WAIKATO-TAINUI TE KAUHANGANUI INCORPORATED V TANIA ERIS MARTIN HC HAM CIV-2011-419-796

WAIKATO-TAINUI TE KAUHANGANUI INCORPORATED V TANIA ERIS MARTIN HC HAM CIV-2011- 419-796 17 June 2011IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYCIV-2011-419-796BETWEEN WAIKATO-TAINUI TE KAUHANGANUIINCORPORATEDPlaintiffAND TANIA ERIS MARTINDefendantHearing: 16 June 2011Counsel: M C Sumpter and J W J Graham for PlaintiffG H J Brant for Defendant (on a Pickwick basis)Judgment: 17 June 2011 at 4:00 PMReasons: 17 June 2011REASONS FOR JUDGMENT OF ALLAN JSolicitors:Chapman Tripp, P O Box 2206 Auckland 1140Email: matt.sumpter@chapmantripp.comjustin.graham@chapmantripp.comStace Hammond, P O Box 19 101 Hamilton 3244Email: GilesB@shg.co.nzCase Officer: Phoebe.Peters@justice.govt.nzIntroduction[1] This is an application by the plaintiff for an order restraining the defendant in her capacity as chairperson of Waikato-Tainui Te Kauhanganui Incorporated, from proceeding with the half-yearly general meeting of the plaintiff due to take place on Saturday next, 18 June 2011, at 9:00am. The plaintiff claims that notice of the meeting is defective and that there are procedural and legal problems with certain of the resolutions proposed to be considered at the meeting.[2] The application is made as a matter of considerable urgency. It has come before the Court on a Pickwick basis, a relatively brief hearing being conducted by way of telephone conference. I heard from counsel on either side and made an order at the conclusion of the conference restraining the defendant from conducting the proposed meeting on 18 June. I indicated that I would give my reasons in writing. These are those reasons.The structure of Waikato-Tainui[3] The application is supported by the affidavit of Mr Morgan, who is ExecutiveChair of the plaintiff's executive body, Te Arataura. Mr Morgan explains the structure of Waikato-Tainui in the following way:3 The plaintiff is an incorporated society which manages assets and distributes income for approximately 60,000 members of the Waikato-Tainui iwi.4 The society is organised on a parliamentary model. Each of the 66 marae making up Waikato-Tainui is entitled to elect 3 members to Te Kauhanganui, the tribal parliament. Each marae is able to exercise a vote at meetings.5 Of those elected members, 10 are elected to sit on the executive body of Te Kauhanganui, Te Arataura. The Maori King is also entitled to appoint a representative to Te Arataura. Members of Te Arataura are elected for three year terms. There is due to be an election for membership of Te Arataura later this year.6 A Chairperson for the tribal parliament is also elected. The current Chairperson is Mrs Martin, the defendant.7 Using the parliamentary analogy, Te Arataura is like the cabinet, with responsibility for managing and controlling the affairs of the society. The Chairperson of Te Kauhanganui is like the Speaker of the House, with procedural responsibilities for running meetings of the tribal parliament.The parties[4] The Society itself was named as plaintiff. That is somewhat unusual. Where it is alleged that a proposed meeting of an incorporated society ought to be restrained, the usual course is that those who contend for a restraint will commence the proceeding as plaintiffs and will name as defendants those who maintain the validity of what is intended. Sometimes, but not always, the incorporated society is named as a defendant.[5] Both Te Arataura on the one hand and Mrs Martin on the other, play a role in the convening and conduct of meetings of the plaintiff. In reality, the plaintiffs are some or all of the members of Te Arataura, who certain members of Te Kauhanganui seek to have removed at the forthcoming meeting. If this proceeding continues on foot, then those having the carriage of it for the plaintiff are asked to consider the need for an amendment to the description of the plaintiff.Brief factual background[6] There are significant differences between Mrs Martin (together, I understand, with other members) and Te Arataura about the way in which the plaintiff ought to function in accordance with its rules. Mrs Martin is critical of the manner in which Te Arataura has been managing and controlling the affairs of Te Kauhanganui and has instituted an internal review of the governance of the tribe which is currently being undertaken by a major accounting firm. That difference of opinion appears now to have come to a head in the context of the forthcoming half-yearly general meeting, convened pursuant to r 8.1 of the Society's Rules. That rule provides:8.1 A Half-Yearly General Meeting of Te Kauhanganui shall be held in the month of March in each year or in such other months of the year as may be determined by Te Arataura (so long as a Half-Yearly General Meeting is held in each calendar year) at a date, time and place to be fixed by Te Arataura.[7] The business to be conduct at a half-yearly general meeting is prescribed by r 8.2 which provides:8.2 The business conducted at the Half-Yearly General Meeting shall be:(a) to receive and consider a report from Te Arataura for the previous Half-Year on the affairs of Te Kauhanganui (including the affairs of Te Arataura);(b) to receive and consider a report from Te Arataura on the activities of Te Kauhanganui as trustee of the Waikato Raupatu Lands Trust for the previous Half-Year; and(c) to transact or consider such other business of Te Kauhanganui which in the opinion of the Chairperson of Te Kauhanganui, may be desirable or which the Elected Members vote to transact or consider (voting may be by show of hands).[8] Rule 10 provides for the giving of written notice of the time and place of a Meeting, which includes a half-yearly general meeting. Rule 10 provides:10. Written notice of the time and place of a Meeting must be sent to the last known address of every Member not less than 21 clear days before the Meeting. The notice must state the place, day and hour of the Meeting, the general nature of the business to be transacted at the Meeting and the text of any Special Resolution to be submitted to the Meeting.Defective notice[9] The plaintiff contends that the notice given to members was defective. There are in fact two notices. The first is given under the hand of Mr Morgan and advises members that:"... the next Te Kauhanganui meeting will now be held on:SATURDAY, 18 JUNE 2011.The agenda will be sent to you at a later date."[10] That notice was sent to members on or about 13 May 2011. It clearly did not comply with r 10 in that it failed to give notice of the place or time of the meeting, or of the general business to be transacted.[11] A second notice was given to members under the hand of Mrs Martin. That notice does give details of the time and place of the meeting and of the business to be transacted, but the notice is dated 3 June 2011 and was sent to members on or about that date. It is plainly not a 21-day notice. The plaintiff argues that neither notice is a valid notice for the purposes of r 10, and that the requirements for a lawful meeting on 18 June 2011 have not been met.[12] I accept the plaintiff's argument that there is a serious question to be tried in respect of the validity of the notices convening the meeting. Indeed, the plaintiff'scontention appears to be unanswerable. If a meeting is conducted along the lines appearing on the notices, there is a very high risk that its proceedings will be unlawful.[13] I turn to the balance of convenience.[14] The business proposed to be conducted at the meeting is of immense significance to the plaintiff and indeed to all members of the Waikato-Tainui iwi. It is intended that the meeting be asked to approve large-scale constitutional changes promoted by Mrs Martin and others. The intention is to remove from office all but one of the members of Te Arataura. But there is nothing to suggest that significant prejudice would arise if the meeting were convened at a later time, after the giving of proper notice. Balance of convenience issues do not significantly impinge upon the plaintiff's strong claim for interim relief, which I consider ought to be granted.[15] Accordingly, I advised counsel at the conclusion of the telephone conference that I proposed to make an order restraining the defendant and those associated with her from conducting any meeting of the plaintiff unless and until a valid notice had been given to members. Each member of the plaintiff is entitled, as a matter of contract, to see the Society's rules are respected and complied with:1 It is appropriate to protect that entitlement by the grant of interim relief in this case. Mr Brant suggested that the plaintiff has routinely failed to comply with r 10 in the1 Porima v Te Kauhanganui o Waikato Inc [2001] 1 NZLR 472 (HC) at [79]; Turner v Pickering[1976] 1 NZLR 129 (SC); and Blackler v New Zealand Rugby Football League (Inc) [1968] NZLR547 (CA).recent past. I have no evidence of that but, in any event, the consequences of a breach cannot be avoided by pointing to equally serious past breaches.Disqualification of members of Te Arataura[16] Rule 15.4 provides that a member of Te Arataura shall cease to hold his or her office, and a vacancy shall be created in certain stipulated circumstances. Two such circumstances are relevant for present purposes. Rule 15.4.1(f) provides that a member of Te Arataura may be removed from his or her applicable position by a Special Resolution of the Society. Rule 15.4.1(g) provides that removal may be effected where a member "... commits a serious breach or a written confidentialityundertaking as determined by Elected Members who hold at least 50% of the Total Marae Votes." A Special Resolution requires a 75 per cent majority.[17] The notice of meeting refers to a proposed resolution (Resolution 5(a)) removing members of Te Arataura (save for the member appointed by the King)from office for "a serious breach". Rule 15.4.1(g) is relied upon. A brief supportingmemorandum sent to members reveals an intention to allege that each member of Te Arataura has committed "... a serious breach".[18] Counsel for the plaintiff argues that reliance upon r 15.4.1(g) is misplaced. That is because there is a clear typographical error in the sub-rule which should read:"... commits a serious breach of a written confidentiality undertaking as determinedby Elected Members ..." rather than: "a serious breach or a written confidentialityundertaking". Counsel for the plaintiff points out that r 5.3.1(i) is a counter-part of r 15.4.1(g). The former rule refers to a "serious breach of" a written confidentialityundertaking.[19] I accept that there is a strongly arguable case that the intention of r 15.4.1(g) is to catch only cases of a serious breach of a written confidentiality undertaking. The language of the rule as it stands is incoherent. The resolution appears to rely onan entitlement to remove a member of Te Arataura for committing "a serious breach"but there is nothing in the rule to suggest what type of obligation or duty is intended to be caught by the sub-rule. I accept the argument for the plaintiff that the apparentintention of the rule, read as a whole, is to require a Special Resolution where it is sought to remove a member of Te Arataura (r 15.4.1(f)), save in the exceptional case of a serious breach of a written confidentiality undertaking (r 15.4.1(g)).[20] As the information package sent to members presently stands, members are asked to pass, by a simple majority of 50 per cent, a resolution removing the members of Te Arataura for a "serious breach". It is strongly arguable that theproposed resolution is invalid and that it would not be lawful for the members to pass it by a majority of less than 75 per cent.[21] Given the manifest importance of the issue placed before members, and the consequences for members of Te Arataura if the resolution is passed, I would (had I not concluded that the meeting ought not to proceed in any event) have restrained the putting of this particular resolution. The plaintiff makes a powerful case that balance of convenience factors are all in favour of the grant of relief.Proposed meeting procedure[22] A further proposed resolution, 6(a), is moved and seconded by two separatemarae. It proposes that Te Kauhanganui ".... stand down all elected members of TeArataura for serious breaches to [sic] the Rules."[23] In the materials forming part of the package sent to members on or about 3 June 2011, there is an explanation of the background to the resolution. The relevant material is brief. The suggestion seems to be that members of Te Arataurawere elected "... to uphold the decisions of Te Kauhanganui" and that it was forElected Members of Te Kauhanganui to determine what a serious breach is. The implication is that members of Te Arataura have failed to uphold decisions of Te Kauhanganui, but no further detail is provided.[24] Instead, there is a note to the effect that:Public exclusion of all documentation to be presented at this meeting is to protect the integrity of Waikato-Tainui Te Kauhanganui Incorporated.The note advises that documentation is to be distributed on 18 June 2011, that is, on the day of the meeting.[25] Mr Brant, for Mrs Martin, advises that there is a degree of concern over the tendency of confidential papers distributed to members to be leaked. That is, of course, a valid concern. But there are two apparent problems with the procedure currently adopted.[26] The first is that, as a matter of fundamental natural justice, those who are in jeopardy of losing their positions as members of Te Arataura should, prior to the meeting, be provided with full details of what is to be alleged against them so that they can be ready to meet the allegations. There can be few circumstances in which it would be right to condone a different approach.[27] The second concern relates to the position of members of Te Kauhanganui. They each represent their own marae and are, in effect, the voices of the marae concerned, within Te Kauhanganui. To enable them effectively to do that, they need to be in a position where they have had an opportunity of discussing with members of their own hapu the issues likely to be relevant to the decision they will be asked to make. That will not be possible under the proposed procedure, because no background material is supplied.[28] I mention these important considerations simply in order that they might be taken into account by those who have responsibility for convening a further meeting. It would be disappointing if one or more persons thought it necessary to make a further application for an injunction in respect of the proposed procedure in relation to resolution 6(a)..Conclusions[29] Having heard from counsel (including Mr Brant on a Pickwick basis) by telephone, I was satisfied that there must be an order restraining the holding of theplaintiff's meeting on Saturday 18 June 2011. To permit the meeting to continue would, as Mr Sumpter submits, expose Te Kauhanganui to the very real risk of achallenge after the event, so raising the spectre of a power vacuum or, worse, a dispute as to who were validly appointed members of Te Arataura. There is, in my view, an overwhelmingly strong argument that the notice of 13 May 2011 was defective; the later notice of 3 June 2011, although valid, was out of time.[30] I return briefly to the question of identification of the proper parties.[31] I earlier expressed the view that there ought to be an amendment. Those members of Te Arataura who claimed that an injunction ought to be granted should have identified and named themselves as plaintiffs. The Society ought to have been named as a defendant in order to ensure that it was bound. Mrs Martin was properly named as a defendant, if only by reason of her position as chair of Te Kauhanganui with the responsibility of conducting any meeting which might validly be convened.[32] These distinctions are important when the question of costs arises. Without pre-judging costs issues in any way, it seems to me that if Mrs Martin's role has beenlargely neutral (despite her office) and her solicitors have simply opposed the injunction application in order to ensure that the other side of the argument was properly put, then it might fairly be said that she ought not to bear any responsibility for costs. On the other hand, if she has taken a leading role in the attempt to unseat the present members of Te Arataura, then the likely costs consequences would be different.[33] I simply mention these considerations for later resolution.Orders[34] There will be an order restraining the defendant and any other Elected Member of Te Kauhanganui from proceeding with the half-yearly general meeting set down for 18 June 2011.[35] There will be a further order restraining those persons from convening any further meeting of Te Kauhanganui without giving a notice that complies with r 10 of the plaintiff's rules, by giving at least 21 days notice of the date, place and time ofthe meeting and the general nature of the business to be transacted at the meeting or any special resolution to be submitted to it.Costs[36] Counsel may file memoranda as to costs if they are unable to agree......................................C J ALLAN, J.