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Shipton v South East Queensland Sport Aircraft Club Incorporated[2022] QSC 5

Reported at (2022) 10 QR 1

Shipton v South East Queensland Sport Aircraft Club Incorporated[2022] QSC 5

Reported at (2022) 10 QR 1

SUPREME COURT OF QUEENSLAND

CITATION:

Shipton v South East Queensland Sport Aircraft Club Incorporated [2022] QSC 5

PARTIES:

ERIC MALDWYN SHIPTON

(Applicant)

v

SOUTH EAST QUEENSLAND SPORT AIRCRAFT CLUB INCORPORATED

(Respondent)

FILE NO/S:

BS 9964 of 2021

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

28 January 2022

DELIVERED AT:

Brisbane

HEARING DATE:

23 September 2021

JUDGE:

Brown J

ORDER:

The order of the Court is:

  1. The termination of the membership of the applicant made by the Committee of the respondent on 15 August 2021 was void;
  2. The decision to terminate the applicant’s membership by the Committee of the respondent be set aside; and
  3. The respondent pay the applicant’s costs of the application.

CATCHWORDS:

ASSOCIATIONS AND CLUBS – INCORPORATED ASSOCIATIONS – OTHER MATTERS – where the applicant was a member of the respondent – where the respondent is an incorporated association – where the respondent terminated the applicant’s membership in it – where the applicant applies for an order that the respondent comply with its rules – whether the respondent gave the applicant a full and fair opportunity to respond to show cause letters issued as required by the respondent’s rules – whether the respondent failed to provide the applicant with natural justice – whether the applicant has standing – whether the Court should refuse to entertain the application – whether the application is unmeritorious

Associations Incorporation Act 1981 s 71, 72, 73

Associations Incorporation Regulations 1999

Goldber v NG (1994) 33 NSWLR 639, considered

Gould v Isis Club Incorporated [2015] QSC 253, considered

Hall v NSW Trotting Club Ltd [1977] 1 NSWLR 378, cited

Kenney v Shailer Park Netball [2006] QSC 403, considered

Kioa v West (1985) 159 CLR 550, cited

Mann v Carnell (1999) 201 CLR 1, cited

McClelland v Burning Palms Surf Life Saving Club (2002) 191 ALR 759, cited

Miller v Soroptimist International of the South West Pacific [2020] QSC 242, considered

Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597, cited

Peninsula Development Group (Tannum Sands) Pty Ltd v Retail Shop Leases Tribunal & Anor [2006] QSC 398, cited

Russell v Duke of Norfolk [1949] 1 All ER 109, cited

COUNSEL:

M Steele for the Applicant

J Lucy for the Respondent

SOLICITORS:

Nexus Law for the Applicant

Rostron Carlyle Rojas Lawyers for the Respondent

  1. [1]
    The applicant, Mr Shipton, was a member of the South East Queensland Sport Aircraft Club Incorporated (the respondent). Mr Shipton’s membership in the respondent was terminated on 15 August 2021 pursuant to rule 11 of the respondent’s Rules of Association (Rules) following a decision of the Management Committee (Committee).
  2. [2]
    Mr Shipton applies to the Court to set aside the decision to terminate his membership in the respondent. In the alternative, Mr Shipton applies for an order that the respondent comply with its rules by providing him with the legal advice referred to in the show cause notice issued by the respondent.

Background

  1. [3]
    The respondent is an incorporated association. It maintains an airfield at Kilcoy. Its object includes fostering sport aviation activities and providing a facility for the storage, operation and maintenance of recreational aircraft. It is governed by Rules of Association. The management of the respondent is vested in the Committee.
  2. [4]
    Mr Shipton has been a member of the respondent since 2000. 
  3. [5]
    The land on which the Kilcoy airfield is located is now leased to the respondent. The lessor of the land is the Queensland Bulk Water Supply Authority (SEQWater). On 14 March 2017, an assignment of the lease to the respondent as lessee was entered into (Lease).
  4. [6]
    Mr Shipton subleases Hangar L at the airfield (Sublease) from the respondent. A number of disputes between Mr Shipton and the respondent arise out of Mr Shipton’s occupation and the use of Hangar L.
  5. [7]
    Clause 6.12(a) of the Sublease provides:

“6.12 The Tenant must not:

(a)  use the Demised Premises for any commercial or profit making undertaking or business (including, subject to clause 6.1 storage of aircraft not owned by the Tenant);”

  1. [8]
    Mr Shipton is a director of a company, Orthonyx Pty Ltd (Orthonyx). Mr Marl Gallety is the other director. Orthonyx holds a certificate of approval from the Civil Aviation Safety Authority (CASA), allowing it to conduct certain approved activities. Pursuant to the approved activities, it is permitted in respect of Hangar L that, “All aircraft owned and operated by the hangar owner and tenant only.” The certificate also allows Orthonyx to carry out aircraft maintenance at temporary locations.
  2. [9]
    In 2004 SEQWater wrote to the former lessee, Kilcoy Shire Council, indicating that they consented to Mr Shipton making an application to CASA for a Certificate of Approval to use his leased hangar at the airfield for the sole purpose of maintaining a personal special interest aircraft and with no commercial activities being carried out. The Kilcoy Shire Council similarly wrote to CASA stating that the Council had no objections to the use of the hangar on the same basis as SEQWater had given its consent.
  3. [10]
    According to Mr Shipton, the only aircraft maintained by Orthonyx at Hangar L are Mr Shipton’s planes. Mr Shipton does not pay Orthonyx. According to Mr Shipton the only maintenance activity undertaken at “temporary locations” is of Mr Shipton’s son’s planes.[1]
  4. [11]
    Evidence was provided to the Committee by way of its tax returns for 2017, 2018 and 2019 years to demonstrate that Orthonyx does not trade or carry on any business activity which is supported.
  5. [12]
    Plane Loopy Pty Ltd, a company operated by Mark Gallety, uses Orthonyx’s certificate of approval to carry out maintenance work on planes but that does not extend to Mr Shipton’s places in Hanger L. Orthonyx receives no payment for the use of its certificate.
  6. [13]
    Mr Shipton provided an affidavit verifying the position of Orthonyx. Mr Shipton was not cross-examined.
  7. [14]
    The Committee and Mr Shipton have exchanged a large amount of correspondence throughout 2021. In particular issues were raised by the Committee as to whether there was a breach of clause 6.12(a) of the Sublease as a result of Orthonyx’s role, which was said to have arisen out of a letter of Seqwater to the Committee on 19 January 2021 about the possibility of commercial activities being carried on by Orthonyx at Hangar L. The letter refers to the Seqwater having been advised of that through correspondence from John Adams, the President of the respondent. That was the result of information said to have been provided to the Committee. Issues were also raised by the Committee as to whether Orthonyx affected the insurance of the Kilcoy airfield. Under the head lease, the respondent covenants that it shall not permit to be done anything whereby a policy of insurance may become void or voidable or whereby the rate of the premium may be increased.
  8. [15]
    Ms McHugh also provided an affidavit. She was cross-examined. Her evidence was generally honest but somewhat coloured in favour of the Committee. Her evidence was said to be particularly relevant to the ground of unreasonableness raised on behalf of Mr Shipton. As little turns on the evidence presented by either party for the reasons set out below, I do not need to make any findings in that regard.

First show cause letter

  1. [16]
    On 7 July 2021, the respondent’s Committee issued a show cause notice to Mr Shipton. The show cause letter included ten allegations regarding Mr Shipton’s conduct. The show cause letter referred to rule 11.3.4 of the respondent’s Rules. Rule 11.3.4 states:

“11.3 The Management Committee may terminate a member’s membership if the member:

…..

11.3.4 conducts themselves in a way considered to be injurious or prejudicial to the character or interests of the Association, the management and operation of the airfield or to the members of the Association in respect of they [sic] conduct as such a member.”

  1. [17]
    Mr Shipton submits that the ten allegations were not particularised in any meaningful way, and did not indicate how the concerns were said to contravene rule 11.3.4.
  2. [18]
    On 21 July 2021, Mr Shipton responded to the show cause letter and requested particulars of the allegations. Mr Shipton’s letter of 21 July 2021 also responded to the ten allegations set out in the first show cause letter.

Second show cause letter

  1. [19]
    On 30 July 2021, the respondent sent a further show cause letter to Mr Shipton,[2] setting out ten allegations, which were related to the allegations in the letter of 7 July 2021, although in some cases were framed differently, with details said to particularise the allegations. The ten allegations were:
    1. (a)
      the role of Orthonyx;
    2. (b)
      alleged access of club bank account;
    3. (c)
      alleged failure to notify the Committee that Hangar L had previously been uncertified;
    4. (d)
      that the Committee was unsure how the certification for Hangar L changed from Class 10 to Class 7;
    5. (e)
      alleged public statements made about Mr Gilpin, another club member;
    6. (f)
      allegedly having contacted SEQWater directly, despite a purported requirement not to do so;
    7. (g)
      an alleged failure to cooperate with an internal investigation undertaken by the Committee;
    8. (h)
      alleged construction of a dwelling over the lease boundary;
    9. (i)
      allegedly overseeing the incorrect placement of a boundary fence while a member of the Committee; and
    10. (j)
      allegedly exposing the club to significant and undue costs relating to legal costs.
  2. [20]
    The second show cause letter made three references to legal advice obtained by the Committee. The following references were made to legal advice:
    1. (a)
      “As none of the committee members have legal qualifications, and upon the advice of SEQWater, SEQSAC Committee of Management on behalf of the membership sought a legal opinion whether Orthonyx Pty Ltd was in breach of the lease.”
    2. (b)
      “Legal advice provided to SEQSAC was that Orthonyx Pty Ltd is in breach of the sub-lease and the SEQSAC Committing of Management is acting upon this advice.”
    3. (c)
      “The SEQSAC Committee of Management cannot make representations to SEQWater that Orthonyx Pty Ltd complies with the lease conditions, and it would be irresponsible in our duties to make representations to SEQWater in this regard, given this would contravene the legal opinion obtained on behalf of the membership.”
  3. [21]
    On 3 August 2021, Mr Shipton requested copies of the legal advice referred to in the second show cause letter. On 4 August 2021, by way of letter, the respondent refused to provide copies of the legal advice. On 6 August 2021, Mr Shipton made a further request for copies of the legal advice. The second request was refused by the respondent on 7 August 2021.
  4. [22]
    On 13 August 2021, Mr Shipton responded to the second show cause letter and again requested copies of the legal advice referred to in the second show cause letter.
  5. [23]
    The respondent did not provide copies of the legal advice. Mr Shipton submits that privilege in the legal advice has been waived and it was a denial of natural justice not to produce the advice.

Termination

  1. [24]
    On 15 August 2021, the respondent purported to terminate Mr Shipton’s membership in the respondent. The termination letter cited rule 11.3.4 of the Rules as the rule under which Mr Shipton’s membership was terminated.
  2. [25]
    Mr Shipton submits that the letter did not set out the reasons for the termination other than to state the conclusion that his conduct was injurious or prejudicial to the respondent.
  3. [26]
    On 10 September 2021 Mr Shipton gave notice of his intention to appeal against the decision to terminate his membership. That appeal is determined by the membership at a general meeting. 

The Rules

  1. [27]
    Rules 11.3 to 11.5 set out the basis on which the Committee may terminate membership in the respondent. Rule 11.4 requires that before a membership is terminated for any of the reasons outlined in rule 11.3:

“…the Management Committee must give the member a full and fair opportunity to show why the membership should not be terminated.”

  1. [28]
    Rule 11.5 states:

“If, after considering any and all representations made by the member, the Management Committee decides to terminate the membership, the Secretary of the Management Committee must give the member a written notice of decision. The Association, Management Committee or Secretary are not required to give reasons for the termination other than those specified in 11.3 above.”

Applicant’s contention

  1. [29]
    Mr Shipton submits that the application should be allowed because:
    1. (a)
      The respondent did not give Mr Shipton a full and fair opportunity to respond to the show cause notice, as required by rule 11.4 of the respondent’s Rules. In particular, the respondent refused to provide Mr Shipton with natural justice by refusing to give him documents and other information necessary for him to respond to allegations made against him.
    2. (b)
      The material included legal advice which the respondent referred to in the show cause notice.
    3. (c)
      There was no reasonable or rational basis for the Committee to reach the required state of satisfaction set out in rule 11.3.4 that Mr Shipton’s conduct was injurious or prejudicial to the character or interests of the respondent, the management and operation of the airfield or to the members of the respondent.
    4. (d)
      The purported notice of termination did not provide the reasons required by rule 11.5.

Respondent’s case

  1. [30]
    The respondent submits that the application should be dismissed because:
    1. (a)
      Mr Shipton does not have standing to apply to the Court and the Court does not have jurisdiction to make the orders sought because Mr Shipton is not a member of the respondent.
    2. (b)
      If the Court does have jurisdiction, it should refuse to entertain Mr Shipton’s application on the basis that it was unreasonable for Mr Shipton to make the application.
    3. (c)
      The application is unmeritorious as the respondent gave Mr Shipton a full and fair opportunity to show why the membership should not be terminated.

Does Mr Shipton have standing and does the Court have jurisdiction?

  1. [31]
    The respondent submits that Mr Shipton does not have standing to apply to the Court and the Court does not have jurisdiction to make the orders sought, because Mr Shipton is not a member of the respondent within the meaning of s 72(1) of the Associations Incorporation Act 1981 (Cth) (the Act) as his membership was terminated. According to the respondent, “member” refers to a “current member”. The respondent contends that a distinction is drawn under the Act between a member as opposed to a person. For example, in s 119A of the Act a relevant person is defined to include a person who is or was a member of the management committee. It further relies on rule 11 of the Associations Incorporation Regulations 1999 (the Regulations). Rule 11 of the Model Rules[3] provides for a person to give written notice of the person’s intention to appeal against a decision where the membership has, inter alia, been terminated.
  2. [32]
    Mr Shipton submits that the Court has jurisdiction to enforce the rights and obligations of members and associations by virtue of sections 72 and 73 of the Act.
  3. [33]
    Section 72 states:

“(1) The Supreme Court may, on the application of an incorporated association, or of a member thereof, make orders, including interim orders—

(a) giving directions for the performance and observance of the rules of such incorporated association by any person who is under an obligation to perform or observe those rules; or

(b) declaring and enforcing the rights and obligations of members of such incorporated association between themselves, and the rights and obligations between such incorporated association and any member or members thereof.

(2) An order may be made under this section notwithstanding that no right of a proprietary nature is involved, or that the applicant has no interest in the property of the incorporated association.”

  1. [34]
    Section 73(1) states:

“(1) The Supreme Court may, on an application brought pursuant to section 72, grant such relief as is appropriate in the circumstances.”

  1. [35]
    Mr Shipton submits that the mere assertion by the respondent that he is no longer a member cannot make that assertion correct. Mr Shipton submits that he remains a member of the respondent because natural justice was not afforded to him.  Mr Shipton contends that a decision set aside for jurisdictional error is of no legal effect.
  2. [36]
    Section 71 of the Act specifies that the rules of an incorporated association constitute the terms of a contract between the association and members.
  3. [37]
    Section 71(3) of the Act states that an incorporated association shall be bound by the rules of natural justice in adjudicating upon the rights of its members conferred by the rules of such association on its members. In the present case Mr Shipton contends he has been denied natural justice in the determination of his membership.
  4. [38]
    To the extent the question of whether Mr Shipton is a member of the respondent or not, Mr Shipton submits that it is a jurisdictional fact to be determined by the Court, with the onus lying on the respondent to prove the absence of the fact.
  5. [39]
    Mr Shipton contends that the fact that there is an appeal right which permits the general meeting to determine “why the membership should not be terminated” further supports the fact that he remains a member until the matter is determined by the general meeting as is the case where it is a matter the Court is asked to determine.
  6. [40]
    Mr Shipton also contends that the Court can intervene when the contract between the parties has been breached by the respondent failing to arrive at a determination in a reasonable and rational way, which Mr Shipton contends the respondent has failed to do.
  7. [41]
    The respondent’s contention that “member” in s 72 properly construed only refers to a current member should be rejected for the following reasons:
    1. (a)
      Section 71(2) of the Act provides that where a member is deprived, by a decision, of a right conferred on the member by the rules of that association as a member thereof, the Supreme Court shall have jurisdiction to adjudicate upon the validity of that decision under the rules. Under rule 11.3 Mr Shipton had a right to be given “a full and fair opportunity to show why the membership should not be terminated.” Section 72 of the Act provides for an application to be made to the Supreme Court by a member, including for orders giving directions for the performance and observance of the rules and declaring and enforcing the rights and obligations of members and associations. Section 73 of the Act provides the Court with a broad discretion for the granting of relief.  While the respondent submits that Mr Shipton has relied on sections 72 and  73 of the Act, and not s 71 of the Act, section 72 expressly provides for the application to be made to the Supreme Court which would incorporate an application under s 71. In any event both s 71 and s 72 of the Act refer to a member, supporting the fact it has the same meaning in both. The termination of membership through a misapplication of the rules or failure to accord natural justice would be a significant deprivation of right. It would be consistent with purpose of providing for membership of incorporated associations[4] to provide for recourse to the Courts when an association purports to deprive a member of their membership rather than excluding it from challenge in the Court by virtue of the fact that the action the subject of challenge brought their membership to an end.
    2. (b)
      While the respondent contends that the jurisdiction of the Court has not been specifically challenged in cases of this Court which have entertained similar applications, the question of jurisdiction, while not on the face of the decisions a matter necessarily in issue, was addressed in those cases and accepted:
      1. In Gould v Isis Club Incorporated,[5] McMeekin J considered an application where a member’s membership had been terminated on the basis of the same rule that was relied upon by the management committee in the present case,[6] where the essential issue was whether the member had been given full and fair opportunity to show why her membership should not be terminated. His Honour noted that s 71(2) of the Act had been relied upon to invoke the Court’s jurisdiction.[7] 
      2. Similarly, in Kenney v Shailer Park Netball,[8] Philippides J accepted the Court had jurisdiction to hear the application under s 71 and s 72 of the Act where the membership of the applicant had been terminated although her Honour refused to grant relief under s 73(2) of the Act.
      3. In Miller v Soroptimist International of the South West Pacific,[9] Henry J made a declaration under s 72 of the Act that the termination of membership was void where his Honour found the decision to terminate Ms Miller’s membership was not validly made because it was not, as s 71(3) required made in accordance with the rules of natural justice.
    3. (c)
      While s 72 does not provide a right to have a decision declared void, the Court may make declarations and directions in relation to the rules. Section 73 also provides the Court with a broad discretion as to relief. While, as submitted by the respondent, an invalid decision is generally treated as valid unless set aside, and the legal consequences of invalidity will depend upon the statute concerned, given s 71(3) of the Act expressly acknowledges that an association is bound by the rules of natural justice in the adjudication of the rights of its members conferred by the rules of the association. In the present case it is the subject of an express rule of the Association. The scheme of the Act supports the fact that a decision denying natural justice would be generally be found to be legally ineffective,[10] although that isn’t necessarily the case.[11]
    4. (d)
      The reference to section 119A of the Act and the reference to “relevant person” is not probative given its different context. It provides a power for the Chief Executive to investigate complaints and require the production of information and documents about a stated matter.
    5. (e)
      The Model Rules made under the Associations Incorporation Regulations 1999[12] provide little assistance as to the construction of the Act, particularly given the reference to “person” in rule 11 of the Model Rules is explained by the fact that it applies not only to a member who has their membership terminated but a person whose application for membership is rejected and never was a member at all. Similarly the fact that the Association rules must provide for whether or not there is a right of rejection or termination of membership and how that is to occur and whether there is a right of appeal does not evince a legislative intention that a challenge of a termination of membership under s 72 is excluded. 
  8. [42]
    In my view, the Court has jurisdiction under the Act to consider the application by a member where the association has purported to terminate their membership which is sought to be challenged because it does not accord with the rules or natural justice.

As to the position with respect to the challenge to the management committee’s decision on the basis it was unreasonable and irrational, the argument raised by the respondent is as to the availability of the ground at all in the circumstances.

Should the Court refuse to entertain the application?

  1. [43]
    The respondent further submits that if the Court finds that Mr Shipton has standing to bring the application, the Court should refuse to entertain the application pursuant to section 73(2) of the Act because it was unreasonable for Mr Shipton to apply to the Court when he did.
  2. [44]
    Section 73(2) of the Act states that:

“The Supreme Court may refuse to entertain such an application, or to make an order on such application, or may refuse an order for costs, or may make an order for costs against a party, whether successful or not, if it is of the opinion that –

  1. (a)
    the issue raised in the application is trivial; or
  2. (b)
    having regard to the importance of the issue, the nature of the incorporated association, any other available method of resolving the issue, the costs involved, lapse of time, acquiescence or any other relevant circumstance, it was unreasonable to make the application; or
  3. (c)
    the unreasonable or improper conduct of a party has been responsible for the making of an application, or has added to the costs of the proceedings.”
  1. [45]
    The respondent submits that it was unreasonable for Mr Shipton to make the application where he had a right of appeal to a general meeting, and such a right had not been exercised.
  2. [46]
    In Kenney v Shailer Park Netball,[13] Philippides J refused to hear the application under s 73 of the Act where an appeal had been instituted and was to be heard by an appeals tribunal. Her Honour considered that the appeal process was an inexpensive means of resolving the matter and which was appropriate given the factual disputes between the parties. Further, the representative netball season was over and the member was told she could reapply for membership for the following year. Nor did her Honour regard any of the matters to be of general importance, involving various incidents of her conduct.
  3. [47]
    In the present case Mr Shipton has been a member of the respondent since 2000 and had the benefit of a Sublease over Hangar L since 2001. Section 73 of the Act recognises that it is not appropriate for the Court to intervene in the internal affairs of an incorporated association. Such associations are often social or sporting associations (as is the case here) which benefit the local community and operate on small budgets. That is a factor in the present case against the Court hearing the application.  A further factor that weighs against the Court hearing the application is the fact that Mr Shipton has sought to institute an appeal, however that is of less weight insofar as it does not necessarily remedy the defects of the original decision where there has been a denial of natural justice.[14] Similarly the question of legal costs being incurred by a community organisation is also a significant issue which must be considered by the Court.
  4. [48]
    While the respondent contends the present case involves a number of factual issues, the application raises a number of legal issues in relation to the termination of Mr Shipton’s membership, not simply factual matters, which cannot be resolved by a general meeting. In particular, it raises whether, in order to be provided with natural justice, Mr Shipton was entitled to be given the legal advice referred to in the show cause letter. Further, the Management Committee’s power to terminate a member’s membership is limited to the circumstances outlined in rule 11.3, a general meeting’s power to do so is not, albeit that the general meeting must accord a full and fair opportunity for the party to be heard under rule 13.4 of the Rules. While Mr Shipton lodged an appeal, no doubt to preserve his rights, he made it clear he did not accept the legality of the decision of the Committee’s decision through this application.
  5. [49]
    As to the question of legal costs, there is some evidence that the legal costs of the respondent defending the matter will create a strain on the respondent’s finances. However, the matter had already been set down for trial and evidence exchanged when the matter came before me. The costs had therefore largely been incurred. Insofar as the respondent complains Mr Shipton has exposed the respondent to significant and undue costs with regard to legal actions, Mr Shipton is entitled to exercise his legal rights and the respondent is entitled to determine how it wishes to respond. The fact that the respondent incurs legal costs in defending the application does not make Mr Shipton’s actions unreasonable nor given my findings below do I find it unreasonable.
  6. [50]
    In the circumstances I decline to exercise the Court’s discretion to refuse to hear the application.

Did the respondent provide Mr Shipton with natural justice?

  1. [51]
    Mr Shipton frames his principal case as being that the respondent failed to provide natural justice when terminating his membership.
  2. [52]
    Rule 11.4 provides that a member is to be given a full and fair opportunity to show why their membership should not be terminated. Mr Shipton submits that he was not afforded a full and fair opportunity to show why his membership should not be terminated and was not given natural justice. Mr Shipton’s complaints include that the respondent did not:
    1. (a)
      Provide the legal advice referred to in the show cause letter dated 30 July 2021, over which privilege had been waived and which needed to be produced in order to provide him with natural justice;
    2. (b)
      Notify him of the definition of “main base” or “main location” or how Orthonyx’s is present in Hangar L such that it is breach of the Sublease;
    3. (c)
      Notify him of any evidence that any activity of Orthonyx had affected the renewal of the Sublease;
    4. (d)
      Notify him of any basis upon which it was contended that the present classification of Hangar L was incorrect and the prejudice suffered;
    5. (e)
      Notify him of what was alleged to have been said about Mr Gilpin or whether anything said about Mr Gilpin was incorrect;
    6. (f)
      Notify him in relation to his “failure” to provide an affidavit of whether there is any basis for the Committee to require members to provide affidavits or other documents. Further he complains no particulars were provided of the power of the Committee to require a member to do or refrain from doing anything in response to investigations, or limit contact with outside organisations or persons.
  3. [53]
    Mr Shipton submits that without the information outlined above, it was not possible for him to have “a fair opportunity to make any relevant statement which he may desire to bring forward and a fair opportunity to correct or controvert any relevant statement brought forward to his prejudice”[15]  in answer the assertions made in the show cause notice.
  4. [54]
    Mr Shipton submits that the contentions made about the activities of Orthonyx and the alleged breaches of the Sublease rely on legal advice obtained by the respondent and communications made to SEQWater. The respondent has not provided the legal advice but was obliged to do so to accord natural justice, given its reliance upon it which resulted in a waiver of privilege. Mr Shipton therefore submits that without that advice he cannot meaningfully respond and correct or controvert its contents.
  5. [55]
    The respondent submits the basis of why Mr Shipton is said to be in breach is set out in the letter. The respondent submits that provision of legal advice is not required for procedural fairness to be provided, given that Mr Shipton has been informed of the allegations against him and has been given a full and fair opportunity to respond to the allegation that he is in breach of the Sublease. The respondent submits it otherwise gave Mr Shipton particulars of the allegations sufficient for him to respond or the complaints of Mr Shipton do not relate to the allegations actually made such that particulars had to be provided.
  6. [56]
    As outlined by McMeekin J in Gould v Isis Club Incorporated,[16] the requirements of natural justice are not inflexible and depend on “the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter being dealt with and so forth.” [17] Thus, it is relevant for the Court to take into account the nature of the Association. 
  7. [57]
    In setting out allegations, the respondent was required to adequately particularise the allegations.[18]

Waiver of privilege

  1. [58]
    Dealing with the question of whether there has been a waiver of privilege first, I note that the respondent submits it is not relevant whether or not privilege was waived because sufficient particularity of the allegations was given and the advice itself was not a particular of the allegation nor a matter he needed to address the allegation.
  2. [59]
    According to Clarke JA in Goldberg v NG,[19] a party should be found to have waived privilege “if the party has conducted himself or herself that the law imputes to that party an intention to waive the privilege and such imputation will occur when the party (or his or her agent) intentionally performs a deliberate act which renders it unfair to another party that the privilege be maintained.”[20] To phrase it differently, a party may waive privilege by asserting the effect or conclusion of a privileged communication on the basis of inconsistency between the conduct of the party and maintenance of confidentiality of the communication.[21]
  3. [60]
    In the present case, Mr Shipton relies on the conduct of the respondent in relying on legal advice given in the show cause letter. As set out above, it has been referred to on three occasions in the second show cause letter as demonstrating Orthonyx is in breach of its Sublease which was relied upon by the Committee and that the Committee could not make representations to the Lessor, SEQWater, that Orthonyx complies with its Sublease “given this would contravene the legal opinion obtained on behalf of the membership”. In that regard, the letter sets out what are said to be the facts surrounding the relationship between Orthonyx and Plane Loopy but not the basis upon which it is said Orthonyx is in breach of the Sublease, although reference is made to correspondence between the solicitors as having fully ventilated the relevant information.
  4. [61]
    The respondent has clearly sought to rely on legal advice as justifying its position that Mr Shipton by his relationship with Orthonyx and its relationship with Plane Loopy is in breach of the Sublease, which the Committee considers has been prejudicial and injurious to the club and its members. The mere reference to legal advice would not generally be sufficient to constitute a waiver of privilege. However, in the present case, the Committee seeks to bolster and justify its position by reference to such advice, a position which was clearly disputed by Mr Shipton in earlier correspondence. Its conduct in maintaining the privilege in those circumstances is unfair and reliance and reference to the legal advice as the basis for the committee regarding Mr Shipton as in breach of his Sublease is inconsistent with its maintaining confidentiality. I find privilege in the advice is therefore waived.

Natural justice

  1. [62]
    The question of waiver however doesn’t resolve the question of whether or not natural justice required Mr Shipton to be provided with the legal advice in order to accord natural justice to Mr Shipton. The respondent contends that Mr Shipton was given sufficient particulars of the allegation that he had breached the Sublease to know the case he had to meet. The letter of 30 July 2021 is said to form part of the show cause letter of 7 July 2021 and provide sufficient particulars. As the respondent rightly submits it is not for the Court to engage in an assessment of the merits of the particulars given but whether they are sufficient to allow Mr Shipton to meaningfully respond. 
  1. [63]
    Natural justice does not require a decision maker to provide every piece of evidence relied upon.[22] However, while the second show cause letter sought to outline facts said to be relevant to the breach and what provision was breached, it does not actually provide proper particulars of what constitutes the breach by Mr Shipton.
  2. [64]
    The particulars of the breach in the letter of 7 July 2021 and in the letter of 30 July 2021 are incomplete and in some respects inconsistent and confused.[23] Although Counsel for the respondent helpfully provided a  schedule of how the allegations were particularised and describes the breach to be the operation of a business by Orthonyx which is described as having its main base as Hangar L, the show cause letters did not reveal such clarity as to the allegations nor were the allegations so limited.
  3. [65]
    The letter of 30 July 2021 is lengthy. It raises a myriad of facts and assertions which do not, particularise the allegations which are apparently being relied upon by the respondent insofar as they are set out at the beginning of section 1 of the letter. While the respondent is not to meet the standard required of lawyers in providing particulars, the letter is confused and inconsistent such that Mr Shipton could not identify the case he had to meet. Relevantly the allegation of breach of the Sublease refers to the “installation and presence” of Orthonyx, rather than providing particulars of the basis upon which approval was required to be sought and the basis upon which its installation and presence is in breach of clause 6.12(a) of the Sublease. While Counsel for the respondent contended that the allegation of breach related to the premises being used as a business of which particulars have been provided albeit brief, the said particulars being the fact that Orthonyx was a company and describing a company as a business structure, that does not provide any particulars of the use of the premises as a business by Mr Shipton. Nor does the reference to Hangar L being Orthonyx’s main base provide particulars of the allegation. Further while the letter refers to the commercial operations surrounding Orthonyx, that does not provide particulars of the allegation. The description of Orthonyx having its main hangar as hangar L, Plane Loopy’s commercial operations and its arrangement with Orthonyx do not provide particulars of how Mr Shipton was engaging in a commercial or profit making undertaking or business. If the suggestion is that Plane Loopy was operating a maintenance organisation at Hangar L using Orthonyx’s certificate of approval no particulars are provided of how that was in breach of the Sublease by its “presence” or more particularly Mr Shipton. While Mr Shipton provided details of the operation of Orthonyx and its relationship with Plane Loopy on 21 July 2021, that does not establish procedural fairness has been given unless it is clear he is responding to the allegation made which was not clear in the present case.
  1. [66]
    It is plain that the Committee had relied upon the advice which was adverse to Mr Shipton and the advice was material to the Committee’s to the allegations made against Mr Shipton in relation to Orthonyx and the basis upon which he is alleged to have been in breach of the Sublease. While the advice is not a “particular” of the allegation, given the reliance of the Committee upon it and its materiality, I consider that without the provision of that advice Mr Shipton could not properly respond to the allegations made and given a full and fair opportunity to rebut the allegations made. Proper particulars were not otherwise provided. In those circumstances the advice, or at least the substance of it, should have been disclosed to Mr Shipton to enable him to deal with it and respond to it in a meaningful way. In the circumstances natural justice required the advice to be provided to him.
  2. [67]
    In not providing such information in relation to the allegations the respondent denied natural justice. While Counsel for the respondent referred to the statement in the letter of 30 July 2021 to extensive and documented correspondence between the solicitors for the respondent and Mr Shipton as to the breach, that is not sufficient without some particularity in the reference to identify the particulars of the breach.
  3. [68]
    There are multiple allegations in relation to Orthonyx. While there is some complexity about it, there is a need for the respondent to identify clearly what the offending conduct is with proper particulars and the respect in which it is said to be injurious or prejudicial under one of the three limbs of rule 11.3.4.
  4. [69]
    As to the remaining complaints of deficiency of particulars outlined in Mr Shipton’s submissions, bearing in mind the nature of the association involved, I find as follows:[24]
    1. (a)
      the reference to “main base” or “main location” was language used by Mr Shipton and further particulars did not need to be provided by the respondent in order for Mr Shipton to fairly respond, provided the respondent was using it in the same sense as Mr Shipton which the respondent states that it was in the letter of 30 July 2021. Mr Shipton’s real complaint is in the identification of clause 6.12(a) which is dealt with above;
    2. (b)
      as to the activity of Orthonyx which interfered with the renewal of the lease, that does not appear to be the allegation made by the respondent but to the extent that insofar as it is alleged its presence is in breach of the sub-lease and an impediment to the lease renewal which is said to be injurious and prejudicial to the respondent in the renewal of the lease proper particulars of the breach need to be provided;
    3. (c)
      the particulars of Hangar L not being certified was something Mr Shipton reasonably should have known and to which he responded and did not need to be provided. While the particulars provided regarding how that conduct is said to be injurious or prejudicial in terms of clause 11.3.4 are tenuous they were sufficient for Mr Shipton to understand the case he had to meet.
    4. (d)
      the complaint of the Committee that there was a change in certification of Hangar L from class 10 to class 7 “when you were aware that Hangar L was uncertified and had never been certified in any class” is obscure in terms of what the Committee is actually alleging against Mr Shipton. Further the particulars provided are not particulars but speculate as to what may or may not be the case and seek to have Mr Shipton provide information to determine whether there is an anomaly at all. The charge and particulars are confused and unclear such that Mr Shipton cannot fairly respond to the complaint.  The anomaly needs to be identified and how it is said to be unfair or prejudicial needed to be provided in order for Mr Shipton to respond;
    5. (e)
      as to the allegation “Publicly making unsubstantiated and easily disproved allegations regarding breaches of rule 15.1.1 of the Rules against club member at a club meeting despite being aware of and prior demonstrating the correct process for lodging SMS Reports” in the 7 July 2021 letter, particulars were outlined in the letter of 30 July 2021 however they appear to be incomplete insofar as while the Committee relied on any matters other than reference to a statutory declaration of Ms Jenkins by Mr Shipton at the meeting of 6 December 2020 in alleging Mr Shipton made unsubstantiated and easily disproved allegations and set out the process they adopted for that, it doesn’t identify whether the Management Committee contend, by referring to the statutory declaration, that Mr Shipton is said to have made those allegations and the basis upon which it is injurious or prejudicial within clause 11.3.4. By the use of the words “which included” the respondent appears to rely upon further statements by Mr Shipton which have not been particularised. If it was, as was submitted by Counsel for the respondent, to be all statements in the Minutes of Meeting in relation to Mr Gilipin that needed to be identified and particulars of those statements being unsubstantiated and easily disproved and which statements, the making of which are said to be prejudicial and injurious to the character of the respondent. The respondent failed to provide adequate particulars of the allegation in order for Mr Shipton to respond;
    6. (f)
      Counsel for the respondent clarified that the respondent was not suggesting that the Committee had a particular power to require provide documents, provide an affidavit or seek the approval of the respondent before negotiating with Seqwater or the next door neighbour, nor did it need to identify such a power in order to find Mr Shipton’s conduct prejudicial or injurious. The allegations made against Mr Shipton allege a failure to supply documents when requested to do so which suggests that he had an obligation to do so. If the respondent’s position is that it is injurious or prejudicial within the terms of clause 11.3.4 in the absence of such an obligation, it needs to provide particulars as to how it is injurious or prejudicial to the respondent in order for Mr Shipton to be able to properly respond rather than just making assertions of the refusal to supply being “obstructionist” to management and the running of the respondent. Sufficient particulars were however provided as to the allegation Mr Shipton contacted SEQwater despite the respondent’s directive they should not to do so; and
    7. (g)
      sufficient particulars were provided of the failure to co-operate with the investigation save that the respondent failed to provide particulars of how the conduct was prejudicial and injurious as discussed below.
  5. [70]
    As to the remaining complaint as to lack of particulars sufficient to accord natural justice, where the Committee is asserting that the conduct could be in breach of sub-rule 11.3.4, I accept Mr Shipton’s contention that particulars should be provided identifying what particular part of the sub-rule was offended by the conduct said to be injurious or prejudicial given that three alternatives referred to in the sub-rule as potentially the subject of the offending conduct and particulars of the basis upon which the conduct is said to be injurious or prejudicial  in order for it to be properly responded to by the member concerned. However, a number of complaints of Mr Shipton require a level of detail beyond what was required to allow him to fairly respond and go to the merits of what was stated by the Committee to be the injurious or prejudicial effect of the conduct rather than particulars.[25] I consider that the letter of 30 July 2021 did provide sufficient particulars in relation to a number of the allegations other than those identified above, insofar as setting out what the Committee was relying upon in this regard.
  6. [71]
    Mr Shipton was denied natural justice such that he was not given a fair opportunity to respond to all of the allegations made against him. The respects in which natural justice has been denied is material insofar as I have found that the respondent failed to provide proper particulars of the allegations, including by disclosing the legal advice as to breach. I consider the denial of natural justice prevented Mr Shipton being given a full and fair opportunity to respond such that the decision to terminate should be set aside.

Unreasonable or irrational decision

  1. [72]
    Given the above, I do not need to determine the extent of or whether there was no rational or reasonable basis to form the state of satisfaction in rule 11.3.4.[26]

Failure to provide reasons

  1. [73]
    Mr Shipton made a further complaint that the respondent failed to give the reasons required by rule 11.5. I will comment on that ground briefly.
  2. [74]
    Normally a club is not required to provide reasons.[27] That of course can be modified by the rules of the association. Rule 11.5 provides some reasons to be given for a termination of a membership but it is of limited scope.
  3. [75]
    According to Mr Shipton, that requires reasons to be given that the member acted in a way that was, for example, prejudicial to the character or interests of the Association. The respondent contends it requires nothing other than specifying the rule pursuant to which the respondent’s Committee has acted in determining membership should be terminated as the respondent did in the present case.
  4. [76]
    The rule is a curious one insofar as it seeks to limit the reasons for termination “other than those specified in 11.3 above”. Requiring reasons “specified in 11.3 above” requires something more than merely identifying the sub-rule relied upon.  The ordinary meaning of “reason” relevantly includes a justification or “a fact adduced or serving as this”. [28] The identification of the sub-rule does not provide the reason for the termination, particularly given the rule provides for termination of membership where a members conduct is injurious or prejudicial in one or more of the three ways identified in the sub-rule which are framed as alternatives. It may be that conduct of the member either individually or the cumulative effect of conduct may be said to be injurious or prejudicial in more than one way.  The provision of “reasons” requires that the Committee to identify the part of the sub-rule the management committee concluded was offended by conduct of the member which it relied upon in terminating the member’s membership. The limitation to ‘specified in 11.3 above” precludes the Committee being required to otherwise set out any individual findings of fact in relation to the allegations to be provided.

Relief to be given

  1. [77]
    The respondent submits that no relief should be given by the Court and rather the matter should go through the appeal process, which has been preserved by Mr Shipton’s lodging an appeal. I have found that Mr Shipton was denied natural justice by the Committee in a number of respects. That was required to be accorded prior to the decision to terminate being made by the Committee.  The appeal process is an appeal from that decision, but the general meeting is not constrained by the rules which constrain the Committee and the defects in the procedure of the Committee will not be cured by the appeal. Like the case of Gould v Isis Club Incorporated,[29] the Rules provided for members to have the opportunity to be heard twice, once by the Committee and once by the general meeting. Mr Shipton is entitled, under the rules, to know the allegations he has to answer prior to the matter proceeding upon appeal to a general meeting. The appeal process will not cure the deficiencies in the process of the Committee.
  2. [78]
    I have not found that the Committee failed to provide natural justice in all respects alleged by Mr Shipton. The Committee did seek to provide details of the allegations made against Mr Shipton in the letter of 30 July 2021. However, the number of respects in which I have found sufficient particulars were not provided of the allegations, including the production of the legal advice, are such that I find the decision making process viewed in its entirety has not met the requirements of natural justice.
  3. [79]
    I therefore will declare the decision of the Committee of the respondent terminating the membership of Mr Shipton on 15 August 2021 void and that the decision be set aside. I do not consider that the further orders sought by Mr Shipton to “perform or observe” rule 11.4 or produce the legal advice are appropriate. It will be for the respondent to determine what course they wish to adopt following the Court’s determination that the termination of Mr Shipton’s membership was invalid. Although applications such as these place a considerable financial burden upon a sporting organisation such as the respondent, as Mr Shipton has been successful in his application which was actively opposed by the respondent and given my finding that an appeal was not sufficient to remedy the denial of natural justice, I consider there is no reason costs should not follow the event.

Orders

  1. [80]
    The orders I make are:
  1. The termination of the membership of the applicant made by the Committee of the respondent on 15 August 2021 was void;
  2. The decision to terminate the applicant’s membership by the Committee of the respondent be set aside; and
  3. The respondent pay the applicant’s costs of the application.

Footnotes

[1] Not at the Kilcoy airfield.

[2] Said to form part of the show cause letter of 7 July 2021 which provided information to Mr Shipton to assist   him in answering it.

[3] Provided in Schedule 4 of the Regulations: see regulation 8.

[4] S 1A of the Act.

[5] [2015] QSC 253.

[6] [2015] QSC 253 at [7] and [8].

[7] [2015] QSC 253 at [6].

[8] [2006] QSC 403.

[9] [2020] QSC 242 at [26],[28] and [31].

[10] Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at [13]-[14] per Gleeson CJ, Gaudron and Gummow JJ at [51] and [57]; Gould v Isis Club Incorporated [2015] QSC 253 at [78]; Miller v Soroptimist International of the South West Pacific [2020] QSC 242 at [31].

[11] McClelland v Burning Palms Surf Life Saving Club (2002) 191 ALR 759 at [155].

[12] Regulation 4 of the Associations Incorporation Regulations 1999.

[13] [2006] QSC 253.

[14] Gould v Isis Club Incorporated [2015] QSC 253 at [76]; Miller v Soroptimist International of the South West Pacific [2020] QSC 242 at [30].

[15] Hall v NSW Trotting Club Ltd [1977] 1 NSWLR 378 at 388 per Samuels JA.

[16] [2015] QSC 253.

[17] Gould v Isis Club Incorporated [2015] QSC 253 at [10] referring to Russell v Duke of Norfolk [1949] 1 All ER 109 at 118 referred to in Ex Parte Angliss Group (1969) 122 CLR 546 at 552.

[18] Gould v Isis Club Incorporated [2015] QSC 253 at [58].

[19] (1994) 33 NSWLR 639 at 674.

[20] Goldberg v NG (1994) 33 NSWLR 639 at 674.

[21] Peninsula Development Group (Tannum Sands) Pty Ltd v Retail Shop Leases Tribunal & Anor [2006] QSC 398 at [31] referring to Mann v Carnell (1999) 201 CLR 1 at [28]-[29].

[22] Kioa v West (1985) 159 CLR 550; (1985) 62 ALR 321 at 380.

[23] For example, whether Mr Shipton had beached the Sublease by the installation and presence of Orthonyx, which by reason of it being a separate entity is said to be a business, or Mr Shipton carrying on a business or commercial operation through Orthonyx or whether Orthonyx itself was in breach.

[24] [41] Applicant’s submissions.

[25] Complaint is made as to the lack of reasonable and rational justification in the Committee’s decision.

[26] Counsel for Mr Shipton noted that if the Court found the denial of natural justice was of such serious import that the decision should be set aside the Court did not need to consider the ground of unreasonableness:T1-48.

[27] Public Service Board of NSW v Osmond (1986) 159 CLR 656

[28] Australian Oxford Dictionary, 2nd edition, online.

[29] [2015] QSC 25.

Close

Editorial Notes

  • Published Case Name:

    Shipton v South East Queensland Sport Aircraft Club Incorporated

  • Shortened Case Name:

    Shipton v South East Queensland Sport Aircraft Club Incorporated

  • Reported Citation:

    (2022) 10 QR 1

  • MNC:

    [2022] QSC 5

  • Court:

    QSC

  • Judge(s):

    Brown J

  • Date:

    28 Jan 2022

  • Selected for Reporting:

    Editor's Note

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Carlyon v Town & Country Pubs No 2 Pty Ltd (No 2) [2015] QSC 25
1 citation
Jump To
Cite 1 - [2015] QSC 25
Goldberg v Ng (1994) 33 NSWLR 639
3 citations
Jump To
Cite 1 - (1994) 33 NSWLR 639
Cite 2 - (1994) 33 NSWLR 639
Cite 3 - (1994) 33 NSWLR 639
Gould v Isis Club Incorporated[2016] 1 Qd R 363; [2015] QSC 253
9 citations
Jump To
Cite 1 - [2015] QSC 253
Cite 2 - [2015] QSC 253
Cite 3 - [2015] QSC 253
Cite 4 - [2015] QSC 253
Cite 5 - [2015] QSC 253
Cite 6 - [2015] QSC 253
Cite 7 - [2015] QSC 253
Cite 8 - [2015] QSC 253
Cite 9 - [2015] QSC 253
Hall v New South Wales Trotting Club Ltd [1977] 1 NSWLR 378
2 citations
Jump To
Cite 1 - [1977] 1 NSWLR 378
Cite 2 - [1977] 1 NSWLR 378
Kenney v Shailer Park Netball Association [2006] QSC 403
2 citations
Jump To
Cite 1 - [2006] QSC 403
Cite 2 - [2006] QSC 403
Kioa v West (1985) 159 C.L.R 550
2 citations
Jump To
Cite 1 - (1985) 159 C.L.R 550
Cite 2 - (1985) 159 C.L.R 550
Kioa v West (1985) 62 ALR 321
1 citation
Jump To
Cite 1 - (1985) 62 ALR 321
Mann v Carnell (1999) 201 CLR 1
2 citations
Jump To
Cite 1 - (1999) 201 CLR 1
Cite 2 - (1999) 201 CLR 1
McClelland v Burning Palms Surf Club (2002) 191 ALR 759
2 citations
Jump To
Cite 1 - (2002) 191 ALR 759
Cite 2 - (2002) 191 ALR 759
Miller v Soroptimist International of the South West Pacific [2020] QSC 242
4 citations
Jump To
Cite 1 - [2020] QSC 242
Cite 2 - [2020] QSC 242
Cite 3 - [2020] QSC 242
Cite 4 - [2020] QSC 242
Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597
2 citations
Jump To
Cite 1 - (2002) 209 CLR 597
Cite 2 - (2002) 209 CLR 597
Peninsula Development Group (Tannum Sands) Pty Ltd v Retail Shop Leases Tribunal [2006] QSC 398
2 citations
Jump To
Cite 1 - [2006] QSC 398
Cite 2 - [2006] QSC 398
Public Service Board of NSW v Osmond (1986) 159 CLR 656
1 citation
Jump To
Cite 1 - (1986) 159 CLR 656
R v Boulle [2006] QSC 253
1 citation
Jump To
Cite 1 - [2006] QSC 253
R v Commonwealth Conciliation and Arbitration Commission; ex parte Angliss Group (1969) 122 CLR 546
1 citation
Jump To
Cite 1 - (1969) 122 CLR 546
Russell v Duke of Norfolk (1949) 1 All ER 109
2 citations
Jump To
Cite 1 - (1949) 1 All ER 109
Cite 2 - (1949) 1 All ER 109

Cases Citing

Case NameFull CitationFrequency
O'Connell v Kawana Tennis Club Inc [2025] QSC 604 citations
1

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