High Court of Ireland Decisions
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Cite as: [2012] IEHC 412
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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Dunne & Ors -v- Mahon & Anor [2012] IEHC 412 (10 October 2012) URL: http://www.bailii.org/ie/cases/IEHC/2012/H412.html Cite as: [2012] IEHC 412 |
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Judgment Title: Dunne & Ors -v- Mahon & Anor Neutral Citation: 2012 IEHC 412 High Court Record Number: 2010 864 SP Date of Delivery: 10/10/2012 Court: High Court Composition of Court: Judgment by: Hogan J. Status of Judgment: Approved |
Neutral Citation 2012 [IEHC] 412 THE HIGH COURT [2010 No. 864 Sp.] IN THE MATTER OF ROADSTONE GROUP SPORTS CLUB BETWEEN/ JOHN DUNNE, ANTOINETTE AGNEW AND PHILOMENA MOODY PLAINTIFFS AND
OLIVER MAHON AND MAURICE O'CONNOR DEFENDANTS JUDGMENT of Mr. Justice Hogan delivered on the 10th day of October, 2012 1. This application arises from a dispute between the trustees of the Roadstone Group Sports Club ("the Club") concerning the question of whether the Club should be wound-up pursuant to the inherent jurisdiction of this Court. The first plaintiff is the Chairman of the Club (albeit not a trustee) and the second and third plaintiffs are trustees of the Club. The second and third plaintiffs were formerly full members of the Club but are now associate members, having subsequently retired from the employment of the Roadstone companies. 2. The defendants are full members of the Club and also constitute the remaining trustees. The defendants were elected trustees of the company in February 1997 having being nominated by Roadstone Dublin Ltd. and Roadstone Provinces Ltd. in accordance with Rule 4(c) of the Rules of the Club ("the Rules"). 3. The Rules do not contain any provisions providing for their amendment and were originally silent as to what would become of the Club's assets were it to be dissolved. This is at the heart of the present dispute and, specifically, questions of whether certain resolutions and amendments to these Rules have been validly adopted are central to the present proceedings. I will return to this question towards the conclusion of this judgment once I have set out certain background facts and enumerated the governing principles. 4. The Roadstone Group Sports Club was established in 1957 for the benefit of the employees of the company of the same name. When originally established it was as a small social club. Over time the Club expanded, notably following the merger of Roadstone Ltd. with Irish Cement in 1970 and the formation of CRH Plc, a flourishing multinational which is now one of the mainstays of the Irish economy. 5. The Club moved to new premises in Belgard Road in Dublin in the 1970s. In 1991, after some negotiations and discussions between the Club and CRH, a site was purchased at Kingswood, Clondalkin, County Dublin from CRH. There is now a substantial clubhouse on the premises. The Club has a variety of soccer pitches (which are floodlit) and a pitch and putt course in a 6.73 hectacre site. It has a 200 square metre function hall, a bar and a restaurant area. The parking facilities are extensive and ample. The clubhouse caters for a wide variety of social events and it has rooms and facilities cater suitable for a wide range of activities such as darts, snooker, bridge and other similar activities. In recent years the premises have been rented out for major pitch and putt championships, martial arts competitions and even Irish dancing competitions. The Club also receives a rental of some €13,000 per year in respect of a mobile telephone mast. 6. Full membership is open to employees of CRH, but associate membership is also open to those who are not CRH employees and the evidence is that since about 1970s provision has been made for associate members who have significantly supplemented that full membership. As of the end of 2010 the Club had 349 associate members, 53 full members, one honorary member and two life members. As of June, 2012 the Club has a small number of part-time employees. 7. Although disputed by the plaintiffs, the Club's finances seem - superficially at least - to be in a healthy position. It has no debt and as of October, 2010 it had savings of some €478,820. By reason, however, of exceptional items (including redundancy payments) there was a total loss of just over €207,000 in 2011 and the cash at hand reduced to €312,008. Although the present financial position of the Club is open to various interpretations, the plaintiffs point to this loss as a harbinger of what may yet ultimately happen if the Club is permitted to continue into the future. 8. Judged from the photographs that have been supplied to me, the facilities seem most impressive and are such as might tempt the interest of any person eligible to join the Club. That, however, is not the view of the full members of the Club, or, at least, the majority of them as expressed by a vote at an extraordinary general meeting in July 2009. (It should be observed that the associate members were not permitted to vote).They take the view that the Club should be wound up on the basis that membership is in terminal decline and that it has no long term future. As we have noted, the Club's rules do not provide for such a winding up and, accordingly, the majority of the members petition the Court for an order to this effect pursuant to this Court's inherent jurisdiction. The net question, accordingly, is whether such a jurisdiction exists and, if so, in what circumstances should it be exercised. 9. The defendants suspect that issues in relation to the viability of the Club stem from the compulsory acquisition of two acres of the Club's grounds by South Dublin County Council for the sum of €1m. in 2004. During this period of intense economic activity in the State and a time when the price for building land reached elevated proportions the Club received many unsolicited approaches regarding a possible sale of the lands. At another point in April 2008 the Club received an offer of over €20m. for the lands, although realistically an offer of this kind will not again be forthcoming in the present economic climate. In view of the price paid for the acquisition of those lands, not unnaturally, perhaps, the minds of some members have turned to the question of whether the assets of the Club might not be realised on a dissolution. 10. It bears remarking that an unincorporated body such as the Club differs significantly from the position of a company incorporated under the Companies Act 1963. In the latter case the Oireachtas has enacted statutory mechanisms whereby such companies can be wound up, not merely on the (all too common) ground of insolvency, but also on the basis that it would be just and equitable to do so: sees. 213(f) of the Act of 1963. Specific protection is also available for the minority shareholders where the affairs of the company have been conducted in a manner oppressive to their interests: see s. 205 of the Act of 1963. 11. By contrast, a club such as the present one has no existence apart from its members as it is not a legal person in its own right. Johnston J. put the matter well in Feeney v. McManus [1937] I.R. 23, 31-32 when he observed:-
12. Like perhaps so much else touching on the law of incorporated associations, the law and practice in relation to the existence of a jurisdiction to wind-up such an association is in many respects obscure and not free from difficulty. The English law is admirably summarised and analysed in Green's superb article, "Dissolution of Unincorporated Associations" (1980) M.L.R. 626, an article from which I have derived the greatest assistance. 13. So far as the jurisdiction to wind-up is concerned, as Green observes, many of the authorities in this general area are what might be termed sub-stratum cases. As it happens, both of the leading Irish cases on this precise point arise from the tumultuous events of 1916 and 1921-1922 respectively. In the first of these, Feeney v. McManus, the General Post Office (Dublin) Dining Club had flourished until the General Post Office was destroyed by fire following the Easter Rebellion in April, 1916. This had the effect of breaking up the club as a going concern. Johnston J. held- or perhaps more accurately, assumed- that he had a jurisdiction to direct a wind-up of the club and he directed that the proceeds be distributed equally among the members of the club. 14. The second case, Buckley v. Attorney General (No.2) (1950) 84 I.L.T.R. 9, concerned the status of the original Sinn Fein political party following the signing of the Anglo-Irish Treaty in December 1921. That treaty was, of course, ratified by a small majority in Dáil Eireann in January 1922, but this simply was the prelude to the Civil War which broke out in June, 1922. The original Sinn Fein did not survive that conflict and as Kingsmill Moore J. noted ((1950) 84 I.L.T.R. 9, 31), it "melted away in the course of that year as the result of the political strife culminating in the civil war". It is true that a new organisation calling itself Sinn Fein was formed in 1923 in the aftermath of the Civil War. This, however, was a new organisation which Kingsmill Moore J. found was not the successor to its predecessor: the sub-stratum of the latter having vanished at some point between the flames which consumed the Four Courts in June, 1922 and a late August evening in Béal na Bláth a few weeks later. It followed, therefore, that what might be termed the "new" Sinn Fein was not entitled to the assets of the "old" Sinn Fein. 15. Both Feeney and Buckley illustrate how external events can bring about the collapse of the sub-stratum. This is also borne out by the English cases which not untypically concern the future status of unincorporated associations providing benefits for employees of particular companies following the cesser of business by the companies in question. Thus, for example, in Re Lead Company's Workmen's Fund Society [1 904] 2 Ch. 196, 203 Warrington J. observed that:-
17. Yet the present case is, therefore, clearly not a substratum case. The Club is currently viable and it possesses the lands and facilities which are apt and suitable to enable the original aims and objects of the Club to be fulfilled. While it is true that the viability of the Club was hotly contested in the course of the hearing, I am not presently convinced that the future of the Club is necessarily as doubtful as the plaintiffs seem to think. As counsel for the defendants, Mr. McDonald SC put it in cross-examination of the first plaintiff, Mr. Dunne, little efforts have been made over the last few years to attract new members or to re-invigorate the Club by seeking to attract new types of custom and business. In fairness, it should be noted that although Mr. Dunne riposted by saying that they did so endeavour, but that this was in any event pointless. The evidence nonetheless establishes that the club has been effectively closed to new members since about 2004 and there has been no advertising for new members since that date. Should the Club be wound up by reason of the fact that a majority so desire this? 19. We may start with Harington v. Sendall [1903) 1 Ch 921. Here Joyce J. granted the plaintiff an injunction restraining his expulsion as a member of a club who declined to pay an increase in the membership subscription for which the rules did not provide. It is true that one may justify decisions of this kind on the basis that membership of an incorporated association is based on contract and that even the single dissentient member is entitled to hold all other members to the precise terms of that contract. A similar view was taken by Harman J. in Re Tobacco Trade Benevolent Association [1958] 3 All E.R. 353 where he held ([1958] 3 All E.R. 353, 355) that an amendment designed to allow a benevolent association invest in a wider range of securities than heretofore was invalid in the absence of express authority in the pre-existing rules:-
21. Different views on this point have, of course, been expressed by English judges. In M'Kenna v. Barnsley Corporation (1894) 10 T.L.R. 533 the English Court of Appeal held that an implied power existed on the part of the majority to bind a dissentient minority. That Court would accordingly not interfere with a resolution passed by a majority to register their society under the Friendly Societies Act 1875, even though no provision was made for this in the society's rules. In Abbatt v. Treasury Solicitor [1969] 1 W.L.R. 1575. 1583 Lord Denning observed in this context:-
23. But earlier generations of English judges had also taken the view that there was an implied power to amend. Thus, in Re Lead Co. Workmen's Fund Society Warrington J. had approved the dissolution in a case where the majority had been so in favour. In more recent times Megarry J. took a similar view in Keys v. Boulter (No.2) [1972] 1 W.L.R. 642 where, albeit without much discussion of the point, the judge concluded that he enjoyed an inherent jurisdiction to dissolve two trade unions who had unsuccessfully amalgamated, even though - as might be expected - not every member of the amalgamated union agreed with this. 24. For my part I take the view that, absent an express agreement to the contrary in a club's rules, it is unrealistic to expect or assume that an individual member can have the right to block each and every proposed change through the exercise of an individual power of veto. An implied power to amend through majority vote must generally be assumed, as otherwise the association would lack the necessary flexibility to enable it to adapt to the challenges of modem society. In that respect, I consider that the test articulated by Maguire C.J. in Ward v. Sprivack Ltd. [1957] I.R. 40, 47-48 (and which principles were applied by the Supreme Court in subsequent decisions such as Sweeney v. Duggan [1997] 2 I.L.R.M. 211 and Carna Foods Ltd. v. Eagle Star Insurance Co. (Ireland) Ltd. [1997] 2 I.LR.M. 499):-
27. All of this is re-inforced by a further consideration which must, where necessary, re-mould the law in this area, namely, the guarantee of the right of free association in Article 40.6.1.iii of the Constitution. As the Supreme Court observed in National Union of Railwaymen v. Sullivan [1947] I.R. 77, 107: "[E]ach citizen is free to associate with others of his choice for any purpose agreed upon by him and them." In Equality Authority v. Portmarnock Golf Club [2009] IESC 73, [2010] 11.R. 671,741 Hardiman J. commented in respect of that decision that the Court had assumed "that voluntary association of persons had some purpose or activity, social, sporting, intellectual, economic or otherwise". 28. In the present a group of individuals had originally come together for social and sporting purposes, but a majority of them no longer wish to continue to maintain the Club and have elected to dissolve it. Just as their right to come together is protected by Article 40.6.1, so must the very corollary of that right- the right to dissociate- be protected and enforced. Kingsmill Moore 1. may be thought tacitly to have acknowledged this principle in Buckley, where speaking in the context of irreconcilable policy differences within an organisation, he observed that in that situation "the organisation would have to be dissolved, for neither a house nor an organisation divided against itself can stand." 29. In arriving at this conclusion I fully recognise that a hardship is thereby imposed on the minority who desire anxiously that the Club and its wonderful facilities be maintained. I entirely sympathise with them in their opposition to the closure of the Club, but the Court cannot effectively compel an unwilling majority to associate with a minority. Dissolution is the fairest solution in these circumstances, since at least the property interests of all members are maintained and preserved on an equal basis. Rule 37
32. It is agreed that this amendment was effected by a majority vote. In these circumstances I nevertheless feel compelled to hold that this is an example of an impermissible rule change. Prior to the adoption of Rule 37, all existing members had a vested right to share in the distribution of the proceeds of the Club on its dissolution. As Sir Charles O'Connor M.R. put in Tierney v. Tough [1914] 1 I.R. 142, 155: "The society is only the aggregation of those [individual members] and the property of the former is not the property of the latter". Kingsmill Moore J. also expressed similar views in Buckley with regard to the "old" Sinn Fein ((1950) 84 I.L.T.R. 9, 28):
34. This also means that, absent a pre-existing rule to the contrary, it is an implied term of the contract of membership that the society's property should on dissolution be distributed in equal shares: see In re Bucks Widows' Fund (No.2) [1979] 1 W.L.R. 936, 952, per Walton J. 35. A change of the kind proposed would thereby deprive a member of a right personal to him or her and would significantly alter the nature of the Club to the prejudice of individual members. Nor can it truly be said that there has been acquiescence on the part of the members since the adoption of Rule 37 in 1992. While it is true that the Rule was not challenged at the time, it is only now that the potential operation and applicability of Rule 37 has come into view. Any member who sought to challenge the validity of Rule 37 prior to any actual dissolution would very probably have been met with the response that any such challenge was hypothetical and premature: of the decision of the Supreme Court in Collooney Pharmacy Ltd. v. North Western Health Board [2005] IESC 44, [2005] 4 IR 124. The 2009 resolution
(b) Declaring Rule 37 to be invalid. (c) An order providing for the sale of the Club's assets, the payment of any liabilities and debts and providing that any surplus would be divided on the basis of 20% to Our Lady's Hospital, Harold's Cross, 40% to full members and 40% to associate members. Conclusions 39. Further orders were sought with regard to the manner in which full members, associate members and life members would be treated. In the light of the views I have expressed in this judgment, I will make orders in the terms sought, with the proviso that the question that the manner in which the proceeds are to be distributed remains to be fully argued. Accordingly, I propose to hear further argument on these questions, not least having regard to the principles set out in Tierney v. Tough, Buckley and In re Bucks Widows' Fund (No.2).
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