Clubs

Clubs and unincorporated associations

A club is a group of persons who associate together for social purposes or for the promotion of politics, sports, art, literature. In broad terms, the purpose can be anything except for business or financial gain. In this latter event, a trade or partnership may be held to exist.

The purpose of social intercourse may be combined with other purposes. The incidental earning or acquisition of gain does not negate the existence of a club provided it is incidental to the principal purposes. The purpose for which a club is formed or exists may be altered.

Clubs may operate in a variety of ways. They may be an unincorporated association of members. They may be incorporated under the Companies Acts. They may be incorporated under friendly societies legislation. They may be unincorporated proprietary clubs.

Certain types of clubs are regulated depending on the activity which they undertake. Special licensing rules exist which facilitate the equivalent of intoxicating liquors licence for a registered club. See the sections on the Intoxicating Liquor Law.

An unincorporated club involves members who contribute to funds out of which the expenses of the society or club are met. The subscriptions may be periodic or occasional.

Members of a club are entitled to all its assets jointly. They are generally held by trustees for the benefit of all. On a dissolution, the assets are to be distributed to the members.

Prior to dissolution, the members enjoy the club assets in accordance with the rules. This is conditional upon compliance of the rules and in particular and in most cases, payment of subscriptions.

The rights and duties of members are determined by the rules and are contractual. The supply of club property to a member is not a sale even if a price is paid. This principle exempts registered clubs from most of the provisions of the Intoxicating Liquors Act and facilitates the scheme of registration of clubs.

The management of the club lies with its members and is conducted by them jointly. It is generally delegated to the management committee in accordance with its rules. Full powers lie with the general committee subject to what is delegated to the management committee under the rules.

A proprietary club is not a club in the present sense of the word. The property and assets belong to a particular owner who conducts its activities with a view to a profit. The members’ rights to participate and use the assets are based on a licence derived from payment.

The corporate club may be limited by a guarantee or by shares but more commonly by guarantee. In this case, the memorandum and articles of association take the place of the club rules and may be supplemented by further byelaws or rules.

In the case of an incorporated club, the members do not have personal liability. Their relationship with each other and with the outside world is determined by company law.

In the case of an incorporated proprietary club, the company is the proprietor. The relations of the members are governed by the rules as in the case of an unincorporated club. The rights of the shareholders are based on company law.

The club rules govern the purpose for which it is instituted, payment of fees, subscriptions, acceptance, expulsion and resignation of members, management of the affairs, general meetings, admission of guests, intoxicating liquor, etc. They form a contract between the members. Generally, a copy of the rules is given to new members although this is not necessary for them to be binding.

There is very little regulation of the terms of club rules. Certain types of clubs, including shop clubs and working men clubs, are permitted to be registered under the Family and Societies Act. In this case certain matters must be specified in the rules and they must be registered.

Alterations in the rules take place in accordance with the terms of the rules themselves. Alterations may take place with the consent of all the members or by delegates accordance with the basic laws of principal and agent.

Rules commonly provide that management shall be conducted by a committee of specified members who are elected or otherwise provided for. It will be presumed that the committee has necessary powers for the governance and management of the club.

The rules may provide that the rules may be altered by a specified majority in general meeting. If this is the case, then changes to the rules and to objects by them may be permitted. Rules may not be applied retrospectively.

The power to alter the rules is valid presumptively. It must be exercised in good faith and in accordance with the terms of the rules. It must not be incompatible with the fundamental objectives of the club.

Before it is decided to change the rules, special notice should be given to the members. It should not be encompassed under general business. Where there are no rules prescribing the manner of serving notice is provided for, the committee may specify how notices are to be given. Posting of the rules may suffice regarding routine matters may be sufficient. However, in the case of more basic matters or concerns particular members, the notice or circular should be given to all.

The rules will generally provide for admission, resignation and expulsion of members. That members may be proposed and seconded and subject to approval by the whole society of the committee. The new member will generally receive notice of the rules and will not generally be a member until he has paid a subscription. The prospective member may accept or reject the membership.

A member may terminate his membership by communication of resignation to the secretary. The rules may provide for expulsion. If no rules are provided, there is no implied power to expel. It may be possible to alter the rules to so provide.

The rules in relation to expulsion must be strictly followed. Some types of clubs may be subject to the rules of natural justice and in some cases constitutional justice where a person’s constitutional rights are affected.

Typically, the rules provide for a committee or a person to inquire into a conduct or the basis of proposed expulsion. Notice of the charges and meeting, etc., must be given. Actual notice should generally be given.

It will generally be implied that a fair inquiry is made into the truth of the alleged facts The committee, etc., must act in good faith. The rules will be interpreted relatively strictly.

The power to expel must be exercised in good faith for the benefit of the club. It must not be exercised for any direct or indirect motive. The rules of natural justice must be observed unless they are very clearly excluded. It is arguable that it is not possible to exclude the rules.

Where the consideration of the matter, places the members of the committee in a quasi-judicial position, the rules of natural justice apply. There must be a fair opportunity to defend and the proposed charges must be fairly put. The person accused must have the opportunity to challenge the accusations and his representation must be taken into account in the decision making.

Where the rule provides that a person may be expelled on a basis such as conduct injurious to the character of the club, the committee must not only act in good faith, given proper notice and follow procedure but must have some reasonable and probably cause. This will depend on the nature and objects of the club.

Where the conditions have not been satisfied, an application may be made to court to invalidate the expulsion. The principles are broadly similar to those in judicial review.

The person wrongfully expelled may have a right to seek a court declaration, declaring his expulsion void and restraining steps being taken further to his expulsion. An action for damages will not lie unless there is a breach of contract.

An action will not generally lie to compel payment of subscriptions and fees of a person who is prospectively admitted. That is because he is not a member and not party to the contract until he has paid his first subscription.

Once the person becomes a member, he can be sued for subscriptions and fees. His liability continues until he ceases to be a member in accordance with the rules by resignation or expulsion. The rules may provide and it may be implied that a person may not vote until a subscription has been paid.

The rules usually provide that a committee manages the club. It will be elected in accordance with the rules. Unless the rules provide that it may act by a quorum and majority, all members of the committee may be required to approve the decision.

The secretary’s function is to conduct correspondence, collect subscriptions and preform clerical functions under the direction of the committee.

There are usually trustees of an unincorporated club who hold property and assets on trust for the members. They may be given powers to invest at the direction of the committee under the rules or otherwise.

Trustees and committee are not entitled to an indemnity from members in the absence of a provision so providing in the rules. General principals of members may not become liable in the absence of a rule to pay monies to the society or club beyond subscriptions.

The trustees have a lien on trust property for all assets, liabilities property incurred by them on behalf of the club.

The clubs committee may have authority to borrow and mortgage assets and issue debentures. This will depend on the rules. There may be an undertaking to pay out of the funds of the club but not otherwise. This is effectively a limited recourse loan secured by the club assets.

The authority of the club committee is determined by the rules and general principles of agency. The trustees and committees have the power to contract on behalf of the members as expressed or implied by the rules. Club rules would not generally be interpreted to give the committee the authority to make contracts personally binding on members in the absence of very clear provisions. This would be very unusual.

The management committee is under an obligation to pay expenses and liabilities from the club’s funds. If they’re insufficient, they must convene a meeting to seek additional funds. They do not have power to pledge the members’ credit without express authority.

Members of a club may be liable on contracts entered by trustees, management committees or agents within the scope of the authority given by the rules. If they are beyond the scope of the rules, the members may be bound if they can be shown to have sanctioned or ratified the committee’s action or held them out as having the authority.

The general assumption is that rights and liabilities of members of a club are joint. All members should be joined as plaintiffs or defendants if an action is brought against them. The court rule may permit another course. One judgment recovered; this is a bar against proceeding against the others. The member who discharges more than his proper share would generally be entitled to contribution under Civil Liability Act.

A member who resigns is liable in respect of contracts entered prior to resignation. He did not liable on subsequent transactions.

Trustees and members of the management committee who purport to act on behalf of the club or others may incur a personal liability if by the terms of the contract, they act in excess of their authority.

If they contract in their own names, they’re presumptively liable and may be sued personally. If they were authorised by the club, the other party may elect to sue them or sue the members as his principal. This is a provision under agency law irrespective of whether the agency was disclosed at the relevant time.

Any person who purports to contract on behalf of another gives a warranty of authority. Therefore, if a person exceeds his authority, he is liable in damages personally to the third party.

As regards actions for civil wrongs by third parties, there is no distinction between committee members and ordinary members. The committee members may be liable to the exclusion of members if they are negligent in employing a particular person thereby causing injury to another.

The question is whether the actual wrongdoer stands in relation to them as an agent and if so whether he was acting within the scope of his authority. If this is so, the question analyses as to who the principals are. Sometimes it may be the committee of management rather than the members.

An unincorporated members’ club cannot sue or be sued in its own name. Trustees may however sue and be sued in respect of club property vested in them. In this case, they act on behalf of the members beneficially entitled to it. Further and numerous persons having the same interests in a matter, the court may permit them to sue one or more to sue or be sued for or on behalf of them all.

A representation order may be made in a contract or civil wrong case provided that the members whose names appear on the summon may be fairly taken to represent the interests of the body of the club members.