Scottish Court of Session Decisions

On 8th October 1907, Peter Anderson, Globe, Lerwick, brought an action against Anderson Manson, Maryfield, Bressay, Shetland, and others, the president and members of

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council of the Shetland Pony Stud-Book Society for 1907, and George Hendry, 43 Carlton Place, Aberdeen, the secretary of the Society, for, inter alia—(1) reduction of a resolution of the council suspending him from membership of the Society till the next general annual meeting, and (3) £200 damages. (The conclusion for damages was directed against those members of the council of the Society who took part in the meeting at which the pursuer was suspended. A declaratory conclusion (2) that the pursuer was entitled to remain a member of the Society was departed from.)

The pursuer pleaded, inter alia—“(1) The resolution complained of being ultra vires, ought to be reduced, either wholly or partially as condescended on. (2) In the circumstances condescended on, decree of reduction and of declarator as craved should be pronounced. (3) The pursuer having sustained loss and damage through the illegal actings of the defenders, is entitled to compensation.”

A narrative of the facts upon which the case was based and the contentions of parties is given in the opinion ( infra) of the Lord Ordinary ( Dundas), who, on 18th January 1908, allowed a proof before answer.

Opinion.—“The pursuer, who owns and breeds Shetland ponies and deals in them, was admitted on 6th June 1906 a member of the Shetland Pony Stud-Book Society. The members of this Society consist mainly of breeders and owners of Shetland ponies, and its main objects are to maintain the breed of such ponies and to publish a studbook in which their pedigrees are registered. The 16th volume of this stud-book, being the register issued by the Society for the year 1906, contained a number of entries referring to the pedigrees of Shetland ponies owned by the pursuer. On 30th January 1907 one of the defenders—Mr Manson, a member of the Society—wrote a letter to the secretary to the effect that some of the entries regarding these ponies were false. The secretary sent a copy of Mr Manson's letter to the pursuer, who on 16th February replied admitting that the entries (made from particulars on forms signed by him) were erroneous, and making certain explanations. On 9th March the council met and passed a resolution agreeing, inter alia, that the erroneous entries be deleted from the stud-book and that this be notified in the next volume, and that ‘further action in this matter’ be deferred till the general meeting of the Society. This resolution was communicated to the pursuer. The general meeting was held on 10th July, but the pursuer did not attend it. A motion was made and carried that ‘the case of Mr P. Anderson … be remitted to the council with full powers, and that the secretary be instructed to ask Mr P. Anderson to attend next meeting of council in his own interests, when the matter will be disposed of.’ The secretary intimated this to the pursuer, and informed him that the council would meet on 31st August. The council accordingly met on that day, when five members (a bare quorum) were present other than the pursuer, and Mr Manson occupied the chair. The pursuer made certain statements and explanations to the effect, inter alia, that he had signed the forms blank, and that the erroneous statements which subsequently found their way into volume xvi of the stud-book had been filled in by a Mr Simpson of Chicago, who had purchased the ponies from him. The minute concludes that ‘after full consideration of the correspondence and of Mr Anderson's verbal statement, it was moved by Mr Miller that the council suspend Mr Peter Anderson from membership of the Society till next annual general meeting, and instruct the secretary to refuse to accept any entries from Mr Peter Anderson for next volume of the stud-book, and to decline to grant any transfer, export, or other certificates to him, and to report the finding of the council to next annual general meeting for further procedure, which motion was seconded by Mr Joseph Duncan and agreed to.’ The next annual general meeting of the Society does not fall to be held until the summer of this year (1908). On 8th October 1907 the present acction was raised. The defenders called are the president, secretary, and whole members of the council of the Society for the year 1907; and the summons concludes—(1) for reduction of the said resolution of council, dated 31st August 1907;… and (3) for £200 of damages against the five members who were present at the meeting on 31st August, jointly and severally.”

At the debate in the Procedure Roll counsel for each of the parties contended that his adversary had stated no relevant case, and while neither was prepared to renounce probation they both invited me to decide the case (except, of course, the assessment of damages if that matter should arise) upon the record and the documents which are produced. After careful deliberation I do not see my way to dispose of the case upon this footing in favour of either party. It cannot in my judgment be safely or properly determined upon a bare consideration of the pleadings and documents, and without full inquiry into the facts. As the argument on both sides was not only interesting but was conducted with ability and elaboration, it is right that I should explain, or at least summarise, my reasons for the course which I propose to adopt.

The defenders' counsel pressed upon me an argument based on the broad general doctrine that the Court takes no concern with the resolutions of voluntary associations or societies except in so far as they affect civil or patrimonial rights, and they contended that the pursuer has not relevantly averred any patrimonial loss or damage arising through the actings of the defenders. The law on the matter is, I think, well settled, and is illustrated in the cases to which I was referred at the debate— e.q., Murdison, 1896, 23 R. 449 (a football case); M'Kernan, 1874, 1 R. 453; Aitken, 1885, 12 R. 1206; Rigby, 1880, 14 Ch. Div. 482 (trades union cases); and M'Millan, 1861, 23 D. 1314, 1862, 24 D. 1282; Forbes, 1865, 4 Macph. 143,

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affd. 1867, 5 Macph. (H.L.) 36; and Skerret, 1896, 23 R. 468 (ecclesiastical cases). But I am not prepared to hold that the pursuer's averments may not support sufficient evidence of patrimonial loss arising to him not only by reason of his suspension but also from the defenders' refusal to accept from him any entries for the studbook, and to grant him any certificates; nor am I satisfied that (as was maintained for the defenders) this view is conclusively negatived by making reference to a rule of the council which reserves to it ‘full right to … publish … or not to publish any or every pedigree presented for entry.’ Again, it was contended for the pursuer that the resolution complained of was manifestly ultra vires of the council, and must be de piano reduced, and also that the conduct of the meeting was ex facie of the record and documents contrary to the principles of natural justice and fair dealing. His counsel referred to some well-known English decisions in relation to clubs— Dawkins, 1881, 17 Ch. Div. 615; Labouchere, 1879, 13 Ch. Div. 346; Fisher, 1878, 11 Ch. Div. 353, which lay down that the Court will not interfere with the decision of a club professing to act under their rules, unless it can be shown that the rules are contrary to natural justice, or that what has been done is contrary to the rules, or that there has been mala fides or malice in arriving at the decision. The argument upon ultra vires was to the effect that the constitution of the Society contains no express power to suspend members; that the power to expel (which might be held to include suspension) rests solely with the Society in general meeting, and is safeguarded by certain conditions as to procedure, and that the power to expel (or suspend) could not be delegated by the Society to the council— Thomson, 1887, 15 R. 164. The defenders, on the other hand, not only rely upon the Society's remit to the council ‘with full powers’ as a valid delegation to them to exercise the right of suspension which they hold the Society itself possesses—and differentiate Thomson's case as being one of attempted subdelegation of certain statutory powers, but also present a separate and independent argument based upon the duty imposed upon the council by the constitution, inter alia, ‘to deal with all matters concerning the Society arising between the annual general meetings.’ As bearing upon this part of the case I was referred to Barton, 1886, 11 A.C. 197; Rex v. Mayor of London, 1787, W. Term Rep. 177; lnnes, 1845, 1 Oar. & K. 257; Barnes, 1898, 1 Ch. 414; Osgood, 1872, L.R., 5E. and I. App. 636. Even upon the question of ultra vires it would, in my opinion, be somewhat rash to pronounce a judgment solely upon a construction of some clauses of the Society's constitution, and without full knowledge of what precisely was done and intended to be done with regard to the pursuer. There remain other points which, if they are to be decided, must, I think, necessarily involve inquiry into the facts. The most important of these has regard to Mr Manson's position in the matter, and his occupancy of the chair at the meeting on 31st August 1907. A number of cases were cited as bearing on this point— e.g., Huggins, 1895, 1 Q.B. 563; Wildridge, 1897, 25 R. (J.C.) 27; Rae, 1904, 6 F. (J.C.) 42; Leeson, 1889, 43 Ch. Div. 366. The decisions appear to me to illustrate and emphasise the necessity of having accurate knowledge of the facts in each case of the kind before proceeding to determine it. For the reasons which I have now indicated I am satisfied that there must be inquiry.… [ His Lordship then dealt with the declaratory conclusion subsequently withdrawn.] …

Thereafter on 20th June 1908 the Lord Ordinary assoilzied the defenders, finding that the resolution libelled was not ultra vires of the council, and that their proceedings were not irregular, oppressive, or contrary to justice or in any way illegal.

Opinion.—For a general outline of the case, and of the legal questions involved in it, I refer to the opinion I delivered when proof was allowed on 18th January 1908. The proof has now been taken. At the hearing which followed, Mr A. M. Anderson for the pursuer departed (wisely, as I think) from the declaratory conclusion of the summons, but he insisted upon the conclusions for reduction and for damages. In support of these he submitted a very able argument to the effect (1) that the resolution complained of could not stand, ( a) because it was ultra vires of the council to pronounce it, and ( b) because their procedure was irregular and oppressive, and the circumstances under which the resolution was arrived at were such as to amount to a denial of natural justice; and (2) that the pursuer had proved patrimonial loss and damage to a substantial amount.

I have come without difficulty to the conclusion that the resolution was not ultra vires of the council. Mr Anderson urged that suspension is just a form of expulsion; and that by the Society's constitution no member can be lawfully expelled except by a general meeting of the Society upon motion carried by at least three-fourths of the members present, and after intimation previously made in the manner prescribed. I think this argument is erroneous. Expulsion and suspension are, I apprehend, essentially different things. Expulsion means permanent extrusion from the Society; suspension infers a temporary and conditional deprivation of the privileges of membership. But, in any view, the introduction into the resolution of the word ‘suspend’ is really superfluous; for it adds no weight to the substantive part of it, viz., an instruction to the secretary to refuse to accept entries from the pursuer for the next volume of the stud-book, and to decline to grant certificates to him pending the further consideration of the matter by the Society at its next annual general meeting. Now, I think the council were quite entitled, if they thought fit, to decline to accept entries from the pursuer, or to grant him certificates pending a final decision. The matter was, in my judgment, one peculiarly suited to be dealt with in

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the first instance by the council. Its attention had been drawn to the position by Mr Manson's letter of 30th January of 1907; and after explanations had been asked and obtained from the pursuer, the council, on 9th March 1907, took the practical step of resolving that the false entries should be deleted from the stud-book and the fact of deletion notified in the next volume; and they deferred further action until the general meeting. That meeting took place on 10th July 1907, when the Society remitted the matter to the council ‘with full powers.’ It seems to me that the subsequent resolution of council now complained of was quite competent to them, not only in virtue of their ‘full powers,’ but also because, looking to the sequence of events, this was a ‘matter concerning the Society arising between the annual general meetings,’ and, as such, one with which the council had an express right (and indeed duty) to deal.

The pursuer's counsel next complained, as I understood, that the notice for the general meeting of 10th July did not include his case in the agenda, that is true; but I do not see how it could possibly prejudice the pursuer, for all that was then done was to remit to the council with full powers—a perfectly proper step in the interests of all concerned. He did receive due notice that the remit had been made, and that the council would meet on 31st August, and he was advised that he should then be present, or at least that a written or oral statement should be submitted for him; and before attending the meeting he had consulted and been advised by a very competent law agent. But it was next contended that the procedure at the meeting on 31st August, and the resolution pronounced, were unfair and oppressive. I do not think this has been made out at all. The pursuer was fully heard on his own behalf, and made no request for an adjournment, and the scope of the inquiry lay within narrow limits. I have, of course, no right to assume the functions of a Court of Appeal to review the merits of the resolution pronounced. I can only consider whether it was such a resolution as might in the circumstances have been reasonably and honestly arrived at; and I have no hesitation in affirming that it was. The pursuer admitted before the council that he had signed blank a large number of entry—as well as export—forms, his explanations in his previous correspondence, and orally at the meeting, might certainly be regarded as unsatisfactory, and he asserted he had written a letter to the secretary which that gentleman had never received. Whether or not there was ground for suspecting the pursuer of fraudulent intent—as to which I need pronounce no opinion—it seems clear that the council might not unreasonably conclude that he had acted with wanton recklessness, and in a manner calculated to defeat the primary object of the Society, and that they ought not to permit such a person to insert further entries in the studbook, or to receive further certificates pending further consideration of his case by the Society. Pour of the five gentlemen who formed the meeting were witnesses at the proof, the fifth being unable to attend through illness. I see no reason whatever for supposing that any one of the five was actuated by anything like malice against the pursuer, or applied his mind to the matter otherwise than a fair and honourable man should do. There remains, however, a question which was earnestly pressed upon me by Mr Anderson. One of the five gentlemen present was Mr Manson, and it was urged that his presence—to which, be it observed, the pursuer took no objection at the time—vitiated the whole procedure, because no man is entitled to be alike prosecutor and judge in the same cause. The legal proposition is sound, but I think it fails in its application to the facts. I do not consider that Mr Manson can fairly be described as the pursuer's prosecutor. His letter of 30th January 1907 merely drew the council's attention, as was right and proper, to entries in the stud-book which to the personal knowledge of the writer were false, and left it to the council to deal with the matter as they might think proper. His attitude at the meeting on 31st August—from which he could not have withdrawn without leaving less than a quorum present—was to do no more than vote; he abstained from taking any active part in the matter, or from influencing in any way the determination of the meeting. But it was maintained that, whether prosecutor or not, Mr Manson was, at all events, a trade rival of the pursuer, and as such was disqualified, because even if he was not in fact biassed by his pecuniary interest, there was a possibility of his being so biassed. It is true that it has sometimes been laid down, in cases where an order or a conviction by magistrates or justices of the peace—or even (as in Leeson v. General Council of Medical Education, 1889, 43 Ch. Div. 366) a decision by a council constituted by Public Acts of Parliament with drastic powers of dealing with cases of ‘infamous’ professional conduct—was under consideration by the Court, that a person who has a judicial or quasi-judicial duty to perform disqualifies himself for performing it if he has a pecuniary interest in the decision, or a bias which might render him otherwise than an impartial judge; and that if a pecuniary interest exists the law will not allow any further inquiry as to whether his mind was actually biassed by it—the possibility of bias being sufficient to disqualify. The English cases have gone further in this direction than anything that has been decided in Scotland. They are very numerous, and some of them at least do not go the length of supporting the doctrine above enunciated to its full extent. I doubt whether in Scotland the Courts would so sustain it. I should perhaps note some of the cases which serve to illustrate how delicate and difficult may be the task of drawing a consistent line between what ought and what ought not to infer disqualification under varying circumstances— Milledge, 4 QBD 332; Gibbon, 6 QBD 168;

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Gaisford, [1892] 1 QB 381; Henley, ibid., 504; Handsley, 8 QBD 383; Meyer, 1 Q.B.D. 373; Huntingdon, 4 Q.B.D. 522; Huggins, 1895, 1 Q.B. 563; Band, 1866, L.R., 1 Q.B. 230; Rae, 1904, 6 F. (J.C.) 42; Wildridge, 1897, 25 R. (J.C.) 27. But whether or not the doctrine which I have tried to formulate is of sound application in the kind of circumstances to which it has been applied with greater or less rigour in the decided cases, I am not disposed to apply it too strictly in the present case. I am not here in the position of reviewing a sentence, or quashing a conviction; I am considering whether a resolution by the council of a private society ought to be set aside, with resulting damages, because one of those who took part in its pronouncement had a pecuniary interest in the matter, although in fact—as I am prepared to hold—he was not thereby biassed or prejudiced. The pursuer avers on record that the members of the Society ‘consist mainly of breeders and owners of Shetland ponies’.; and the evidence shows that all or nearly all of them have a pecuniary interest, smaller or larger, in the breeding and selling of such ponies. If, therefore, pecuniary interest—even a slight one—is sufficient to infer disqualification, it might be impossible for the Society or its council to deal effectively with any case of the kind which has here arisen. Pushed to its logical extreme, this doctrine, applied to such a Society, appears to me to result in absurdity. I think all the members must be held to have joined this Society in the knowledge that offences of this sort would require to be dealt with by persons having pecuniary interest, greater or less, in the subject-matter under consideration. If this be so, the problem seems to be one not of principle but of degree; and the question comes to be whether or not Mr Manson was in fact biassed by his pecuniary interest when he sat as a member of this meeting. I am of opinion, upon the evidence, that he was not. This seems to me to end the matter as regards the crave for reduction of the resolution; and reduction being negatived, no question of damages arises.

“But, even if I had felt myself bound to reduce the resolution upon the technical ground with which I have last dealt, I gravely doubt—it is not necessary to put it higher—whether the pursuer would have been entitled to damages. It would, I think, be a strange and inequitable result that he should recover damages because a resolution pronounced by the council, intra vires and ( ex hypothesi) fairly and honestly, and without any actual bias, was open to challenge upon the ground that such bias might possibly have existed, though in fact it did not.”

The pursuer reclaimed, and argued—(1) The resolution complained of was invalid, in respect that ( a) it was contrary to the constitution of the Society, and ( b) the proper procedure had not been followed, ( a) This was a penal resolution, and no justification for such a resolution could be found in the constitution of the Society. Moreover, there was no contract between the pursuer and the Council of the Society, and it was therefore ultra vires of the council to pass the resolution in question. Esto, however, that the council had power to “expel” the pursuer, they had no power to “suspend” him, and his suspension was therefore illegal, ( b) The proper procedure had not been followed. No proper notice was given to the pursuer, no evidence was led, and no opportunity of explaining his conduct was given to the pursuer, who was not a member at the date of the alleged offence. The resolution was therefore invalid—Wertheimer on Clubs (3rd ed.),p. 113 et seq.; Fisher v. Keene, L.R., 11 C.D. 353; Labouchere v. Earl of Wharncliffe, L.R., 13 C.D. 346; Dawkins v. Antrobus, L.R., 17 C.D. 615. (2) The defender Manson, who presided at the meeting of the council, was disqualified in respect of bias. He was a trade rival of the pursuer's, and had therefore an adverse interest. That was sufficient to render the resolution invalid— Leeson v. General Council of Medical Education and Registration, 1889, L.R., 43 C.D. 366; The Queen v. Gaisford, [1892] 1 QB 381; The Queen v. Huggins, [1895] 1 QB 563.

Counsel for the respondents were not called on.