Dunne and Others v Mahon and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Hogan
• Judgment Date: 10 October 2012
• Neutral Citation: [2012] IEHC 412
• Court: High Court
• Date: 10 October 2012

[2012] IEHC 412

THE HIGH COURT

[No. 864 Sp./2010]

Dunne & Ors v Mahon & O'Connor

IN THE MATTER OF ROADSTONE GROUP SPORTS CLUB

BETWEEN/

JOHN DUNNE, ANTOINETTE AGNEW AND PHILOMENA MOODY

PLAINTIFFS

AND

OLIVER MAHON AND MAURICE O'CONNOR

DEFENDANTS

COMPANIES ACT 1963 S213(F)

COMPANIES ACT 1963 S205

FEENEY & SHANNON v MACMANUS & ORS 1937 IR 23

GREEN THE DISSOLUTION OF UNINCORPORATED NON-PROFIT ASSOCIATIONS 1980 43(6) MLR 626

BUCKLEY & ORS v AG & POWER (NO 2) 1950 84 ILTR 9

LEAD COMPANYS WORKMENS FUND SOCIETY, IN RE 1904 2 CH 196

GKN BOLTS & NUTS LTD (AUTOMOTIVE DIVISION) BIRMINGHAM WORKS SPORTS & SOCIAL CLUB, IN RE; LEEK v DONKERSLEY 1982 1 WLR 774 1982 2 AER 855

HARINGTON v SENDALL 1903 1 CH 921

TOBACCO TRADE BENEVOLENT ASSOCIATION CHARITABLE TRUSTS, IN RE 1958 1 WLR 1113 1958 3 AER 353

M'KENNA v BARNSLEY CORP 1894 10 TLR 533

FRIENDLY SOCIETIES ACT 1875

ABBATT & ORS v TREASURY SOLICITOR & ORS 1969 1 WLR 1575 1969 3 AER 1175

KEYS & ANOR v BOULTER & ORS (NO 2) 1972 1 WLR 642 1972 2 AER 303

WARD v SPIVACK LTD 1957 IR 40

SWEENEY v DUGGAN 1997 2 IR 531 1997 2 ILRM 211 1997/6/2236

CARNA FOODS LTD & MALLON v EAGLE STAR INSURANCE CO (IRL) LTD 1997 2 IR 193 1997 2 ILRM 499 1998/13/4384

THE DISSOLUTION OF UNINCORPORATED NON-PROFIT ASSOCIATIONS 1928 41(7) HARV L REV 898

CONSTITUTION ART 40.6.1.iii

NATIONAL UNION OF RAILWAYMEN & ORS v SULLIVAN & ORS 1947 IR 77 1947 81 ILTR 55

EQUALITY AUTHORITY v PORTMARNOCK GOLF CLUB & ORS 2010 1 IR 671 2010 1 ILRM 237 2009/20/4842 2009 IESC 73

CONSTITUTION ART 40.6.1

TRUSTS OF THE GRAND CANAL BOATMEN & WORKMENS BENEFIT SOCIETY FUNDS, IN RE; TIERNEY v TOUGH 1914 1 IR 142

BUCKINGHAMSHIRE CONSTABULARY WIDOWS & ORPHANS FUND FRIENDLY SOCIETY (NO 2), IN RE 1979 1 WLR 936 1979 1 AER 623

COLLOONEY PHARMACY LTD v NORTH WESTERN HEALTH BOARD; HOLLY HILL PHARMACY LTD v SOUTHERN HEALTH BOARD 2005 4 IR 124 2005/11/2348 2005 IESC 44

CLUBS

Constitution

Rules - Winding up - Courts - Jurisdiction - Unincorporated bodies - Right of association -- Viability of club - Collapse of substratum - Whether majority vote sufficient to dissolve club - Whether intrinsic failure of expression in club rules - Whether court having jurisdiction to supplement rules - Whether court should compel unwilling majority to associate with minority - Whether majority rule change valid - Feeney v MacManus [1937] IR 23; Buckley v AG (No 2) [1950] 84 ILTR 9; In re Lead Workmen's Fund Society [1904] 2 Ch 196; In re GKN Bolts & Nuts Ltd (Automotive Division) Birmingham Works, Sports and Social Club; Leek v Donkersley [1982] 1 WLR 774; Harington v Sendall [1903] 1 Ch 921; In re Tobacco Trade Benevolent Association Charitable Trusts [1958] 1 WLR 1113; M'Kenna v Barnsley Corp (1894) 10 TLR 533; Abbatt v Treasury Solicitor [1969] 1 WLR 1575; Keys v Boulter (No 2) [1972] 1 WLR 642; Ward v Spivack Ltd [1957] IR 40; Sweeney v Duggan [1997] 2 IR 531; Carna Foods Ltd v Eagle Star Insurance Co (Irl) Ltd [1997] 2 IR 193; In re Trusts of the Grand Canal Boatmen & Workmen's Benefit Society Funds; Tierney v Tough [1914] IR 142; In re Buckinghamshire Constabulary Widows & Orphans Fund Friendly Society (No 2) [1979] 1 WLR 936 and Collooney Pharmacy Ltd v North Western Health Board; Holly Hill Pharmacy Ltd v Southern Health Board [2005] IESC 44, [2005] 4 IR 124 considered - Friendly Societies Act 1875 - Companies Act 1963 (No 33), ss 205 and 213 - Constitution of Ireland 1937, Art 40.6.1 - Application granted; dissolution ordered (2010/864SP - Hogan J - 10/10/2012) [2012] IEHC 412

In re Roadstone Group Sports Club; Dunne v Mahon

Facts: The application concerned a dispute between trustees as to whether Roadstone Group Sports Club should be wound up. The jurisdiction of the court was called upon as the rules of the club did not provide for such a winding up and there was no provision for their amendment.

The question before the court was whether such a jurisdiction existed and if so, in what circumstances it should be exercised.

Hogan J noted that the jurisdiction existed and had been previously been exercised. On analysis of the relevant authorities it was highlighted that the cases in which it had been invoked were substratum cases (Feeney v McManus [1937] IR 23 and Buckley v Attorney General No. 2 (1950) 84 ILTR 9). Roadstone Group Sports Club did not however fall into this category as it was currently viable and able to carry out its purpose.

The question moved on to whether the court had jurisdiction to wind up the club as it was the majority”s desire to do so, illustrated by a vote to do so at the extraordinary general meeting in 2009. It was held that an implied power to amend through majority vote must generally be assumed in the interests of flexibility and practicality, Harington v Sendall [1903] 1 Ch 921 considered. Dissolution was held to be the fairest solution, ensuring all the members maintained their property interests. The court could therefore imply a term to the effect that the rules could be amended.

A previous amendment stating that upon disbandment the remaining funds would be donated to charity was held to be an impermissible rule change, as a matter of law the club”s property ultimately belonged to the members, Tierney v Tough [1914] 1 IR 142 considered.

The court ordered for the club to be wound up, with the manner in which the proceeds were to be distributed remaining to be fully argued.

1 1. This application arises from a dispute between the trustees of the Roadstone Group Sports Club ("the Club") concerning the question of whether the Club should be wound-up pursuant to the inherent jurisdiction of this Court. The first plaintiff is the Chairman of the Club (albeit not a trustee) and the second and third plaintiffs are trustees of the Club. The second and third plaintiffs were formerly full members of the Club but are now associate members, having subsequently retired from the employment of the Roadstone companies.

2 2. The defendants are full members of the Club and also constitute the remaining trustees. The defendants were elected trustees of the company in February 1997 having being nominated by Roadstone Dublin Ltd. and Roadstone Provinces Ltd. in accordance with Rule 4(c) of the Rules of the Club ("the Rules").

3 3. The Rules do not contain any provisions providing for their amendment and were originally silent as to what would become of the Club's assets were it to be dissolved. This is at the heart of the present dispute and, specifically, questions of whether certain resolutions and amendments to these Rules have been validly adopted are central to the present proceedings. I will return to this question towards the conclusion of this judgment once I have set out certain background facts and enumerated the governing principles.

4 4. The Roadstone Group Sports Club was established in 1957 for the benefit of the employees of the company of the same name. When originally established it was as a small social club. Over time the Club expanded, notably following the merger of Roadstone Ltd. with Irish Cement in 1970 and the formation of CRH Plc, a flourishing multinational which is now one of the mainstays of the Irish economy.

5 5. The Club moved to new premises in Belgard Road in Dublin in the 1970s. In 1991, after some negotiations and discussions between the Club and CRH, a site was purchased at Kingswood, Clondalkin, County Dublin from CRH. There is now a substantial clubhouse on the premises. The Club has a variety of soccer pitches (which are floodlit) and a pitch and putt course in a 6.73 hectacre site. It has a 200 square metre function hall, a bar and a restaurant area. The parking facilities are extensive and ample. The clubhouse caters for a wide variety of social events and it has rooms and facilities cater suitable for a wide range of activities such as darts, snooker, bridge and other similar activities. In recent years the premises have been rented out for major pitch and putt championships, martial arts competitions and even Irish dancing competitions. The Club also receives a rental of some €13,000 per year in respect of a mobile telephone mast.

6 6. Full membership is open to employees of CRH, but associate membership is also open to those who are not CRH employees and the evidence is that since about 1970s provision has been made for associate members who have significantly supplemented that full membership. As of the end of 2010 the Club had 349 associate members, 53 full members, one honorary member and two life members. As of June, 2012 the Club has a small number of part-time employees.

7 7. Although disputed by the plaintiffs, the Club's finances seem - superficially at least - to be in a healthy position. It has no debt and as of October, 2010 it had savings of some €478,820. By reason, however, of exceptional items (including redundancy payments) there was a total loss of just over €207,000 in 2011 and the cash at hand reduced to €312,008. Although the present financial position of the Club is open to various interpretations, the plaintiffs point to this loss as a harbinger of what may yet ultimately happen if the Club is permitted to continue into the future.

8 8. Judged from the photographs that have been supplied to me, the facilities seem most impressive and are such as might tempt the interest of any person eligible to join the Club. That, however, is not the view of the full members of the Club, or, at least, the majority of them as expressed by a vote at an extraordinary general meeting in July 2009. (It should be observed that the associate members were not permitted to vote).They take the view that the Club should be wound up on the basis that membership is in terminal decline and that it has no long term future. As we have noted, the Club's rules do not provide for such a winding up and,...