Battle v Bundagen Co-operative Ltd

HEADNOTE Facts The respondent (Bungaden Co-operative Ltd, "the Co-operative") owns a large area of land near Coffs Harbour. The appellant (Mr Battle) has been a member of the Co-operative since February 1989, and resides on its land. Rule 47(a) of the Co-operative's Rules is as follows: A member may be expelled from the co-operative by special resolution at a general meeting of the co-operative to the effect: (i) that the member has failed to discharge the member's obligations to the co-operative, whether prescribed by these rules or arising out of any contract; or (ii) that the member has been found guilty of conduct detrimental to the co-operative, in particular, breaking the Rules or By-laws. On 22 July 2007 a general meeting of the Co-operative was held. A special resolution "That Chris Battle be expelled from Bundagen Co-operative Ltd" was passed with a two-thirds majority, purportedly pursuant to Co-operative rule 47. The Co-operative required Mr Battle to leave its land by 1 December 2007. Mr Battle did not comply, alleging that he was denied procedural fairness and that the resolution was invalid because of substantial departure from the rules. Mr Battle attempted to invoke dispute resolution procedures provided by Co-operative rule 90. On about 7 November 2008 the Co-operative gave notice to its members and Mr Battle of another general meeting to be held on 29 November 2008. The meeting considered in detail the special resolution set out in the notice. Each of the particular allegations made against Mr Battle in the special resolution was put to the meeting, voted upon, and passed by a two-thirds majority; the final resolution expelling Mr Battle. Mr Battle questioned whether this was another "dud" special resolution. The primary judge held that Mr Battle had not been denied natural justice on 22 July 2007, and that his expulsion by both meetings' resolutions was not ultra vires by reason of limitations imposed by Co-operative rules 47 and 90. Issues Issues arising on appeal: (1) Was the resolution of 22 July 2007 authorised by rule 47? (2) Was there a denial of natural justice on 22 July 2007 either through bias or through other features of the procedure? (3) Did rule 90 preclude reliance on the 22 July 2007 resolution? (4) Was the resolution of 29 November 2008 authorised by rule 47? (5) Did rule 90 preclude reliance on the 29 November 2008 resolution? (6) Did the primary judge err in failing to consider the exercise of discretion? HELD ( Granting leave to appeal, appeal allowed, setting aside orders of the primary judge and ordering the respondent's proceedings be dismissed ): In relation to (1) - 22 July 2007 and rule 47 ( Per Hodgson JA, Campbell JA and Sackville AJA agreeing ) The resolution was not authorised. Rule 47 should not be construed loosely, as it is a very serious step possibly involving the loss of a home. The resolution "That Chris Battle be expelled from Bundagen Co-operative Limited" is not "to the effect of" either pars (i) or (ii) required by rule 47(a); and is not altered by the statement of grounds in the notice or the content of the discussion at the meeting. ( Per Sackville AJA, Hodgson JA disagreeing, Campbell JA agreeing ) The resolution did not conform with rule 47, because 47(a) requires a two-stage process: the finding of guilt followed by a separate resolution expelling the member. The " rolled up " single resolution of 22 July 2007 did not comply with this requirement. In relation to (2) - 22 July 2007 and natural justice ( Per Sackville AJA, Campbell JA agreeing ) Mr Battle was denied a reasonable opportunity to be heard, for the reason that a two-stage process was not followed. ( Per Hodgson JA ) It was not necessary to make a finding on the question of natural justice. In relation to (3) - 22 July 2007 and rule 90 ( Per Hodgson JA, Campbell JA agreeing, Sackville AJA not deciding ) (i) Prior to 22 July 2007 Rule 90 relates to the possible commencement of court proceedings, not to the passing of a resolution under rule 47; therefore it cannot be used to preclude reliance on the 22 July 2007 resolution. (ii) After 22 July 2007 Rule 90 does not provide a defence to proceedings, but rather provides a ground for staying them until rule 90 has been complied with. As Mr Battle did not apply for a stay, no relief under rule 90 is available. In relation to (4) - 29 November 2008 and rule 47 ( Per Hodgson JA, Campbell JA and Sackville AJA agreeing ) The resolution did not conform to rule 47 because it was not passed as a resolution to expel a member. It was passed as a resolution to enhance the Co-operative's position in relation to a person who was not a member. In relation to (5) - 29 November 2008 and rule 90 ( Per Hodgson JA, Campbell JA agreeing, Sackville AJA not deciding ) Rule 90 did not preclude reliance on the resolution of 29 November 2008 for the reasons given in relation to (3) above. In relation to (6) - Exercise of discretion ( Per Hodgson JA, Campbell JA and Sackville AJA agreeing ) It was not necessary to make a finding on this question.