Speechley & Ors v Allott & Ors

The rules of an unincorporated members’ club form a contract and are construed like any other contract, with allowance for their operation by non-lawyers. Whether non-compliance invalidates club business depends on the language, subject matter and purpose of the requirement, the background, and the actual or possible effect on members.

A requirement for election by ballot ordinarily requires a secret vote. It may provide a substantive safeguard against pressure at a heated meeting and may widen participation where voting occurs afterwards. In a hostile dispute convened specifically to secure elections under the rules, failures to give proper notice, permit nominations and use the prescribed voting procedure may invalidate the meeting’s business.

The appellants and respondents were members of an unincorporated working men’s club registered under friendly-society legislation. A dispute between bowling and social members arose from proposals to sell the club’s bowling green. The appellants challenged the election of officers and committee members at an annual general meeting held on 24 July 2011.

Mr Recorder Rawlings in Leeds County Court held that the elections were valid despite procedural defects. He also refused orders requiring three members to account for payments, permitting further inspection of the club’s records, and directing the convening of another general meeting.

The central issues were the contractual effect of non-compliance with the club’s rules, the remedies available in respect of payments and records, and whether a further meeting should be ordered.

1. Appeal allowed in part. Lewison LJ, with whom McFarlane and Sullivan LJJ agreed, held that the President, Treasurer and committee members were not validly elected at the meeting on 24 July 2011. The other grounds of appeal were dismissed.

2. The club’s rules constituted a contract between its members and had to be construed like any other contract, while allowing for their intended operation by non-lawyers. Construction of the requirement and the consequences of non-compliance were separate questions. The latter depended on the contractual language, subject matter, background, purpose and effect of the breach. The flexibility described in Re GKN Bolts & Nuts Ltd was directed to that second inquiry and did not permit the rules to be ignored.

3. The Finance Committee’s unanimous agreement to the meeting date was equivalent to a formal resolution. That principle, familiar in company and directors’ meetings, applied equally to a club committee. The identity of those calling the meeting was also subsidiary to the statutory and contractual obligation to hold an annual general meeting.

4. The notice did not properly identify the permitted business. Members had no demonstrated opportunity to nominate alternative candidates. A ballot ordinarily entails a secret vote and was a substantive safeguard against pressure from hostile factions. The elections by acclamation or show of hands could not be treated as mere formal irregularities in the circumstances. Although rule 20 did not unambiguously make a secret ballot mandatory for committee members, the absence of nomination sheets and advance publication of candidates remained a substantive defect. The meeting was not validly convened and its purported business was ineffective.

5. No account was ordered. A committee member was a fiduciary and could not retain unauthorised profit merely because he acted honestly. The recorder was nevertheless entitled, by analogy with section 61 of the Trustee Act 1925, to excuse the honest and reasonable receipt of customary payments. Reimbursement of genuine expenses was not prohibited remuneration, and equity could allow fair remuneration for work performed.

6. The right to inspect records under rule 22 and section 62 of the Friendly Societies Act 1974 entitled a member to inspect computerised records with suitable software. It did not require the club to convert them into hard-copy form. No further inspection order was justified.

7. No further general meeting was ordered. Section 76 of the Friendly Societies Act 1974 did not apply to a registered friendly society. An AGM had since occurred, another was expected, and the Financial Conduct Authority had statutory power to intervene after default.

1. Court of Appeal (Civil Division): In Speechley & Ors v Allott & Ors [2014] EWCA Civ 230, the court allowed the appeal to the extent of declaring invalid the election of the President, Treasurer and committee members. It dismissed the remaining grounds.
2. Leeds County Court: Mr Recorder Rawlings held that the elections at the meeting of 24 July 2011 were valid despite procedural defects. He refused orders for accounts, further inspection and the convening of another meeting. No citation is stated.