Court decision

Does your club or association have the power to reject membership applications?

Joanne O'Brien, Catherine Nufer-Barr, and Natalie Wissa / 03 June 2022
6 min.
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Worthwhile read for: Advisors, Business Owners

Case Alert – Singh & Ors v Brisbane Sikh Temple (Gurdwara) Inc 

Incorporated associations and its members have rights and obligations which are governed by the Associations Incorporation Act 1981 (Qld) (Act) and its Rules or Constitution. Generally, a person making a membership application will not have standing to bring an action under the Act, in relation to a membership application. However, current members of the Association are able to bring an action to compel the management committee to consider the membership applications in accordance with the Association’s Constitution.

In the recent judgment of Singh & Ors v Brisbane Sikh Temple (Gurdwara) Inc [2022] QSC 17, the Supreme Court of Queensland, found the decision of the management committee of Brisbane Sikh Temple (Gurdwara) Inc (Association) to reject 2,151 membership applications was void as the power to reject the applications was exercised for an “improper purpose”.

The order made by Justice Kelly, pursuant to section 73 of the Act required the management committee to reconsider the rejected applications in accordance with its Constitution and law. 

Background

The Applicants were ordinary members of the Association. In March 2021 the Association undertook a membership drive inviting applications for ordinary membership. A total of 3,156 applications were received, which was significantly more than the 235 applications received in the 2020 membership drive.

The management committee raised concerns with a number of applications, in particular that some people were lodging and paying membership fees for hundreds of applications at a time. As the term of the current management committee was coming to an end, there were concerns these applications were made in an attempt to branch stack the membership.

In addition to the branch stacking concerns (as a result of a recent building report), the management committee were also worried about the influx of membership and its effect on the safe occupancy rate of the Temple, as well as the ability to comply with COVID-19 restrictions and social distancing requirements.

At a management committee meeting, the committee resolved that due to safety and occupancy limits and COVID-19 restrictions, they would limit the total number of members of the Association based on selection criteria (referred to as the “Fairness Principle”). This would be based on loyalty (applications from members who had been financial members of the Association within the last five years) and first-time applicants may be rejected.

Where the management committee suspected an application had been made as part of the alleged branch stacking, these applications would also be rejected as non-genuine.  

The management committee passed a resolution to accept 1,005 applications and reject the balance of 2,151 applications. 

The Applicant commenced proceedings against the Association claiming the decision of the management committee in deciding to reject applications was not in accordance with its Constitution and sought relief under sections 72 and 73 of the Act to overturn the decision. 

Membership requirements under the constitution

The Association’s Constitution contained a number of rules which the Court found contradicted the approach taken by the management committee when considering membership applications.  

To be eligible to apply for membership, the applicant was required to satisfy the following criteria: 

  • be a Sikh and be able to give a statutory declaration that Sikhism is their only religion;
  • reside in Brisbane or in the vicinity of Brisbane;
  • be 18 years or older; and
  • pay the required membership fee along with their application.  

The Constitution contained no other provision which sought to limit the qualification for membership and in two separate provisions it expressly stated, “the number of members shall be unlimited.”

Decision

 Justice Kelly found that while the management committee had discretionary power under the Constitution to admit or deny members, this power had been exercised for an improper purpose. Therefore, the decision of the management committee to reject the 2,151 membership applications was void and of no effect.

In coming to his decision, Justice Kelly considered the Constitution as a whole, including its objects and found that upon proper construction of the Constitution, the power to admit or reject applications was to be exercised on the basis there was to be no limit imposed on the number of ordinary members (as the Constitution stated the number of members was unlimited) and in accordance with the objects of the Association. 

Further, it was deemed irrelevant that the decision to limit the membership was due to safety concerns around the number of occupants allowed at the Temple at any time, as the management of visitation and occupancy of the Temple was a separate issue from any consideration relating to membership of the Association.

An order was made for the management committee to reconsider the rejected applications in accordance with the Association’s Constitution and according to the law. 

Useful takeaways

The decision of the Supreme Court reinforces the fiduciary duty of management committee members to make decisions in the best interests of an association, act in good faith and otherwise in accordance with the association’s rules or constitution, objectives, and any relevant laws.

When exercising their powers, management committee members must make decisions as to whether to admit new members within the parameters embodied in its constitution. Although the management committee may have the power to reject a membership application, there still must be a valid reason to do so. To do otherwise, may raise allegations of bad faith or use of position for an improper purpose and relief may be sought from the Court under the Act.

For associations making decisions, especially in relation to membership, it is also important that detailed contemporaneous minutes and records of decisions are retained as evidence of a management committee’s deliberations if there is a dispute arising in relation to their powers being exercised appropriately.

It should also be remembered that pending changes to the Act will make it compulsory for all incorporated associations to have an internal grievance procedure or dispute resolution process in place. These changes are still waiting to receive proclamation and come into effect, but management committees of incorporated associations should be seeking to implement these processes now.

HopgoodGanim have experience providing advice to both management committees and members seeking to enforce their rights. If you would like any further information, please contact Joanne O’Brien or Catherine Nufer-Barr.
 

Authors
Joanne O'Brien
Partner
Joanne O'Brien is a Partner in the firm, and a sector specialist in the Health and Aged Care and Not-for-Profit space.
Catherine Nufer-Barr
Senior Associate
Catherine is a Senior Associate in our Taxation practice and a Chartered Tax Advisor.
Natalie Wissa
Associate
Natalie is an Associate in our Private Enterprise team. 

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