The general policy of the law is not to interfere in the internal decisions of an incorporated association. However, in recent decades the judiciary has become involved in several areas of internal dispute resolution. This is reflected in the Associations Incorporation Act, which in Sections 71 to 73 provides for the intervention of the Supreme Court in certain circumstances. The Supreme Court because of its nature usually requires legal representation, delays and expense. Most people avoid relying on the Court as a forum in which to solve internal disputes because of these factors.
Section 71(1) of the Act makes the rules of the association a contract between the members from time to time and the association. The “rules” are defined in Section 2 as the constitution and regulations of the association. There was doubt under the common law whether in a particular instance the rules did constitute a contract between the members and the association. This section clears up any doubt about this point.
This contract, like any contract, is enforceable by the courts. Section 71(2) specifically allows a member who is denied a right conferred under the association’s rules to have the court decide on the validity of the decision. This decision by the court is not primarily concerned about investigating whether the denial was just or fair in the circumstances, but whether the denial of the member’s right was achieved by following the rules of the association and the rules of natural justice mentioned in Section 71 (3).
An association may expel a member for what any fair-minded person might regard as unfair reasons, as long as the association follows the requirements of its rules and obeys the rules of natural justice. The court will not usually interfere with an association’s decision unless the rules have not been followed or natural justice has been denied.
Natural justice is the term used by lawyers to describe the rules developed by the common law to define the standard of justice required of different bodies - judicial, quasi-judicial or an association’s committee. The standards will vary in application depending on the type of body and the gravity of the decision for the complainant. While the rules of natural justice seem quite complex they are really commonsense rules. These rules are often referred to in the American context as “due process”. An association’s management committee or its subcommittees must comply in their proceedings with the rules of natural justice. The classic example would be the proceedings of the management committee in deciding to admit a new member to the association or discipline or to expel a member. The rules of natural justice revolve around several main rules which are:
- The right to have notice of the charges brought against you
- The right to be heard in answer to those charges
- The right to have an unbiased body hear and determine those charges
While Section 72 gives the court clear power to make a range of orders concerning such matters, Section 73 places no requirement on the court to make an order. The court has wide discretion not to make an order although the rules of the association may have been breached.
A further factor in the decision to bring a matter to court for adjudication is that the court may refuse to award costs to a successful party and may even award costs against a successful party in certain circumstances. It is usual practice for a court to award to the successful party the costs of bringing the litigation. These costs do not cover all the legal costs that a successful party would usually pay, but they cover a substantial proportion. Where the court believes that the matter is trivial, or unreasonable in the circumstances, or unreasonable (although not illegal) behaviour has added to the matter being before the court, such costs may not be awarded. It is suggested that where a party can be shown to reject reasonable negotiations or offers of settlement, the courts will order costs accordingly.
This section should also be read in conjunction with Section 133 of the Associations Incorporation Act. This section deals with irregularities in proceedings. The substance of the section is to allow the court to declare valid any procedural irregularity such as lack of a quorum, insufficient notice of a meeting or non-observance of a technical meeting rule as long as no substantial injustice has been done. The association or an interested person has wide powers for the association or an interested person to apply for an order of the court to rectify a technical breach of the rules of the association. This and the previously discussed section ought to be contemplated seriously by a potential litigant before legal action is embarked on. It has serious financial consequences and reinforces the earlier comment that means other than legal means ought to be explored before redress is sought through the formal court system.
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