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Clubs in the Courts
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Over the course of this year , courts have handed down a number of decisions that are relevant to clubs . Below is a summary of some key cases which provide useful lessons for clubs .
Breaking the impasse
Clubs should be wary of how damaging disputes at an executive level can become . In the matter of Coogee Sports Club Ltd [ 2016 ] NSWSC 817 , a dispute arose between directors which resulted in the Club taking the unusual step of applying to the NSW Supreme Court to appoint a receiver to itself .
The Club ’ s constitution required it to have five ordinary directors with four directors constituting a quorum for a Board meeting . A divide arose between one director and the remaining directors which resulted in the Bank effectively “ freezing ” the Club ’ s bank accounts , allegedly on the instruction of one director . This was discovered by the other directors when cheques in favour of suppliers were dishonoured .
The Bank took the position that it would not lift the freeze on the accounts until all directors had signed off that the dispute had been resolved . As a result , the Club was unable to pay its debts . No doubt aware of their potential personal liability in relation to the solvency of the Club , the remaining directors resolved that in their opinion the Club was insolvent or likely to be insolvent in the future and that it was necessary to appoint an administrator .
The Club required approval from the Independent Liquor and Gaming Authority to appoint an administrator under section 41 of the Registered Clubs Act . It is not clear from the judgment but it appears that the Authority was not able to immediately make such a decision prior to a later date . Due to the dire financial situation facing the directors , they determined to approach the Court for the appointment of a receiver .
The Court noted that it will not usually appoint a receiver on an ex parte application except in the case of an emergency , in extraordinary circumstances or where satisfied that the creditors would support the application . The Court was satisfied that this was an extraordinary case and that the Club was facing an emergency not being able to pay its creditors , including its electricity supplier who was threatening to cut off power to the Club premises .
To allow or not to allow
Boards and management should take greater care when admitting members to their clubs , to make sure there are no additional requirements in place that might affect their discretion in deciding whether to admit the member or not . This is particularly important when the club is deciding whether to re-admit a member who has previously been expelled or had their membership lapse for failure to pay fees .
In Walker v New South Wales Bar Association [ 2016 ] FCA 799 , Ms Walker , a barrister , was unsuccessful in challenging the refusal of the NSW Bar Association (“ the Association ”) to consider her application for appointment as Senior Counsel .
The Association appoints Senior Counsel each year . The purpose of this designation is to set apart Senior Counsel from the ranks of other practising barristers in New South Wales on the basis of their excellence . The designation also carries the potential to deliver significant economic benefits , as Senior Counsel typically charge higher fees and receive more lucrative briefs .
Ms Walker ’ s application for appointment as Senior Counsel was refused because it did not meet the criteria embodied in a Protocol adopted by the Selection Committee of the Bar Association . Ms Walker sought to challenge this decision in the Federal Court .
Courts will not intervene in the affairs of voluntary associations unless the member can show that :
• his or her rights in the property of the association have been interfered with ;
• the rules of the association amount to an enforceable contract between the association and its members which the association has breached ; or
• the association has damaged the member ’ s livelihood or reputation .
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