Graham v Sinclair [1918] HCA 40; (1918) 25 CLR 102 (14 August 1918)

HIGH COURT OF AUSTRALIA

Graham Plaintiff, Appellant; and Sinclair and Others Defendants, Respondents.

H C of A

On appeal from the Supreme Court of New South Wales.

14 August 1918

Barton, Isaacs and Rich JJ.

Moriarty, for the appellant.

Monahan, for the defendants, was not called upon.

Barton J.

I think that the decision of the Supreme Court ought not to be and cannot be disturbed. I am not going to take up time in discussing a case which appears to me to be so clear. The plaintiff's rights, whatever they may be and if she has any at all against these defendants, are contractual. They are not such rights as she can assert in an action framed as this is, and if she could assert them I do not think that she has proved any breach of contract. At any rate the evidence which she has given cannot be said to be proof of the declaration, which is one for a tort. Whatever may be done in another jurisdiction does not concern us on the present appeal. It is sufficient to say that the mere passing of the resolutions by the directors and the writing of the letters by their orders are no proof of an actionable wrong, either by themselves or under the circumstances which Mr. Moriarty has pointed out. The appeal must therefore fail.

Isaacs J.

I agree that the appeal must fail, but I wish to say a few words about the aspect in which the appeal appears to me. The action is brought against individuals who are directors of a limited company called the Nurses' Club Ltd. That company is registered as a joint stock company under the Companies Act 1899. One of its objects as stated in the memorandum of association is to establish a Club for the accommodation of certain of the members of the Company and their friends. It has established a Club; and certain by-laws and so-called rules have, under the authority of the Company's articles, been framed by the directors of the Company in connection with that Club. Those by-laws and rules provide for membership of the Club as distinct from membership of the Company. The plaintiff was a member not only of the Company but also of the Club, to which a separate subscription had to be paid. In connection with the Club there is a house committee which, according to the rules, has power to suspend a member and then refer the incident in respect of which the suspension occurred to the directors of the Company for their decision and confirmation. The committee had suspended the plaintiff and had referred the matter to the directors, who confirmed the decision, but without hearing the plaintiff and notwithstanding her request to be heard. In my opinion that was utterly wrong; it was void. It may be called unlawful, but the word "unlawful" is used in two senses: it may mean simply unauthorized by law and therefore void, or it may mean that the act is one which exposes the person who does it to an action or to punishment. This act of the directors was unlawful in the sense of being void. The term "void" was used in Innes v. Wylie[1] by Lord Denman C.J. in summing up to the jury. That was an action for an assault by preventing the plaintiff from going into a room. He was a member of a society, and he was expelled without proper notice of the charge against him and under circumstances which Lord Denman thought rendered the expulsion invalid. He said: "I think that the removal is altogether a void act, and I am therefore of opinion that the plaintiff is still a member of the society." As to one of the defendants, a policeman who was charged with having committed the assault, the learned Chief Justice asked the jury whether he actively stopped the plaintiff from entering the room or was merely passive. The jury found for the plaintiff, and on that the plaintiff got damages. A new trial was refused because the jury found that there was an active interposition by the policeman which was illegal. But the resolution of the directors in this case is not an act which, of itself, stopped the plaintiff from getting into the Club house. It was a declaration of the mind of the corporation, and under the circumstances I agree with the Supreme Court that it was void. But the directors did nothing more, except that the secretary of the Company under direction communicated to the plaintiff the fact of the resolution, and stated she could no longer be accommodated at the Club. The question is whether an action lies against the directors personally. This Club, which in a sense is distinct from the Company, is the property of the Company. In Halsbury's Laws of England, vol. iv., p. 409, par. 869, it is pointed out that in the case of an incorporated proprietary club the company is distinct from the club, and takes the place of the proprietor, and it is laid down in Baird v. Wells[2] that in the case of a proprietary club the proper course, where a member has been prevented from having the advantages of the club that have been contracted for, is to sue the proprietor for breach of the contract. What the damages would be, I do not know. That was the view taken by the learned Chief Justice at the trial in the present case, and it strikes me as being the correct view. But in any case the defendants have done no act of interference with the plaintiff. The writing of the letters by the secretary at the direction of the directors, besides being a letter of the Company itself, was not an actual interference with the plaintiff's right to enter the Club.

The whole foundation of the plaintiff's case is that the resolution of suspension was invalid and of no effect. The circumstances stated in the declaration might in certain cases afford ground for going to a Court of equity for relief, but that course has not been taken, and the Supreme Court has held that it could not be taken. The action seems to me, therefore, to be levelled against persons who have done the plaintiff no wrong, and, that being so, the nonsuit was properly entered.

Rich J.

I agree that the act of the directors was a void act. Regarded as a case of tort, I am unable to see any evidence of actionable wrong on the part of the defendants. If the case could be regarded as one of contract, the contract was between the plaintiff and the Company and not the directors.

Appeal dismissed.

Solicitor for the appellant, H. E. McIntosh.

Solicitor for the respondents, H. R. Waring.

[1] [1844] EngR 286; 1 Car. & K., 257, at p. 263.

[2] 44 Ch. D., 661.