LAW REPORTS.

Dominion, Volume 7, Issue 1882, 16 October 1913, Page 11

LAW REPORTS.

SUPREME COURT. FUNDS OF FRIENDLY SOCIETIES. FORESTERS' ORDER. IMPORTANT RULING BY JUDGE,

The powers of the central authorities of local bodies to alter rules on contributions from individual lodges was reviewed in a judgment delivered in the Wellington Supreme Court yesterday by His Honour the Chief Justice (Sir Robert Stout). Tho plaintiffs- were T. T. M'Carthy, G. I. Clark, and M. Spriggs, trustees of the Court Sir Charles, Napier A.0.F., Napier, and the defendants were W. A. Donaldson, J. Kennedy, and A. 0. llanefy, trustees of tho Ancient Order of Foresters. At the hearing, Mr. C. P. Skerrett, K.C., with him Mr. H. B. Lusk, appeared for the plaintiffs, and the Hon. H. D. Bell, K.C., with him Messrs. V. G Wood and H. E. Evans for the defendants. What Was Sought. The plaintiffs asked the Court to declare that certain rules passed and registered by tho society were ultra vires and void, and asked tor the issue of an injunction to restrain the society from enforcing' compliance with these rules. The now rules with rospect to which complaint was made were two, providing:—

(1) i That those courts which (at tho end of 1910) have drawn out of the Central Sick Fund more than they have paid in, shall refund tho amount to the said fund.

(2) That one-fourth of each member's contributions payable into the court's sick and funeral fund shall be paid into the central sick fund, . to meet casos of sickness continuing after twelve months, together with tho levy under clause (o). Judge's General Review. His Honour explained that tho court bad a fund usually called the sick and funeral fund, which waß the main fund of the court. Payments to this fund varied from 2s. 6d. per month for members under eighteen years of age to 4s. lid., from thirty to forty. In addition, overy member has to pay 6d. per quarter to the central sick fund, which i 3 a district fund. Up to tho passing of tho now rulos complained of, tne central fund was kept up by tho payment of this Gd. per quarter, together with

3d per quarter paid by the court out of its sick and funeral fund —in all, a sum of 3s. per member per year. Then there came tho new clause enacting -that, in addition, thd court must pay one-fourth of each member's contributions to the court's fund to the central fund. Tho plaintiffs complained that as the district bad not raißod tho contributions of members to the court's fund, it would bo impossible for a court to pay the sickness charge hithorto paid, and by tho rules payable, to its momb?rs, if, in addition to tho levy of 6s. a year, one-fourth of the fund is to be paid to tho contral fund. Tho funeral benefit, His Honour eaid, was really a life insurance bonefit, assuring tho payment of £30 to tho relatives of a male member on his death. This funeral benefit was duo to be paid by the court, but the court practically reinsured in the district, which undertook tho liability for tho payment of a certain sum out of the sick and funeral -fund. What, then, had happened in tho past, was that a court, out of its sick and funeral fund, had paid to tho district a sum for reinsurance of funeral benefits, and had also paid a contribution to the central fund, the district paying for sickness which continued after twelve months.

The first question asked by the plaintiffs was—Can a district transfer from a sick and funeral fund a share of that fund to tho central sick fund? They claimed that such an action was a violation of the provisions of tho Friendly Societies Act, 1909. It was urged that what was heing done was to take sick and funeral funds to bo used for sick funds only. To this the defendants made two answers: —(1) That it was not taking funds from one fund and-plac-ing them to a fund for a different purposo; and (2) that the Court had no jurisdiction to deal with tho internal affairs of a society,. unless there was seme express law violated. His Honmu' was of the opinion that so far as the rule was concerned, tho Court could not inquire ns to what its effect might be in making a court unfinancial or insolvent. All sick and funoral benefits Lad to come out of the sick and funeral fund. He saw no violation of tho Act in the court taking a sum out of tliat fund to'reinsure funeral benefits, which hi) understood had been done for years. Al 1 that tho now rule did was to take from the fund moro for the central fund than had hitherto been demanded. It was not transferring a sick fund to another purpose, nor was it a case where there had been such a taking as to leavo nothing for funoral purposes. These were provided for. Ho was thereforo of opinion that as to the second rule in dispute, tho claim of the plaintiffs had not been 1 substantiated. Difficult Point. Tho quostion as to whether the first rulo was ultra viros, His Honour said, was ono of considerable difficulty. Tho first inquiry must be —What power has a district to mako rules? There seemed to bo no direct statement as to what rules a society may cnact. llules could be altered, but he apprehended that rules, like other laws, could speak only fiom their registration. The disputed rulo purported to demand from a branch a return of bonofits paid to it, and disbursed to its members. It was, as was put by Mr. Skerrett, to demand from tho shareholders of a company the dividends paid to them. It was even moro than that, for tho sick benefits paid woro paid in pursuance of the rules, and it was ordering that theso bi-nefits bo ropaid. It was not in conformity with general principle that suciotios should mako a levy wnich bore unequally on branches. The rulo, if it were construed as a levy, was not on the principlo of equality. It was making a levy by seoking to set asido or tioat as null, a rule that had been in existence and had been acted upon. It had been admitted by counsel' for tho defendants that if an amending rule were not consistent with tho Act and with tho law of New Zealand, the Supreme Court had power to proclaim tho amending rulo ultra vires. He was of opinion that the prtipoHC-d altoiation in the rule went beyond a mero alteration, and was not in accordance with tho rules; and, further, that the new rule might talco all tho sick and funeral fund, and would do so in tho case of one court, and .leave nothing for funeral benefits. It was a violation of the Act totako a sick and funeral fund and apply it to one section only. For these reasons, His Honour thought that lie should grant the injunction if the defendants attempted to carry out the provisions of the rulo. •