Waikato Tainui Te Kauhanganui Incorporated v Martin [2012] NZHC 85 (8 February 2012)

Last Updated: 23 February 2012

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2011-419-1621 [2012] NZHC 85

UNDER The Judicature Amendment Act 1972 and the Declaratory Judgments Act 1908

BETWEEN WAIKATO TAINUI TE KAUHANGANUI INCORPORATED

Plaintiff

AND T E MARTIN Defendant

Counsel: J E Hodder SC and J Graham for plaintiff

K Crossland and G Brant for defendant

Judgment: 8 February 2012

(ORAL) JUDGMENT OF LANG J [on application for injunctive relief]

WAIKATO TAINUI TE KAUHANGANUI INCORPORATED V MARTIN HC HAM CIV-2011-419-1621 8

February 2012

[1] This proceeding raises important issues relating to the management and governance of an organisation closely associated with Tainui Iwi. The Iwi consists of representatives of 33 hapuu. Although 120 marae are affiliated to the 33 hapuu, not all of those marae are members of Waikato-Tainui Te Kauhanganui Incorporated (“Te Kauhanganui”), with which this proceeding is concerned.

[2] Te Kauhanganui is an incorporated society registered under the Incorporated Societies Act 1908. Like all incorporated societies, Te Kauhanganui conducts its affairs in accordance with rules registered with the Registrar of Incorporated Societies. The defendant, Ms Martin, is the Chairperson of Te Kauhanganui.

[3] The day to day management and control of Te Kauhanganui is left in the hands of an elected group of individuals, comparable in some senses to an executive committee, known as Te Arataura. That group is elected from members of the wider Te Kauhanganui body on a triennial basis.

[4] This proceeding has arisen because, on 29 October 2011, those present at a half yearly General Meeting of Te Kauhanganui purported to pass a number of changes to the rules of the body. For present purposes the important changes were contained in a resolution known as Resolution 7. This significantly altered the structure and governance of Te Kauhanganui. It created new officers, including a position as the Secretary for Te Kauhanganui. It also purported to vest oversight of much of the management and governance of the affairs of the wider body in Te Kauhanganui. This represents something of a sea change, because up until now Te Arataura has been solely responsible for the operation and governance of the affairs of the wider organisation.

[5] Some members of Te Arataura took the view that the resolution was not validly passed. As a result, they caused Te Kauhanganui to issue the present proceeding, in which it challenges the validity of the resolution on two broad grounds. First, it alleges that the resolution did not attract the necessary number of votes at the meeting to enable it to be passed. Secondly, it contends that the resolution was passed for an improper purpose.

[6] The proceeding has been the subject of applications for injunctive relief on two previous occasions. The Annual General Meeting (“AGM”) of Te Kauhanganui was due to be held on 4 December 2011. Members of Te Arataura apprehended that the AGM was to be conducted in accordance with the changes effected by the resolution passed on 29 October 2011. By that stage, the Registrar of Incorporated Societies had registered the changes and they therefore had legal effect. There is now controversy as to whether or not the registration occurred by way of inadvertence or oversight on the part of the Registrar. It is not necessary to say further about that issue in the present context. The important point, however, is that following registration the new rules came into force, and will remain in force unless and until the Registrar takes steps to alter that position.

[7] The protagonists supporting the litigation therefore caused Te Kauhanganui to apply for an injunction preventing those responsible for organising the AGM from conducting it. This issue was ultimately resolved without the need for a formal hearing on the basis of an undertaking that the AGM would be conducted in

accordance with the previous rules.[1] Those present at the AGM on 4 December 2011

passed a resolution, however, calling for the present litigation to come to an end.

[8] The next event precipitating an application for injunctive relief was a so- called “induction meeting” scheduled to be held on 4 February 2012. After hearing submissions on 2 February 2012, Duffy J directed that that meeting would be permitted to proceed.

[9] The present application arises because a further General Meeting has now been scheduled for 12 February 2012, at which an election will be held to elect new members to Te Arataura. Those supporting this litigation consider that the election should not be held until such time as the Court has determined whether Resolution 7 was validly passed. That issue will be determined at a substantive hearing to be held on 20 and 21 February 2012.

Relevant principles

[10] In any application for injunctive relief the Court is required to determine two issues.[2] First, it must determine whether the substantive proceeding raises a serious issue or question to be tried. Secondly, it must determine whether the balance of convenience favours of the maintenance of the status quo through the granting of injunctive relief.

Is there a serious question to be tried?

The required majority

[11] There appears to be no dispute that 33 members of Te Kahunganui voted in favour of the resolution that was passed on 29 October 2011. The 2009 rules, which applied as at that date, required any resolution for an alteration to the rules of Te Kahunganui to be passed by a majority of 50 per cent or more. The issue is whether

33 votes in favour of the resolution were sufficient to enable it to meet this threshold.

[12] There appears to be no dispute that 62 members were represented at the meeting on 29 October 2011. If the 50 per cent threshold relates to those present at the meeting, the resolution was clearly passed.

[13] This does not resolve the issue, however, because the relevant rule provides as follows:

18.1 Any alteration or change to these Rules shall 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 ...(Emphasis added)

[14] The plaintiff argues that, because Resolution 7 altered the rules of Te Kahunganui, it required the support of 50 per cent of all members who were entitled to vote, and not just a majority of those who were actually present and who voted at the meeting on 29 October 2011. It contends that 67 or 68 marae were entitled to attend and vote at the meeting, notwithstanding the fact that not all were ultimately

present. The plaintiff therefore contends that the resolution did not attract a sufficient majority, because it required at least 34 votes.

[15] There is some factual support for the plaintiff’s allegation that 67 or 68 marae were entitled to vote. Some of it comes from the defendant, Ms Martin, who referred to that fact in at least one earlier affidavit. Her evidence now, however, is firmly to the effect that only 66 marae were entitled to attend and vote at the meeting. If that is the case, and it appears to be the last word on the subject, then there was sufficient support for the resolution to enable it to be passed even if the required majority relates to all members eligible to vote rather than to those who actually attended the meeting and cast a vote.

[16] It seems to me, however, that the wording of clause 18.1 suggests that the relevant majority is to be that of those attending the meeting. That is the only reason I can see for the inclusion of the words “at a meeting” in the clause.

[17] Keane J referred to this issue in earlier litigation involving the same protagonists.[3] He noted that the words “at a meeting” had to be given meaning, and that it was likely that they meant that the required majority related to those present at the meeting rather than those potentially eligible to vote.

[18] Although I accept that there is some evidence to support the plaintiff’s position, I consider that its case is relatively weak in relation to the issue of the required majority.

Improper purpose

[19] The remaining causes of action allege that the alteration of the rules was carried out for an improper purpose. The thrust of this submission is that the rules as they previously stood prescribed a careful balance of power between the members of Te Kahunganui on the one hand, and the executive body comprising Te Arataura on the other. The plaintiff contends that this balance has now shifted substantially as a result of Resolution 7. It says that the alteration was been effected for an improper

purpose, and that it was possibly designed to ensure that Mrs martin and others supporting her placed themselves in a position of greater power than they could previously have achieved.

[20] I consider that this argument faces difficulties, because the rules do not expressly restrict the manner in which the members of Te Kahunganui may alter the rules. There is no entrenchment of existing rules beyond the requirement that any alteration be by way of resolution supported by 50 per cent or more of the members at a meeting. The absence of any such restriction is not surprising, because the rules of any incorporated society must be capable of alteration to meet changing circumstances. Rules that may have been appropriate and workable in one era may prove to be inappropriate and unworkable in another. It must therefore be open to an incorporated society such as Te Kahunganui to alter its rules to adapt to changes in its circumstances.

[21] Mrs Martin and her supporters maintain that this is precisely what has occurred here. They say that they are concerned at the manner in which the affairs of Te Kahunganui have been managed by the present members of Te Arataura. They consider that the 2009 rules prejudiced their ability to have any realistic input into or oversight of governance issues and the manner in which Te Arataura was conducting the affairs of the wider body. They say that the changes brought about by Resolution

7 were designed to address that legitimate issue.

[22] It is not necessary for me to make any findings regarding the motives of those supporting or opposing the changes effected by the resolution. I consider, however, that the plaintiff will face a significant hurdle in persuading the Court that a majority of members of Te Kahunganui were not entitled to alter their rules in a manner that they considered better reflects the current environment than was the case under the

2009 rules. For that reason, I have reached the conclusion that the case for the plaintiff is also weak on the remaining grounds contained in the statement of claim.

Where does the balance of convenience lie?

[23] My conclusions in relation to these issues mean that it is not strictly necessary for me to pass to the second limb of the enquiry. Had it been necessary to do so, however, I find that the balance of convenience firmly falls on the side of Mrs Martin and her supporters.

[24] I accept that it may be of assistance to both Te Arataura and Te Kahunganui to ascertain whether or not the new rules were passed in a manner that complies with the rules of Te Kahunganui. In the end, however, the determinative factor that drives my conclusion in relation to the issue of balance of convenience is the fact that the rules of Te Kahunganui clearly contemplate that members of Te Arataura will be elected for three year terms. Once those terms have expired, it is time for a newly elected entity to take over. That process occurs through the democratic process of elections in which all eligible members of Te Kahunganui participate. That is the time for opposing views to be expressed, and for the members of Te Kahunganui to decide which path they choose to tread for the next three years.

[25] The newly elected members of Te Arataura may decide that they wish to continue with the current proceeding so as to obtain judicial guidance as to whether or not Resolution 7 was validly passed. Alternatively, they may decide that they do not wish the current litigation to proceed any further. In that event the rules as currently registered will remain in force. Either way, I have no doubt that the newly elected group will listen to the views of members of the wider body, and that those views will be conveyed to all candidates in a forthright manner during the period leading up to the forthcoming election.

[26] I consider that the need to hold the elections now overrides all arguments to the contrary, and for this reason I am not prepared to grant injunctive relief to prevent the forthcoming meeting from taking place.

[27] The only point that gives me cause for concern is that relating to notice. The current rules require the Secretary of Te Kahunganui to send out written notice of any General Meeting at least 20 days prior to the date of a meeting. The notice must

include notice of the time, date and place of the meeting, together with a brief description of the business to be discussed at it.

[28] At present, no person occupies the position of Secretary of Te Kahunganui, because that position will only be filled at the forthcoming elections. To that extent there is currently a vacuum in the rules regarding notice. I accept the submission for the plaintiff that in such circumstances the responsibility of giving notice of the meeting would ordinarily rest with Te Arataura, because it is charged with the overall responsibility for the day to day management and control of Te Kahunganui.

[29] Members of Te Kahunganui have now received two separate notices regarding the forthcoming meeting at which elections will be held. Those supporting the present litigation have sent out a notice advising that the meeting originally scheduled for 12 February 2012 has now been re-scheduled for 4 March 2012. They took that step so that the determination of this Court regarding the validity of the

2011 alterations would be known to those attending the meeting. The problem with this notice is that the description of the business to be discussed at the meeting does not make any reference to matters that need to be discussed under the 2011 alterations. In particular, the notice does not contain any reference to the fact that an election will be held for the position of Secretary of Te Kahunganui.

[30] The defendant, in her capacity as Chairperson of Te Kahunganui, has also sent out a notice confirming that the meeting will be held on 12 February 2012. Included in that notice is notification that among the business to be conducted at the meeting is the election of a Secretary. To that extent, Mrs Martin’s notice complies with the 2011 rules.

[31] I accept, however, that the existence of the two notices may have created confusion for some members of Te Kahunganui as to the date upon which the meeting is to be held. Some may consider that it is being held on 12 February, but others may be under the impression that it will not be held until 4 March 2012. It would be highly unfortunate if parties eligible to attend the meeting fail to do so because of a misunderstanding regarding the date. For that reason, I direct that Mrs Martin is to send out, no later than midday tomorrow, further notice to all members

eligible to attend and vote at the meeting. I have directed that she, and not Te Arataura, is to be responsible for taking this step because I do not wish there to be any delay in sending out the notice.

[32] Mrs Martin’s previous notice did not specify the place where the meeting was to be held, and to that extent it failed to comply strictly with the requirements of the rules. The new notice is to confirm that the meeting will be held at the Debating Chambers, 451 Old Taupiri Road, Hopuhopu, Ngaruawahia at 9 am on Sunday

12 February 2012.

[33] There is a suggestion in the evidence that the current members of Te Arataura may not have co-operated with those who organised the meeting on 4 February 2012. I would not anticipate, given the terms of the Court’s order, that there will be any lack of co-operation regarding the arrangements to be made for the meeting to be held on 12 February 2012. Should any issue arise, however, both parties have leave to ask the Registrar to arrange an urgent telephone conference before me at any stage prior to the meeting on 12 February.

Result

[34] The application is dismissed.

Costs

[35] Te Arataura has agreed to meet Mrs Martin’s reasonable costs. Should any

issue arise in relation to that issue, I reserve leave to both parties to file memoranda addressing it.

Lang J

Solicitors:

Stace Hammond, Hamilton

Chapman Tripp, Wellington

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[1] These came into effect in 2009.

[2] Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129
[3] Morgan v Martin HC Hamilton CIV-2011-419-1305, 23 September 2011 at [45] to [47].