By Vera Visevic, Partner

The members of a not-for-profit or charitable organisation inevitably have one thing in common – they all support the objects of the organisation, and want to work towards bettering the organisation and its activities.

However, most organisations will eventually come across a member whom despite their best intentions (or perhaps not), are simply not acting in the best interests of the organisation. In those cases, it may be necessary to discipline or even eject that member from the organisation. To be prepared for these situations, it is important that your constitution deals with the discipline of members, and that you know the rights of those persons being disciplined.

Although less common among not-for-profits and charities, members who have been aggrieved by disciplinary action may have a right to apply to a Court to have the decision set aside. Such applications are costly for both the organisation and the member, and tend to result in some internal turmoil, as well as having the potential to be a public relations nightmare.

Put briefly, to lower the risk of such a dispute arising, you need to ensure that you are familiar with:

1. the grounds upon which a member can be disciplined; and
2. the rules of natural justice and procedural fairness as they apply to your disciplinary process.

On what grounds can a person be disciplined?

1.1. Understanding your disciplinary policy1.

It is uncommon for an organisation’s disciplinary policy to state specific matters for which a member can be disciplined. More commonly, an organisation’s disciplinary policy will state that a person may be disciplined if they “act contrary to the interests of the organisation” or “engage in conduct unbecoming of a member”.

But what do phrases like this actually mean?

In the case of Oei v The Australian Golf Club [2016] NSWSC 846, the defendant’s constitution allowed its Board to expel a member, if that member’s conduct was “unbecoming”. That term was not, however, defined in the constitution.

The Court held that such terms should be given their ordinary meaning, and should be considered in the context of the organisation and its activities. In the above case, the plaintiff was accused of having breached the rules of golf by improperly moving his golf ball on two separate occasions.

The Court found that such conduct was clearly “unbecoming”, in the context of the game of golf. Presumably this was partly because golfers rely on an honour system, expecting their fellow competitors to accurately record their shots, and to conduct themselves in accordance with the rules of the game generally.

Of course, a member’s conduct may be “unbecoming” or “prejudicial” in other more obvious ways, such as:

1. consistently failing to comply with the terms of the constitution, including the terms of any ancillary documents created under the       constitution (e.g. a code of conduct, rules or bylaws);
2. making misleading, deceptive or defamatory statements about the organisation, its Board / Committee or other members;
3. bullying, harassing or making threats to Board / committee members or other members;
4. attending the organisation’s premises and harassing staff or visitors, or causing a nuisance; and
5. being consistently and habitually obstructive at general meetings.

Whatever the conduct, decisions such as Oei v The Australia Golf Club make it clear that a member’s conduct must be viewed in the context of the organisation and its activities.

2. Your disciplinary policy

2.1 Where is our disciplinary policy?

As noted above, your constitution forms the basis upon which your organisation can discipline members.

Ideally, your constitution itself should set out the process for dealing with disciplinary matters. Your disciplinary procedures may, however, also be set out in by-laws, assuming your constitution expressly allows for the Board / Committee to adopt and amend by-laws.

Some organisations, such as professional associations, may also have a separate code of conduct that must be read in conjunction with disciplinary procedures. In this case, your constitution should expressly state that all members are bound by the code of conduct, as amended by the Board / Committee from time to time.

2.2 Requirements for Natural Justice

Case law developed by the Australian Courts over many years, requires a body making an administrative decision that might affect the rights, privileges, interests or legitimate expectations of a person, to afford that person natural justice. Because of the willingness of the Courts to extend the principles of natural justice beyond the decisions of government and public entities, charities and not-for-profits need to ensure that they understand the application of the principles as they apply to their disciplinary processes.

The term “natural justice” does not have a definitive or precise meaning in the law. However, one principle that is clearly enunciated by the case law, is that a person the subject of a decision must be afforded procedural fairness. In particular, the decision making body must act without actual or apprehended bias, and must:

1. ensure that the person the subject of the decision has been fully briefed of the allegations made against them, and the grounds upon which it is proposed to discipline them; and
2. ensure that the person the subject of the decision has been given a reasonable opportunity to meet and respond to the allegations made against them.

Interestingly, it is generally not necessary for a decision making body to prove that a decision is fair, only that the procedure used to reach that decision was fair.

The recent case of Christie v Agricultural Societies of NSW Limited [2015] NSWSC 1118 involved a horse trainer who was disqualified from competing in competitions for a period of 12 months, after the horse he was riding in a competition was found to have been given banned supplements, in breach of the defendant’s disciplinary policy. The plaintiff pleaded, and the Court accepted, that he had no knowledge of the giving of the supplements to the horse. One of the issues the Court was asked to determine, was whether the decision to disqualify the plaintiff was unreasonable in light of his lack of knowledge of the offence. The Court found that the decision could not be set aside on the basis that it was unreasonable, as the Court was not empowered to undertake a review of the merits of the decision. Rather, the Court found that the decision could only be set aside if it lacked any evident and intelligible justification. Because the disciplinary policy of the defendant did not require proof of knowledge of the offence, the Court found that it was open to the disciplinary committee to disqualify the plaintiff (the disqualification was, however, set aside for other reasons).

2.3 What should your disciplinary policy contain?

Your organisation’s disciplinary policy should be drafted in such a way, that the process for disciplining a member is clearly set out. You should ensure that your disciplinary policy includes, among other things, the following:

1. A statement of who will constitute the disciplinary committee, or who has the right to appoint the disciplinary committee (e.g. the       Board / Committee);
2. The grounds upon which and by whom a disciplinary complaint can be brought against a member;
3. An express power and discretion on behalf of the disciplinary committee to suspend or expel a member from membership;
4. An express power and discretion on behalf of the disciplinary committee to reject a complaint where it is vexatious or trivial;
5. The right of the member to receive adequate notice of the time, date and venue of the disciplinary hearing (this should be at least 14 days);
6. The right of the person the subject of a complaint to receive detailed notice of the allegations made against them, and the grounds on which it is proposed to discipline the person (e.g. the relevant clause of the constitution, code of conduct or disciplinary by-law);
7. The right of the person to provide written and oral submissions to the disciplinary committee; and
8. That a person has a right to appeal the decision of the disciplinary committee and has a right to receive written notice of that right to appeal, and the timeframes within which an appeal must be lodged.

On occasion, the Courts have also specified that a person the subject of disciplinary proceedings may have a right to be legally represented at a hearing, especially where the potential outcome of that hearing is expulsion from membership. Although this is the case, it is acceptable to require that a member advise the disciplinary committee, if they intend to be legally represented.

2.4 What should our disciplinary policy not include?

Your policy should not allow for:

1. the appeals body to comprise of any of the those persons who comprised the initial disciplinary committee; or
2. the appeals body to comprise of any of the those persons who comprised the initial disciplinary committee; or
   1. any person making the complaint against the member;
   2. the person investigating the complaint; or
   3. any other person who has been directly or personally aggrieved by the person’s alleged conduct.

When presiding over disciplinary matters, it is also advisable that disciplinary committees ensure the following:

2.5 Other Tips

1. That the relevant member is provided with the materials or “evidence” which the disciplinary committee will be considering in making its decision;
2. That the initial notice to the member advising of the disciplinary matter, states the recourse open to the disciplinary committee (e.g. suspension or ejection from membership); and
3. That any “prosecutors” of the case against the member do not form part of the disciplinary or appeals committee.

Further, although disciplinary tribunals of charitable and not-for-profit organisations will not normally need to follow the rules of evidence (e.g. receiving sworn affidavits etc.), disciplinary committees should properly inform themselves of the facts and circumstances surrounding the complaint made against a member, and base their decision on that material accordingly. The decision, and the reasons upon which it is made, should be evident from the minutes taken at the disciplinary hearing.

3. Summary

When times are good, your organisation should review its disciplinary policies and constitutional provisions, in preparation for the bad times, when an issue with a member arises.

Ensuring you have proper procedures in place that comply with the rules of natural justice will reduce the risk that a member makes an application to the Court for setting aside of the decision of the disciplinary committee, a process which is expensive and often results in internal upheaval.