Non Raceday Inquiry – Stratford RC 30Jan09 Pt 4

hearingid: 99410f732fcfd64095677ca8abaaf2de

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startdate: 01/01/2001

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hearing_title: Non Raceday Inquiry - Stratford RC 30Jan09 Pt 4

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continued from Part 3

[79]              We believe we can express the matter no more clearly than it has been previously expressed by Miller J in Adlam v Stratford Racing Club Inc (HC, New Plymouth CIV 2006-443-238, 1 February 2007) at para [95]:

“The power to admit new members is discretionary but it must be used to promote the Club's objectives, and fairly.  In this case, it was exercised for an improper purpose, that of perpetuating the existing Committee's control of the Club.  The decisions to reject applications in 2002 (twice) and 2005 were invalid for that reason....  I observe that the Club needs new members if it is to remain viable, let alone to restore its former standing in the racing industry, and the Committee ought to have welcomed applicants of good character with an interest in the racing industry and in seeing the Club succeed in promoting its objectives.  That they might differ from the Committee about how best to promote those objectives is insufficient reason to reject them.”

[80]              We find as a fact that the defendants were caught up in a web of their own self-confidence that what they were doing was right.  We accept they thought that what they were doing (ie blackballing applicants in the manner they did) was proper and in the interests of the SRC.  It is clear however, following and applying Miller J’s decision, that what they were doing was wrong, was for an improper purpose, and was not in the bona fide interests of racing. 

[81]              We are satisfied that the blackballing was done for the sole purpose of denying membership to all applicants irrespective of their character or involvement in racing.

[82]              The evidence of Mr Enting and Mr Jewel clearly illustrates that racing clubs welcome new members and that rejection of an application is very rare and should only be because of a criminal record or undesirable character.  The committee gave no reason for declining the candidates’ applications and there is no evidence before this Tribunal to the effect that any, let alone all, of the 44 applicants on the first occasion and the 15 on the second were of such disrepute or of such bad character as to be turned down for membership.

[83]               The only reasonable and logical inference to be drawn from the fact that all 44 and 15 of the applicants failed is that the blackballing process, although provided for in the Rules, was used on each occasion for an improper purpose.  The evidence indicates that that the blackballing was undertaken by the defendants in order to preserve their positions as office holders of the SRC.  In other words, the majority of the committee adopted this practice because they believed the prospective members wished to join the club in order to oust the committee at the forthcoming AGM and so alter the decisions made about track usage and charges.  The defendants feared that they would lose control of the club and they were wrong to reject applications on this basis.

[84]              We must be satisfied, to the required standard, as discussed at paras [16] to [18], that the actions of the defendants were detrimental to racing in that they acted to the disadvantage of or caused damage to the interests of racing.  Newspaper articles and comment in the radio and TV media, to which a number of the informant’s witnesses made reference in their evidence, support the view that the general public, and the racing fraternity in particular, were incensed that in this day and age prospective members of the club were denied their right to be properly considered for membership.  In relation to the two blackballing charges against each defendant, we are satisfied that the evidence clearly shows that the defendants’ actions caused the general public and, in particular, the prospective members, outrage that the matter had been dealt with in the way that it was.  Thus we do not believe it matters which of the two alternative approaches described in paras [8] to [15] that we take, although we reiterate we adopt the first.  The finding is the same.

[85]              We are satisfied that the defendants were actuated by the improper purpose of perpetuating control of the SRC and, in so doing, that their actions in blackballing all of the prospective members of the SRC at the SRC committee meetings on 5 August and 2 September were detrimental to the interests of racing.  We accordingly find these two charges to be proved against each of the defendants.

Did the determination that Mr Broughton was not a financial member of the SRC bring racing into disrepute?

[86]              In the lead-up to the AGM of the SRC in October 2002 it became known that Mr Len Caskey, the President of the SRC at the time, was likely to retire.  Two persons were nominated to run for election as President: the then Vice President, Dr Murray Blue; and Mr Kemp Broughton, who was a member of the COTG.  Other members of the COTG also put their names forward for positions on the committee and Mr Broughton was the proposer or seconder of a number of these nominations.

The evidence

[87]              Mr Broughton was a former Chief Executive Officer of the Stratford District Council and he had been involved in the thoroughbred industry since 1998.  He had owned, bred and raced horses.  Mr Broughton’s evidence was clear as to the history of his payments for membership.  He had joined the SRC in the 1998/99 financial year and had missed a year’s subscription in 2000/01, but had paid a double amount ($45) by cheque on 29 October 2001.  This money was duly banked into the club’s account.  He did not receive at any time a written notice from the SRC that his subscription was in arrears.  He paid his next year’s subscription on 18 July 2002 after receiving an undated membership renewal account.  This payment was clearly, therefore, before the committee meetings in August, September and October 2002.  The annual report of the SRC for the 2001/02 year states that Mr Broughton was a member for the 2001/02 financial year. 

[88]           Mr Graeme Alldridge, the then secretary of the SRC, who dealt with payment of subscriptions during the relevant period, confirmed the payment of $45 (2 years subscriptions) by Mr Broughton, which was banked on 1 December 2001.  In cross-examination, he said that he had no problems with accepting the $45, and that it was not unusual for this to happen with other members.  He said the SRC needed the money and it had never crossed his mind not to accept the cheque as payment for both years.  As far as he was concerned, he said, Mr Broughton was a financial member. 

[89]           Mr Broughton gave evidence that he rang and spoke to Ms Dianne Rowe, the then secretary of the SRC, prior to the closing of nominations for President of the SRC on 25 September 2002, in order to confirm he was a current financial member of the SRC.  He said Ms Rowe confirmed that he was.  He stated he did this as wished to confirm his eligibility to stand for President of the SRC.  Ms Rowe in her evidence said that she remembered a phone call from Mr Broughton, but could not recall what she said.  However, she also stated that she had no recollection of telling him that he was a financial member.  We accept Mr Broughton’s evidence that he did have his membership confirmed by Ms Rowe during the course of this telephone conversation. His evidence was to the effect that the raising of this issue was the very purpose of his call.

[90]           The minutes of a meeting of the SRC committee on 30 September 2002 refer to seven named individuals as having been sent letters concerning overdue subscriptions.  Mr Caskey in his evidence refers to Mr Broughton being treated exactly the same as these seven other members who had already had their membership declared as lapsed for non-payment of membership, in the interests of consistency.  Mr Gilbert stated in his evidence that two of these seven lapsed members, were sons of committee members.  Significantly, Mr Alldridge stated that he did not believe any of the individuals referred to in the minutes of 30 September as having been sent letters concerning lapsed membership, had paid their subscriptions at all; ie in contrast to Mr Broughton, current amounts were outstanding.  Ms Rowe also stated she did not believe any of the individuals mentioned in the minutes of 30 September 2002 as having been sent letters, had paid their subscriptions at all.  Significantly, Mr Broughton was not one of those members who had been sent a letter stating his membership had lapsed.

[91]           The defendants uniformly state that when the issue of Mr Broughton’s status was raised at the meeting of 30 September Mr Bishop insisted that the Rules be followed and everyone had to be treated the same.  When cross-examined, Mr Bishop agreed he would have insisted that the Rules be followed and applied fairly and evenly.  Mr Caskey stated that he said that he was quite content for Mr Broughton’s nomination to go forward as he believed he had no realistic chance of being elected President.  Mr Blue confirms Mr Caskey said this.  Ultimately, the meeting determined that the matter be put off to a later meeting, with Ms Rowe being asked to examine the situation.  Mr Caskey stated he did not think of taking legal advice.  He now accepted he should have.  Mr Blue also stated he did not think that he had taken legal advice but, when cross-examined, stated he thought he might have spoken to Mr Roger Laurence, the club solicitor, about the matter.  He was quite uncertain, however, in his evidence on this point.  There was no clear evidence before this Tribunal that legal advice had been taken by any member of the committee.

[92]           In the notice published in the Stratford Press on 2 October 2002 advising that the annual general meeting of the SRC would be held on 20 October, Mr Broughton was listed as one of the two presidential candidates, the other being Mr Blue.

[93]           On 11 October 2002 there was a special meeting of the SRC Committee.  Three of the defendants, Messrs Blue, Hart and Caskey were present.  No witness had a clear memory of who raised the issue of the membership status of Mr Broughton.  The letter to Mr Broughton dated the following day (Exh “E”) simply states that “[a]t the instigation of a committee member, the committee of the SRC has revisited the list of financial members paying attention to the timing of payments of subscriptions.”  It is clear that the issue of whether Mr Broughton was a financial member of SRC and, as a result, whether his nomination for President, and the nominations he made of others to be committee members was valid, was considered by the committee.  The meeting concluded that Mr Broughton was not a financial member, notwithstanding that he had paid his membership fees on 29 October 2001 and 18 July 2002. 

[94]           According to Mr Bishop’s evidence, at this special meeting of the committee on 11 October Mr Caskey said that Mr Broughton was not a member of the club “so he couldn’t stand for President and he could not nominate or second any of the members of our group [the COTG] who were standing for committee”.  This was apparently because he had been late in paying his subscription for the 2000-01 year.  Mr Bishop said that he and Ms Lawson tried to argue against that proposition, but they were in a minority of two.  Ms Lawson gave evidence that the meeting on 11 October 2002 was told by Mr Caskey that Mr Broughton’s membership had lapsed similarly to the other members.  Ms Lawson said that she and Mr Bishop spoke against removing Mr Broughton as a member and that she and Mr Bishop voted against a motion to that effect.  Ms Rowe did not attend this meeting.

[95]           Mr Caskey, Mr Blue and Mr Hart state that Mr Bishop’s decision to vote against the motion that Mr Broughton was not a member of the club was a mystery to them as Mr Bishop, in a similar manner to the meeting on September 30, had prior to the vote kept insisting that “the committee stick to the Rules”, which they interpreted as meaning they were to be applied evenly to all, in which case Mr Broughton’s nomination would have been voided.  Mr Caskey stated that he still wanted to allow Mr Broughton to stand for President regardless of that fact.  He acknowledged, however, that he voted to declare Mr Broughton ineligible.  Mr Blue stated he voted against Mr Broughton because of the need to uphold the Rules.  He said he thought about but “never discussed the potential conflict of interest”.  Mr Hart said he voted against Mr Broughton because of the pressure applied by Mr Bishop to adhere to the Rules.

[96]           Ms Lawson stated nobody at either meeting had a copy of the constitution.  In response to questioning, she indicated that both she and Mr Hart had previously been made committee members even when their membership was in doubt, and this had been ratified at the 2001 AGM.

[97]           Mr Broughton was sent a letter by the SRC, signed by Ms Rowe and dated 12 October 2002 (and thus seven days prior to the AGM), telling him he was not a financial member

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