“Clear days” – Trouble at the Courts – anyone for tennis?

2010 Article, updated November 2017 Anyone for tennis? Just before the out-of-town bach owners and holidaymakers increased the population of Pauanui on the Coromandel Peninsula for the Christmas holidays, on 16 December 2010, the High Court in Hamilton issued a judgment in Reeves & Hartstone v Pauanui Sports and Recreational Club Inc (CIV-2010-419-1599). The decision made no new law and is not otherwise greatly noteworthy (other than for those who own property at Pauanui or enjoy its facilities), but it highlights a number of points about the operation of community organisations and what can be done when things go wrong. Pauanui Sports and Recreational Club Inc The society, with a membership of between 1,400 and 1,500, was well-established, and its purposes were to foster sporting, recreational and cultural activities at Pauanui. The society owned a number of properties there, and proposed to sell its tennis courts at Gallagher Park Lane to fund refurbishment of its principal building elsewhere, alleging that the tennis courts were under-utilised, in poor repair, and subject to vandalism. The plaintiffs opposed the sale, asserting that the tennis courts were an important, well-used facility. The power of an interim injunction As is common, the High Court proceedings were prompted by the Society’s proposed actions, and an urgent hearing was required because a tender for the sale of the tennis courts was to close on 17 December 2010, the day after the hearing. The Court was satisfied that the society’s processes were defective and an interim injunction was granted to stop the tender process. The Court, of course did not consider the merits of the arguments about whether or not...

Types of Society

2010 Article, updated November 2017 Issues The first interview with people wanting to form a society is usually interesting, as there are issues to be discussed they have never thought of.  Generally, I try to avoid getting into details immediately, as I think it is important to understand what may be required by exploring: What the organisation is doing and may do in the future, Whether the organisation will make commitments or incur risks that make an incorporated entity desirable to manage personal financial risks for members (especially the executive), How the entity is governed and managed, to ascertain whether a democratic entity is involved or whether a trust might be more suitable, How complex and extensive the entity’s operations may be, and What ideas and expectations the interviewees have. What form of legal entity? Whether an entity should be a society or trust depends largely on the extent of involvement of the “members” in its governance and choice of executive.  If a democratic model is desired then a society is usually the best model, although a trust’s trustees may be selected by election. The nature of the possible choices may be illustrated by an example.  If the formation of an entity to control a performing cultural group is being considered there are different options, including: If the group takes “all comers,” with all welcome, then the best governance model is likely to be a society, with a traditional form of membership, annual meetings of members, elections of the governing executive, and day-to-day governance (and, usually, management) handled by the elected executive. If members are graded in some way by...

Winding up a society or charitable trust

2011 Article, updated November 2017 Big brother is interested It should come as no surprise that the State has an interest in the winding up of societies and charitable trusts, as noted in Hunt v Border Fancy Canary Club of NZ (Inc) (2000) 8 NZCLC 262,140, para [30]: The Incorporated Societies Act 1908 [and the Charitable Trusts Act 1957] governs the conduct of non-profit associations. The purpose of the Act is to establish a state-controlled system of registering and controlling non-profit making associations and providing for the dissolution and winding up of those associations. . . . The power to wind up [a society] rests with the majority of members at a general meeting or the High Court. Alternative ways of winding up a society or charitable trust There are three main different ways an entity may be dissolved or wound up: Registrar’s dissolution, Members voluntarily liquidation, and High Court liquidation. Registrar’s dissolution The Registrar’s attention is drawn to a society incorporated under the Incorporated Societies Act if it fails to file its annual financial statements.  In such a case, or where after an enquiry or for other reasons the Registrar concludes that a society incorporated under the Incorporated Societies Act or an entity registered under the Charitable Trusts Act is no longer in existence, the Registrar may dissolve the society by notice in the Gazette, the effect being to strike the entity off the Register (see s 28, Incorporated Societies Act, or s 26(1), Charitable Trusts Act). There is a right of appeal under s 34B to the High Court after Registrar’s dissolution, but where the dissolution is under the Charitable Trusts Act...