Norbrook Laboratories Ltd & Anor v Carr

The constitution of an unincorporated association is a contract between its members. It should be interpreted reasonably, broadly and in the light of the association’s purposes and established practice.

Unless the constitution expressly authorises otherwise, officers may manage only the association’s affairs and may not formulate or implement significant policy without the informed approval of the membership. Members must act in good faith and in the association’s best interests, but committee members do not owe fiduciary duties merely by holding office. Courts ordinarily leave the internal affairs of an unincorporated association to its members and will rarely order an officer’s removal.

The judgment determined liability and costs issues arising from several related disputes within the Eden Owners’ Association, an unincorporated association of fisheries connected with the River Eden. The principal claimants alleged that James Carr, the association’s secretary, and John Garnett, its chairman, had acted without authority, breached the association’s constitution and mishandled dealings concerning Solway haafnetting, the Corby Coops and association meetings.

The court also considered claims for damages, declaratory and injunctive relief, and delivery up of association documents, including documents said to be subject to legal professional privilege. The principal questions concerned the scope of the committee’s authority, the contractual obligations between members, the court’s role in internal association disputes and the recoverability of claimed legal expenses.

1. Constitution and authority. The constitution created contractual relationships between the members. It was to be interpreted reasonably, fairly, broadly and in a common-sense manner, having regard to the association’s purposes and established practice. The committee’s power to manage the association did not extend to formulating or implementing major policy without prior, informed approval by the membership. An officer could act without prior approval only in matters falling within management or in a genuine emergency, subject to subsequent notification and ratification.
2. Members’ duties. Members were required to act reasonably, fairly, in good faith, in compliance with the constitution and to promote the association’s objects. A decision authorised by the membership could be implemented even if it benefited one member and adversely affected another, provided it was taken and implemented in good faith. Committee members did not owe fiduciary duties merely by analogy with company directors.
3. Findings against Carr. Carr acted without authority in significant dealings with the Environment Agency and in attempts to influence regulation of haafnetting and the Coops. He also failed to give a full, fair and accurate account of the meeting with the Haafnetters and circulated inaccurate and defamatory material. These matters amounted to contractual breaches. Garnett did not breach the constitution in chairing the 2009 AGM.
4. Relief. The claim for legal expenses as damages failed because the expenses were potentially costs, were in part barred as an abuse of process and were unsupported by adequate evidence. The court would not ordinarily compel an officer’s resignation, invalidate an election or interfere in the association’s internal affairs. Declarations might have been available in exceptional circumstances, but the claimants were not entitled to the injunctions or mandatory orders sought.
5. Documents and costs. Documents created or received by committee members as agents of the association belonged to the membership and had to be delivered to the current secretary. The relevant documents were not privileged from inspection by Norbrook. Applying the Civil Procedure Rules 1998 and the pre-action conduct requirements, there was no order as to costs between the principal parties in the misconduct and Carr disclosure actions. Garnett and the EOA received costs orders, and Robson received his costs on the indemnity basis.

• Court of Appeal In [2010] EWCA Civ 1108, the court set aside a procedural order and stayed one of the related claims, leaving the trial judge to determine the construction of the constitution and the parties’ duties.
• High Court (Queen’s Bench Division) The present court determined the outstanding liability, delivery-up and costs issues.