Shipton v South East Queensland Sport Aircraft Club Incorporated

This case related to the termination of an individual’s membership of an incorporated association. The association had made a number of allegations about the member, but they were insufficiently particularised. As a result, the Court found that the member had not been given a “full and fair opportunity” to show why his membership should not be terminated, as required by the association’s rules. The Court set aside the termination, pursuant to s 72 Associations Incorporations Act 1981.

Brown J

28 January 2022

Background

The applicant, Mr Shipton, was a member of the South East Queensland Sport Aircraft Club Incorporated (“the Club”). [1]. On 15 August 2021 the Club terminated Mr Shipton’s membership in it, purportedly pursuant to its Rules of Association (“Rules”). [1].

Mr Shipton applied to the Court to set aside that termination. Alternatively, he sought an order that he be provided with a copy of the legal advice to which the respondent had referred in a show cause notice. [2]. Mr Shipton’s principal allegation was that he had not been provided with a “full and fair opportunity” to show why his membership should not be terminated, as required by the Rules. [27], [51].

In the result, Mr Shipton succeeded in obtaining an order setting aside the termination of his membership. [80]. In the course of the judgment, Brown J gave particular consideration to three issues, which are expanded on further below.

Standing and jurisdiction

Section 72 Associations Incorporation Act 1981 (“the Act”) provides that “[t]he Supreme Court may, on the application of an incorporated association, or a member thereof, make orders” (emphasis added), which may include the granting of “such relief as is appropriate in the circumstances” (per s 73(1)). [33]–[34]. Notably, the Club contended that Mr Shipton did not have standing, and the Court did not have jurisdiction, because he was no longer a “member” of the association (as required by s 72), on account of his termination. [30]–[31].

Justice Brown rejected the Club’s argument that “member” in s 72 only referred to a current member. [41]. Her Honour observed that a “termination of membership through a misapplication of the rules” – as was contended to be the case here – would involve a “significant deprivation of right”. In those circumstances, it was consistent with the statutory purpose to “provide for recourse to the Courts”. [41]. Her Honour also noted that a number of prior decisions were consistent with that conclusion. [41]. Accordingly, it was held that:

“the Court has jurisdiction under the Act to consider an 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.” [42].

Finally, the Club contended that the Court should refuse to entertain the application on the basis that it was unreasonable for Mr Shipton to make the application when he had an internal right of appeal, which had not yet been exercised. [45]. However, Brown J considered that an internal appeal would not necessarily “remedy the defects of the original decision”, and that this application raised “legal issues” which could not be resolved by such an appeal (such as whether Mr Shipton was entitled to a copy of the Club’s legal advice, as discussed below). [47]–[48].

Whether the applicant had been afforded a “full and fair opportunity”

In July 2021, the Club provided the applicant with two “show cause” notices, which made a series of allegations. [16]–[20] Some of the allegations related to a supposed commercial use by Mr Shipton of a hangar he had at the club, in apparent contravention of a term of his sublease. [7]. The notices referred to rule 11.3.4 of the Club’s Rules, which provides that the Club may terminate a member’s membership if the member “conducts themselves in a way considered to be injurious or prejudicial” to the Association. [16]. After providing Mr Shipton with an opportunity to respond, the Club subsequently terminated his membership. [24].

Justice Brown concluded that the Club had failed to provide Mr Shipton with a “full and fair opportunity” to show why his membership should not be terminated, as required by rule 11.4 of the Rules. [52]. That was because the show cause notices raised “a myriad of facts and assertions” but did not “particularise the allegations” being relied upon. [65]. There was a need for the Club to “identify clearly what the offending conduct” was, with “proper particulars” in respect of which it was said to be “injurious or prejudicial” to the Club, so as to justify termination under rule 11.3.4 of the Rules. [68]. Further, the show cause notice sought to rely on legal advice which had been provided to it, but it did not disclose that advice, meaning that Mr Shipton “could not respond to it in a meaningful way”. [66].

In conclusion, the denial of a “full and fair opportunity” for Mr Shipton to show why his membership should not be terminated was in breach of the Club’s Rules. It justified an order that the termination be set aside. [71].

Whether the applicant should be provided with a copy of a legal advice

As discussed above, Justice Brown found that the Club had failed to afford Mr Shipton procedural fairness, including because it had not disclosed to him legal advice on which it sought to rely in show cause notices. Further, her Honour considered that, in invoking the advice to “bolster and justify its position”, the Club had impliedly waived legal professional privilege in it (noting that, as held in Goldberg v NG (1994) 33 NSWLR 639, waiver may occur where a person “intentionally performs a deliberate act which renders it unfair to another party that the privilege be maintained”). [59].

However, her Honour declined to make an order requiring that the advice be provided to Mr Shipton, as he had sought. [79]. The termination decision having been set aside, it would be for the Club to decide “what course they wish to adopt”. [79].

W Isdale