Background

As the law stands at the present time, when a member of an incorporated association is affected by a decision of the association then the Supreme Court has jurisdiction to adjudicate. But that is the only avenue for solving disputes involving incorporated associations.

This shortcoming in the Associations Incorporation Act 1981 (Qld) (AIA) has been recognised for some time and is intended to be addressed by the inclusion of mandatory grievance procedures in the Bill tabled in the State Parliament in November 2019 to amend the AIA.

Under the Bill any grievance procedure adopted by an incorporated association must include mediation and may provide for a person to decide the outcome of the dispute. The Bill goes on to enshrine rules around natural justice to the application of a mediation procedure.

A recent decision of the Queensland Court of Appeal involving the Christian Church in Samoa – Australia[1] handed down a few days ago shows just how important an effective mediation procedure could be to determine internal disputes affecting an incorporated association and avoid the expenditure of very significant legal costs.

Facts

A split had arisen within the Samoan Church at Ipswich which was structured as an incorporated association (Association). The effect of the split in membership was to divide those members who supported the long-standing minister, Mr Reupena, and those who remained loyal to the church in Samoa with whom the Association was affiliated in accordance with its constitution.

There had been a long standing period of dominance of the Association by Mr Reupena. Amongst other things the management committee, contrary to the AIA, was appointed by Mr Reupena.  But in addition to that there were other irregularities in the governance of the Association such as a register of members not being maintained and accounts traditionally late in being filed or not appropriately audited.

Matters came to a head when Mr Reupena was effectively dismissed from the Association by the affiliated church in Samoa following which a majority group within the Association (though not 75%), loyal to Mr Reupena, purported to amend the constitution (improperly) by deleting all reference to the Association’s affiliation with the church in Samoa.

The other group (remaining group) remained loyal to the church in Samoa.

The matter ended up in the Court with a claim by the remaining group seeking an order for the winding up of the Association and distribution of assets.

Decision of Supreme Court

The initial decision of the Court had been that it was inappropriate for the Association to be wound up but an order be made for the appointment of receivers to determine just who were the members of the Association and for a meeting to be held to appoint a management committee properly with a view to the internal problems of the Association being left to the members to be sorted out.

However, the remaining group appealed that decision to the Court of Appeal seeking an order for the winding up of the Association.

One of the grounds of appeal was that the Association’s financial resources were used by the controlling majority for their own purposes, which effectively amounted to a form of oppression. However, the Court held that the Association had a legitimate interest in challenging the claims of the remaining group because issues litigated affected the Association as a whole eg  interpretation of the constitution and sorting out the membership.

The Court then went on to hold that the remaining group had failed to demonstrate that winding up, a measure which should only be used as a last resort remedy, was justified. The Court said that the Association still served a purpose in the local community and was strongly supported.  The internal machinations of the Association were up to the members to sort out amongst themselves and in relation to the church in Samoa.

As a consequence the original orders stood with receivers being appointed to determine the membership, hold a special meeting and appoint a new management committee which would then need to address Mr Reupena’s position and its ongoing relationship with the church in Samoa. It could, the Court said, at that point amend the constitution by deleting all provisions dealing with the ongoing affiliation with the Samoan Church if the requisite majority of members approved that course.

The lesson

Internal disputes involving voluntary associations are inevitably unpleasant and emotional. If they are not dealt with quickly and sensibly, enormous legal fees can quickly be racked up.  This is the reason why the new Bill to amend the AIA mandates grievance procedure provisions.

Of course it has yet to be seen if and when the Bill will be passed given the current challenges the government has in a COVID-19 world with limited sitting days and an imminent election. But hopefully we will see provisions in the AIA before too long that mandate sensible grievance procedures to deal with these sorts of disputes in the future.

[1] Faamate & Ors -v- Congregational Christian Church in Samoa – Australia (Ipswich Congregation) & Ors [2020] QCA 87