As part of the Institute of Community Directors’ commitment to encouraging good governance, this ongoing series of articles dubbed “Case Watch” aims to highlight failures that offer lessons for other not-for-profits.
In this case the lesson could be summed up as “Respect your members and don’t breach your own rules if you want to avoid fossicking in the Supreme Court.”
Sapphires promote the ability to make wise and good decisions, according to those who believe in (or sell) such things.
You’d think, then, that the governance of the Queensland Sapphire Miners Association would be an example to all of us.
Well, it is, but not in a good way.
The case of Feyen v Charlton & Others  QSC 122 (7 June 2016) gives us a window into the workings of a small professional association.
Before its annual general meeting, the committee advertised for nominations, in line with its constitution:
“If you wish to submit a postal nomination please use the form below and send to PO Box 364, Ruby Vale, Qld 4702 made to the attention of the secretary before the AGM.”
Mr Feyen filled out his form and sent it in. At the AGM, though, he was surprised to find that his name wasn’t on the list of nominations, and wasn’t voted on. When he asked why, the secretary wrote back:
“Your only nomination has been presented to the whole of the committee on two occasions and has been rejected unanimously by the whole committee on both occasions, which you have already been made aware of.”
Mr Feyen took it to court, representing himself.
The constitution didn’t seem to allow the committee to reject a nomination, so the committee’s solution was to clutch at what must have been the frailest straw ever to float into Australian not-for-profit committee business. Mr Feyen’s nomination, the committee said, wasn’t considered because the notice had called for nominations to be sent to “Queensland Sapphire Miners Association, PO Box 364, Ruby Vale, Qld 4702”, and he had in fact sent it to “QSMA PO Box 364”.
Judge McMeekin ruled in favour of Mr Feyen on two basic grounds.
First, it was ridiculous to suggest that a committee that didn’t have the right to refuse a nomination did have the right to add ridiculous new rules about what constituted a valid nomination.
Second, it was beyond ridiculous, considering the facts of the case, to suggest that the committee had actually decided the issue on technical grounds rather than because they didn’t want Mr Feyen on the committee.
To lend verisimilitude to this second ground, the judge noted that the committee’s letter to Mr Feyen hadn’t mentioned anything about an invalid nomination.
He also pointed to the minutes of the meeting:
“A further one nomination was received nominated by D. McLaughlin member number 1029 of a Robert Feyen member number 1279 as a Committee member this nomination was not addressed in the correct manner and it is sheer luck it is on the table now. Addressed as Q.S.M.A, P.O. Box 364. The committee agreed this was not served correctly and to be marked as a void nomination.” (sic)
The minutes then went on to say:
“Mr Feyen’s nomination was put to all the attending committee and it was a unanimous decision not to forward this person’s name for nomination as a committee person for the QSMA. Due to all issues arising at this meeting and it was felt that the progress we the QSMA have made in the last seven months with the various Departments and our Members that we as an organisation could not afford a person with this type of conduct on board.”
This would have been unnecessary if the first part had actually happened, because, as the judge noted:
“A determination of invalidity had supposedly already been made. However if the passage I have quoted at above – to the effect that the addressing of the envelope was the problem - was a creation thought up at some later time and inserted at an early place in the minutes in a clumsy attempt to justify a decision actually based on character, and inserted at a time when the committee realised they were to be called to task for a wrongful assumption of power, then the existence in the minutes of a “decision” in these terms makes some sense.”
The minutes also said that the committee hadn’t opened the letter, then went on to include details from the letter. The judge noted:
“The secretary is in the impossible situation of pretending that the detail of the nomination form was not available at the meeting because the envelope was not opened but the detail from the form is there in the minutes, minutes that she recorded.”
The annals of Australian law record few more thorough eviscerations.
When individuals get into arguments with committees, the advice of the Institute of Community Directors Australia is invariably that they should think very, very carefully before taking the committee to court. But this case, up to this point, seems a robust counter to that advice – the judge found overwhelmingly that the committee was wrong wrong wrongitty wrong with wrong sprinkles on top.
So what happened next?
At this point in the judgement, the reality of NFP life re-emerged.
Mr Feyen wanted a re-run of the election at a special general meeting. That would have been fair, but the year was nearly over, and if there had been a new election, the new committee would have had only a month to run before the ordinary AGM and the routine election. Not much point in that.
The judge couldn’t bounce the wrongdoers off the current committee, or say they couldn’t stand again at the AGM – that would be intervening far too much in the affairs of an independent association.
And of course while the judge could say that Mr Feyen was entitled to stand, he couldn’t order the members to elect him.
In the end, all the judge could do was order that the decision of the committee was void, that the committee had breached the rules, and that the president had to tell the members exactly that before they came to elect the next committee at the next AGM.
That was back in 2016.
Today, several years later, Greg Charlton, the president of the QSMA (sorry, the Queensland Sapphire Miners Association – have to get it right) is the same person who headed the organisation during the court case, which suggests that his association with that omnishambles hasn’t done him much harm with his electorate.
- Read your constitution generously with regard to members’ rights, and don’t take a stand on trivial details. That’s not how contract law works.
- Negotiate. Compromise. Settle. Lawyers are almost never a good idea.
More Case Watch files and legal tips: communitydirectors.com.au/tools-resources/legal