Pray this never happens to your organisation

Posted on 13 Feb 2020

By Chris Borthwick, thinker-in-residence, Our Community

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Confucianism and Taoism are among the world’s great religious and philosophical traditions, and have been studied by seers and sages for thousands of years. It’s fair to say, however, that it’s not easy to apply their teachings to the governance of Australian associations. Imagine, for a Western comparison, being the secretary of the Anarchist Conservatives Club.

One can sympathise then, up to a point, with the difficulties of the Australian Chinese Confucius-Mencius Tao Centre Incorporated.

The association was established by five founding members in 1992 to set up a temple for the followers of I-Kuan Tao. They donated large sums, and they invited others to donate, and they assembled over $1 million to build the temple. The founding members later fell out about what to do with this property, and there were a number of arguments that need not concern us. At that point, however, they went to court, upon which the judge went to town.

Zhang Tianran is recognised as the founder of the I-Kuan Tao sect.

As a properly incorporated association, the centre had a constitution. The problem was, apparently, that as it was written in English, none of the Mandarin-speaking board could read it. Not being able to read the constitution, they claimed, they didn’t know that they were supposed to have regular board meetings, take minutes, or keep financial records, and so they didn’t.

As the judge commented, “[one of the founding members] said that before then the affairs of the association were conducted in an informal manner. By this I understood him to mean otherwise than in accordance with the requirements of the constitution.” Judges are not big fans of informality in such matters.

Membership procedures were similarly “informal”. As the judge pointed out, the constitution required members to be approved by the board, which had never met. There were neither membership forms nor a membership list. Under one interpretation, that is, the association had no members at all other than the founding members.

At the first trial, the judge wasn’t having that:

“The board members had deliberately failed to make themselves aware of the criteria for membership, had not prepared membership application forms, did not require written applications for membership and, by a failure to state the contrary position, led contributors to believe that they would become members of the Association. On that basis, the contributors acted to their detriment in contributing money to an organisation that, if it strictly applied the relevant clause of the constitution, would not permit them to become… It can be seen that significant unfairness would arise if the membership criteria were subsequently applied to deprive those people of membership.”

The centre’s followers had been treated by the board as if they were members, the judge said, and that meant they were entitled to be members. The judge said:

“For the moment I believe the appropriate way to move forward is for a general meeting to be held at which a new board of directors is elected. The board should then admit to membership every person who meets the criteria in the constitution.”

As there was money involved, there was an appeal, and in the second case the judges weren’t prepared to let a little unfairness overrule the clear words of the constitution. The board hadn’t met, so it hadn’t approved any ordinary members, so there were no ordinary members.

If the people who had been led to think they were members had a problem with that, they should sue the board members who’d let that happen; but that wasn’t the court’s problem. Members are members.

Temple HQ Google Street View Dec2015
The temple in Canning Vale in Perth’s southern suburbs. Picture: Google streetview

Takeaways
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1. Every board should know how to read its constitution.

2. Every association should keep its membership register clear, up-to-date, and legal. This means – and it’s horrifying to know how many boards ignore this – that if your constitution says the board has to approve every membership application, then that’s what it has to do.

3. If you’re fighting the board, then the remedy in nearly all cases (except this one, where there were no members) is to appeal to the membership at a general meeting. If you don’t think a general meeting will back you, then don’t expect the courts to take your side. As the judge said in the case of Green v Page in the Tasmanian Supreme Court in 1957, “The authorities make it clear that the court has no jurisdiction to entertain an action of a member against members of the management committee if the issues between the parties merely involved questions of irregularities in internal management which could be resolved by a general meeting of the members”.

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