Disciplining members – protecting your organisation’s reputation

November, 2012

Is one of your members behaving inappropriately? Are they breaching your governing rules? Or have they done something which is giving your organisation a bad name?

Those involved with a not for profit organisation are already giving good time and energy to that organisation, and the last thing you all need is to have a messy internal dispute getting in the way of the organisation’s activities, or negatively effecting the organisation’s reputation. Not only do these matters need to be resolved quickly, but they need to be resolved in the right way too, to ensure that the resolution procedure being adopted complies with any legal obligations your organisation has.

This is particularly important for associations because, generally, an association is trying to promote a certain standard of behaviour for its members. In addition, the Government appears to be increasingly unwilling to create, regulate, impose and monitor compliance with agreed standards of behaviour by Australian industries, leaving it up to industry and professional associations to self-regulate. Interestingly, the courts are also generally very reluctant to become involved in internal disputes in associations.

So, does your association have good processes in place so that it can discipline a member appropriately and get the mess sorted out promptly? Here we set out some general information for you to have a think about.[1]

Outlining the process

The best way to ensure your association has good processes in place is to have provisions for disciplining members in your rules or constitution.

As you know, as far as incorporated associations are concerned, each State and Territory has its own legislation which applies to incorporated associations and which regulates some of these matters. So if your organisation is an incorporated association, the relevant legislation usually requires your association to handle internal disputes in accordance with the legislation, as well as the association’s constitution.

For example, in New South Wales, Item 5, Schedule1 of the Associations Incorporations Act 2009 (NSW), requires that a constitution must address “the procedure (if any) for the disciplining of the association’s members and the mechanism (if any) for appeals by members in respect of disciplinary action taken against them”.

Further, there is a model constitution set out in the Associations Incorporation Regulations 2010 (NSW) and it contains model provisions for disciplining members and the right of appeal of a disciplined member. This is a useful starting point for your organisation to consider and we would recommend that your association follows the model provisions as closely as possible. It can even be modified for a public company limited by guarantee for inclusion in its constitution.

It is important that your rules or constitution set out the sorts of complaints that the management committee/board can consider and also what powers they have, such as whether they can suspend or expel a member and what process they need to follow.

For example, in clause 11 of the model constitution set out in the Associations Incorporation Regulations 2010 (NSW), the management committee can consider a complaint about a member who has refused or neglected to comply with its rules, or a member who has wilfully acted in a manner prejudicial to the interests of the association. It also provides that the management committee can expel or suspend the member by resolution if the management committee is satisfied the facts alleged in the complaint have been established.

Importance of natural justice

Whether you use the model provisions (if your organisation is an incorporated association) or you draft your own provisions, it is very important that the provisions observe the rules of natural justice and that any consideration of any complaint also observes those rules.

Natural justice (also sometimes called “procedural fairness”) means that at the least, the member concerned is informed of any charges against that member, the member is given an opportunity to be heard, and that any decision about the matter is made in good faith.

It is well established from cases that have been through the courts, that:

 

We have a complaint about a member on our hands – now what?

If there is a dispute within your organisation, the first thing your management committee/board should do, is check your rules or constitution to see what the procedure is for dealing with disputes.

IMPORTANT – if your rules outline a procedure, you need to follow it very closely to make sure that what you are doing is legal, and also to prevent the matter being taken to court later. If you do not have a procedure and your organisation is:

As well as following the procedure outlined in your rules or constitution, the management committee/board also needs to ensure that it follows some well-established principles which have been established by previous cases, such as:

 

Protecting your members

One other matter to consider is what you can do to protect those members – who are considering the complaint – from being sued.

Apart from taking out directors’ and officers’ liability insurance, it is important that you ensure there is an indemnity clause in the rules or constitution generally, and also relating to the provisions that deal with disciplining members, so that there is adequate protection for those on the management committee/board. An example provision could be:

“Each member acknowledges that no matter or thing done or omitted by the management committee/board (including the exercise of its powers in relation to its consideration of any complaint set out in clause X) subjects the management committee/board  or incorporated association/company to any liability. Each member hereby releases the incorporated association/company and management committee members/directors from any such liability”.


[1] Please keep in mind that each State/Territory has its own legislation for incorporated associations and so this information is provided in a general sense.

[2] Associations Incorporations Acts: Qd s 71(3); SA s 40; ACT s 50; Vic s 14B(3); NT s 39

[3] Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362 per Dixon J.

[4] Goodwin v Vietnam Veterans Motor Cycle Club Australia NSW Chapter Incorporated (2008) 72 NSWLR 224 at [43], [46-49] per White J.

Contact Mills Oakley

For more information, please contact:

vera-visevic-mills-oakley

Vera Visevic | Partner
T: +61 2 8289 5812
E: vvisevic@millsoakley.com.au

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