Peace and Goodwill to all Members

This is not a religious (or political) article, but the well-rehearsed Christmas theme of peace and goodwill to all has prompted me to consider more deeply the relationship between members of a society.  That relationship is largely taken for granted when people join community organisations, and, sadly, it receives critical consideration only when things go wrong.

The common law heritage

In the absence of a statutory framework for the incorporation of societies, British case law characterises the relationship between members in a society and between a member and a society as being contractual in nature.  Despite having statutory provision for the incorporation of societies, that rationalisation has been adopted in Commonwealth countries such as New Zealand, Australia and Canada.  With the prospect of new societies’ legislation being considered by the Law Commission it is timely to consider whether that legislation should establish minimum expectations of a society’s members.

New Zealand Case Law

Our Courts have accepted the contractual analogies derived from Britain:

  • On becoming a member a contract arises between the member and the society, the terms of which are set out in the rules of the society (for instance, see Henderson v Kane and The Pioneer Club [1924] NZLR 1073 at 1076, O’Neill v Pupuke Golf Club Inc [1932] NZLR 1012, Temple v Hawke’s Bay Football Association [1970] NZLR 862 at 864, and Finnigan v New Zealand Rugby Football Union Inc [1985] 2 NZLR 159 at 177 (CA)),
  • By virtue of their membership members agree to be bound by the society’s rules (see, for instance, Tucker v Auckland Racing Club [1956] NZLR 1), but
  • The Courts seem reluctant to hold that there is any contract between the members themselves (see Watford v Miller [1920] NZLR 837 (Full Court) and Henderson v Kane and the Pioneer Club [1924] NZLR 1073 at 1076-1077), although that is the basis of the relationship if the society is unincorporated (see Grogan v McKinnon [1973] 2 NSWLR 290; and Makin v Gallagher [1974] 2 NSWLR 559).

While that may seem unexceptional, I believe these assumptions leave too much unstated, and the need to draw on contractual analogies tends to confuse the analysis.

Reform in New Zealand?

The current legislation is silent on the rights and duties of members, and most societal constitutions address only the apparently obvious rights and responsibilities, but still leave much unstated which Courts may or may not be willing to imply.

If someone joins or remains a member of a society then I believe it is implicit that they should act in a manner consistent with their membership.  If that is correct, I would prefer that it be explicitly stated in statute law.  Further, I would prefer any new statute to state explicitly that the member-society and member-member relationships are governed by the statute and the rules, and not by any notional contractual relationship.  The new legislation might also establish some core principles or requirements for society members and committee members:

  1. Promote the interests and the purposes of the society – If members are not prepared to do this then you have to ask why they belong.  If members want to change anything, then they need to consider principle 3.
  2. Comply with the society’s constitution – The constitution is there for a reason (see my article “Are Rules Binding?” ), and compliance with it is not voluntary.  There can be no order or certainty if rules are ignored, whether carelessly, thoughtlessly, deliberately or deviously.  The same explanation applies to the laws that we should all obey in society.  Without the rule of law there is anarchy (unfortunately often seen in societies!).  If the constitution needs to be changed, seek to change it lawfully (see principle 3).
  3. Respect and work within the democratic processes of the society – Winston Churchill famously noted that “It has been said that democracy is the worst form of government except for all the others that have been tried.”  No system is perfect, but if change is needed members need to work democratically to effect change, and to recognise that being a rebel can be destructive.  Disagreement and dissent are healthy, but everyone needs to move on once issues have been properly and democratically aired and decisions made.  If people do not want to accept the result of democratic processes then perhaps they should reconsider their membership.
  4. Treat other members and the society’s visitors with respect – The membership of most societies is glued together by membership respect, honesty and integrity.  If members treat each other or guests in a rude, contemptuous, or disrespectful manner, or abuse the privilege of using society property, then all members and the society suffer.  Acting in a civilised mature way is not much to ask.
  5. Do nothing to bring the society into disrepute – Disgruntled members tend to be vocal, not just with fellow-members but with anyone who will listen to their grievances (justified or not).  If members get to the point of “bad-mouthing” a society to which they belong they should reconsider whether they wish to continue to belong.

Disciplinary and dispute processes

In my experience when things go wrong between members the inadequacies of a society’s constitution are exposed, and those inadequacies make it harder than it should be to restore Utopian (or, even, relative) peace and goodwill.  Some of the questions posed in the Law Commission’s Issues Paper (NZLC IP 24, June 2011) raise issues about how member disputes and discipline should be dealt with, recording that the 2009 New South Wales Act requires constitutions to:

  • Provide for the disciplining of members, setting out the procedure (if any) for the disciplining of members, and the mechanism (if any) for appeals by members in respect of disciplinary action taken against them, and
  • Set out the mechanism for resolving disputes between members (in their capacity as members) and between members and the society.

As the Issues Paper asserts (at 2.13), “By far the best way of avoiding disputes around disciplining members is to have clear rules that reflect basic notions of natural justice to guide the administration of disciplinary processes.”  Any new legislation here should also require societies’ constitutions to have such rules, possibly based on either the Victorian or New South Wales statutes.  The Commission goes on to suggest (at 5.6), “… that silence about dispute resolution mechanisms is not desirable.  Incorporated societies, in setting their rules, ought to be required to consider what first-instance dispute resolution mechanism will be appropriate when disputes arise between members and the society.  It is further suggested that if model codes of rules are to be promulgated, those model rules contain an elementary dispute resolution mechanism.  It is unlikely that such a dispute resolution mechanism could, or should, completely remove the prospect of remedy in more formal legal fora.  Rather, it is hoped that it might prevent some of the more minor disputes that have reached the superior courts, and indeed the law reports.”

While such measures may not ensure that peace and goodwill will prevail in New Zealand societies, having robust processes required under society legislation and in society rules would be conducive to that end.  Give this some creative thought as you enjoy the present season of peace and goodwill with a good (Hawke’s Bay) wine, a cool beer, or some other pleasant beverage.

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.