Club Los Claveles v First National Trustee Company Ltd
| Jurisdiction | Scotland |
| Judge | Lord Clark |
| Judgment Date | 18 August 2022 |
| Court | Court of Session (Inner House) |
| Docket Number | No 22 |
[2022] CSIH 35
Lord Clark
First Division
Process — Title to sue — Unincorporated associations — Litigation authorised by committee of unincorporated association — Whether defenders entitled to challenge the basis upon which committee members elected — Whether election of committee members res inter alios acta
Unincorporated associations — Constitution — Approach to be taken to interpretation of requirements of constitution of unincorporated association — Election of committee members — Degree of flexibility to be allowed
The pursuers were an unincorporated association established to facilitate the ownership and management of timeshare properties at Los Claveles resort in Spain. The club's constitution required that the properties in the resort be owned by an independent trustee. The defenders were appointed as trustee in 1991. The club wished to remove the defenders as trustee. In 2012, the club's committee wrote to the defenders purporting to terminate their appointment. The defenders did not demit office. In August 2017, the club's committee passed a resolution authorising litigation against the defenders.
The club's committee consisted of five members, two of whom were nominees of the resort's management company. Clause 11.2 of the club's constitution provided that, at each annual general meeting, one committee member should retire and another be elected. Members could be reappointed but could not serve for more than six years. Clause 11.3 provided that election or removal of committee members could only take place at annual or special general meetings. Clause 11.4 provided that, until such time as the committee was constituted, the management of the club and powers of the committee would vest in the founder members. The constitution empowered the committee to institute legal proceedings.
In August 2017, the three non-nominee committee members were Mr Fletcher, Mr Lindsay and Mrs Burston. Mr Fletcher had first been appointed in 2014. At subsequent general meetings in 2017 and 2018, Mr Fletcher and Mr Lindsay were re-elected. Mrs Burston resigned and was replaced by Mr Smith and Mr Farquhar. The defenders challenged the validity of the 2017 and 2018 general meetings at which the appointments were made at arbitration. By arbitral award of March 2020, the proceedings at the 2017 and 2018 meetings were held to have been invalid. Litigation against the defenders was brought by the club and by the members of the club's committee as it was constituted in 2017. A committee meeting was held on 23 March 2021 with Mr Fletcher, Mr Lindsay and Mrs Burston as members, in line with the arbitrator's determination.
Following the decision of the arbitrator, the summons was amended to remove invalidly appointed committee members and to include Mr Fletcher, Mr Lindsay and Mrs Burston in their capacity as representatives of the club and as individuals. The defenders challenged the pursuers' title to sue.
The defenders contended that, following the decision of the arbitrator, there was no validly constituted committee and that, in consequence, the vote to appoint Mr Fletcher, Mr Linday and Mrs Burston in March 2021 was invalid. Further, Mr Fletcher had served for longer than the six years permitted by the constitution.
The pursuers contended that: (1) the defenders had no standing to challenge the validity of the March 2021 appointments; and (2) the appointments had in any event been validly made in line with the club's constitution. If the appointments were not authorised by the express terms of the club's constitution, they were authorised by an implied term that the members could vindicate the club's interests and take reasonable steps to give effect to the settled will of the club as expressed by the members at general meetings which would permit three individual members to litigate on behalf of the club as a whole.
The Lord Ordinary held that the defenders had standing to challenge the pursuers' title to sue but the relevant appointments had been validly made. The defenders reclaimed and the pursuers cross-appealed.
Held that: (1) any defect in the election of a committee member was res inter alios acta so far as third parties were concerned, with an action brought by an unincorporated association being properly instructed by the members or a body such as its committee with delegated powers to sue, and the present action having been brought by the club's only functioning committee, there was no basis for the defenders to assert that the action was not properly authorised by the membership (paras 20, 21, 35); (2) the provisions of an unincorporated association's constitution should be read in a way to give an element of flexibility, and, the rules having proceeded on the basis that there would be a functioning committee, the only pragmatic solution was to determine that the committee members in office prior to the invalid meetings remained in office until the next validly constituted general meeting, notwithstanding the provisions in the rules in connection with retirement and maximum terms (paras 31–33, 35, 36); (3) an unincorporated association has a title to sue in order to vindicate its rights in relation to third parties and that the practice in the Court of Session of adding office bearers as pursuers was principally to facilitate the recovery of expenses (paras 19, 20); and reclaiming motion refused, cross-appeal allowed and plea of no title to sue repelled.
Observed (per Lord President (Carloway)) that had it been necessary to determine the matter, the pursuers would not necessarily have succeeded in demonstrating the existence of an implied term to the effect that three members of the club could sue on behalf of the membership as a whole in circumstances where there was no apparent lacuna in the constitution and the test for implication, in consequence, was not met (para 34).
Dissenting (on the cross-appeal) (per Lord Doherty) that title to sue was a matter of substantive law and whether the committee appointments were valid was one of interest to the defenders and a point which they were entitled to take, not being a matter which was res inter alios acta the defenders (paras 38, 39).
Re GKN Bolts and Nuts Sports and Social Club [1982] 1 WLR 774 followed.
Consolidated Nickel Mines Ltd (Re) [1914] 1 Ch 883
Crocket v Tantallon Golf Club [2005] CSOH 37; 2005 SLT 663; 2005 SCLR 657
Detrick and Webster v Laing's Patent Overhead Handstitch Sewing Machine Co Ltd (1885) 12 R 416
Donaghy v Rollo 1964 SC 278
Edinburgh Veterinary Medical Society and ors v Lord Provost, Magistrates, and Council of Edinburgh (1874) 1 R 1072
GKN Bolts and Nuts Ltd (Automotive Division) Birmingham Works Sports and Social Club (Re) [1982] 1 WLR 774; [1982] 2 All ER 855
Greengairs Rovers Football Club v Blades (1910) 26 Sh Ct Rep 280
Harman v BML Group Ltd [1994] 1 WLR 893; [1994] BCC 502; [1994] 2 BCLC 674
Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742; [2015] 3 WLR 1843; [2016] 4 All ER 441; 163 Con LR 1; [2016] 1 P & CR 13; [2016] L & TR 8; [2016] CILL 3779
New Cedos Engineering Co Ltd (Re) [1994] 1 BCLC 797
Pagan and Osborne v Haig 1910 SC 341; 1910 1 SLT 122
Renton Football Club v McDowall (1891) 18 R 670
Ward (Alexander) & Co Ltd v Samyang Navigation Co Ltd 1975 SC (HL) 26; 1975 SLT 126; [1975] 1 WLR 673; [1975] 2 All ER 424; [1975] 2 Lloyd's Rep 1
Whitecraigs Golf Club v Ker 1923 SLT (Sh Ct) 23
Club Los Claveles and members of its management committee raised an action in the Court of Session against First National Trustee Co Ltd for declarator, accounting and implement. The cause called before the Lord Ordinary (Armstrong) for debate on the procedure roll. On 30 September 2019, the Lord Ordinary refused the defenders' motion for dismissal, sustained in part both parties' pleas to relevancy and specification and allowed a proof before answer ([2019] CSOH 66). The defenders reclaimed.
The cause called before the First Division (Lord President (Carloway), Lord Woolman and Lord Doherty), for a hearing on the summar roll, on 24 April 2020. On 16 June 2020, the Inner House refused the defenders' reclaiming motion ([2020] CSIH 33; 2020 SC 504).
The cause thereafter called for a proof before answer before the Lord Ordinary (Clark). On 20 January 2022, the Lord Ordinary held that the defenders had standing to challenge the pursuers' title to sue but that title to sue had been demonstrated and that the defenders were obliged to demit office on the terms set out in a draft deed of retirement which was lodged in process ([2022] CSOH 6). The defenders reclaimed and the pursuers cross-appealed.
Bain, D, ‘Associations and Clubs’ in Stair Memorial Encyclopaedia: The Laws of Scotland (Butterworths/Law Society of Scotland, Edinburgh, 2019), Reissue, para 20
Maclaren JA, Court of Session Practice (W Green, Edinburgh, 1916), p 440
Macphail, ID, Sheriff Court Practice (4th Cubie ed, W Green, Edinburgh, 2022)...
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