Incorporated Association Disputes Lawyers Geelong & Melbourne

Incorporated associations play an important role in Victoria’s community sector.  Sporting clubs, cultural organisations, community groups, charities and member-based organisations commonly operate through an incorporated association structure.   While many associations function effectively, disputes can arise between members, committees and the association itself.  These disputes commonly relate to committee elections and appointments, voting rights, membership eligibility, disciplinary action, governance issues and the application of the association’s rules.

What is an incorporated association?

An incorporated association is an organisation that is incorporated under the Associations Incorporation Reform Act 2012 (Vic) (the Act).  Incorporation creates a separate legal entity that can enter into contracts, hold property and sue or be sued in its own name, which protect individual members of the association from personal liability for the association’s debts.

In Victoria, a club or community group that operates as a not-for-profit can be registered as an incorporated association.  It is not compulsory to incorporate a club or community group in Victoria. You can recognise an incorporated association by the word ‘Incorporated’ or the abbreviation ‘Inc.’ appearing after its name.

The rights and obligations of the members, committees and the association will arise from the Rules of the association, together with the Act.

What are the common types of disputes?

In our experience, it is common for disputes to arise in relation to:

• challenges to committee elections or appointments;
• disputes about voting rights or membership eligibility;
• disagreements regarding rule changes;
• allegations that the committee has acted outside its powers;
• disputes concerning the expenditure or distribution of association funds;
• disciplinary action taken against members; and/or
• allegations of procedural unfairness in meetings or decision-making.

What laws apply?

Incorporated associations are regulated by common law, legislation and associated regulations.

Common law

Common law is the body of law that is developed by and applied by the courts.  For example, contract law is not codified or governed by one single piece of legislation, but by the common law, which is established and developed by the courts.

The association’s rules are usually the starting point for resolving any disputes regarding an incorporated association.  The association rules are a type of contract between the members, committees and the association, meaning that these rules will be subject to the common law (particularly, contract law).

Legislation

As noted above, the primary legislation governing incorporated associations in Victoria is the Act.  The Act is a state law that regulates incorporated associations in Victoria.

The requirements under the Act are extensive, so we cannot provide a comprehensive list of its requirements here.  However, notably, the Act provides as follows:

1. The rules of the incorporated association must set out a grievance procedure for dealing with any dispute under the rules between a member and another member; or a dispute between a member and the association.
2. In dealing with a grievance, the association must ensure that:
   1. each party to the dispute has been given an opportunity to be heard on the matter which is the subject of the dispute; and
   2. the outcome of the dispute is determined by an unbiased decision-maker.
3. If an incorporated association proposes to take disciplinary action against a member in respect of that member’s status as a member of the association, the association must:
   1. inform the relevant member of the grounds upon which the disciplinary action against the member is proposed to be taken;
   2. ensure that the relevant member has been given an opportunity to be heard in relation to the matter; and
   3. ensure that the outcome of the disciplinary procedure is determined by an unbiased decision-maker.
4. A member or former member may apply to the Magistrates’ Court of Victoria where the affairs of an incorporated association are being conducted or proposed to be conducted in a manner that is oppressive, unfairly prejudicial or unfairly discriminatory. These claims commonly arise in disputes concerning voting rights, governance, membership decisions and disciplinary action.

What are my options to resolve a dispute?

Most disputes can be resolved by carefully reviewing the association’s rules and following the applicable procedure(s) set out in the rules.  Where this is unsuccessful, the parties should take all reasonable steps to attempt to resolve the dispute before commencing legal proceedings.  Litigation should generally be treated as a last resort.

If the dispute remains unresolved and the aggrieved party still wishes to pursue the complaint, the aggrieved party may need to commence legal proceedings.   Courts and tribunals are often reluctant to interfere unnecessarily in the internal affairs of incorporated associations.  As a result, an aggrieved party will generally need to demonstrate that there has been a genuine breach of legal rights or a failure to comply with the governing rules, for the purposes of making out a claim.

Court rules and procedures are formal, complex, time bound and the consequences for non-compliance can be significant and costly.  We strongly recommend engaging legal representation when contemplating commencing any litigation process in any court jurisdiction.

Coulter Legal has extensive experience in assisting both members and incorporated associations in relation to disputes. Coulter Legal can help you by:

1. providing you with tailored advice about your rights and obligations in relation to a dispute concerning an incorporated association;
2. assisting you to negotiate a resolution regarding an incorporated association dispute; and
3. representing you in any proceeding relating to an incorporated association dispute.