Stylis v UMP Limited

Supreme Court of NSW|2006-05-19|Before: McHugh JJ, Harrison J

CITATION : Stylis v UMP Limited [2006] NSWSC 951

DECISION : (1) The appeal is dismissed; (2) The cross claim is dismissed; (3) The decision of His Honour Magistrate Reiss dated 17 November 2005 is affirmed; (4) The summons filed 14 December 2005 is dismissed; (5) The plaintiff is to pay the defendant's costs as agreed or assessed.

LEGISLATION CITED : Corporations Act 2001 (Cth) - s 140 Local Courts Act 1982 (NSW) - ss 73, 75

Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Bache & Co (London) Ltd v Banque Vernes et Commerciale de Paris SA [1973] 2 Lloyd's Rep 437 Brick and Pipe Industries Limited v Occidential Life Nominees Pty Limited [1992] 2 VR 279 Carr v Neill [1999] NSWSC 1263 CASES CITED : Devries v Australian National Railways Commission (1993) 177 CLR 472 Dobbs v National Bank of Australasia Limited (1935) 53 CLR 643 Kerr v John Mottram Limited [1940] 1 Ch 657 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 R L & D Investments Pty Ltd v Bisby (2002) 37 MVR 479 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588

PARTIES : Dr Stanley Chris Stylis - Plaintiff United Medical Protection Limited ACN 077 283 884 - Defendant

COUNSEL : Mr G A Sirtes - Plaintiff Mr R Marshall - Defendant

SOLICITORS : Swaab Attorneys - Plaintiff Sally Nash & Co - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

15872/2005 - STANLEY CHRIS STYLIS v UNITED MEDICAL PROTECTION LIMITED ACN 077 283 884

JUDGMENT (Appeal decision of Local Court Magistrate - unpaid instalments, liability to pay call) 1 HER HONOUR: There is both an appeal and a cross appeal. By summons filed 14 December 2005 the plaintiff Dr Stanley Stylis (Dr Stylis) seeks an order that the judgment of His Honour Reiss LCM dated 17 November 2005 be set aside and in lieu thereof orders that the plaintiff pay the defendant the sum of either $5,649 or $12,616.81 and that the statement of claim be dismissed.

Cross appeal 2 By cross appeal filed 12 January 2006 the defendant United Medical Protection Limited (UMP) seeks firstly, an order that the cross appeal be allowed; secondly, an order that the judgment dated 17 November 2005 be set aside and in lieu thereof judgment for UMP in the amount of $52,815.38; thirdly, that Dr Stylis pay UMP interest up to judgment as claimed in paragraph 9(b) of the statement of claim; and fourthly, an order that Dr Stylis below pay UMP's costs. Dr Stylis relied on the affidavit of Terence Paul Sperber sworn 21 February 2006. UMP relied on the affidavit of Kylie Britton sworn 8 March 2006. 3 The Magistrate entered judgment in part for UMP and ordered Dr Stylis to pay UMP $27,126.00 for the call and $12,616.81 for the two quarterly dues instalments within 28 days. 4 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the parties. Section 73 of the Local Courts Act 1982 (NSW) (the Act) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby (2002) 37 MVR 479. The judicial officer cannot act on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. 5 Section 75 of the Act provides that the Court may determine an appeal by either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal.

Plaintiff's grounds of appeal 6 Dr Stylis appeals against part of the decision of his Honour Magistrate Reiss on the grounds that firstly, the Magistrate erred in law in holding that Dr Stylis was liable to make payment to UMP for a "call" made in November 2000 for an amount of $27,126; secondly, in holding that as from 16 May 2000 Dr Stylis ceased to be a member of UMP, the Magistrate ought to have held that Dr Stylis was not liable for the "call" made upon members in November 2000; thirdly, the Magistrate, having found that Dr Stylis' membership ceased in May 2000, erred in law in holding that Dr Stylis was a member of UMP pursuant to clause 58 of UMP's Constitution (and hence liable for the November 2000 "call"); fourthly, the Magistrate erred in law in holding that Dr Stylis was liable to UMP for a quarterly instalment of membership fees for October to December 1999 in circumstances when UMP did not claim such amount as due; fifthly, the Magistrate erred in law by denying Dr Stylis natural justice in relation to the Magistrate finding that Dr Stylis failed to pay UMP the October to December 1999 quarterly instalment; and sixthly, the Magistrate erred in law in holding that Dr Stylis was liable for the May 2000 instalment.

Cross claim by UMP 7 The grounds of appeal for the cross appeal are firstly, that the Magistrate ought to have found Dr Stylis liable for the amount of $25,235.17 on account of unpaid membership subscription fees instead of $12,616.81; and secondly, the Magistrate was in error in his interpretation of the provisions of UMP's constitution in regard to whether Dr Stylis' unpaid subscription fees were all claimable by UMP. Dr Stylis submitted that if the he was in default of the October to December 1999 quarterly instalment, then the Magistrate ought to have found that his liability for outstanding membership fees was only $5,649 (representing the October-December 1999 instalment).

The Local Court Proceedings 8 In the Local Court UMP was claiming from Dr Stylis unpaid subscription fees for the period leading up to his resignation and an unpaid levy imposed by the UMP in 2000. UMP is a medical defence organisation that provides medical indemnity insurance for its members. Dr Stylis had been a medical practitioner for just on 50 years at the date of the Magistrate's decision and was a member of the UMP and its predecessor from 1957 to 2000, except for a five year period when he was working in the United Kingdom. Dr Stylis resigned his membership with the UMP at the end of 2000 and since 2001 has arranged for medical indemnity insurance through other avenues. 9 UMP's claim was for two distinct sums. Firstly, an amount of $25,689.38 concerning allegedly unpaid "subscription fees"; and secondly, an amount of $27,126 concerning a "call" made on the doctors in November 2000 to top up the ailing funds of UMP. Dr Stylis' answer was firstly, that he conceded in his defence that he owed an amount for the subscription fees, representing one quarter of those fees ($6,967.81); and secondly, he owed nothing in relation to "the call" as he was, by November 2000, no longer a member of UMP. 10 The Magistrate set out the facts which were not in dispute in his reasons for decision (at pp 1-2). They are: "Dr Stylis intended to continue his membership of the UMP from 1999 into a new membership year of 2000 and he took active steps in that regard. He completed and signed a UMP annual "Subscription Notice" on 21st December 1999 for his 2000 membership year. In that form he opted for quarterly payments of the annual membership fee. There is no suggestion that the UMP did not wish Dr Stylis to continue his membership. The UMP took a number of active steps to facilitate that ongoing membership.

… Dr Stylis also did not pay an amount for final instalment for 1999. The reason for this was not presented to the court. At the time Dr Stylis was a member of the UMP he was bound by the UMP Constitution. In November of 2000 the UMP Board passed a resolution by which it made a "call" on its members, in accordance with the UMP Constitution, requiring payment from most members of an additional amount equal to the member's annual subscription fee. There is no challenge to the legal validity of this resolution. Dr Stylis was first in default of a payment of his subscription for a period in excess of one month in either January or May of 2000. The amount of outstanding subscription fees claimed, if such fees are fully payable, is $25,235.17. The call amount owing, if payable, is $27,126.00." 11 I shall deal with the two issues separately as some different constitutional provisions apply.

(1) The unpaid subscription fees 12 Section 140 of the Corporations Act 2001 (Cth) provides that a company constitution is a binding contract between the company and its members. 13 The terms "cease to be a member" and "ordinary member" are defined in clause 9 of the UMP Constitution (the Constitution). "Cease to be a member" and "Cessation of Membership" means termination of membership of the company for any reason whatsoever including, but not limited to, resignation or expulsion therefrom. "Ordinary member" means a guaranteeing member for the time being of the company in accordance with clause 13. Clause 13(3) states that an ordinary member is liable to meet any calls for contribution of funds pursuant to clause 24. 14 Clause 20(2) reads: "If any member makes default in any payment of the subscription payable by him to the Company and if such default continues for one month after such payment shall become due the Member shall, unless the Board or any committee of the Board authorised in that behalf at any time otherwise determines, cease to be a Member." 15 The Magistrate noted (at p 6) that there was no dispute that for the purposes of clause 20(2), the word "due", for a person who had opted for quarterly payments, is a reference to an instalment payment that is due and not the total annual fee. However UMP submitted that the word "due" in clause 26 has a different meaning from that in clause 20(2). According to UMP the word "due" in clause 26, means the annual membership due. In the Local Court UMP submitted that the scheme of membership under the Constitution is an annual one and that the payment by instalments rather than in a lump sum in advance, is only an administrative arrangement. Clause 17 of the Constitution provides that membership shall be from the date of admissions to the end of the first anniversary of admission. Clause 25 provides that a member shall cease to be a member if he dies, if he resigns in the manner provided by Clause 22, if he is expelled from the company; or if he ceases to be a member by reason of any of the provisions of the Constitution. 16 UMP claims (by cross appeal) that, by reason of clause 26, Dr Stylis remains liable for subscription instalments due in July and November 2000. Clause 26 reads: "Any person who shall by any procedure or for any reason cease to be a Member shall nevertheless remain liable for and shall pay to the Company all moneys which at the time of his ceasing to be a Member be due from him to the Company." 17 Dr Stylis submitted that the Magistrate erred when he held that UMP could not allocate the payments that were made by Dr Stylis for subscriptions, as the Constitution did not regulate the internal management of UMP and how it internally allocated payments. Dr Stylis also submitted that, if the Court does not interfere with this decision, then the Magistrate erred in finding that the October-December 1999 payment was not paid and that Dr Stylis ceased to be a member on 16 May 2000 due to the automatic expulsion in clause 20(2). Thus, if the 1999 instalment was outstanding, Dr Stylis' membership would have ceased on 16 November 1999, releasing him from all 2000 subscriptions. But this submission overlooks the fact that Dr Stylis paid another instalment in 2000. 18 Dr Stylis submitted that the Magistrate erred in finding him liable for the October-December 1999 instalment, as UMP did not make any claim for this payment. UMP submitted that if the pleadings do not make it clear what the arrears of subscriptions were for, the evidence given by Mr Hunt, served before the final hearing, does. Insofar as the pleadings are concerned, the statement of claim refers to the amount of $25,689.30 owing for unpaid subscription amounts, but does not give dates. At the time of the hearing, the dates that outstanding subscriptions were due were known by both parties. The hearing was conducted on that basis. 19 The Magistrate in his reasons stated (at pp 6-7): "Dr Stylis's October-December 1999 quarterly instalment of $5,649.00 was due on 15 October 1999. This instalment was not paid as such. Dr Stylis forwarded to the UMP an amount of $6,967.81, comprising the quarterly instalment for January-February 2000 of $6,657.98 plus $309.83 for the legal expenses insurance. This amount was received by the UMP on 31st January 2000 and credited to his membership account on 15th February 2000. There was evidence that the UMP had at one stage administratively allocated this payment against the unpaid October-December 1999 liability. As there had been no payment at all by Dr Stylis for a period beyond 30 days of 15th October 1999 by clause 20(2) his membership arguably ceased on 15th November 1999. However the defence has not argued this position but have submitted that if the instalment for the first period of 2000 is allocated against the last payment of 1999 the defendant must be in default of his first instalment for 2000 by February 2000. Alternatively, it submits that if that allocation is not appropriate the default date is in May 2000. The court has not been taken to any clause of the UMP Constitution or any principle of law that would allow the reallocation made and I am not persuaded that such action was open to it. Given the way the matter was argued I conclude that the date on which the membership of Dr Stylis should be taken as having ceased pursuant to clause 20(2) is in 16th May 2000. Dr Stylis is therefore liable for the October-December 1999 quarterly instalment and the April-June 2000 quarterly instalment." 20 The Magistrate's interpretation of the meaning of the word "due" in clause 26 is as follows: "Clause 26 certainly does not specifically state that a member remains "liable for the current annual fees and any other moneys due". As touched upon by the defence, it appears somewhat inconsistent that a member can be expelled for non-payment of an instalment and no longer be entitled to most benefits of membership yet still be obliged to pay for a period well beyond the instalment period. Such an interpretation appears inappropriate in the absence of clear words. On a plain reading of clause 26 in the context of the subscription notices for Dr Stylis, notwithstanding that the membership scheme was predominantly an annual one, I conclude that the amount "due" by Dr Stylis is for the outstanding quarterly instalment only and not the dues for the entire year…My interpretation of clause 26 is therefore consistent with that view of clause 20(2)." 21 In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 the High Court stated that the primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The Magistrate adopted this approach in construing the Constitution. I agree with the Magistrate's interpretation of clause 26. 22 The Magistrate made a finding that the $6,967.81 was payment for the quarterly instalment for January-February 2000 this was the period nominated by Dr Stylis. The Magistrate also made a finding that membership ceased, pursuant to clause 20(2), as at 16 May 2000. These are findings of fact. Leave should not be granted to appeal these factual findings. Payments for the quarterly fees for October to December 1999 and March to May 2000 were due and owing. There is no error of law in relation to the unpaid subscription fees decision.

(2) The call 23 Dr Stylis submitted that the finding made by the Magistrate that he remained a member as at November 2000 (and was hence liable for "the call") undercut the other principal finding made by the Magistrate that Dr Stylis was not liable for subscription payments (i.e. insurance premiums) after 16 May 2000. According to Dr Stylis, the Magistrate found, on contradictory grounds, that Dr Stylis was not due for half of UMP's claim because he was no longer a member after 16 May 2000 but was liable for the other half (in November 2000) because he was a member. Dr Stylis submitted that these two positions are irreconcilable and cannot be allowed to co-exist. It does seem harsh that if Dr Stylis, by virtue of the operation of clause 20(2) of the Constitution, was deemed to have ceased to be a member on 16 May 2002 but can still be required to make payment in relation to a call in November 2002, because UMP had not removed his name from the UMP register of ordinary members. 24 UMP submitted the power of the Board to "otherwise determine" that membership ceased one month after a default in payment of subscription is contractually binding on Dr Stylis and UMP. The existence of that power and its exercise by the Board "at any time" does not mean that a minute of the Board meeting at which such a determination was made should be construed as a contract would be, as all the minute serves to do is to provide admissible evidence of the Board's transactions. UMP submitted that the phrase "at any time" in clause 20(2) must be construed to mean a determination made by the Board, either before an Ordinary Member fails to pay a due subscription payment and, also, after an Ordinary Member fails to pay a due subscription payment. 25 UMP submitted that there is no temporal limit on how long after an Ordinary Member "makes default" in any payment of subscription the Board is empowered to "otherwise determine" that an Ordinary Member ceases to be a member. UMP submitted that the phrase "presently in default", in paragraph 6.4.1 of the minutes, means any length of time from which the due instalment remains unpaid. Finally, UMP submitted that the phrase "any Member" in resolution 6.4 must by logic, include any Member now deemed a former member by operation of clause 20(2).

The resolution dated 17 November 2000 26 On 17 November 2000 the UMP Board passed a resolution that provided: "6.2.2 Ordinary members pay a call fixed at an amount equal to the subscription paid or payable by each ordinary member in the 2000 calendar year.

… 6.4 MEMBERSHIP CONTINUATION The Board unanimously resolved that for the purposes of clause 20(2) of the Constitution: 6.4.1 the Board determines that any member presently in default of payment of the subscription payable by that member shall continue to be a member until otherwise determined. 6.4.2 the authority to make determinations concerning the default period is delegated to the Underwriting Committee which shall report any such determination to the Board." 27 The Magistrate considered the effect of this resolution upon clause 20(2) and said (at p 4): "On a plain reading of the resolution the words can only be applied to a member in the first 30 days of default in payment and not for a person in default beyond that period and who is no longer a "member". The word "member" is used, and not "person" or "former member" or an alternative expression which clearly can apply after the event to former members as used elsewhere in the UMP Constitution (see for example "expelled member" as used in clause 24 and " person …cease[s] to be a member who was a member " as used in clause 26). The expression "continue to be a member" in the resolution is not possible under the rules to anyone in default for longer than 30 days who no longer a "member" - there is no membership to continue. I also note that the reference in 6.4.1 is to a member being "presently in default" and not to "a member who was previously in default and whose membership ceased". The resolution can be read as seeking to allow those within the 30-day non-payment period to continue in default beyond the one month and until a time as set by the committee. That is the only interpretation consistent with the specific wording of the resolution. This interpretation of the resolution is also consistent with the conclusion I expressed above concerning the meaning of clause 20(2). Even if my conclusion had been that that "at any time" in clause 20(2) allowed action to be taken beyond the 30-day default period for a person whose membership has already ceased, that is not what the Board resolution in its terms states." 28 I agree that the resolution does not, in its terms, extend to a doctor who, by virtue of clause 20(2), has ceased to be a member. 29 However, this resolution has to be considered in the light of clause 28 of the Constitution which reads: "On the trial or hearing of any action for the recovery of any moneys due in respect of any call it shall be sufficient to prove that the name of the Ordinary Member sued is entered in the Register of Ordinary Members of the Company [UMP], that the resolution requiring payment of the call is duly recorded in the minute book of the Board, and that notice requiring payment of such call was duly given to the Ordinary Member sued, and it shall not be necessary to prove the appointment of the Directors or any other matters whatsoever but proof of the matters aforesaid shall be conclusive evidence of the debt." (the conclusive evidence clause) 30 The Magistrate in relation to clause 28 stated: "…I am therefore satisfied on the balance of probabilities that Dr Stylis's name was in fact, rightly or wrongly, so entered as a member at the time of the call. That is all the clause requires in this respect. This clause as with several others continued to bind Dr Stylis despite the apparent actual ceasing of membership under clause 20(2). As noted above, whilst it was submitted on behalf of the defendant that the contract ended when membership ceased there was no case law cited to support that assertion and it appears contrary to a plain reading of the UMP Constitution. In meeting the requirement of clause 28 in this respect and the other matters required by the clause the plaintiff has provided "conclusive evidence of the debt" and it is not required to prove "any other matters whatsoever". Dr Stylis is therefore liable to make payment of the call." 31 Dr Stylis submitted that the Magistrate misinterpreted Clause c8 of the Constitution in the following ways: "(i) Clause 28, as its introductory words state, is relevant to "the trial or hearing or any action for the recovery of any moneys due in respect of any call". The Clause cannot be used to decide that matter for the Court, i.e. is a sum actually "due". If the Court finds that there is no money due, then the Clause has no application. (ii) The interpretation of this clause, as urged by UMP (and found by the Magistrate) gives rise to a circularity problem - that is, Clause 28 proves that the money is due in a hearing before a Court of Law to determine if that money is due. (iii) Clause 28 cannot have any application to non-members, because it requires the fulfilment of a number of pre-conditions, the first being that the person being sued must be "an Ordinary Member" [defined in the Constitution] as "…a guaranteeing member for the time being of the Company…". The Clause cannot be used to deem people to be members when the threshold question for a Court to determine is whether the person being sued is a Member. (iv) Another precondition to the application of the Clause is the necessity to give notice of a call to "the Ordinary Member". Such notice cannot be given if the recipient is no longer a member." 32 Dr Stylis submitted that if clause 28 is interpreted as deeming someone a member, this could result in persons, such as deceased persons, remaining on the Register of Ordinary Members, being liable for the call. Further, Dr Stylis submitted that he cannot be penalised if UMP fails to correct its Register to delete members whose membership has ceased through death, resignation, expulsion, or cessation due to the non-payment of subscriptions. UMP submitted that the decision made by the Magistrate that Dr Stylis was entered as a Member at the time of the call was a factual one that would require leave to appeal on, and a clear error demonstrable in the factual findings in the Magistrate's decision. Further, UMP submitted that Dr Stylis' name in the register was "the conclusive evidence of the debt" provided for in clause 28. 33 There was evidence that firstly, Dr Stylis' name was entered in the register of ordinary members of UMP as at 17 November 2000; secondly, the resolution requiring payment of the call is duly recorded in the minute book of the board; and thirdly, notice requiring payment of such call was duly given to the ordinary member sued. That is the matters that need to be established for clause 28 to take effect were satisfied. 34 The Magistrate made a finding that Dr Stylis' name, rightly or wrongly, was proven to be on the Register of Ordinary Members of UMP at the time the call was made and there was conclusive evidence of the debt. Dr Stylis resigned from UMP at the end of 2000. The finding that Dr Stylis was on the register when the resolution was passed is a factual one and one which would not merit leave being granted. 35 The parties referred to Kerr v John Mottram Limited [1940] 1 Ch 657; Dobbs v National Bank of Australasia Limited (1935) 53 CLR 643; Bache & Co (London) Ltd v Banque Vernes et Commerciale de Paris SA [1973] 2 Lloyd's Rep 437 and Brick and Pipe Industries Limited v Occidental Life Nominees Pty Limited [1992] 2 VR 279. 36 UMP submitted that "conclusive evidence" of a fact is absolute evidence of such fact for all purposes for which it is so made evidence. In Kerr, Simonds J considered an application by a shareholder of a company to enforce an alleged contract for the sale of shares that he claimed were offered to him at a meeting of the company. The minutes of the company meeting did not support the plaintiff's claim that the contract had been entered into by the shareholder. The plaintiff sought to rely on evidence that was inconsistent with the signed minutes of the meeting. However, the Articles of Association provided that the minutes of any meeting purporting to be signed by the chairman should be "conclusive evidence without any further proof of the facts therein stated". 37 In Kerr the plaintiff argued that the evidence inconsistent with the minutes is admissible as the secretary may be wrong in his record of what occurred. The defendant argued the words "conclusive evidence" in the Articles of Association mean the minutes were evidence which could not be rebutted and were conclusive between the parties bound by the minutes. The defendant argued that any inconsistent evidence was inadmissible. 38 In Kerr Simonds J stated at 660: "Now, art. 114 which I have read represents the bargain between the shareholders as to what is to be, as between them, the value and effect of the minutes of the company as recorded in its minute book and signed by the chairman, and their bargain is that it is to 'be conclusive evidence without any further proof of the facts therein stated.' I have no doubt that the words 'conclusive evidence' mean what they say; that they are to be a bar to any evidence being tendered to show that the statements in the minutes are not correct." 39 Dr Stylis submitted that the Magistrate's approach is inconsistent with law and referred to Dobbs. I disagree. 40 In Dobbs the High Court considered whether a certificate signed by the manager of a bank at which an account was held was "conclusive evidence" of the indebtedness of the customer to the bank. The validity of the clause was challenged on the grounds that it was an attempt to oust the jurisdiction of the court to determine the liability of the debtor and substitute the determination of the officer of the bank who signed the certificate. The Court rejected this argument, holding that the clause was not one which denied a party access to the courts. 41 The High Court in Dobbs at 651-652 stated: "Perhaps such a clause should not be interpreted as covering all grounds which go to the validity of a debt; for instance, illegality…But the manifest object of the clause was to provide a ready means of establishing the existence and amount of the guaranteed debt and avoiding an inquiry upon legal evidence into the debits going to make up the indebtedness. The clause means what it says, that a certificate of the balance due to the bank by the customer shall be conclusive evidence of his indebtedness to the bank. 42 Both Dobbs and Kerr were followed by the Court of Appeal in Banque Vernes, where a guarantee made a notice "conclusive evidence" of the accrual of a particular liability. Unless error appears on the face of the notice or fraud were shown, Lord Denning MR considered (at 439, 440) that "full effect" should be given to the conclusive evidence clause. 43 These authorities establish that the use of the words "conclusive evidence" in the Articles of Association of a company or within an agreement will be conclusive of what is certified unless manifest error or fraud are proved - see Brick and Pipe. As there was no manifest error or fraud, the full effect should be given to clause 28. Clause 28 relates to any call, not amounts due for unpaid subscriptions. The matters that needed to be established for clause 28 to take effect were satisfied. There was conclusive evidence of the debt. Dr Stylis was obliged to pay the amount due in relation to the call. There is no error of law. 44 I have already covered the matter raised in the cross appeal. Clause 26 refers to "amount due". It does not refer to the annual subscription. The amount due is that due under the quarterly instalment not the amount due for the annual subscription. The interpretation of the word "due" in clause 26 is consistent with that in clause 20(2). The cross appeal is dismissed. 45 The appeal is dismissed. The cross appeal is dismissed. The decision of His Honour Magistrate Reiss dated 17 November 2005 is affirmed. The summons filed 14 December 2005 is dismissed. 46 Costs are discretionary. Costs normally follow the event. However, as the cross appeal did not take up any significant time, the plaintiff should bear the costs of the hearing. The plaintiff is to pay the defendant's costs as agreed or assessed.

(3) The decision of His Honour Magistrate Reiss dated 17 November 2005 is affirmed.

(4) The summons filed 14 December 2005 is dismissed.

(5) The plaintiff is to pay the defendant's costs as agreed or assessed. **********

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Local Courts Act 1982(NSW)

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