Carlos Navarro and Leito Navaro v the Spanish-Australian Club of Canberra, ACT Incorporated [1987] ACTSC 26 (8 April 1987)

SUPREME COURT OF THE ACT

CARLOS NAVARRO and LEITO NAVARO v. THE SPANISH-AUSTRALIAN CLUB OF CANBERRA,
A.C.T. INCORPORATED
S.C. No. 211 of 1985
Voluntary Association - Damages

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Voluntary Association - incorporated under Associations Incorporation Ordinance 1953 - membership - suspension of membership - rules of association - nature of relationship created by rules between members and association and amongst members inter se - applicability of rules of natural justice - consequences of breach of rules of natural justice - whether right to damages - declaration - joint plaintiffs.

Damages - breach of rules of incorporated association - breach of rules of natural justice - whether breach gives right to damages.

Cameron v. Hogan [1934] HCA 24; (1934) 51 CLR 358

Verduci and Others v. Catanzariti and Others (unreported decision of Blackburn CJ., Supreme Court of the ACT, 11 June 1981)

McKinnon v. Grogan (1974) 1 NSWLR 295

Mills v. Darts Federation of Australia Inc. (1979) 1 NSWLR 417

Plenty v. Seventh Day Adventist Church of Port Pirie (1987) ACLD 120

Kioa & Ors. v. Minister for Immigration and Ethnic Affairs & Anor [1985] HCA 81; (1985) 62 ALR 321

HEARING

CANBERRA
8:4:1987

ORDER

The application for an injunction be refused.

The application for a declaration or declarations be refused.

The claim for damages be dismissed.

The plaintiffs and defendant each bear their and its own costs.

DECISION

This is an action brought by the plaintiffs, Mr. and Mrs. Navarro against the defendant, The Spanish-Australian Club of Canberra, A.C.T. Incorporated ("the Club") relating to their purported suspension from membership of the Club on 9 August 1984 for a period of one year. The case was opened on behalf of the plaintiffs and argued on behalf of both sides upon the basis that what the plaintiffs were seeking was a declaration that the purported suspension was in breach of the Club rules, or in breach of the rules of natural justice, or both and that such breach or breaches entitled them to damages.

2. It is appropriate to set out the statement of claim in some detail. The first three paragraphs of the statement of claim were not put in issue. They alleged that the defendant was incorporated under the Associations Incorporation Ordinance 1953, that the plaintiffs were members, and that the plaintiffs and the defendant were bound by the rules of the Club contained in a document dated August 1971. The statement of claim proceeded as follows:

"4. On the 9th day of August 1984 the defendant

forwarded to the plaintiffs a letter in which the
defendant purported to suspend the plaintiffs'
membership in the defendant for a period of one
year, purported to restrain the plaintiffs from
entering the premises of the defendant during the
stated period and purported to prevent the
plaintiffs from holding any position in the
defendant during the said period.

5. In purporting to suspend the plaintiffs'
membership as aforesaid, the defendant was in
breach of the said Rules and in breach of the
rules of natural justice which the plaintiffs
alleged were applicable in these circumstances.

6. Particulars of the defendant's alleged
breaches of the said Rules are:

(a) Failure to provide notice of the
conduct of the plaintiffs which the
defendant alleges was prejudicial to
the interest of the defendant.

(b) Failure to provide notice of the
meeting at which the defendant dealt
with the purported resolution to
suspend the plaintiffs' membership.

(c) Failure to provide the plaintiffs with
an opportunity of giving orally or in
writing any explanation or defence to
their purported suspension.

7. Particulars of the defendant's alleged
breaches of the rules of natural justice are:

(a) Failure to provide details of the facts
upon which the defendant purported to
rely in suspending the plaintiffs'
membership.

(b) Failure to provide notice of the
plaintiffs' purported suspension.

(c) Failure to conduct a hearing into the
proposed suspension.

(d) Failure to provide notice of such
hearing and to allow the plaintiffs to
attend such hearing and provide
evidence in defence of their purported
suspension.

(e) Restraining and continuing to restrain
the plaintiffs from using in common
with other members the premises and
amenities of the defendant.

8. The plaintiffs have in consequence of the
defendant's breach of the rules of natural justice
and breach of the said Rules suffered and
continued to suffer damage.":

3. The relief claimed in the statement of claim was as follows:

"(a) An injunction restraining the defendant by
its servants or agents or otherwise from
restraining the plaintiffs from entering and
using in common with other members the
premises and amenities of the defendant.

(b) Damages.

(c) Costs.

(d) Interest pursuant to s.53A of the Australian
Capital Territory Supreme Court Act 1933."

4. The amended defence was pleaded as follows:

"2. The Defendant denies the allegations
contained in paragraph 3 of the statement of
claim.

3. In relation to paragraph 4 of the statement
of claim the defendant admits that it sent a
letter dated 9 August 1984 to the Plaintiffs
but does not admit that the paragraph
accurately sets out the terms of the letter
and the Defendant craves leave to refer to
the letter as though it were fully set out
herein.

4. In relation to paragraph 5, 6 and 7 of the
statement of claim the Defendant denies:-

(a) that it was in breach of the said rules
either as alleged or at all.

(b) that there are any rules of natural
justice applicable in the circumstances
or at all.

(c) that should there be any rules of
natural justice applicable - which is
denied - that it is in breach of any
such rules either as alleged or at all.

5. In relation to paragraph 8 the Defendant
denies any such breaches and does not admit
any damage.

6. The Defendant denies that the Plaintiffs are
entitled to the relief sought or any
relief."

5. It may be observed then that although the case was argued as if it were a claim for a declaration or declarations, relief of that nature was not sought in the statement of claim, nor was any application made to amend the statement of claim.

6. It is necessary to make some factual findings. Before I do this, however, I should state that although there was a great deal of evidence on factual matters, in the end I do not think that there was any great conflict between the versions given for the respective parties. A good deal of the evidence was given through an interpreter in Spanish, and despite the difficulties that attend that situation, I took care to observe as best as I could the demeanour of all of the witnesses. I must say that I thought the witnesses were doing their best to speak the truth, but that ultimately where there was a conflict between the evidence given on behalf of the plaintiffs and that given on behalf of the defendant in respect of certain events and certain conversations (which were originally in Spanish), then I have little hesitation in accepting the version given on behalf of the plaintiffs. This conclusion is based not only upon observation of demeanour, but also upon a considered assessment of other factors which appear from the transcript. I would also add that the hearing was remarkably free from the bitterness and wrangling which often accompanies a case such as this, and the parties, witnesses and their legal representatives are to be commended for that.

7. The constitution and rules of the Club were tendered in evidence. The document is in Spanish with an English translation or counterpart, and it was accepted by the parties that the English version has equal validity with the Spanish. The objects of the Club are set out in Clause 2. They are:

"(a) To promote social intercourse and good
fellowship amongst Spanish speaking members
and Australian members of the community.

(b) To promote and encourage the integration
into the Australian multicultural community
of Spanish Nationals residing in Australia.

(c) Consistant with object (b) to preserve the
records, arts and way of life of Spanish
people in Australia."

8. There appears to be nothing unusual about the rules. They appear similar to those governing the conduct of similar associations incorporated under the Ordinance. The rules provide, inter alia, that the affairs of the Club are under the management of the Committee. There is provision in Clause 76 for the Committee to appoint sub-committees on any matter which the Committee refers to the sub-committee, or to manage any branch of the activities of the Club.

9. Clause 93 of the rules relates to the suspension and expulsion of members and provides as follows:

"93. If any member shall wilfully infringe any of
the provisions of this Constitution or of
any of the by-laws or disregard any
resolution passed by the Committee, notice
of which shall have been given to the
member, or be in the opinion of the
Committee guilty of any conduct prejudicial
to the interest of the Club, the Committee
shall have the power by resolution to
suspend such a member from all the
privileges of membership of the Club for any
period or to expel that member and erase his
name from the Register of Members, but that
member shall not be expelled unless at least
one week before the meeting at which the
proposed resolution is to be dealt with he
shall have had notice of the meeting and of
the intended resolution of his expulsion,
and he shall at such meeting, and before the
passing of such resolution have had an
opportunity of giving orally or in writing
any explanation or defence he may think
fit."

10. Some time prior to the middle of July 1985 there was within the Club a group of members whose particular interest was in Spanish folk dancing. This group of people was referred to during the course of oral evidence as the "Folkloric Group". It had a president, vice-president, treasurer, secretary and five "voting members". They were referred to in evidence as the "Folkloric Committee" (Junta Directiva Del Groupo Folklorico). The evidence does not establish one way or the other whether the Folkloric Group was a duly constituted sub-committee under the rules, and it is unnecessary for me to make any precise finding on that matter. The terms "Folkloric Group" and "Folkloric Committee" were used loosely, almost interchangeably, by some of the witnesses. I use the term "Folkloric Group" to cover both.

11. In the Club bulletin, which went out to members somewhere in the middle of July, there was included a notice of a meeting of the Folkloric Group to be held at the Club premises on Sunday, 5 August 1984 at 10.30 a.m. This notice was under the hand of the Secretary of the Folkloric Group, Mr. Luis Cano. Whether Mr. Cano was aware of it at that stage or not, there was a difficulty about holding the meeting at the time proposed, because the Club premises did not normally open on a Sunday until 12.30 p.m.

12. At a meeting of the Committee on Sunday, 29 July 1984, a decision was made to refuse to allow the Folkloric Group to hold the meeting as advertised in the notice. The reason for the Committee taking that decision is not clear, but the members of the Committee were concerned at least that the Folkloric Group might seek to pass resolutions which were appropriate only to a general meeting of the Club members when the requirements of a general meeting had not been met.

13. On Wednesday, 1 August or Thursday, 2 August 1984, the Vice-President of the Club and the Secretary of the Club spoke to some members of the Folkloric Group at the club premises and requested particulars of the proposed meeting. They were told that those matters were "internal to the Folkloric Committee". I am unable to determine what was the exact reply of the Vice-President or the Secretary of the Club, but I find that neither of them positively informed the members of the Folkloric Group on that occasion that there had been a firm decision of the Committee of the Club that the meeting should not be held.

14. Some time during the morning of Saturday, 4 August 1984, there was a conversation between Mr. Corujo, the President of the Club, and Mr. Munoz, the President of the Folkloric Group, in which Mr. Corujo said that the Committee had decided to cancel the Folkloric Group meeting proposed for the following day. I find that this was the first occasion upon which anyone representing the Folkloric Group had been definitely informed of the Committee's decision. Mr. Corujo at that stage agreed to meet Mr. Munoz later in the day at the Club premises in order to try to reconvene a Committee meeting to reconsider the Committee's decision. They in fact did meet, but Mr. Corujo was unable to find a sufficient number of Committee members. Mr. Corujo insisted to Mr. Munoz that the Committee's decision would have to stand and that the meeting should be regarded as cancelled. Mr. Munoz spoke to a number of members of the Folkloric Group who were at the Club premises at that stage. They expressed the view that the meeting should go ahead as planned, but that it should be held outside the Club building and not inside. There was a suggestion in the evidence that somebody had said that the meeting should be held as a protest. I find that it was not simply a protest meeting, it was a meeting that had been planned for some time, and it was simply being held despite the Committee's decision. I express no view as to whether the Committee had any power to prevent the members of the Folkloric Group gathering to meet as proposed, either upon the Club premises or away from the Club premises.

15. On Sunday, 5 August 1984 at about 10.30 a.m. a number of members of the Folkloric Group arrived outside the Club premises. The doors were in fact open to permit entry of some tradesmen who were occupied in building an extension to the premises. The Club President, Mr. Corujo, was present. Mr. and Mrs. Navarro arrived after many of the other people had assembled. It was raining and there were some children present. Mr. Corujo was asked whether the doors of the Club might be opened, by which I take it that the request was really a request to hold the meeting inside the Club. Mr. Corujo replied that the doors did not open until the normal time, that is to say about 12 or 12.30. Mr. Navarro said to Mr. Corujo, "You have no shame". His wife added, "They are dictators". Mr. Corujo did not reply at that stage. The meeting proceeded. A resolution was passed in the terms of a typed document which had been prepared in advance of the meeting by the Secretary, Mr. Cano. A number of people in the group signed the document and Mr. Cano showed it to Mr. Corujo and asked him to sign it. Mr. Corujo said, "I cannot sign it, I do not agree with part of it, and someone present has insulted me" or words to that effect. Mr. Navarro, who was close by, stated that he had not said anything which could have insulted Mr. Corujo, and asked Mr. Corujo to identify the person who had insulted him. Mr. Corujo said that it was Mrs. Navarro. Mrs. Navarro enquired what it was that she was supposed to have said. Mr. Corujo told her what it was. There were three different versions in the evidence of what Mr. Corujo told Mrs. Navarro she had said. In descending order of the capacity to insult they were "son of a bitch", "son of a mother" and "son of a -----". I am unable to determine which of these three epithets was used by Mr. Corujo, but it was certainly one of them. Mrs. Navarro replied that she had not said such a thing. She added that she respected Mr. Corujo as an older man and that if she had done anything to upset him then she apologised. Mr. Corujo indicated that he accepted the apology and that he would forget the incident. The people then dispersed and, as it was by then the usual opening time, some of them went into the Club as they might in the ordinary way.

16. On Monday, 6 August 1984 the Committee of the Club met. Mr. Corujo raised the subject of the events the preceding day. He informed the Committee that Mr. Navarro had spoken to him in a threatening manner and that Mrs. Navarro had called him a "son of a -----". Mr. Corujo proposed that Mr. and Mrs. Navarro be suspended from membership of the Club for a year. The members of the Committee discussed the matter. Mr. Corujo did not take part in the discussion. It was unanimously agreed that Mr. Corujo had been insulted by both Mr. and Mrs. Navarro. It was further agreed by a majority that their membership should be suspended for one year and that they should be advised that they would be expelled in the event of a recurrence of their behaviour.

17. On about 11 August 1984 Mrs. Navarro telephoned Mr. Corujo and told him that people were saying that she had called him a "son of a mother". Mr. Corujo replied that he did not wish to create a problem about the matter and that it would be forgotten. He did not inform Mrs. Navarro of the decision of the Committee.

18. On 14 or 15 August 1984 Mr. and Mrs. Navarro received a letter signed by the Secretary of the Club, bearing date 9 August and stating the following (translated into English):

"We inform you of the decision taken by this Board
in view of your behaviour on Sunday morning,
August 5 1984, at 11.00 a.m., at the entrance of
the Club, when you insulted in word and without
any reason the Board's member Mr. Corujo.

Considering these facts, it was decided to suspend
you for one (1) year. You will not be able to
enter these premises during the stated period nor
hold any position in the Club.

I communicate this decision to you for you to
comply with."

19. Mr. and Mrs. Navarro replied to the Club's letter by their own letter dated 15 August, which it is not necessary to repeat. In it they not only protested their innocence, but complained about not having been given the opportunity to defend themselves. They requested an extraordinary special meeting (presumably of the Club) to discuss their purported expulsion. The Club did not reply to this letter. The solicitors acting for Mr. and Mrs. Navarro wrote to the Committee on 21 September 1984 seeking a revocation of the decision to suspend Mr. and Mrs. Navarro from membership and threatening legal proceedings to obtain a declaration and injunction. In a later letter they also asked for costs. The Secretary of the Club replied to these letters on 16 October 1984, stating that the courts would not entertain an action by Mr. and Mrs. Navarro, that the costs were not the responsibility of the Club and that the Committee considered the action taken against Mr. and Mrs. Navarro to be valid and just. On 9 April 1985 the solicitors for the Club wrote to the solicitors for Mr. and Mrs. Navarro informing them that the Club had convened a meeting for Monday, 15 April to consider whether the suspension of the Mr. and Mrs. Navarro should be removed. The letter stated that the invitation was made without admissions and in an attempt to minimise costs, but it repeated that the claim made by the plaintiffs was doomed to failure. The solicitors for the plaintiffs replied in a letter of 11 April 1985 declining the invitation to attend the meeting and expressing the view, somewhat contrary to the attitude that had previously been taken, that the Club had no power to reconsider the decision to suspend the membership of their clients. The solicitors stated that they were "unable to see how the outcome of such a discussion could possibly reinstate our clients' membership". The letter stated further that the matter could only be resolved on certain terms, including a declaration (of the Court), immediate reinstatement of the full privileges of membership to Mr. and Mrs. Navarro, and an unequivocal apology and payment of costs in full. That was the end of the negotiations between the parties.

20. Mr. Purnell of Counsel who appeared for the defendant submitted in the first instance that Rule 93 of the Club rules did not impose any duty upon the Committee to give notice to a member of the suspension of his or her membership. It was submitted that whilst the rule gives the Committee the express power to suspend a member from all the privileges of membership of the Club for any period, as well as to expel that member and erase his name from the register of members, the requirement of one week's notice of the meeting and of the intended resolution is expressly directed at a proposed expulsion and does not apply to a proposed suspension of membership. In other words, whilst the rule is explicit in protecting the member from expulsion until after due notice, it empowers the Committee of the Club to take the less drastic step of suspending membership without notice to the member. I think that the submission is well founded. Whilst I would accept that the rules of a voluntary association such as the Club should not be construed with the strictness that would apply to a commercial contract or to a will, I am of the view that giving the words of Rule 93 their natural meaning, it is impossible to read the word "expulsion" as "expulsion or suspension" or the word "expelled" to read "expelled or suspended".

21. Having accepted Mr. Purnell's submission in that regard, it is necessary to deal only briefly with an alternative submission that the rules of the Club did not constitute an agreement between the members on the on hand and the Club on the other which would give rise to justiciable issues in a court of law. Reliance for this proposition was placed upon Cameron v. Hogan [1934] HCA 24; (1934) 51 CLR 358 and an unreported decision of Blackburn CJ in this Court on 11 June 1981, Verduci and Others v. Catanzariti and Others. In the latter decision the Chief Justice decided in a claim for declarations to enforce the rules of the Italo-Australian Club Incorporated that the Cameron v. Hogan principle applied, and that decisions of single Judges of the Supreme Court of New South Wales in McKinnon v. Grogan (1974) 1 NSWLR 295 and Mills v. Darts Federation of Australia Inc. (1979) 1 NSWLR 417 should not be followed as they were inconsistent with Cameron v. Hogan. For myself I would think that there is room at least for the argument that the Cameron v. Hogan principle does not apply in the present case, and that membership of a body incorporated under the Associations Incorporation Ordinance 1953 gives rise to legal relations between the members and the association itself as well as amongst the members inter se. I note that the Court of Appeal in South Australia has recently by majority declined to apply Cameron v. Hogan in a case questioning the legality of the expulsion of a member from a voluntary association. It was said that the principle did not apply where the plaintiff can show a proprietary interest, a consensual contract or an injury to reputation: Plenty v. Seventh Day Adventist Church of Port Pirie (1987) ACLD 120.

22. I do not overlook the imprecision of the plaintiffs' claim as pleaded. It is not an action for damages for breach of contract. Although the case was argued as if the claim were a claim for a declaration or declarations, the relief sought in the statement of claim is simply an injunction, damages, and costs. I am unable to see on any of the material put before me how an incorporated body such as the Club becomes liable in damages simply because it has, through its Committee, acted in breach of the rules of the Club to the detriment of a member. No authority was cited as direct support for this broad proposition. In any event there is no causal connection between the breach, namely the failure to give notice of the meeting, and the damage alleged, that is the detriment suffered by the loss of membership for a year. It was the decision of the Committee to suspend membership (not the failure to give notice) which caused the detriment. The decision, and the detriment, might just as well have occurred if notice had been given. Damage to loss of reputation was not pleaded and there was no evidence of it.

23. I now deal with the issue of natural justice. It was submitted on behalf of the defendant that the rules of natural justice had been excluded by Rule 93 insofar as it applied to a decision to suspend membership. It was argued that because Rule 93 laid down a particular procedure for notice to be given in the event of intended expulsion, it impliedly contained a waiver by members of the Club of any requirement of the general law that they should be given notice of intended suspension.

24. I am unable to accept this interpretation of Rule 93. Simply because the rule is silent on the question of what procedure should be followed in the case of the proposed suspension of membership does not mean, in my view, that it absolved the Committee, being the body through which the Club acted and made its decisions, from abiding by the appropriate rules of natural justice before making a decision to suspend a member from membership. The rules of natural justice, it is clear, are not identical in every case. The duty to comply with the rules of natural justice, it has been said, is a duty to act fairly according to the circumstances: see for instance Kioa & Ors. v. Minister for Immigration and Ethnic Affairs & Anor [1985] HCA 81; (1985) 62 ALR 321.

25. In my view, the duty to act fairly in relation to the proposed suspension from membership of Mr. and Mrs. Navarro involved letting them know that it was proposed to take some action against them over what was alleged to have happened outside the club on 5 August 1984, giving them some idea of what it was that was alleged against them and giving them an opportunity to say something on their behalf in answer to what was alleged against them. I should add that I think that natural justice required also that they be given an opportunity of saying something about what penalty ought be imposed upon them once it was decided by the Committee that they had behaved as alleged and that such behaviour constituted conduct prejudicial to the Club under Rule 93. It is perfectly clear that none of these four requirements of natural justice in the present case were met. Indeed, it was not argued that if the rules of natural justice applied, there had been no breach.

26. The next question to be decided is what are the consequences of the breach of natural justice? For the plaintiffs it was submitted that a breach of those rules led to a right to damages if damages were sustained. No authority was cited for that submission. It is, in my view, contrary to principle. Where a body is required to observe the rules of natural justice but fails to do so, any decision consequent thereon may be declared void by a competent court and a person adversely affected is restored to the position which he or she occupied prior to the decision. The relief granted which has the effect of nullifying the decision taken, may be by way of a declaration or the prerogative writ of prohibition, but if a right to damages exists, it has to be found elsewhere than in the right to have the decision nullified for breach of natural justice. As I have already stated, the plaintiffs' claim is not for breach of contract. The Club was not guilty of breach of contract, and the decision of the Committee was not a breach of Rule 93. I can see no basis upon which damages might be awarded. The claim for damages will be dismissed.

27. The remaining question is whether the court ought make a declaration that the decision of the Club to suspend the membership of Mr. and Mrs. Navarro for twelve months from 9 August 1984 was null and void. It has been submitted on behalf of the plaintiffs that the decision of the Committee was in flagrant breach of their rights as members and that those rights ought be positively affirmed by the making of a declaration. It was also submitted that the Committee decided not only to suspend the membership of the plaintiffs for a year but threatened that they would be expelled if they repeated their behaviour.

28. I recognize the force of these submissions and the gravity of the decision to suspend Mr. and Mrs. Navarro from the Club for a period of one year. However, the granting of a declaration is always a discretionary matter for the Court. It is common ground that Mr. and Mrs. Navarro resumed their membership of the Club at the end of the twelve months suspension, and it is in no way suggested that their continued membership is in jeopardy. It must also be taken into account that despite the somewhat intransigent attitude of the Committee in the early stages following its decision, there was an offer on behalf of the Club to convene a meeting on 15 April 1985 to consider the removal of the suspension of the plaintiffs. The plaintiffs were invited to attend that meeting. However, the plaintiffs, through their solicitors, declined the invitation to attend, and asserted that the Club had no power to reconsider its decision to suspend the membership of the plaintiffs. The plaintiffs' solicitors asserted further that the plaintiffs had suffered considerable damage to their standing within the Spanish community of Canberra and, somewhat paradoxically in contrast to what they said about the power of the Club under its constitution, they demanded, amongst other things, immediate reinstatement of the full privileges of membership. Whilst it is, of course, impossible to say that if the plaintiffs had accepted the invitation to attend the proposed meeting there would have been a full resolution of the dispute between them and the Committee, the attitude displayed in the solicitor's letter of 11 April 1985 suggests that the intransigence had moved across to the plaintiffs' camp. An acceptance of the invitation to attend the proposed meeting may well have led to the avoidance of expensive litigation. The unhappy events of 5 August 1984 have long since receded into the past and, in my view, no useful purpose would be served by making a declaration. I refer expressly to the making of a declaration, although the statement of claim, as I have already said, seeks no declaration at all, and that is a further factor to take into account in exercising my discretion to refuse the making of a declaration. The plaintiffs do not press their claims for the injunction sought in the statement of claim, or any other injunction, and that relief would, in the circumstances, have to be refused in any event.

29. Another factor standing in the way of the plaintiffs obtaining any order in the present proceedings is that the nature of their claims is such that they sue as joint plaintiffs but they have not shown any joint interest at all. All these matters lead me to exercise my discretion to refuse the application for an injunction, to refuse the application for a declaration or declarations and to order that the plaintiffs and the defendant each bear their and its own costs. The claim for damages is dismissed.