The first of July 2024 marked the commencement of the remaining provisions of the amendments to the Associations Incorporation Act 19811 and its regulations,2 legislated in 2020.3
Two of the provisions may be of interest to QLS members who are called upon to advise incorporated associations and their members:
- Mandated grievance procedures for all incorporated associations, no matter if the association has adopted the Model Rules or has bespoke rules; and
- Disclosure of remuneration and other benefits disclosure at the annual general meeting (AGM), even if the amount to report is zero. This applies to benefits and remuneration given to management committee members, senior staff, and their relatives.
Both have potential to be a source of contention in associations.
In 1981, the Queensland Parliament passed the Associations Incorporation Act 1981 (the Act), which had 70 sections in 30 pages. It now has 163 sections, 136 pages, and two schedules.
The legislation was designed for small community organisations to allow them to escape the deficiencies of being an unincorporated association.
It now has to accommodate calling to account multimillion-dollar enterprises as well as those that fundraise to scrape together their annual audit fees. Mandated grievance procedures and remuneration disclosure highlight this disparity.
Member disputes
Under common law, the courts are reluctant to intervene in members’ affairs in unincorporated non-profit associations unless there are some proprietary, contractual, or trust rights involved.4 The members should be left to resolve the matter amongst themselves.
The advent of the ability of associations to incorporate under the Act meant that the association’s rules were a contract between the members and the association, that the rules of natural justice were to apply, and that the Supreme Court had jurisdiction to intervene in member disputes in certain instances.
The legislators were initially concerned that the floodgates of litigation would be opened by this new legislation. The first iteration of the Act required a management committee to consider a report by a qualified legal person on the prospects of success of any litigation. The section was later repealed as it caused more issues than it solved. It did not require the management committee to follow the advice, and the section was not complied with in several cases before the courts.5
Since then, while some disputes have made their way to the Supreme Court, others have not been able to be resolved internally and festered due to a lack of funds to mount such a proceeding.
Recently, The Courier Mail reported that members of an association are raising a fighting fund of $80,000 to bring an action about an internal member’s dispute.6 Some point to anecdotal evidence that unresponsive management committees know that unless they have members with deep pockets to take the association to the Supreme Court, they can ‘tough out’ protestations of members.
Some of the internal disputes of associations rival those involving fences and trees. The litigation associated with the Cavalier King Charles Spaniel Rescue (Qld) Inc ran for years, with some committee members dying during its course, having 341 filed documents, two aborted trials, numerous interlocutory applications, many directions hearings, three unsuccessful appeals to the Court of Appeal, and one application to the High Court of Australia.7 The case recorded this exchange:
HIS HONOUR: …say… that decision is set aside, what’s that going to achieve from your point of view? It’s a society that have fairly clearly indicated they don’t want you…
PLAINTIFF: Maybe that’s why I want to be in their face.”8
At the other end of the scale, the infamous Cat Protection Society Queensland murder was a tragic part of a voluntary association dispute.9
Other Australian jurisdictions have adopted strategies such as empowering magistrate’s courts and tribunals to hear internal disputes.
Queensland is now pursuing the policy of having an internal dispute resolution mechanism for all incorporated associations, also used in some jurisdictions.
From 1 July 2024 in Queensland, an incorporated association must follow the grievance procedure in the model rules (clauses 12A to F), or adopt a formal grievance procedure in its own rules by meeting the requirements in section 47A of the Act.10
Broadly, the Act’s grievance provisions need to:
- allow a member to appoint any person to act on their behalf in a grievance;
- give each party an opportunity to be heard;
- allow unbiased mediation if the dispute cannot initially be resolved;
- ensure a decision-maker is unbiased if the grievance procedure allows a person to decide the outcome of the dispute; and
- the association cannot take disciplinary action against a complaining member or their membership representative until the grievance procedure is complete.
The provisions in the Model Rules provide the machinery for appointing a mediator, the timing of the process, the conduct of the mediation, and the costs.
The path to the Queensland Supreme Court is still open to members, but section 73 of the Act gives the Court discretion to refuse trivial, unreasonable or improper applications. It may be a consideration of the Court that the internal grievance procedures have not been engaged before seeking the Court’s intervention.
Remuneration disclosure
From 1 July 2024, all incorporated associations will need to disclose the remuneration, including benefits, given to management committee members, and senior staff and their relatives at their annual general meeting (AGM).11
Remuneration includes salary, allowances, and other entitlements but does not include reimbursement for out-of-pocket expenses.12 The regulation refers to AASB accounting standards’ definition of compensation,13 which includes:
- short-term employee benefits, such as wages, salaries and social security contributions, paid annual leave and paid sick leave, profit-sharing and bonuses (if payable within 12 months of the end of the period) and non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees;
- post-employment benefits such as pensions, other retirement benefits, post-employment life insurance and post-employment medical care;
- other long-term employee benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if they are not payable wholly within twelve months after the end of the period, profit-sharing, bonuses and deferred compensation;
- termination benefits; and
- share-based payment.
While a threshold for the disclosure of benefits was canvassed in the Department’s Consultation Paper, it was not taken up in the provisions. The paper explains:
A disclosure threshold for benefits would reduce the burden for incorporated associations and ensure that the association did not need to keep tabs, for example, on every free pie and lemonade that a management committee member received while volunteering in the canteen (along with other non-committee volunteers who received the same benefit).14
The recording of such benefits may be a burden as well as challenging to implement.
A relative of a person means a spouse, parent, sibling, child, grandparent or grandchild of the person.15
A senior staff member is defined as a person who makes or participates in making decisions that affect the whole or a substantial part of the association’s activities, or has the capacity to affect the association’s financial standing significantly.16
Remuneration and benefits may be disclosed as the total value given to all persons, but the number of people who benefited must also be included. This may cause some angst when there is only one employee.
Incorporated associations registered with the Australian Charities and Not-for-profits Commission (ACNC) who are exempt from submitting annual financial reports to the Office of Fair Trading are not exempt from this requirement.
This disclosure is required at the association’s AGM, even if the amount to report is zero. The disclosure may be in the association’s financial statements, ACNC filings, or a written statement. If there are no remuneration or benefits, this can be reported to the AGM verbally, but it must be recorded in the AGM minutes.17
The maximum penalty under section 70D(1) of the Act for not disclosing remuneration as required is 10 penalty units.
Footnotes
1 https://www.legislation.qld.gov.au/view/html/inforce/current/act-1981-074
2 https://www.legislation.qld.gov.au/view/html/inforce/current/sl-1999-0143
3 Associations Incorporation and Other Legislation Amendment Act 2020
4 Cameron v Hogan [1934] HCA 24.
5 For example, Central Queensland Speleological Society Incorporated v Central Queensland Cement Pty Ltd (No.1) 1989 2 Qd. R. 512; Southside Action Group against the Proposed Dump at Rochedale v Brisbane City Council & Anor, Unreported , 91/01/0199 SC 14/2/91 Horton Q.C. Senior Master; Tamborine Mountain Progress Association Inc v Beaudesert Shire Council & Ors, Unreported, Court of Appeal, (93.172], Fitzgerald, P., Pincus, JA., Dowsett, J.
6 Greg Stolz, “No mateship at the RSL”, The Courier Mail, 21 July 2024 https://www.couriermail.com.au/news/queensland/civil-war-erupts-at-tewantin-noosa-rsl-memorial-club/news-story/623b8476783e95a300c5085633aa0492
7 Thompson v Cavalier King Charles Spaniel Rescue (Qld) Inc [2020] QCA 2; Thompson v Cavalier King Charles Spaniel Rescue (Qld) Inc [2019] QCA 110; Thompson v Cavalier King Charles Spaniel Rescue (Qld) Inc & Ors [2015] QCA 10; Thompson v Cavalier King Charles Spaniel Rescue (Qld) Inc & Ors [2020] HCASL 91; Thompson v Cavalier King Charles Spaniel Rescue (Qld) Inc [2022] QSC 82; Thompson v Cavalier King Charles Spaniel Rescue (Qld) Inc & Anor [2022] QCA 149 and Thompson v Cavalier King Charles Spaniel Rescue (Qld) Inc & Anor [2023] QCA 21.
8 Thompson v Cavalier King Charles Spaniel Rescue (Qld) Inc [2022] QSC 82 at [72].
9 M Fynes-Clinton, “Who Killed Kathleen?”, The Courier Mail, Saturday, March 7, 1998, p 21.
10 Section 47A Associations Incorporation Act 1981 and Associations Incorporation Regulation 1999, Schedule 4 Model Rules cl. 12A-F.
11 Section 9E Associations Incorporation Regulation 1999 and Section 70D Associations Incorporation Act 1981
12 Section 70D (2) Associations Incorporation Act 1981
13 Accounting Standard AASB 124 Related Party Disclosures under section 334 of the Corporations Act 2001 – https://www.aasb.gov.au/admin/file/content105/c9/AASB124_07-15_COMPdec22_01-23.pdf
14 Associations Incorporation Regulation 1999, Priority Consultation Paper 2: Disclosure of Remuneration at page 7.
15 Section 70D (2) Associations Incorporation Act 1981
16 Section 70D (2) Associations Incorporation Act 1981
17 Section 9E Associations Incorporation Regulation 1999
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