Responding to dysfunctionality in a society

Cries for help

NZLawyer is read by a wide variety of people, and I receive requests for advice to deal with a variety of issues. The following enquiry (edited to make it anonymous) is one worth sharing as it illustrates frustrations society members commonly experience:

Like other situations you have addressed, our club is also facing internal problems, with a dysfunctional president who behaves inappropriately and acts without committee authority. We have tried to get him to “up his game,” but without success.

We tried to requisition a special general meeting, following the processes under the constitution, but this requisition was ignored and not implemented by the president and secretary.

During this time, the president obtained legal advice without reference to the committee, presumably at the society’s expense, about getting rid of some committee members (and presumably the society will be asked to pay for this advice). Now we are unclear as to who are the members of the committee.

I have asked the Registrar’s office to investigate under the Incorporated Societies Act 1908.

Are there any avenues the committee can pursue to proceed with a special general meeting to let the society’s members deal with the issues and keep the society functioning? Do we have a legal right to access the membership list of the society? Should the committee all resign, leaving the society to wind up?

The legal position

On the facts given, and without access to the society’s constitution, it is difficult to give definitive advice on facts such as those just set out. However, there are some general principles and comments that can be made:

  1. If a society committee has no confidence in a president/chairperson or any other officer or committee member, then, unless the constitution allows otherwise, the only way to remove that person is through a general meeting. The decision in Finnigan v New Zealand Rugby Football Union Inc [1985] 2 NZLR 159 at 168 cited with approval a statement (from 24 Halsbury’s Laws of England (4th ed), para 67) that “Where under the rules of a registered society the control of its business is vested in the committee of management, the members of the society in general meeting cannot exercise that control.” However, the possibility of implied powers of replacement was raised, but not decided, in Barrett v Te Runanga O Ngati Pu Inc [2002] NZAR 296 (HC), paras [16] – [21]. The ability of members under a constitution to call a special general meeting has been described as a “superior right” and “safeguard to members against executives and/or members of council who are out-of-step with the membership” (Schweikert v Burnell [1963] NSWR 821 at 825, lines 40-48). The conflicting authorities mean that the legal position is unresolved, but, in my view, a special general meeting to declare some or all offices vacant and to hold elections (or to remove certain committee members) may be validly called and held.
  2. If a special general meeting is called in accordance with the provisions of a society’s constitution then those responsible to do so should call it, and have absolutely no discretion not to do so. Where the person with appropriate authority, in breach of duty, declines to call a meeting in accordance with proper instructions or a proper requisition, a court is likely to recognise a meeting called by other members if the meeting is otherwise properly notified (as the court did in Barrett v Te Runanga O Ngati Pu Inc [2002] NZAR 296, para [11]).
  3. The president or chairperson generally only has such authority outside meetings as may be conferred by a society’s constitution, or by resolution of a committee or general meeting. A president or chairperson may exercise moral leadership as the titular head of a society, but subject always to the provisions of the society’s constitution and any resolutions of the society’s general meetings or committee. Unless the constitution allows otherwise, the president or chairperson cannot remove committee members (see also the next paragraph).
  4. Disciplinary action can only be taken as provided for in a society’s constitution. A society has no power to discipline or expel a member, no matter how appalling the behaviour of the member, unless there is express power in the rules to do so (Dawkins v Antrobus (1881) 17 Ch D 615 at 620 (CA); Hunt v Border Fancy Canary Club of NZ (Inc) (2000) 8 NZCLC 262,140, para [20]). As pointed out in Tamaki v Māori Women’s Welfare League Incorporated [2011] NZAR 605, at [58], “… the law generally insists that a power to suspend, expel or otherwise discipline membership of a society be express, rather than merely implied. There is good sense in that requirement. An untrammelled, implied power to discipline members is a dangerous device. It is commonsense that its extent should be specified, so all members know what the consequences of their actions might be.”
  5. The Registrar of Incorporated Societies is unlikely to take any action because the Registrar has limited powers and limited funding to do so, but if the society is a charity the Charities Board might investigate and act.
  6. Depending on what’s in the constitution society members may have a right to access the membership details in the membership register; an issue on which there may be room for several opinions – see “Access to society and charity records” (Issue 189, 27-72012) and “Access to society and charity records – Revisited” (Issue 190, 10-8-2012).
  7. The mass resignation of most or all of a society committee would not trigger a winding up, although as evidence of dysfunctionality or severe disharmony it might provide grounds to seek to have the High Court appoint a receiver or manager (see Te Runanganui o Ngati Kahungunu Inc v Scott [1995] 1 NZLR 250) or wind the society up on the grounds that this may be “just and equitable” (see Hunt v Border Fancy Canary Club of NZ (Inc) (2000) 8 NZCLC 262,140, [48]–[68]) where there is a justifiable loss of confidence in the conduct and management of the society going beyond the mere dissatisfaction of some members at being outvoted, the substratum of the society has been destroyed, there exists a significant deadlock or impasse, or some members are being oppressed.

Some learnings

  • Societies are not dictatorships.
  • Autocratic and dictatorial behaviour in societies should not be tolerated, unless clearly authorised by the rules.
  • Members need to be vigilant to ensure that the society is controlled by those whose views accord with the majority.
This is one of a series of articles on societies and charitable trusts (originally published in the NZ Lawyer magazine) by Mark von Dadelszen, a Hastings lawyer and author of Law of Societies, 3rd Edition, 2013. If any reader has examples of issues that have arisen or questions about societies or charitable trusts that might be a suitable subject for one of these articles please contact Mark at mark.vondadelszen@bvond.co.nz.