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A trivial pursuit: does every little gripe trigger a dispute resolution clause?

Wolfe v Sydney Bush Walkers Inc [2018] NSWSC 1032

In Wolfe v Sydney Bush Walkers Inc [2018] NSWSC 1032, the Supreme Court of New South Wales considered the meaning of the word "dispute" in an incorporated association's constitution. The Court found that the grievance raised by the plaintiff, Mr Ian Wolfe, was too trivial or remote from Wolfe's own interests to fall within the ambit of the relevant dispute resolution clause. This decision illustrates that there may be a threshold level a grievance must reach before it is considered a 'dispute' capable of resolution.

Background and judgment
The Sydney Bush Walking Club was established in 1927. The Club's aim was to bring together people with a common interest in promoting bush walking and the preservation of Australian flora and fauna. Unfortunately, over a number of years, some of the Club's senior members were not seeing eye to eye. There were disagreements regarding the following matters (among others):

  • The committee intended to publish a historical account of the Club's affairs called "The Intervening Years". Mr Kenn Clacher complained that his earlier work on that project had been plagiarised.
  • Mr Leigh McClintock (the president) motioned to publish an apology to Clacher in the Club's February 2014 newsletter. The committee passed a resolution in those terms. Mr Ian Wolfe (the previous president) was unhappy with the committee's decision and lodged a complaint against McClintock, alleging that the apology was prejudicial to the Club's best interests.
  • Clause 11(3) of the Club's constitution required the committee to formally serve Wolfe's complaint on McClintock and allow him 14 days to make submissions in response. McClintock effectively waived his right under clause 11(3) of the constitution to address the committee regarding Wolfe's complaint.
  • In response, Wolfe made another complaint; that clause 11(3) of the constitution had not been followed when it ought to have been (the Contravention).

However, it was a separate matter that became the subject of proceedings in the Supreme Court of New South Wales. Clause 10 of the constitution set out a dispute resolution procedure for the Club's members. At first instance, "disputes" would be referred to a community justice centre for mediation. If a "dispute" was not resolved within 3 months, then it would be referred to arbitration governed by the Commercial Arbitration Act 1984 (NSW).

In accordance with clause 10 of the constitution, the parties attended a mediation in respect of the Contravention. However, when the mediation was unsuccessful, the Club refused to proceed to an arbitration. Wolfe submitted to the Court that the Contravention was a "dispute" that should have been referred to arbitration. In Wolfe's submission, formal service of his complaint against McClintock and requiring McClintock to make submissions in response within 14 days was a "mandatory constitutional step". The Court did not agree with him.

The Honourable Justice Stevenson noted that the term "dispute" was not defined in the constitution. So, Stevenson J needed to determine what "dispute" meant, having regard to the rest of the constitution.

Stevenson J noted the following:

  • The constitution gave the committee control and management of the affairs of the Club.
  • If every decision or action of the committee could be referred to mediation (or arbitration, if mediation failed) then the committee's ability to control and manage the affairs of the Club would be compromised.
  • In this context, "dispute" did not mean every issue, no matter how trivial or remote from the complainant's own interests. Rather, it meant something which "impinges, in a real and practical way, on the interests of the disputant, as a member of the Club".

His Honour took the view that the Contravention did not affect Wolfe's interests as a Club member. They affected McClintock's interests - but he had freely waived them. So, there was no "dispute" as understood by the constitution. By extension (though it was not part of the decision), Wolfe's complaint about the committee's decision to publish the apology probably wouldn't have been a "dispute" either. By comparison, Clacher's complaint about his work being plagiarised would have almost certainly counted as a "dispute".

Conclusion
Dispute resolution clauses are a staple of many agreements. This decision illustrates that, unless the relevant agreement says otherwise, there may be a limit on what will trigger a dispute resolution procedure. If you are faced with a frivolous grievance (or if you have one of your own), we respectfully suggest that it might be preferred to take a leaf from most other Sydney Bush Walkers and ….. take it in your stride.

Note: The above material provides a summary only of the subject matter covered, without an assumption of a duty of care by Resolution Institute or Clayton Utz. The material is not intended to be nor should it be relied upon as a substitute for legal or other professional advice. Copyright in the material is owned by Clayton Utz.

Thanks

We thank the authors of this legal update Karen Ingram (Partner) and Adriano Poncini from Clayton Utz Litigation and Dispute Resolution team for their contribution to Pulse.

Tags: Arbitration, Legal practice, Dispute handling administration