Once again, we encounter the question of when and how a member stops being a member.
In Myles McGregor-Lowndes’ invaluable quarterly update of not-for-profit law we find McNeill v The Australian Children's Choir Incorporated  , a Magistrates’ Court case.
McNeill was the parent of a child in the choir, which made her eligible to be a member of the Australian Children’s Choir Inc, and she was elected at an AGM to the paid position of performance co-rdinator, giving her an ex officio position on the committee of management.
It all went downhill from there, as it so often does, even without COVID coming along, which it did. The choir was on hold. There was no need for a performance co-ordinator. McNeil’s daughter left the choir.
There were personal differences, and an acrimonious correspondence. Eventually the rest of the committee accused McNeill of peeking at members’ records online and suspended her until further notice, pending completion of an investigation.
Heigh-ho, heigh-ho, it’s off to court we go. McNeil said that her suspension was oppressive conduct within the meaning of the Corporations Act and demanded that the choir pay her $3,304.40 as a penalty and publish an apology to the membership.
The choir, conversely, said that as McNeill wasn’t a parent of a choir member and wasn’t performance co-ordinator, she didn’t fulfil the constitutional requirements of membership and therefore wasn’t a member at the time of the committee meeting in question. And as she wasn’t a member, the committee couldn’t have oppressed her.
Sighing deeply, the judge ruled that:
- Nice try, McNeill, but on his reading of the way the Act worked, only the Director of Consumer Affairs could authorise penalty fines, and the Director hadn’t, so no $3,304.40. Furthermore, it wasn’t appropriate for the court to tell the committee to apologise. “Ordinarily, a court will not interfere with the decisions of an Association unless it exceeds its powers and the decision results in injury to property or to civil rights.”
- Nice try, committee, but while the constitution said you had to be a member or an employee to be elected to the committee, it didn’t say anything about what happened if you stopped being a member or an employee – “There is no rule setting out the consequences of a member ceasing to be an eligible member”.
- That being so, once you were on the committee you stayed on the committee till the position was declared vacant at the next AGM, and so McNeill was a member at the time of the relevant committee meeting, and so the committee could oppress her, and it had.
- Not necessarily, however, because it didn’t have the power to expel her. It may have: the magistrate didn’t find it relevant. What it didn’t have, under the constitution, was the power to suspend her. So “McNeill’s suspension from the Association on 13 August 2020 was unlawful, void and was of no legal effect.”
The case demonstrates, in fact, the general proposition that going to law over NFP constitutional issues is almost always a mistake and tends to make matters worse for all concerned. The committee was taken to task by the magistrate and was stuck with its own legal costs and can’t have been happy.
McNeill, on the other side, hadn’t particularly wanted her suspension revoked; she’d since resigned, anyway. She wanted her reputation restored and the committee chastised. The court found for her on a comparative technicality and said that it had no power to make the committee confess its error or sanction it in any meaningful way.
Anybody on a committee will themselves be breathing a deep sigh of relief about now. If disgruntled members, however much oppressed, could start levying penalties, the not-for-profit world would become a much more explosive place.
The real takeaway, though, should be the message that every secretary should remove the constitution from its crypt and check what happens to members who become ineligible between AGMs.
Oh, and it would be a mistake to overreact and put in sweeping provisions about when membership ceases without wargaming the consequences. I’ve encountered a football club which clearly stated in the constitution that membership ceased at the end of the football season. It was some years before someone pointed out that, technically, that meant the club had no members at all from that date on and so, technically, had nobody at all who was entitled to attend the coming AGM and vote for a new committee. The organisation should, therefore, come to an abrupt termination on that date.
Everybody agreed to ignore the issue while they cobbled up a rapid constitutional amendment, and all was eventually well, but it was a near thing.