Pa Credit Union Co-Operative Limited v the Registrar of Co-Operative Societies [1987] ACTSC 44 (3 July 1987)

SUPREME COURT OF THE ACT

P.A. CREDIT UNION CO-OPERATIVE LIMITED v. THE REGISTRAR OF CO-OPERATIVE
SOCIETIES
S.C. No. 388 of 1987
Building, Co-operative and similar societies - Prerogative Writs

COURT

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

CATCHWORDS

Building, co-operative and similar societies - Rules - charges imposed on members - nature of obligation of Registrar of co-operative credit society to register alterations to Rules of co-operative credit society - Co-operative Socities Ordinance 1939 ss.11, 46, 48, 49, 50 and 51.

Prerogative Writs - mandamus - duty of Registrar to register alterations to Rules of co-operative credit society.

HEARING

CANBERRA
3:7:1987

ORDER

The application for an order for the issue of a writ of mandamus be dismissed.

The application that the Registrar register and certify Rule 8(c) and Rule 17(D) (b) of the Rules of the Society as altered by Special Resolution on 16 October 1986 be dismissed.

The Registrar approve or disapprove the alteration of the charges set out in the Society's Rules effected by such Special Resolution.

Each party pay its and his costs.

There be liberty to apply.

DECISION

The P.A. Credit Union Co-operative Limited ("the Society") is a co-operative credit society incorporated under the Co-operative Societies Ordinance 1939 ("the Ordinance"). The Registrar of Co-operative Societies ("the Registrar") is appointed pursuant to the Ordinance. The Society applies for a writ of mandamus and an order under s.11 of the Ordinance directing the Registrar to register certain alterations to the Rules of the Society.

2. At its Annual General Meeting on 16 October 1986 the members of the Society passed a special resolution amending certain of the registered Rules of the Society.

3. On 20 October 1986 the Society by letter notified the Registrar of the terms of the special resolution and furnished a copy of each of the Rules amended by the special resolution.

4. On 21 November 1986 the Registrar wrote to the Society enclosing copies of the duly registered special resolution and notifying the Society that he had not registered Rules 8(c) and 17(D)(b) as amended because he was not satisfied pursuant to s.50(5) of the Ordinance that those Rules as altered were not contrary to the Ordinance or the regulations.

5. On 25 March 1987 the Society applied for a writ of mandamus directed to the Registrar. No order was made on the application and it was adjourned for the purpose of anticipated proceedings pursuant to s.11 of the Ordinance. On 6 April 1987 the Society caused an originating summons to be issued directed to the Registrar seeking orders that the Registrar register the special resolution made on 16 December 1986 (sic) and further that the Registrar register and certify the alterations to Rule 8(c) and Rule 17(D)(b).

6. By consent the hearing of the application for the writ of mandamus and the hearing of the originating summons were heard together before me. At the hearing it was admitted on behalf of the defendant that the special resolution had been registered and I was satisfied that this was the case. The issue then was whether an order ought be made directed to the Registrar requiring the registration and certification of the alterations to Rule 8(c) and Rule 17(D)(b).

7. I was informed that no previous application has been made under s.11 of the Ordinance during the period of nearly fifty years since it came into operation. It may be convenient then to say something about the general scheme of the Ordinance.

8. The Ordinance makes provision for the formation, incorporation, administration and winding-up of co-operative societies within the Australian Capital Territory. There are three types of co-operative societies: co-operative trading societies, co-operative building societies and co-operative credit societies. A co-operative credit society (sometimes known as a credit union) may be formed for any or all of a number of objects concerned with financial assistance to members. Loans may be made to members in accordance with Rules registered in accordance with the Ordinance. The Registrar is obliged under s.16(7) to register a society and its Rules if satisfied that the society has complied with the provisions of the Ordinance and the regulations and that the proposed Rules of the society are not contrary to the Ordinance or the regulations.

s.11 of the Ordinance provides as follows:

"11(1) Where the Registrar refuses to register a
society or any of its Rules, or refuses to
register or directs a change of its name, the
Registrar shall, if so required by the society,
set forth in writing under his hand the grounds
of his refusal or direction.

(2) The society may summon the Registrar to
appear before the Supreme Court and uphold his
refusal or direction.

(3) The Supreme Court may direct any fact to
be determined in such manner as it thinks fit
and may make such order, including an order as
to costs, as it thinks proper in the
circumstances."

9. It was not contested that the power and duty of the Registrar to register Rules of a co-operative credit society included the power and duty to register alterations to Rules. Nor was it contested that the effect of s.11(2) was that the onus lay upon the Registrar to uphold his refusal to register and certify the alterations to the society's Rules.

10. I turn now to the Rules in question. The terms of Rule 8(c) prior to the special resolution made on 16 October 1986 were as follows:

"8(c) The Board shall fix the term, rate of
interest, the amount of periodic payments and
other conditions which will apply to any loan
made and may fix different terms, rates of
interest, methods of calculation of interest,
amounts of periodic payments and other conditions
for different classification of loans.
Loans may be classified with reference to the
type of security, the terms of repayment or the
source from which the Co-operative obtained
funds allocated for loans to members."

11. The terms of Rule 8(c) as amended by the special resolution are as follows:

"Rule 8(c) Amended

The Board shall fix the term, rate of interest,
the amount of periodic payments and other
conditions which will apply to any loan made and
in respect of such loans may impose
administration charges, maintenance fees and
like charges. In imposing such charges, the
Board may take into consideration for differing
classifications of loans, rates of interest, the
method of interest calculation, the amount of
periodic payments and other conditions. Loans
may be classified with reference to the type of
security, the terms of repayment or the source
from which the Co-operative obtained funds
allocated for loan to members."

12. The terms of Rule 17(D)(b) prior to the special resolution made on 16 October 1986 were as follows:

"17(D)(b) Where a Government tax, duty, charge,
impost or levy ("the Tax") is payable directly
by the Co-operative or is lawfully charged to
the Co-operative by any person or body corporate
which has paid or is liable to pay the tax in
relation to or incidental to any business of any
kind transacted by a member with the Co-operative
or transacted by the Co-operative with its bank
or banks or any other person or corporation
arising out of such business a charge of $1.10
(the charge) shall be payable by such member
provided however that the Board may at its
discretion waive the whole or any part of the
charge payable hereunder. The Co-operative may
debit the charge against any investment or loan
account held by such member with the Co-operative
or deduct it from any payment by the
Co-operative to the member."

13. The terms of Rule 17(D)(b) as amended by the special resolution are as follows:

"Rule 17(D)(b) amended

Where a Government tax, duty, charge, impost or
levy (hereinafter called collectively "the tax")
is payable directly by the Co-operative or is
lawfully charged to the Co-operative by any
person or body corporate which has paid or is
liable to pay the tax in relation to or
incidental to any business of any kind
transacted by a member with the Co-operative, or
transacted by the Co-operative with its bank or
banks, or any other person or corporation
arising out of such business, the tax shall be
payable by such member, provided however that
the Board may at its discretion waive the whole
or any part of the tax payable hereunder. The
Co-operative may debit the tax against any
investment or loan account held by such member
with the Co-operative, or deduct it from any
payment by the Co-operative to the member."

14. Other provisions of the Ordinance that are particularly relevant for the purposes of the present application are as follows:

"46(1) A society shall furnish to any person
intending to become a member a list of the
charges payable by a member of the society.

(2) A person who becomes a member of a
society shall be liable to pay only the charges
mentioned in the list furnished to him under the
last preceding sub-section and any charges which
may be imposed by any subsequent alteration in
the Rules of the society.

(3) The charges referred to in this section
may be altered by special resolution.

(4) The charges and any alteration of the
charges shall be subject to approval by the
Registrar.

48(1) For the purposes of this Ordinance, a
special resolution means a resolution which is
passed by a majority of not less than two-thirds
of such members of the society entitled under
its Rules to vote as are present in person or,
where the Rules allow proxies, by proxy, at any
general meeting of the society of which notice
specifying the intention to propose the
resolution has been duly given in accordance
with the Rules.

(2) At any general meeting to which this
section applies a declaration by the Chairman
that the special resolution has been carried
shall, unless a poll is demanded, be conclusive
evidence of the carrying of the resolution.

(3) A copy of any special resolution which is
carried shall be signed by the chairman of the
meeting, countersigned by the secretary of the
society, and shall be sent to the Registrar,
together with the determined fee and shall be
registered by him.

49 (1) The Rules of a society shall be divided
into paragraphs numbered consecutively and shall
set forth -

. . . . .

(xxiv) The charges including any charges on
admission or for working expenses or otherwise,
which are to be payable by a member of the
society.

. . . . .

50 (1) The Rules of a society shall not be
altered unless the alteration has been approved
by a special resolution.

(2) Where an alteration of the Rules has been
so approved, the society shall, within one month
after the date of approval, apply, in the
prescribed manner, to the Registrar to register
the alteration.

(3) The application for registration of the
alteration shall be accompanied by -

(a) a statutory declaration from the chairman
and secretary of the meeting at which the
special resolution of alteration was
passed as to compliance with the
requirements of this section;

(b) two copies of the alteration signed by
the secretary and not less than three
members; and

(c) the determined fee.

(4) Where the alteration alters part of a
Rule only a copy of the alteration shall mean a
copy of the Rules as altered.

(5) If the Registrar is satisfied that the
Rules as altered are not contrary to this
Ordinance or the regulations, he shall register
and certify the alteration as prescribed.

(6) The alteration shall not have any force
or effect until it is registered and certified
in accordance with the last preceding
sub-section.

(7) The Rules of the society shall be read
subject to all alterations so registered and
certified.

(8) For the purposes of this Ordinance, an
addition to, rescission of, or a substitution
of, a Rule shall be deemed to be an alteration
of a Rule."

15. In refusing to register the proposed Rules as amended the Registrar in a letter dated 21 November 1986 stated his reasons to be as follows:

"1. proposed Rule 8(c) does not set out the
precise amount of the charges to be
levied. Further it purports to delegate
to the Board the power to set charges. A
charge can only be imposed by a rule or a
special resolution (sections 46 and 49(1)
XXIV of the Ordinance);

2. proposed Rule 17(D)(b) does not set out
the precise amount of the charges to be
levied;

. . . . ."

16. On behalf of the Registrar it was submitted that both Rules in their amended forms did not specify the amount of the charge which each of the Rules purported to impose and that each of the Rules was therefore contrary to the provisions of the Ordinance. In relation to Rule 8(c) as amended, it was further submitted that the Rule as amended purported to give power to impose a charge to the Board of the Society, that the Ordinance provided that a charge could be imposed only by rule, and that there was no capacity in the Society to confer upon the Board a power to impose a charge.

17. It was further submitted on behalf of the Registrar that insofar as s.49(1)(xxiv) of the Ordinance provides that the Rules shall set forth "the charges" then it was implied that no charges other than those set forth in the Rules might be imposed.

18. It was submitted on behalf of the Society that the term "the charges" is restricted to liability for payment of a sum of money which is imposed on a member as a liability attendant upon the fact of membership only and that in contrast a member's liability to pay a sum of money that may derive from a particular contractual relationship entered into between the Society and one of its members did not involve a charge. It was said that where, for instance, the member entered into a contract for a loan from the Society the amount or amounts which the member was obliged to pay to the Society in discharge of the loan could not be categorised as a charge or charges. Support for the submission was said to be found in the impossibility of a list of charges catering for all the possible variations and permutations that might exist in the contractual arrangements between the Society and a member after an intending member had taken up membership.

19. The word "charge" is not defined in the Ordinance. Dictionary definitions were referred to in argument but, in my view, in the context of the Ordinance, the term "charge" may be taken to involve the exercise of a power by the Society to impose liability on a member to pay a sum of money which is not otherwise imposed by s.49(1). The term "charge" would not include, for instance, fines for which liability may be imposed by a Rule made under paragraph (xxv) or subscriptions for shares for which liability may be imposed by a Rule made under paragraph (xxxii) of s.49(1).

20. S.51(1) of the Ordinance confers on the Board "the powers of the Society as if they had been expressly conferred on the Board by a general meeting of the Society". Insofar as the alterations to Rule 8(c) purport to give power to the Board to impose upon members liability to pay "administration charges, maintenance charges and like charges" in relation to loans to members, those alterations make provision for "the charges . . . . . which are to be payable by a member of the Society". Similarly, the alterations to Rule 17D(b) impose upon members the liability to pay "the tax" which the Society is liable to pay to the government in relation to transactions by a member with the Society, or to incidental transactions and, in my view, make provision for charges within the section.

21. The objection taken by the Registrar is that the alterations, whilst making provision for charges, do not "set out the precise amount of the charges to be levied". But s.49(1) requires only that the Rules "set forth" the charges and there is no requirement that the Rules must specify the precise amount either in dollars and cents or by reference to any mathematical formula. Similarly, there is nothing in s.49(1) which prohibits the Board from exercising the power to specify the precise amount of any charges provided for and imposed on members so long as those charges are "set forth" in the Rules. No doubt there must be some identification of the nature of the charges set forth, and a Rule which purported to give the Board power to impose such charges as it saw fit might well be invalid. But in my view the alterations sufficiently identify the nature of the charges so that this objection cannot be sustained.

22. I conclude therefore that the proposed alterations to the Rules do make provision in relation to charges, but that they are not contrary to the Ordinance or the regulations. Accordingly, the Registrar had no power to refuse registration and certification under s.50(5) on the ground that he was not satisfied that the Rules as altered were contrary to the Ordinance or the regulations. The question then arises whether the Registrar is left under s.50(2) with some residual discretion to refuse registration and certification or whether he is obliged to register and certify the alterations.

23. On this further issue it was submitted on behalf of the Society that a textual analysis of the provisions of the Ordinance leads to the conclusion that charges or alterations to charges are to be dealt with by the Registrar on a different basis from special resolutions and alterations to Rules. It was submitted that whilst the Registrar is under a general obligation to register special resolutions passed in accordance with s.48, the obligation to register alterations of Rules constitutes an exception insofar as the Registrar is obliged to register and certify the alteration only if he is satisfied that the rules as altered are not contrary to the Ordinance or the regulation. Perhaps the argument could be restated by saying that the obligation under s.48(3) to register a special resolution duly passed in accordance with the preceding requirements of that section is an absolute one, whereas the obligation to register an alteration, or more precisely to register and certify an alteration, is a qualified one and may be discharged only when the Registrar is satisfied that the Rules as altered are not contrary to the Ordinance or to the regulations. It was submitted that no discretion was conferred upon the Registrar at all, that his duty was first to satisfy himself whether or not the alterations were contrary to the Ordinance or to the regulations and next if so satisfied, to register and certify or if not so satisfied to refuse to register or certify.

24. However, in the event, it is unnecessary for me to decide whether the Registrar has any residuary discretion of the nature which the Society sought to deny. For the Registrar, no reliance was placed upon any residuary discretion but reliance was placed, somewhat belatedly, upon the provisions of s.46(4) that any alteration of the charges shall be subject to approval by the Registrar. It was submitted that no approval of the charges having been given (or sought) for the alterations to the charges then the Registrar was entitled (and possibly bound) to refuse registration and certification of alterations of the Rules. For the Society, in reply to this argument, it was submitted that the Registrar had in effect nailed his colours to the mast in furnishing his reasons under s.11(c) of the Ordinance by his letter of 21 November 1986 and had not in those reasons relied upon a lack of approval of an alteration in the charges under s.46(4) of the Ordinance.

25. With respect to the industry and argument of counsel, I do not think that acceptance of the submissions on either side disposes of the issues that arise in the present case. When the Rules are altered by special resolution, the Registrar is obliged under s.48(4) to register the special resolution regardless of whether or not it purports to alter the Rules. However in the case of a special resolution purporting to alter a Rule, the Registrar is obliged under s.50(5) to register and certify the alteration to the Rule only if satisfied that the Rule as altered will not contravene the Ordinance or the regulations. In the case of charges and alteration of charges s.46(4) provides that they shall be subject to approval by the Registrar. In my view, therefore, until the Registrar has made a decision to approve an alteration of the charges, an alteration to the Rules which purports to impose or alter a charge or charges is ineffective and incapable of being registered and certified. I express no view as to the position which may arise if the Registrar registers and certifies an alteration in the rules imposing or altering a charge without express approval of the alteration insofar as it affects the charge. Perhaps the act of registration and certification may carry an implied approval. The fact is in the present case, however, that no application was made to the Registrar for approval and no approval to the alteration to the charges has been made by the Registrar. It therefore follows that the Registrar is not at this stage obliged to register an alteration to a rule which purports to have the effect of altering the charges payable by a member to the Society. I appreciate that the Registrar has registered the special resolution which alters the rule. To distinguish between the registration of a special resolution and the registration of an alteration of a rule (which alteration must be carried out by the medium of a special resolution) may seem highly artificial. However, it must be remembered that the Ordinance attempts to cover a very wide field in what appears to be a relatively simple manner. No doubt it could, as a piece of legislation, be improved. The construction which I have placed upon those sections which I have been called upon to consider does not prevent the scheme established by the Ordinance from being workable nor does it bring about any injustice. If I am wrong on the question of the Registrar's power, I would still think it proper in the exercise of my discretion to decline to order the Registrar to register the alteration of the Rule until he has made a decision approving the alteration to the charges. I express no view as to whether the Registrar ought or ought not approve the charges as altered.

26. I dismiss the application for an order for the issue of a writ of mandamus. I dismiss the application that the Registrar register and certify Rule 8(c) and Rule 17(D)(b) of the Rules of the Society as altered by Special Resolution on 16 October 1986. I direct the Registrar to approve or disapprove the alteration of the charges set out in the Society's Rules effected by such Special Resolution. I order each party to pay its and his costs. Liberty to apply.