Hall v Job

The Parkes Lodge was a subordinate Lodge of the Loyal Orange Institution of New South Wales, which is an unincorporated association formed some time before 1875. The Institution is governed by rules and regulations which had been altered from time to time. Reference will be made to the provisions adopted in 1928, which were in force at all times with which we are concerned. The Institution is not governed by any statutory provisions affecting the questions which arise for decision.

In or about 1927, the land now in question, upon which there was a small hall, was purchased in the names of five persons who became the registered proprietors as joint tenants of an estate in fee simple therein under the provisions of the Real Property Act, 1900 N.S.W.. It is admitted on the pleadings that the whole of the purchase money was paid by the Parkes Lodge. On 20th June 1929, the registered proprietors executed a declaration of trust reciting that the purchase money had been so paid, and that they had become possessed of the land merely as trustees for the Parkes Lodge "to be dealt with as directed by the members of the said Lodge from time to time"; and they thereby declared that they would thenceforth stand seised and possessed of the land "upon trust for the said Lodge and the Members thereof for the time being and to be sold leased mortgaged or otherwise dealt with as the said Lodge and the Members thereof for the time being shall from time to time direct."

Thereafter, the land and the hall upon it were used for the purposes of the Lodge, and revenue was obtained by the letting of the hall from time to time for other purposes. In March 1935, however, the Lodge meetings, which had attracted dwindling attendances and had been held with diminishing frequency came to an end. No formal steps were taken by the Lodge itself to terminate its existence or to deal with the land; its few remaining members, some nineteen in all, simply ceased to take any further interest in its affairs. An attempt was made to revive the Lodge in 1943, but without success. It seems that the Grand Lodge of the Institution declared the Parkes Lodge "defunct" in 1937, and declared it "dissolved" in 1939; but no steps were taken with respect to the land until 24th January 1944. On that date the Grand Executive of the Institution passed, and on 26th February 1944, it confirmed, a resolution which declared the Lodge to be, and to have been since 1933, defunct and dissolved, and determined that the land now in question was the property of the Grand Lodge and should be transferred to and vested in the Grand Lodge Trustees. Later in the same year the surviving trustees of the land executed a memorandum of transfer of the land in favour of the trustees of the Grand Lodge, but this has not yet been registered. The plaintiffs, attacking the transfer as a breach of trust, sought in the suit an injunction to restrain its registration.

The way in which the plaintiffs put their case is that the Parkes Lodge was an unincorporated voluntary association of persons; that all property held upon trust for it belonged to the general body of members as existing from time to time: Watson v. J. & A. G. Johnson Ltd. [1] ; that the association became dissolved by the tacit consent of all the persons who were members of the Lodge when it became defunct; and that thereupon, subject to their being no outstanding liabilities of the Lodge to be provided for, the property became divisible in equal shares amongst all those persons on the principle of Brown v. Dale [2] ; Re Printers and Transferrers' Amalgamated Trades Protection Society [3] ; In re Customs and Excise Officers' Mutual Guarantee Fund; Robson v. Attorney-General [4] ; Young v. Curran [5] .

1. (1936) 55 C.L.R. 63. 2. (1878) 9 Ch. D. 78. 3. (1899) 2 Ch. 184. 4. (1917) 2 Ch. 18. 5. (1909) 9 S.R. (N.S.W.) 452; 29 W.N. 94.

In the Supreme Court, Roper C.J. in Eq., rejected this contention and held, following an earlier decision of Nicholas C.J. in Eq, in Everingham v. Attorney-General [6] , that rule 80 (b) of the rules and regulations of the Institution (which will be referred to later) should be construed as entitling the Grand Lodge to the subject land in the events which have happened. In this Court the appellants offered arguments, not without cogency, in favour of construing rule 80 (b) as having no application to land and no materiality in this case. It is unnecessary, however, to pronounce finally upon those arguments. The judgment below must be supported upon a ground which does not depend upon the interpretation of rule 80 (b).

The fundamental objection to the plaintiffs' case is that to invoke the principles of law relating to the dissolution of voluntary associations as if a subordinate Lodge of the Institution were an independent association is to overlook the true character of the subordinate Lodges and their relation to the Institution as a whole. The principles to which the plaintiffs appeal are applicable to that class of voluntary associations of which a club provides a familiar example. Such an association is an exclusive society of persons, between whom a nexus is provided by a contract, to which they and no others are parties and by which they agree to pursue together some common purpose of their own. It is only in accordance with the contract between them, or by their common consent, that members may leave or be excluded from the society and that new members may be admitted to it. All the mutual rights and obligations of members as such depend upon the terms of their agreement, and may be altered or abrogated in any manner which the agreement may provide or which the members may unanimously approve. A subordinate Lodge established under the rules and regulations of the Loyal Orange Institution of New South Wales is an entirely different affair. It does not originate in a contract for its formation entered into by the individuals who become its first members; it is constituted by the grant of a warrant by the Grand Lodge of the Institution to a group of individuals, not fewer than five, who are already members of the Institution. The warrant takes effect by force of the rules of the Institution, which of course comprise the terms of a contract to which all the members of the Institution are parties. Thereafter it is in accordance with the rules of the Institution that the membership of the Lodge may be changed; and it is important to observe that an individual cannot be a member of the Lodge except as a member of the Institution. The mutual rights and obligations of the members of the Lodge spring from the rules of the Institution, and cannot be altered except as those rules provide. The purposes which the members of the Lodge have in common are none other than the purposes for which they are members of the Institution. The Lodge does not exist as a society of persons who desire to associate exclusively with one another for agreed purposes; it exists as an integral part of a larger organization, of which all the members are associated for the pursuit of purposes common to them all in accordance with a constitution which governs them all. A subordinate Lodge is therefore not to be considered as if it were an association by itself; it is in truth a branch of the Institution, a section of its membership, which provides, for those who belong to it or may be admitted to its meetings, machinery for the enjoyment of the rights and benefits, and for the performance of the obligations and functions, which are the incidents of their membership of the Institution.

In order to demonstrate that this is so, a brief survey of the rules of the Institution is all that is required. Its members must be protestants and British subjects resolved "to support and defend the rightful Sovereign, the Protestant Religion, the Laws of the country, and the succession to the Throne in the House of Windsor": (rules 1, 3, 4, 46). Certain principles of a religious and ethical character are prescribed for the members: (rules 1, 2, 3). The government of the Institution is divided amongst a Grand Lodge with State-wide jurisdiction, District Lodges dealing with certain administrative matters, and subordinate Lodges. The affairs of the Institution as a whole are directed and controlled by the Grand Lodge, composed of representatives from each District Lodge, and possessing supreme authority including the power of enacting laws and regulations for the government of the Institution, the power of investigating, regulating and deciding all matters relating to the Institution, or to particular Lodges, or to individual members, and the power of dissolving Lodges: (rule 7). There is a Grand Executive: (rule 12), which has all the authority of the Grand Lodge during the intervals between its meetings, except as to altering the constitution or laws of the Institution: (rule 26). Its members are entitled to the privilege of membership in every Lodge in the State, including the right to speak and vote on all matters except the election of officers and finance: (rule 16). The subordinate Lodges are grouped into districts, each having a District Lodge: (rule 33). Each District Lodge consists of representatives from its subordinate Lodges: (rule 34), and has powers relating to the membership of the Institution, including (inter alia) the confirmation of suspensions, resignations and expulsions; applications for re-admission of members who have resigned, been suspended or expelled by subordinate Lodges; dual membership; and raising candidates to the second degree: (rule 35). The subordinate Lodges themselves are aggregations of individual members of the Institution not less than five in number, who are in possession of a warrant under the seal of the Grand Lodge: (rule 45). The admission of candidates for membership of the Institution is the province of these subordinate Lodges. Candidates must sign an application form for admission as supplied by the Grand Lodge, and the Lodge must be satisfied that the rules have been shown to each candidate and that each candidate has been made fully aware of the requisite qualifications and principles of the Institution: (rule 46). Admission is by ballot: (rule 46 (6)), and, as is shown by rules 47, 52, 53 and 57, it is admission into the Institution and not only the particular Lodge. Any person rejected by one Lodge and obtaining admission into another without acquainting its members of the rejection is to be expelled from the Institution: (rule 46 (c)). Resignation is referred to as severing a member's connection with the Institution: (rule 49). Suspension from a Lodge works suspension from the Institution, when confirmed by the District Lodge: (rule 58). Provision is made for a member to belong to more than one Lodge with the permission of the District Lodge in some cases and of the Grand Lodge in others, and suspension or expulsion from one Lodge is to be deemed suspension or expulsion from all others to which such a member belongs: (rule 72). Members may visit Lodges other than their own: (rules 73, 77), and may be transferred from one Lodge to another: (rule 74). A member may in certain events become unattached to any Lodge, one such event being the lapse of his membership through a Lodge becoming defunct: (rule 77). All Lodges have power to make by-laws for their own government, but the power is limited by the requirement of consistency with the rules of the Institution, and of confirmation by the District Lodge: (rule 87).

The rules have little to say about property. They contemplate that there may be landed and other property "belonging to" the Grand Lodge: (rule 31); that there may be moneys "belonging to" a district Lodge: (rule 43); and that subordinate Lodges will have financial matters to decide: (rule 16), and will have "funds of the Lodge" into which entrance and other fees and subscriptions will be paid: (rule 57). There are references to "property of the Lodge": (rule 65), and to moneys entrusted to the treasurer's care "on account of or for the use of the Lodge": (rule 66). Rule 80, which is the rule upon which this case was decided in the Supreme Court, contains three provisions, of which the first refers to "all property of the Lodge such as books, moneys, goods, chattels and effects" and also to the "warrant, regalia, money, deeds, or other property belonging to a Lodge", and the second refers to "all monies belonging to a Lodge." The final provision is: "In the event of the dissolution of a Lodge all property, as aforesaid, shall become the property of the Grand Lodge, to be held in trust, and must be immediately forwarded to the Grand Secretary": (rule 80 (b)). But in rules regulating the internal affairs of an association of this general description, references to property as being property "of" or "belonging to" one of the branches or instrumentalities of the association are not necessarily references to beneficial ownership at all; they may refer, and indeed they refer more naturally, to the allocation of the property as amongst the several agencies of the association for the purposes of use, management and disposition.

In the case of a voluntary association of the kind to which the plaintiffs seek to assimilate the Lodge No. 98 Parkes, all property which the association acquires belongs to the members jointly. While it is a going concern the members have such individual rights with respect to the property as the social compact provides; and upon its dissolution, if nothing to the contrary is agreed, surplus assets are, naturally, divisible amongst those who were members at the date of dissolution. But in the case of a subordinate Lodge created under and regulated by the rules of the Loyal Orange Institute of New South Wales, the position is necessarily different. It has already been pointed out that such a Lodge is not governed by a contract peculiar to the members of the Institution of whom it is composed, and that it does not exist to enable those members to pursue their common ends in an exclusive society of their own; it consists of a group of members of the Institution who, as such members, and in accordance with the Institution's rules, are organized under the authority of the governing body of the Institution as one of the particular instrumentalities within the Institution by which it seeks to serve its general purposes. The notion of joint ownership of property, and its corollary as to the division of surplus assets amongst members on dissolution, are obviously inappropriate to such a Lodge. Since it is constituted by the authority of the Institution for the furtherance of the Institution's purposes, the presumption is strong that any property it may acquire is acquired for the Institution. The dissolution of the Lodge does not terminate a contract regulating the mutual rights of the members of that Lodge with respect to property which they jointly own, so that effect must be given to their joint ownership by means of an equitable division; the dissolution brings to an end the means which had been created by the Institution, by the issue of its warrant, for the carrying on of a branch of its activities and the control of a part of its property. There is therefore neither that joint ownership by the members of the dissolved Lodge which is the basis in other cases of the right to a distribution amongst members, nor that termination of a contractual relationship which in those cases provides the occasion upon which that right arises. The question in the present case must be decided in the light of these considerations and the history of the subject property.

The beneficial title to the subject land must necessarily coincide with the beneficial title to the moneys which it represents. Those moneys, as has already been mentioned, were paid by the Lodge No. 98 Parkes. The declaration of trust which was executed in 1929 by the five members in whose joint names the legal title had been taken is chiefly important for its acknowledgement of the source of the purchase moneys and of the absence of a beneficial title in the declarants. It does not purport, and it could not be effective, to alter the trusts upon which the land, in the circumstances of its purchase, must be taken to be held. Its language expresses the understanding of the parties as to the fiduciary duty they would continue to be under so long as "the said Lodge and the Members thereof" were in existence to give them directions from time to time. It says nothing as to the nature or ambit of the directions which the Lodge and its members were entitled to give vis à vis the members of the Institution as a whole, or as to the situation which would arise when there should no longer be a Lodge No. 98 Parkes.

The land was bought subject to a mortgage. It appears from the evidence that the payment made to the vendor was subscribed for the purpose by the then members of the Lodge, and that the mortgage was paid off, partly if not wholly, out of revenue obtained from the letting of the hall. The only other possible source of any part of the moneys which went into the land would seem to be the funds of the Lodge derived from the entrance fees and monthly subscriptions of members. So far as subscriptions ad hoc are concerned, it is impossible to doubt, having regard to the character of the Institution, that the donors intended to part with all beneficial interest in their respective donations. The immediate object they had in view must have been the provision of a meeting place for the Lodge No. 98 Parkes as a Lodge of the Loyal Orange Institution of New South Wales; but, since the Lodge was not an association by itself but was simply one of the groups into which the general body of members was divided for the purposes of the working of the Institution, the donors must be taken to have had as their general object the provision of facilities for the attainment of the purposes of the Institution through the instrumentality of that body in Parkes which for the time being possessed the appropriate authority under the rules. The only conclusion consistent with a recognition of that object is that the donations were intended to constitute gifts to the Institution, and were made to the Parkes Lodge as the body within the Institution which had authority at the time to receive and apply them in accordance with the rules. As regards entrance fees and monthly subscriptions the position is equally clear. The obligation of members of the Institution to pay these moneys arises under rule 57. The quantum is left to be fixed by individual Lodges, but the liability to pay is an incident of membership of the Institution. Any moneys of this kind which may have gone into the subject land were therefore received by the Parkes Lodge by virtue of its character as a particular group of members of the Institution possessing under the rules the authority of a subordinate Lodge to use such moneys for purposes of the Institution.

These considerations lead to the conclusion that ever since its purchase the land has belonged beneficially to the Institution, and that the disbandment of the Lodge No. 98 Parkes produced no other result with respect to the land than the relinquishment of the authority to control and use it which the Lodge had theretofore possessed. The members of the Institution who composed the Lodge immediately before its disintegration were not the joint beneficial owners of the land and cannot be held entitled to have it realized and divided amongst them. All that has happened is that the special rights with respect to the property which those members enjoyed under the rules of the Institution while they maintained the Parkes Lodge in existence have come to an end; and even if they still remain members of the Institution they no longer stand in any better position in relation to the property than the general body of members.