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Often, associations or clubs are governed via an operative entity. Members of clubs or associations rarely, if ever, have access to the entity’s governing documents. The may get a copy of the relevant charter or rules of membership, but it would be somewhat odd to call for a copy of the company constitution before, for example, pledging your allegiance to the Scouts movement.*

A recent NSW decision, however, has determined that even where a member is not aware of all of the governing documents, including updates enacted through resolutions, they are still bound by all of the updated terms. It also provided some interesting commentary on the cloning of horses, if you’re interested in that kind of thing. Below, we set out the court’s decision in Bull v Australian Quarter Horse Association [2015] NSWCA 354 and why you should not ignore your company constitution. 

What Was The Problem?

Mr Bull purchased a cloned horse, “Smart Little Lena-D”, from the USA in December 2010. In April 2011, Mr Bull imported Smart Little Lena-D to Australia, and on 29 July 2011, he applied to the Australian Quarter Horse Association (AQHA) to register Smart Little Lena-D in their Stud Book. AQHA was an incorporated company, to which Mr Bull was already a member for 40 years. Unfortunately for Mr Bull and Smart Little Lena-D, AQHA refused his application on 15 September 2011 since Smart Little Lena-D did not fulfil the registration requirements, as per AQHA’s Regulations.

Between December 2010 and April 2011, AQHA made several amendments to their Regulations through resolutions passed during two board meetings. Some of the amendments included disallowing any cloned horse to be registered (previously they could be registered) and for imported horses to be first registered in their country of origin (whereas previously this was not necessary).

What Was The Outcome?

Article 14.5 of AQHA’s constitution stated that the directors may make, vary or annul regulations at any time, provided that such changes were in accordance with the company’s constitution, and the members of AQHA would be bound by any such changes. If an amendment occurred through resolution, then it must be effective from when the resolution was passed. As unfair as it may sound, it is not the fault of AQHA if they lag in communicating to their members any resolutions that have occurred.

Hence, even though Mr Bull was unaware of the regulatory updates since the resolutions amending the Regulations stopped Smart Little Lena-D from getting registered with AQHA then there is little that members like Mr Bull can do to dispute that.

Key Takeaways

If you are a member of an organisation, always make sure that you are aware of the terms of the company constitution and any of its regulations that may affect you. Questions? Get in touch with LegalVision’s commercial lawyers on 1300 544 755.

*Disclaimer – the Scouts may not actually operate via an entity. I was more of a nippers girl

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