Morgan v Martin HC Hamilton CIV 2011-419-001305 [2011] NZHC 1147 (23 September 2011)

Last Updated: 20 October 2011

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

_{CIV 2011-419-001305}

BETWEEN TUKUROIRANGI MORGAN Plaintiff

AND TANIA ERIS MARTIN First Defendant

AND WAIKATO-TAINUI TE KAUHANGANUI INCORPORATED

Second Defendant

Hearing: 22 and 23 September 2011

Appearances: D M Salmon & I T K F Hikaka for Plaintiff

W C Pyke for First Defendant

M C Sumpter and J W J Graham for Second Defendant

Judgment: 23 September 2011

_{JUDGMENT OF KEANE J}

This judgment was delivered by on 23 September 2011 at 6.45 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

Solicitors: Lee Salmon Long, PO Box 2026, Shortland Street, Auckland 1140:

[e-mail]

Chapman Tripp, Auckland: [e-mail]

_{Copy to: W C Pyke, Barrister, Hamilton:} [e-mail]

TUKUROIRANGI MORGAN V TANIA ERIS MARTIN HC HAM CIV 2011-419-001305 23 September 2011

[1] On 6 August 2011, at the half yearly general meeting of Te Kauhanganui, the incorporated society of the Waikato iwi, a resolution was passed, as the chairperson of the society, Mrs Martin, held to be by a sufficient majority, disqualifying Mr Morgan from being an elected member of the society.

[2] The effect of that resolution, which the society confirmed as the rules require by notice to the marae Mr Morgan was elected to represent, Te Hoe O Tainui Marae, was that he ceased to be qualified to represent that marae as from the date on which it received the notice.[1] There was also an immediate consequent effect. Mr Morgan ceased to be able to continue as the chairperson of the executive of the society, Te Arataura.[2]

[3] At the meeting itself Mr Morgan immediately challenged the validity of the resolution. Of the 68 marae comprising the society, 65 were represented at the meeting, each entitled to one vote. Six of the votes cast were ruled to be invalid. There were two abstentions. Twenty-seven voted against the resolution. Mr Morgan contended that for the resolution to be valid a majority of 30 affirmative votes was not enough. At least 33 were called for.

[4] Mrs Martin, in the face of that challenge, upheld the validity of the resolution; a declaration that was conclusive as to the fact that the motion had been carried and by a particular majority.[3] Mr Morgan's only recourse, Mrs Martin said to him, if he wished to challenge the validity of the resolution, was to bring an application for relief in this Court.

[5] Mr Morgan seeks an order quashing Mrs Martin's declaration made at the meeting that the motion was validly carried by 30 votes. He seeks a declaration that he is not a disqualified member. He seeks a related declaration that for the resolution to have been valid the majority should have been 50 percent or more of the sum of votes of all marae comprising the society, 34 votes, or 50% of those present at the

_{meeting, 33 votes.}

Urgent fixture accorded

[6] Mr Morgan did not bring this present application for judicial review until 12

September 2011 and, when he did so, he sought at the telephone conference given on

16 September 2011 an urgent fixture. Urgency was accorded his application by

Woolford J and why that was needs to be set against what had gone before.

[7] On 7 August 2011, Chapman Tripp, solicitors to Te Kauhanganui, and thus also to its executive arm, Te Arataura, in a letter to Mrs Martin, and to the deputy chair of the Te Arataura, expressed the opinion that the resolution disqualifying Mr Morgan had been passed invalidly; that to have been valid a majority of at least 33 affirmative votes would have been called for.

[8] On 8 August 2011, relying on that opinion, Te Arataura issued a public statement affirming Mr Morgan as its chairperson. In response, and on the same day, Mrs Martin also issued a public statement saying that Te Kauhanganui had instructed Chen & Palmer, solicitors, to give an independent opinion; an opinion that, if it were given, has not figured in this case.

[9] On 31 August 2011 Stace Hammond, solicitors, on instructions from Mrs Martin, in a letter to Chapman Tripp, expressed the opinion that the majority had been sufficient because it was the majority of the valid votes cast for or against the motion at the meeting. In a letter, dated 2 September 2011, Chapman Tripp disagreed. On 2 September 2011, Mrs Martin, on behalf of Te Kauhanganui, issued a further public statement affirming that Mr Morgan had been validly disqualified.

[10] On 9 September 2011 Lee Salmon Long, Mr Morgan's solicitors, wrote to Stace Hammond confirming that this proceeding was to issue and that they intended to seek an urgent fixture, before the resumed half yearly meeting of the society on 24

September 2011, to resolve what they described as the narrow issue of interpretation on which the validity of the resolution turned.

[11] On 16 September 2011, in the telephone conference with counsel for Mr

Morgan and the incorporated society, before Mrs Martin had been served with the

application, Woolford J accepted that a fixture before the resumed meeting was called for and set it down for hearing on 22 September 2011.

[12] Mr Morgan's status as an elected member, Woolford J accepted, was likely to be central to the validity and coherence of the meeting. That apart, he accepted, the Society needed to know whether Mr Morgan continued to be able to serve as its chief executive, given its ongoing negotiations with the Government and other entities.

[13] The fact that Mrs Martin had not been served at the date of the conference did not dissuade the Judge from granting a fixture, even though he thought it important that she have the opportunity to be heard. He was satisfied that she was aware of the proceeding and its substance and that she had already taken advice. He made an order for her substituted service.

[14] On 20 September 2011, I declined an application Mrs Martin made for the hearing to be adjourned to enable her to take legal advice. I did so essentially for the reasons why Woolford J had allocated an urgent fixture in the first place.

[15] On 22 September 2011 I received from Mrs Martin a statement in reply to the application in which she said that she would represent herself assisted by a McKenzie friend. At the fixture itself, however, Mr W C Pyke appeared on late instructions that he had still to confirm and he sought an adjournment, which I also declined.

[16] Immediately I declined the application, I heard the submissions for Mr Morgan and I confirmed that the society, which had only reserved the right to be heard as to the effect of its rules if that was called for, did not wish to make any submissions of its own. I then adjourned to enable Mr Pyke to prepare his reply.

[17] At 9 am today I resumed the hearing at Auckland. I heard a complete submission in response by Mr Pyke contradicting the submissions made for Mr Morgan as to why there should be a declaration. I then heard submissions in reply for Mr Morgan and on this occasion a brief submission for the society. I am satisfied that

I received a complete argument for the purpose of weighing whether to grant the declaratory and other relief applied for.

Jurisdiction and principles

[18] Mrs Martin puts in issue whether this dispute as to the meaning of the rules, the contract between the society and its members, is the proper subject of an application for judicial review or for any grant of declaratory relief, more especially against her. I am satisfied that it is.

[19] A dispute as to the meaning of the rules of an incorporated society, more especially when that relates to the eligibility of members, or their continued eligibility, is readily susceptible of judicial review.[4] As the embodiment of the Waikato Iwi in their relations with the Crown and other entities, moreover, the society is as public a private entity as can be imagined.[5]

[20] I am satisfied equally that, even though Mr Morgan's continued eligibility to be an elected member of the society depends on a vote taken by the society itself, Mrs Martin is properly joined as a defendant. Mrs Martin's decision to declare the vote validly passed by a majority of 30 had conclusive effect under the rules and, I am satisfied, was an exercise of a power of decision susceptible of review. It falls within the definition of a 'statutory power of decision' in respect of which that right

to relief is accorded.[6]

[21] I am also satisfied that this is a case where there is good reason to grant relief if the resolution passed does not comply with the rules. As a result of the resolution Mr Morgan was disqualified from being an elected member; a decision adverse not just to him but to the marae he was elected to represent. The effect was also that he ceased to be able to be the chief executive; a position carrying with it a right to be

remunerated.[7]. The decision also went to his reputation. The ground on which he was

_{disqualified was that he had brought Te Kauhanganui into disrepute.}

[22] The issue of interpretation on which the validity of the resolution depends, moreover, is one that touches all those rules of the society that call for decisions to be taken at a general meeting, whether by ordinary or special resolution, and what number of members may call for a general meeting, and what constitutes a quorum. All depend on the meaning of the central concept 'Total Marae Votes'.

[23] To resolve that issue, an issue as to the meaning of the contract between the society and its members, the rules that have a bearing must be:[8]

... fairly construed as a whole and their intentions derived from a reasonable interpretation of the language used. They should be construed so as to give them reasonable efficacy and a workable construction.

That can mean, as Wild J held in Re New Zealand Thoroughbred Racing Inc,[9] 'an interpretation which is reasonable and efficacious over one that is literal'.

Te Kauhanganui

[24] Te Kauhanganui is an incorporated society established to uphold support, strengthen and protect the kingitanga, and to protect, advance, develop and unify the interests of the Waikato iwi, and to foster amongst the members of Waikato the principles of whakaiti, rangimaarie and kia tuupato.[10]

[25] The society has as related objectives to achieve a settlement of Waikato's outstanding claims to the Waikato River, the West Coast harbours and the Wairoa and Maioro land blocks. It is to act also as a trustee of a significant lands trust and in these and other ways to serve the spirit and intent of the 1995 deed of settlement between Waikato-Tainui and the Crown.[11]

[26] The members of Waikato are those persons who are members of Iwi Waikato, and the members of the society are elected by the marae comprising that Iwi. The

_{rules identify, in all, 68 such marae. Each is entitled to elect three members of the}

society. At any general meeting of the society, at which decisions require to be taken, and these may be half yearly meetings or annual meetings, or special meetings, or triennial general meetings, each marae is entitled to one vote.

[27] The management and control of Te Kauhanganui, including its duties and functions as trustee, is vested in Te Arataura, the executive arm. It exercises all the powers that the society has as a whole, except where the rules limit that ability.

[28] The critical rules, for the purpose of this application, obviously enough, are those governing how the society takes decisions by way of ordinary or special resolution at general meetings.

Disqualifying resolution

[29] The resolution passed on 6 August 2011 disqualifying Mr Morgan as an elected member was in response to the following motion:

WAIKATO TAINUI TE KAUHANGANUI (INC) confirms:

Pursuant to Rule 5.3.1(i) that Tukuroirangi Morgan has acted in a manner which has brought or is likely to bring Te Kauhanganui into disrepute, by virtue of his conduct and activities as the Chair of Te Arata (outlined in Appendix C), and should therefore be disqualified as an elected member of Te Kauhanganui.

[30] The grounds on which Mr Morgan was said to have brought Te Kauhanganui into disrepute, said to be outlined in the appendix, are not in evidence. Those grounds are not in issue on this application. All that is in issue is whether, on the face of the record, the resolution disqualifying Mr Morgan was passed by a sufficient majority.

Critical rules

[31] Rule 5.3.1(i) , the rule giving the power to disqualify an elected member, says this:

A person shall be disqualified from membership as an Elected Member if he

or she ... at (whether or not in his or her capacity as an Elected Member) in a

manner which has brought or is likely to bring Te Kauhanganui into disrepute (including a serious breach of a written confidentiality undertaking) as determined by Elected Members who hold at least 50% of the Total Marae Votes.

[32] The concept fundamental to the calculation of the 50% majority required to disqualify a member is 'Total Marae Votes' as defined by rule 4.1, 'the sum of votes to which all the Marae are entitled pursuant to Rule 12.1'. Rule 12.1 says:

At all meetings of Te Kauhanganui, on every motion on which a vote is required, each Marae represented at the meeting shall be entitled to the number of votes which is calculated in accordance with the formula set out in the Fourth schedule.

[33] The Fourth Schedule simply says 'Each Marae shall be entitled to one vote'. And then rule 12.5 says:

Except as otherwise provided in these rules, a resolution or motion shall be adopted if it is approved by a majority of 50% or more of the Total Marae Votes.

[34] Rule 12.5, and others incorporating the term 'Total Marae Votes', necessarily assumes that its meaning is self evident. It is not. It calls for the coherent interplay of three aspects of the rules and that interplay is less than coherent. Whereas the definition of 'Total Marae Votes' in rule 4.1 refers to rule 12.1, the converse is not the case. The purpose of clause 12.1 is not to amplify the definition of 'Total Marae Votes' in rule 4.1. It is to prescribe how many votes a marae 'represented at a meeting' is entitled to. It serves that purpose by confirming that the entitlement is as stated in Schedule 4. That is all it does.

[35] The result is that while, for the purpose of calculating 'Total Marae Votes', rule 12.5 confirms that there is to be one vote for each marae, that still leaves unresolved under that rule which marae are to be taken into account to fix the total. Is it all marae comprising the society, as the preliminary definition in rule 4.1 appears to say? Or is it, as rule 12.1 itself may imply, only those present at the meeting? That is the critical issue in this case.

[36] Mr Morgan contends that the only reason why the definition of 'Total Marae

Votes' refers to rule 12.1 is to link it to the Fourth Schedule, which specifies the vote

to which each marae is entitled. It is contended for Mrs Martin that rule 12.1 is more than a neutral conduit. It confirms that the only votes that count towards the total the definition speaks of are the votes of the marae 'represented at the meeting' at which the vote takes place.

[37] Mr Morgan contends that 'Total Marae Votes' must mean quite literally the sum of the votes of the marae that comprises the society. Only in that way, he contends, can it be known in advance of a meeting what will constitute a quorum, and what majority will be called for in decisions taken on those issues reserved to the society as a whole. Only in that way, he contends, can the society work with certainty. Only in that way will unity between marae comprising the society be achieved and decisions genuinely taken by the society as a whole. A majority turning on those that happen to be present, conversely, will always be unpredictable and vulnerable to manipulation by a minority.

[38] It is contended for Mrs Martin that the concept 'Total Marae Votes', qualified critically as it is by rule 12.1, promotes real, not hypothetical decision making. It promotes decision making by those who not merely have the right to be present and vote at a meeting, but those who have chosen to be present. It prevents decisions being dictated by those not present at the meeting, or by those present but who have elected to abstain, or by those whose votes are invalid, perhaps deliberately so. A high notional threshold for a valid resolution, she contends, could prevent effective decision making. Members, by choosing to stay away, could equally render the society vulnerable to decision making by minorities.

[39] These contrasting submissions, which I have set out in the broadest way, must now be set against the rules as a whole.

Disqualification decision

[40] Mr Morgan's first submission is that the rule under which the motion was passed, rule 5.3.1(i), singles out the disqualification of a member for bringing Te Kauhanganui into disrepute as more serious than any of the others. It is the only ground for disqualification reserved to the society as a whole for decision.

[41] Consequently, it is his argument, the vote called for has to be of a sufficient number of the members of the society to be commensurate with the seriousness of the issue. It has to be 50% of the sum of votes able to be cast by all marae. If it were to depend only on those who happened to be present at the meeting, that could only denude the vote taken of authority and render it vulnerable to the caprice of a minority.

[42] I have no difficulty accepting this argument to this extent. The decision is, of course, serious. I have already said so. It is one reason why Mr Morgan has been allowed an urgent fixture. His livelihood and reputation are also in issue. But there are other rules, which Mr Morgan himself accepts may permit a simple majority of those actually present and voting, to which I am about to come. They too involve issues as significant to the society, or even more.

Actual majority instances

[43] In three instances, Mr Morgan next contends, the rules expressly contemplate that a simple actual majority may be enough because they qualify the definition of

'Total Marae Votes', by adding the words 'at a Meeting'. Those further words, he contends, must mean that whatever the usual purpose of rule 12.1, it can only, for the purpose of amplifying the definition 'Total Marae Votes', link that definition to the formula in the Fourth Schedule.

[44] The first of the three instances is rule 16.3, which confirms that the ability of Te Arataura to take decisions concerning 'any final settlement of Waikato's outstanding claims to the Waikato River, the West Coast harbours and Wairoa and Maioro land blocks' is subject to the will of the society. Te Arataura is prohibited from taking any such decision 'unless that action has been approved by a resolution passed by a majority of the Total Marae Votes at a meeting'.

[45] The second instance is where there is to be an alteration or change to the rules. Rule 18.1 says:

Any alteration or change to these Rules should be made only if that alteration or change has been approved by a resolution passed by a majority of 50% or more of the Total Marae Votes at a meeting.

Rule 18.1 identifies some rules that call for special resolution, and rule 18.3, the third instance, again requires that any alteration or change to the standing orders calls for 'a resolution passed by a majority of the Total Marae Votes at a meeting'.

[46] These powers of decision, especially those in the first and second instances, are issues of high significance. It is not obvious to me, I have to say, why the words

'at a meeting' should qualify 'Total Marae Votes' in these instances but not in the instance in issue, the disqualification of a member. The fact is that they do qualify the definition in those three instances and they are not to be found in rule 5.3.1(i); and that cannot be ignored.

[47] The natural inference from the presence of those words in these three instances is that 'Total Marae Votes' is otherwise to be understood as the sum of votes all marae comprising the society. If it meant, as Mrs Martin contends, only those votes validly cast one way or the other at the meeting itself, they would serve no purpose.

[48] Conversely, the absence of such words in rule 5.3.1(i) is thrown into relief. If such words are to be imported to that rule, as these three instances in the rules demonstrate, that would have to be express. It cannot be by implication only.

Convening general meetings and quorum

[49] Finally, Mr Morgan contends, there are two converse instances where 'Total Marae Votes' must mean the sum of votes able to be cast by all marae comprising the society because each depends for efficacy on a fixed datum, and the first, rule 9.2, confers the ability on elected members to call a general meeting.

[50] Rule 9.2 says this:

In addition to General Meetings convened pursuant to Rule 15.1.2 or Rule

15.2.3, a General Meeting may be called for by resolution of the members of

Te Arataura or by written request to Te Arataura by Elected Members who

hold at least 50% of the 'Total Marae Votes' stating the nature of the business to be transacted or considered at the General Meeting.

[51] The second rule, Mr Morgan contends, which calls for that fixed datum is rule 11.1, which governs quorum. It says:

The number of Elected Members present in person who together hold at least

50% of 'Total Marae Votes' shall constitute a quorum for any meeting of Te

Kauhanganui.

[52] I accept that these rules, the first perhaps even more than the second, do call for a fixed datum that cannot be dependent on who is actually present at a meeting, the first because a meeting has still to be convened, the second because the sufficiency of the quorum calls for a comparison between the number present and an externally fixed number.

[53] Those rules, I accept, cannot work unless the definition 'Total Marae Votes' is given its literal notional effect, despite rule 12.1, linking 'the sum of votes to which all marae are entitled' to the number of votes able to be cast according to Schedule Four.

[54] I do not ignore Mrs Martin's submission that, if this were so at a meeting where the quorum is 50 percent of all marae entitled to vote, all present would have to vote in favour of the motion for there to be even a simple majority. That is, I accept, a highly exacting standard. But that may simply mean no more than that where only half the marae attend, what constitutes a sufficient majority nevertheless remains constant. It is not to be eroded.

Actual majority possibility

[55] If, however, rule 12.1 is to be given its apparently literal effect and the result is that 'Total Marae Votes' are the total votes of those present at the meeting, Mr Morgan contends alternatively, even 30 affirmative votes would still have been insufficient.

[56] Present at the meeting were 65 marae, each entitled to one vote. All 65 participated in the vote. For the resolution to be passed validly, there would have had to have been 33 affirmative votes.

[57] It is contended for Mrs Martin that if an actual majority was all that was required, then the six votes declared invalid and the two abstentions would have to be left out of account. There would have been 57 valid votes cast and the 30 affirmative votes cast, exceeding as they did the 27 votes against the motion, constituted a sufficient majority.

[58] As to this issue at least, I consider, rule 12.1 is more clear. It is concerned with the entitlement to vote of each marae represented at the meeting. It confirms that this entitlement is as set out in the Fourth Schedule. The upshot is each marae represented at the meeting is entitled to one vote. Rule 12.2, moreover, confirms that the elected members representing each marae at the meeting are entitled to cast the vote of that marae.

[59] Neither of these rules is concerned with what the effect will be on 'Total Marae Votes' if a marae, represented at the meeting and entitled to vote, abstains from voting for or against the motion or votes invalidly. The former is not neutral. It will have an effect, if only negatively, on whether the resolution is carried. The second could result from deliberate choice or inadvertence. It too will have, if only a fortuitous, effect on whether the motion is carried.

[60] What is ultimately important, I consider, is that those entitled to vote participated and their entitlement to do so cannot be ignored in fixing the sum of

'Total Marae Votes' at the meeting.

Conclusions

[61] The issue whether Mr Morgan was validly disqualified from being an elected member of the society, as a result of the vote taken on 6 August 2011, is unfortunately bedevilled by a lack of clarity in the rules of the society, especially as

to what constitutes 'Total Marae Votes' for the purpose of calculating what constitutes a sufficient majority.

[62] I am satisfied, however, that 'Total Marae Votes' to be consistent with the rules as a whole and to serve the purposes of the rules, has to be a fixed datum not dependent on contingency. And the only datum that qualifies for this purpose, I am satisfied, is to equate 'Total Marae Votes' with the sum of votes of all marae comprising the society.

[63] That fixed datum, I consider, also serves the wider purposes of the society. As well as providing certainty, it calls for a high level of participation by marae, a participation that can only serve to protect, advance, develop and unify the interests of Waikato iwi and foster positive relations amongst member marae. It ensures that as to those decisions reserved to the society as a whole, except where the rules expressly say otherwise, that there will always be a real majority.

[64] If that interpretation is incorrect, however, I remain satisfied that the resolution on 6 August 2011 was not passed by a majority of the marae represented at the meeting. That majority had to be half of those present entitled to vote, even if their votes were ruled invalid, or they abstained. Thirty affirmative votes was insufficient.

Declarations and orders

[65] I quash the declaration Mrs Martin made at the meeting under rule 12.6 that the motion was carried by a majority of 30 affirmative votes, and I declare that Mr Morgan remains an elected member of the society and was not validly disqualified by the resolution ostensibly passed.

[66] I declare as well, and necessarily, that for the resolution to have been passed validly under rule 5.3.1(i) a majority of 34, 50% of all marae comprising the society and entitled to vote at the meeting, whether or not they were present, would have been called for. Or, if that is wrong, I declare that, to comply with the rule, a majority

of 33, at least 50% of those marae present and eligible to vote, would have been called for.

[67] I reserve the issue of costs. A memorandum for Mr Morgan is to be filed and served within ten working days of the date of this decision, and memoranda from Ms Martin and from Te Kauhanganui itself are to be filed and served within the

_{succeeding ten working days.}

P.J. Keane J

---

[1] _{Waikato-Tainui Te Kohanganui Incorporate Rules, rule 5.3.2(b).}
[2] _{Rule 15.4.1(a).}
[3] Rule 12.6.
[4] _{Stratford Racing Club Inc v Adlam [2008] NZCA 92; [2008] NZAR 329.}
[5] _{Hopper v North Shore Aero Club Inc [2006] NZCA 308; [2007] NZAR 354 (CA).}
[6] _{Judicature Amendment Act 1972, s 3}
[7] Waikato-Tainui Te Kohanganui Incorporate Rules, rule 15.9.
[8] _{Laws of New Zealand, Incorporated Societies and other Associations at para [27].}
[9] Re New Zealand Thoroughbred Racing Inc HC Wellington CIV 2009-485-001767, 3 November _{2009 at [27], [43].}
[10] _{Rule 3(a) - (c).}
[11] Rule 3(d) - (f).