 3, at [96]–[99].[40] The pre-conditions for implication of a term were summarised bythe Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings asfollows:16(1) it must be reasonable and equitable; (2) it must be necessary to givebusiness efficacy to the contract, so that no term will be implied if the contractis effective without it; (3) it must be so obvious that "it goes without saying";(4) it must be capable of clear expression; (5) it must not contradict anyexpress term of the contract.[41] There has been some debate about whether these are distinct pre-conditions, orwhether they are simply different ways in which judges have tried to expressthe central idea that the proposed implied term must spell out what the contractactually means.17 We do not need to engage with that debate here. For presentpurposes it is sufficient to say that on any approach the suggested term cannot beimplied. It is not necessary to give the Rules business efficacy. The parameters of anysuspension power — the circumstances in which it can be invoked, the procedure tobe followed, and the maximum duration of any suspension — are far from obvious.The Rules cannot be read as implicitly including such a power.[42] It follows that the two suspensions of Mr Middeldorp were not authorised bythe Rules, and were unlawful.[43] As the Supreme Court said in Ririnui v Landcorp Farming Ltd, although reliefin judicial review is discretionary, courts today will generally consider it appropriateto grant some form of relief where they find reviewable error.18 The more fundamentalthe defect in the decision that is challenged, the more likely it is that relief will begranted. The defect in the Committee's decision in this case was fundamental:it purported to make a decision imposing a sanction that it had no authority to impose.The factors that may justify a decision to decline relief depend to a significant extent16 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 (PC) at 283; and seealso Mobil Oil New Zealand Ltd v Development Auckland Ltd [2016] NZSC 89, [2017] 1 NZLR48 at [79]–[82].17 Mobil Oil New Zealand Ltd v Development Auckland Ltd, above n 16, at [80]–[81];Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988; andMarks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72,[2015] 3 WLR 1843.18 Ririnui v Landcorp Farming Ltd [2016] NZSC 62, [2016] 1 NZLR 1056 at [112]. See alsoAuckland Council v Wendco (NZ) Ltd [2017] NZSC 113, [2017] 1 NZLE 1008 at [96]; Rees vFirth, above n 8, at [48]; and Air Nelson Ltd v Minister of Transport, above n 9, at [60].on the nature of the relief sought. If an applicant seeks an order setting asidea decision, delay is likely to be a significant factor, especially where steps have beentaken in reliance on the decision. But delay in and of itself is unlikely to be a goodreason to decline to grant a declaration recording the lack of authority for the decision,in the absence of any prejudice caused by that delay.[44] The High Court Judge considered that there were good reasons to decline reliefin this case.19 We take a different view. In particular, we do not consider that thereare good reasons to decline to grant a declaration that the suspension decisions wereunauthorised and unlawful. Such a declaration serves an important purpose:it vindicates the interests of the applicant, others adversely affected by the decision(here, the members who had voted for Mr Middeldorp and were entitled to have himpresent and participating in meetings), and the rule of law more generally.[45] This is not a case in which delay counts against the making of a declaration, inthe absence of any prejudice to the Club caused by the delay. The Judge did notidentify any respect in which the Club would be worse off as a result of a declarationbeing made some months later than might have been the case if the proceedings hadbeen commenced earlier. Any impact that a declaration might have on the reputationor standing of the Club would not be increased as a result of delay in the making ofthat declaration.[46] Nor was Mr Middeldorp's conduct, however open to criticism it may havebeen, a reason to decline to make a declaration that the suspensions were notauthorised by the Rules. This is not a case where the same result could have beenreached as a matter of substance, and might well have been reached, but there wasa procedural defect in the decision-making process. It simply was not open to the Clubto suspend Mr Middeldorp as a Committee member. We accept Mr David'ssubmission that the possibility that some other disciplinary action might have beentaken against Mr Middeldorp cannot justify the taking of action for which there wasno authority. Nor are we in a position to reach a conclusion on what the outcome19 High Court decision, above n 1, at [201].might have been if r 17 had been invoked and the procedure contemplated by that rulehad been followed.[47] Applying the guiding principle identified at [43] above, we consider thata declaration should be granted that the decisions to suspend Mr Middeldorp were notauthorised by the Rules and were unlawful.[48] Accordingly, we allow the appeal in relation to the High Court's refusal togrant relief in respect of Mr Middeldorp's suspensions from the Committee.[49] However, we do not consider that the terms of the declaration sought byMr Middeldorp are appropriate. The declaration he seeks goes beyond recording thatthe suspensions were unauthorised and unlawful: it would also declare the suspensiondecisions to be void and of no effect. In the public law context, a finding thata decision was unlawful does not automatically mean that the decision was void.The court needs to go on to consider whether, in all the circumstances of the case,the decision should be set aside.20 Mr David confirmed that Mr Middeldorp is notseeking to argue that decisions made by the Committee during the two periods ofsuspension were unlawful or liable to be set aside, or to challenge any otherdownstream actions taken by the Committee. In those circumstances, we consider thatthe declaration made by the court should not extend to the validity or effect ofthe suspension decisions.[50] Accordingly, we make a declaration that the decisions to suspendMr Middeldorp from the Committee were not authorised by the Rules, and wereunlawful. Membership applicationsThe facts[51] In April and May 2017 the Club received 16 membership applications.The evidence of Mr Boyle, the Club President, was that:Fourteen of the applicants appeared to be associated with Mr Middeldorp(given the timing, and the cross-nominations within the group). I and some20 Counsel did not address the question of whether the contractual framework in this case might leadto a different approach, and we do not consider that that is an issue we need to resolve.other members of the Committee were concerned that these 14 ofthe applicants might not genuinely wish to be ongoing members of the Club.That is, we wondered whether they each had a bona fide interest in truly beingmembers of the Club, or whether their sole purpose in applying was to supportsome agenda of a group of trainers, and/or Mr Middeldorp, in opposingthe closure of the training operations, such as facilitating a requisition for aSpecial General Meeting.[52] In light of those concerns, the Committee decided to defer the 14 applicationsand ask the Secretary to write to the applicants inviting them to provide their reasonsfor wanting to join the Club. Thirteen of the 14 applicants did not reply tothe Secretary's letter. In the absence of a response, the Committee voted by a majorityat its meeting on 24 July 2017 to decline the membership applications.[53] The 14th applicant did respond to the Secretary by email, confirming hisinterest in becoming a member and asking that his application be considered atthe next Committee meeting. A question was then raised about whether the 14thapplicant was jointly liable for overdue debts owed to the Club by his brother, whowas a Club member, for the use of training facilities. The Committee deferredconsidering his application while his potential indebtedness to the Club wasinvestigated. The minutes of the Committee meeting held on 28 August 2017 recordthat the inquiries made in the interim suggested that the 14th applicant's brother wasindebted to the Club, and the 14th applicant had agreed to take over responsibility forthose debts but had not met them. The minutes record "[t]he application has to bedeclined on that basis". The Secretary was asked to write to the 14th applicant to thateffect.[54] The letter written by the Secretary to the 14th applicant dated 20 October 2017identified two factors that had led to his membership application being declined:Your correspondence with the Club, relating to the application, implyingsupport for a potential reopening of the now-closed horse training operationat Avondale and Advice from one of our Committee that you have a co-liability to the Club for unpaid training fees relating to horse(s) that you andyour brother were involved with. The Club will not admit as a member aperson who has a bad debt record with the Club.[55] The 14th applicant then sent an email to the Secretary asking the Committeeto reconsider his application, and agreeing to look into the unpaid invoices owed tothe Club by his brother. His application for membership came back beforethe Committee at its meeting on 12 February 2018. The minutes record a resolutionas follows:Given that applicant has not addressed the debt issue put to him relating to hisinvolvement with training costs incurred at Avondale concerning [his]brother's horses or horses that [he] has had an interest in, then [his] applicationto join is declined. Secretary to write to him.High Court decision[56] The High Court Judge found that there was a proper foundation for the Club'sconcern that the 14 applicants for membership might not be genuine.21 The timing ofthe applications and the connections between the applicants and Mr Middeldorpsuggested that the applications might have been made as part of Mr Middeldorp'scampaign to reverse the decision to close the training track, rather than because all 14had recently formed a genuine desire to become members of the Club.[57] The Judge did not accept the argument that the membership applications wererejected for an improper purpose. The Judge emphasised that the Committee did notsimply resolve to refuse the applications on the basis of their concerns. They askedthe applicants to clarify their reasons for wishing to become members. Thirteen ofthe applicants did not respond, and the Committee then declined their applications.There was no evidence that any of the 13 applicants disputed that decision at the time.There was no evidence that any of them subsequently reapplied for membership orotherwise engaged with the Committee. None of them gave evidence in support ofMr Middeldorp's application to the High Court.22[58] The Judge summarised her reasoning in relation to the 14th applicant asfollows:[167] In relation to the 14th applicant, there was an unpaid debt. There isno evidence that he attempted to pay the debt and reapply for membership.Although the Secretary, in her letter of 20 October 2017, referred to hispossible support for the re-opening of the training facility as a reason fordeclining his application, the two committee resolutions were on the basis ofunpaid debts. That is a standard matter that the Committee takes into accountwhen considering a membership application.21 High Court judgment, above n 1, at [139]–[173].22 At [162]–[164].Mr Middeldorp's submissions on appeal[59] Mr Middeldorp says that the Committee failed to act in good faith and fora proper purpose in declining the 14 membership applications made in April and May2017. It is well established that a discretion to admit new members to an incorporatedsociety must be exercised in good faith, for the purpose of advancing the objects ofthe society.23 In this case, Mr Middeldorp says, the Committee rejected the 14applications because the applicants held a different view from the majority onthe Committee in relation to the proposed closure of the training track.[60] Mr David submitted that the Committee was not entitled to reject applicationsfor membership because they come from persons who may have differing views onhow best to promote the Club's objectives. If an applicant is genuine and eligibleunder the Rules, they are entitled to join the Club. In this case, the applicants were alleligible to be members under the Rules. The approach adopted by the Committee, andits ultimate decision to reject the applications, were the result of the Committee'sdesire to perpetuate its control of the Club and ensure its views about closure ofthe training tracks were not challenged. The reason for the rejection was thatthe prospective members had differing views on the training tracks, and no more.[61] This is especially clear, Mr David submitted, from the approach the Committeetook in relation to the 14th applicant. The 14th applicant responded tothe Committee's inquiry by saying that he would love to become a member of the Cluband support it in any way he could. The Committee nonetheless rejected hisapplication. The letter of rejection expressly referred to the 14th applicant's supportfor re-opening of the training tracks, as well as joint liability for his brother's debt.His views on the training tracks were an irrelevant factor that should not have beentaken into account. Mr David also submitted that it was inconsistent and unreasonableto reject the 14th applicant's membership application because of the debt, when hisbrother continued as a member of the Club.23 Stratford Racing Club Inc v Adlam, above n 3, at [58].The Club's submissions on membership applications[62] The Club says that the Rules do not "entitle" an applicant to membership.Applicants who meet the eligibility requirements for membership are not accepted asof right. Election is a matter for the members of the Committee by way of ballot.[63] There was a proper basis for the Club's concerns that the applications were notgenuine, including the common link in the 14 applications; the large number ofapplications presented in an apparently co-ordinated way; and the connection betweenthis initiative and Mr Middeldorp's indication that he intended to requisition a specialgeneral meeting with a view to reversing the training track closure decision.[64] Ms Coumbe drew our attention to the evidence of Mr Boyle that his view wasthat:the mere fact that an applicant might support a view opposed to that ofthe majority of the Committee would not of itself be a reason to declinemembership, as long as the person was genuinely interested in being amember and was not, for example, intending to just let their membership lapseafter taking the intended action.Mr Boyle was not cross-examined on his affidavits.Analysis[65] We agree with the High Court Judge that there was a reasonable basis on whichthe Committee could decide to make further inquiries about the genuineness ofthe 14 membership applications. As the Club submits, there is no entitlement tobecome a member of the Club. In exercising its judgment on whether to admit a newmember, it is reasonable for the Committee to take into account whether there isa genuine desire on that person's part to become and remain a member of the Club, orwhether the membership application is made for the purpose of influencing a singledecision of the Club, or in order to advance the interests of the applicants (or someother person), rather than with a view to advancing the objects of the Club.The Committee cannot be criticised for making further inquiries of the 14 applicants.Nor can the Committee be criticised for declining the applications of the 13 applicantswho did not provide any response to that inquiry.[66] The position is more finely balanced in relation to the 14th applicant. He didrespond to the inquiry, and expressed a commitment to the Club. The minutes ofthe meeting at which his application was declined do not refer to his opposition toclosure of the training tracks. But this was identified as one of the reasons forthe decision in the letter from the Secretary. That was not a factor that could properlybe taken into account in determining his application for membership.[67] On balance, we consider that the Judge was right to reject the challenge tothe Committee's decision. We are not satisfied that the Committee's decision inrelation to the 14th applicant was materially influenced by irrelevant considerations,having regard to:(a) Mr Boyle's evidence confirming that he understood that an applicant'sopposition to the training track closure would not be a reason to declinemembership so long as that person was genuinely interested in being amember.(b) The absence of any reference to the 14th applicant's views aboutthe training track closure in the minutes of the meetings of 28 August2017 and 12 February 2018 at which his membership application wasdeclined. Both sets of minutes identify the 14th applicant's jointresponsibility for his brother's debt as the reason for rejecting hismembership application.24[68] The appeal in relation to the 14 membership applications is thereforedismissed.24 There was no cross-examination of Mr Boyle or the Club Secretary (who also swore an affidavitin these proceedings, and was not cross-examined on it) in relation to the accuracy andcompleteness of those minutes.Committee composition and election of Committee membersThe facts[69] It was common ground that throughout the relevant period the Committee didnot have the full complement of members contemplated by r 25: a President, a Vice-President and 10 Committee members. At various times during this periodthe Committee has had between five and eight members.[70] It was also common ground that the Club had for many years adopted apragmatic approach to the Rules in relation to election of Committee members.Rule 26, set out at [15] above, provides that at each annual meeting of the Club fivemembers must retire and five will continue in office. In circumstances where thereare fewer than 10 Committee members immediately prior to an annual meeting, literalcompliance with this rule is not possible. The Committee therefore adopteda pragmatic approach under which Committee members would serve a two year termand then retire, though they could stand for re-election. So, for example, ifthe Committee had eight members prior to an annual meeting, four would retire at thatmeeting and four would continue. There would be six vacancies open for nominationand election at that annual meeting: the two unfilled positions and the four positionsvacated by retiring members.High Court decision on Committee issues[71] In the High Court, Mr Middeldorp said that in these circumstances the Clubhad been operating and transacting business without a properly constitutedCommittee. He sought a declaration that the Club has operated in breach of its Rulesin the election and appointment of Committee members and by operating with aCommittee with less than 10 elected members from the Annual General Meeting of 29October 2014 until the present.[72] The Club argued that a term could be implied into the Rules authorisingthe pragmatic approach that had been adopted.[73] The Judge accepted the Club's submission that the following terms could beimplied into the Club's Rules:25(i) In the event [that] fewer than 10 members are elected tothe Committee at the AGM, the Committee may operate withthe number of members who are so elected;(ii) In the event there are fewer than 10 members of the Committee,at the next AGM, half the members (those who are longest serving)shall be required to stand for re-election.[74] The Judge considered that it was consistent with established principles inrelation to implication of terms into contracts to imply terms along those lines. On thatbasis, it was lawful for the Committee to operate with fewer than 10 members and tofollow the process it had adopted for elections to the Committee at the annualmeetings.26Mr Middeldorp's submissions on appeal in relation to Committee matters[75] Mr David submitted that the High Court erred by implying these terms intothe Rules. The implied terms accepted by the High Court are not necessary to givethe Rules business efficacy, and are contrary to the express terms of the Rules: inparticular r 25(a). It is well established that a term cannot be implied into a contractthat is inconsistent with the express terms of that contract.[76] If there was a genuine problem with filling the prescribed number of vacancieson the Committee and operating the Committee in accordance with the Rules,the appropriate response was to call a meeting to amend the Rules, not to depart fromthem on a pragmatic basis.Club's submissions on Committee issues[77] The Club supported the Judge's reasoning in relation to implication of termspermitting the Committee to operate with fewer than 10 members, and to adaptthe operation of the Rules in relation to retirement of members.25 High Court judgment, above n 1, at [187](d).26 At [188].[78] Ms Coumbe emphasised that Mr Middeldorp has been a member ofthe Committee since 2013. He was retired and re-elected according to the processadopted by the Club in 2015, and did not take any issue with the process at the time.[79] The evidence of the Club Secretary was that there were too few memberswilling to stand for election to the Committee, or to be appointed to fill vacancies,despite the efforts of the Committee to attract people. There was no known case of aneligible candidate for a Committee position missing out on being elected.Analysis[80] The submissions made by both parties in relation to implication of a term intothe Rules concerning the ability of the Committee to operate with fewer than10 members appear to have proceeded on the basis of a misunderstanding ofthe Club's Rules. There is nothing in the Rules that provides that the Committeecannot operate with fewer than 10 members. The quorum for Committee meetingsrequired by r 44 is five members. Provided that quorum is present, the Committee canhold valid meetings and make valid decisions.[81] Indeed the Rules contemplate the Committee operating, and making decisions,with fewer than 10 members. Rule 28, set out at [17] above, permits the Committeeto fill vacancies occurring within the Committee between annual meetings. But it doesnot require the Committee to do so. The rule goes on to provide that any vacancy thatis not filled in this manner "shall be filled at the first annual meeting after the vacancyoccurred". This provision makes it clear that the Committee has the option ofcontinuing to operate with fewer than 10 members, and can properly call an annualmeeting despite a shortfall in the total number of members. Rule 28 goes on to providethat if the vacancy is not filled at the annual meeting "the Committee shall appointa person to fill it". It is implicit in this limb of r 28 that following an annual meetingat which a vacancy is not filled the Committee can meet even though it does not havea full complement of 10 members, and can make valid appointment decisions.[82] We consider that it is clearly implicit in the Rules, and in particular r 28, thatthe Committee is able to operate with fewer than 10 members. It can continue to doso indefinitely provided that it is able to achieve a quorum at its meetings. An impliedterm to this effect is simply unnecessary.[83] Turning to the retirement of Committee members by rotation under r 26, itappears the drafter of this Rule failed to identify the possibility that there will be fewerthan 10 Committee members prior to an annual meeting — a scenario expresslycontemplated by r 28. As noted above, literal compliance with the rule requiring that"five members shall retire and five shall continue in office" is impossible if, forwhatever reason, the Committee has fewer than 10 members at the time of an annualmeeting.[84] We accept Mr David's submission that the term that the Judge sought to implyinto the Rules is inconsistent with r 26. We also consider that, far from being obvious,and necessary to give the Rules business efficacy, the implied term approved bythe Judge is itself unworkable. Suppose the Committee has seven members prior toan annual meeting: how can half the members be required to stand for re-election?Must three members stand for re-election and four continue? Or vice versa? As thisscenario illustrates, a more detailed and more sophisticated provision would berequired to deal with the retirement of Committee members by rotation in all plausiblescenarios. Choices would need to be made about a number of minor but practicallyimportant issues. We do not think that any one rule can be identified that is so obviousthat it meets the test for implication of a term into a contract. And any suggested rulethat did work would be inconsistent with r 26 as it presently stands.[85] We note that the Club has now adopted a new constitution which was providedto us by way of updating evidence. The new constitution contains a detailed ruledealing with this issue.[86] In circumstances where the Rules were not workable if applied literally,the Club adopted a pragmatic and sensible approach to the operation of the Rules.No person who was willing to serve as a Committee member missed out on electionto the Committee. There were no complaints at the time of any election. No prejudiceof any kind to any person has been identified. We agree that the appropriate responseto the difficulty posed by the framing of r 28 was to amend the Rules to make themworkable. That has now been done. The approach that was adopted by the Clubpending a rule change was adopted in good faith, did not give rise to any practicaldifficulties or concerns, and caused no prejudice of any kind to any person. It is nowof historical interest only. No useful purpose would be served by the Court interveningby way of judicial review in this aspect of the administration of an incorporatedsociety. We decline to do so.[87] We therefore dismiss the appeal from the Judge's finding that the Committeeoperated lawfully, albeit for different reasons.Result[88] The appeal is allowed in part. We make a declaration that the decisions tosuspend Mr Middeldorp from the Committee of the Avondale Jockey Club Inc werenot authorised by the Club's Rules and were unlawful.[89] The appeal is otherwise dismissed.Costs[90] Counsel agreed that any award of costs should be made on the basis that thiswas a standard appeal to which band A applied, and that we should certify fortwo counsel.[91] Mr Middeldorp's appeal has been successful so far as relief in relation to hissuspension is concerned. It was unsuccessful in relation to the other issues pursuedon appeal. If the appeal had been confined to the question of relief in relation tothe suspension, it would have taken half a day, rather than the full day that it occupied.In those circumstances we consider that honours were broadly even.[92] The respondent must pay the appellant usual disbursements. Apart from that,we make no order as to costs.Solicitors:Wilson Harle, Auckland for appellantLee Salmon Long, Auckland for respondent