FRIENDLY SOCIETIES

Evening Post, Volume LXXXVI, Issue 92, 15 October 1913, Page 8

FRIENDLY SOCIETIES

REPAYMENT OF BENEFITS ' f AN BIPORTANT JUDGMENT. ' (fbe question of the right of the federation of a number of friendly ' tocieties to require certain contributions* j from branches was the subject of a ye- ' served judgment delivered by his Honour the Chief Justice, in the Supreme Court to-day. The plaintiffs were the trustees of the Court Sir Charles Napier of the Ancient Order of Foresters, Hawkes Bay District ; the defendants were the District Court «f the same order. The questions advanced by Mr. Skerrett were:— (l) Can a friendly society aiter its rules so as to impose on a member or on a branch society the obligation to repay the amount of benefits astually received under the existing rules of _ the society? (2) Can a friendly society, by alteration of its rules, require a, branch society to transfer contributions of a separate and distinct fund to another fund of the society having objects and purposes not different in their general nature, but materially different in practical scope from the firstmentioned fund? Dealing first with the second question taised, His Honour said that the plain-tiffs-contended that such an action was j la violation of the provisions of the ■'Friendly Societies Act, 1909. It was I mrged that what was being; dons was to take the sick and funeral funds to be used for sick funds only. To this the defendants, made two answers : — (1) That it was not /taking funds from one fund and placing them to a fund for a different purpose; (2) that the Supreme Court had no jurisdiction to deal with the internal affairs of a society unless tbhete was Gome express law violated. '*'! am of opinion that, so far as this rule >& concerned," lemarked His Honour, •"the Court cannot enquire as to what ite effect bay be in making a court j©hat is called unfinancial or insolvent; and I am also of ojunion that this is mpt a violation of ©ection 40. All the sksk and funeral benefits have to come out of the sick and funeral fund. I see no violation of that subsection in the court taking a sum out of that fund to reinsure funeral benefits, and I underfstand that this has been done for years. KThe sick and funeral fund is still to be .vused for-siek and funeral benefits. All "jn fact that rule 38 (g) does is to take •Sficom the fund more for tho central jsick *fund than has hitherto been demanded, yifc is not transferring a sick fund to another purpose : the fund is to be used }im sickness. It is not a case where there has been such a taking as to leave nothing for funeral purposes. They are for. If it should happen that ''the usual contributions to the sick and funeral fund of a court are not sufficient to pay for sickness up to twelve months, then it seems to me that under . rule 49 (») contributions may be mvv creased. I am of the opinion, therefore, t that as to rule 22 the claim of the plainstiffs has not been substantiated. •"The' second question (regarding ie- , payment of the amount of benefits) as Lto whether rule 22 is ultra vires is." con-e-tinned his Honour, "one of considerable ; difficulty. The first enquiry must be : i'iWhat power has a district to make rules? ■•.There seems no direct statement as to /■what rules the society may enact. . . . jiiWhat rule 28 purports to do is to delimand from a branch a return of benefits |*paid to the branch, and which the branch £has disbursed to its members. It is, Vas was put by Mi 1 . Skerrett, to demand -from the shareholders of a company the 1 dividends paid to them. It is even more Hhan that, for the sick benefits paid were .paid in pursuance of the rules, and it t;is ordering that these benefits he repaid. {.It is not unusual for friendly societies ''•iby rules to make levies on branches or [•courts, but I am not aware that it has '"ibeen held that they may make a levy that bears unequally on branches and j '/that is not in conformity with some ijgeneral principle. This rule, if it can fSbe construed as a levy, is not on the of equality. It is making a '^Je-vy by seeking to set aside or treat as Knull a rule that has been in existence ■and had been acted upon. Further, the I rule may have the effect of taking all Wthe sick and funeral fund j and it was ■stated that in one court that this would happen, thus preventing members ge&ting ■possible funeral benefits, for the lodge may have no money to reinsure its members for funeral benefits. Were this to happen, the provisions of section 40 of the Friendly Societies Act, 1909, would ho "violated, for no funds for funeral benefits would be left." Proceeding, his Honour pointed out that rule 22, sis referred to in Mr. Skerrett's first question, ordered a matter ended and concluded to be reopened and dealt with as if the law now enacted had been in existence in the past. The, .question was: had the fact that the rules were registered made them valid? 'After quoting various authorities, his Honour said that he v/as of the opinion that the proposed alteration went beyond a mere alteration and was not in accordance with the rules. He was further •of the opinion that rule 22 might take all the sick and f uneral.£und, and would do so in the case of one court, and leave nothing for funeral benefits. It was a violation of section 40 to take a sick iand funeral fund and 'apply it to one wbject only. For these reasons he was of the opinion that the Court should uphold the plaintiff's objection so far . as the first question was concerned, and grant an injunction if the defendants attempted to carry out the provisions with regard to repayment of benefits received. Mr. C. P. Skerrett, K.C., and with him Mr. Lusk, appeared for the plaintiffs, and Mr. H. D. Bell, K.C., with him Mr. Woods and Mr. Evans, for the defendants.