The Supreme Court allowed an appeal against orders dissolving the Roadstone Sports & Social Club, finding that the club’s rules did not permit it to be wound up by a simple majority and that the evidence did not establish grounds for the court to dissolve it.
The judgment, delivered by Mr Justice Clarke on 8 April 2014, concerned a club founded in 1957 for Roadstone Group employees. It owns about 18 acres at Kingswood, Clondalkin, with sports and social facilities. Its membership includes ordinary members, who must be current group employees, and associate members, including some former employees.
In 2012, the High Court ordered the club dissolved and its remaining money distributed equally among ordinary, associate and life members. The order followed a 2009 vote by ordinary members: 45 supported seeking dissolution and four opposed. Associate members were not entitled to vote at that meeting. Two trustees appealed; three other trustees had brought the High Court proceedings on behalf of the club.
The Supreme Court held that the club’s rules formed a contract among its members. Since the rules contained no procedure for amendment or dissolution by majority vote, a court could not imply a power for a simple majority to change them. Members who no longer wished to belong could resign, but that did not give a majority the right to end the club while a viable minority could continue its activities.
The court also rejected the argument that the club’s underlying purpose had disappeared. Although ordinary membership had fallen and the club’s finances had faced difficulties, associate members remained active and the facilities continued to be used, including through commercial rentals. The court said the club retained reserves and there was a realistic prospect of revival if membership reopened. It stressed that survival was not guaranteed, but the evidence did not show that the club was doomed to fail soon.
The court considered whether dissolution would be just and equitable, an inherent power available where no proper winding-up process exists. It said a large majority favouring dissolution could be relevant, but the 2009 vote did not represent all members: about half of the ordinary members were present, associate members’ views were not canvassed, and the proposed distribution later changed without a vote of members. The evidence therefore did not establish that dissolution was just and equitable.
The court held that Rule 37, which directs remaining money to charity on dissolution, had become part of the club’s rules through members’ long acquiescence. It did not decide how that rule would operate in practice, leaving that question for a later stage.
The appeal was allowed, the declarations and orders sought in the proceedings were refused, and the trustees’ notice to vary was dismissed. The court gave guidance for any future dissolution application, including the need to canvass all categories of membership inclusively and assess whether the club was likely to fail within a relatively short time.