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Ipswich Netball Association Inc v Netball Queensland Limited[2021] QSC 348

Ipswich Netball Association Inc v Netball Queensland Limited[2021] QSC 348

SUPREME COURT OF QUEENSLAND

CITATION:

Ipswich Netball Association Inc v Netball Queensland Limited [2021] QSC 348

PARTIES:

IPSWICH NETBALL ASSOCIATION INC

ABN 86 148 152 575

(applicant)

v

NETBALL QUEENSLAND LIMITED

ACN 612 079 179

(respondent)

FILE NO:

SC No 8635 of 2021

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

17 December 2021

DELIVERED AT:

Brisbane

HEARING DATES:

2 and 3 September 2021

Further submissions on 10 and 17 September 2021

JUDGE:

Wilson J

ORDERS:

  1. Declarations that:
    1. (a)
      the decisions of the respondent made on 6 October 2020, 1 February 2021 and 15 March 2021 (referred to in paragraph 4 of this judgment) were not authorised and are invalid; and
    2. (b)
      the respondent’s “Policy Number – 001 – Affiliation and Membership Policy” purports to vary class rights of Member Associations without complying with section 264B(2) of the Corporations Act 2001 (Cth) and is invalid to the extent that it refers to and requires the affiliation of Member Associations.
  2. Order that the respondent reinstate the applicant’s rights and privileges as a Member Association of the respondent.
  3. The question of costs is adjourned to a date to be fixed.

CATCHWORDS:

CORPORATIONS – CONSTITUTION AND REPLACEABLE RULES – GENERALLY – where the applicant was a member of the respondent – where the respondent decided not to affiliate or re-affiliate the applicant – where the respondent’s constitution did not require or create a process for affiliation – where the respondent’s Affiliation and Membership Policy created a process of affiliation – whether affiliation and membership were synonymous – whether the decisions were authorised by the respondent’s constitution or Affiliation and Membership Policy

CORPORATIONS – CONSTITUTION AND REPLACEABLE RULES – LEGAL CAPACITY AND RELATIONS WITH OUTSIDERS – POWERS – where the applicant was a member of the respondent – where the respondent decided not to affiliate or re-affiliate the applicant – where the decisions were not authorised by the respondent’s constitution or policies – whether sections 124 and 125 of the Corporations Act 2001 (Cth) authorised the decisions

CORPORATIONS – MEMBERSHIP, RIGHTS AND REMEDIES – MEMBERS’ REMEDIES AND INTERNAL DISPUTES – OTHER ACTIONS OR REMEDIES – where the respondent’s constitution created a class of Member Associations – where the respondent’s Affiliation and Membership Policy created a separate status of affiliated Member Associations with different rights – whether the Affiliation and Membership Policy constituted an impermissible variation of class rights under sections 246B and 246C of the Corporations Act 2001 (Cth)

Corporations Act 2001 (Cth), s 140, s 124, s 125, s 246B(2), s 246C

ANZ Executors & Trustees Company Limited v Qintex Australia Limited [1991] 2 Qd R 360, cited

Darvall v North Sydney Brick & Tile Co Ltd (No 4) (1988) 14 ACLR 474, cited

Hillig v Darkinjung Pty Ltd (2006) 201 FLR 148, approved

Rolled Steel Products (Holdings) Ltd v British Steel Corp & Ors [1986] 1 Ch 246, cited

COUNSEL:

H Blattman for the applicant

S Monks for the respondent

SOLICITORS:

Neumann & Turnour Lawyers for the applicant

Clyde & Co for the respondent

  1. [1]
    The parties are both netball organisations that play important roles for the sport in Queensland.  The applicant, Ipswich Netball Association Inc, was established in the 1920’s and incorporated on 6 January 1987.  It is responsible for the administration of netball in the Ipswich region.
  2. [2]
    The respondent, Netball Queensland Limited, is a company limited by guarantee, which was established in 1971 as the governing body for netball in Queensland.  Its first object is to “conduct, encourage, promote, advance, control and manage all levels of Netball in Queensland interdependently with Members and others”.
  3. [3]
    The applicant became a founding member of the respondent upon its inception in 1971 and remained a member until the events that are the subject of these proceedings.  Under the respondent’s constitution (“the Constitution”), the applicant is classified as a “Member Association”, which is a legal entity recognised by the respondent as representing a geographic area or group of clubs.  Whether the applicant remains a member of the respondent’s company is a matter of contention between the parties.
  4. [4]
    From early 2020, a series of disputes arose between the applicant’s management committee and the respondent’s board of directors, which culminated in three decisions:
    1. (a)
      On 6 October 2020, the respondent’s board purportedly resolved “to not renew INA affiliation” (“the first decision”).
    2. (b)
      On 1 February 2021, the respondent’s board purportedly resolved “not to re-affiliate Ipswich Netball Association unless there was major change in the Management Committee” (“the second decision”).
    3. (c)
      On 15 March 2021, the respondent purportedly resolved “not to consider affiliation of INA until after the AGM and SGM with assurances in relation to conduct and civil and responsible communication” (“the third decision”).
  5. [5]
    I will refer to the first, second and third decisions collectively as “the decisions”.  The applicant claims that the decisions are invalid and seeks declaratory relief.

The issues

  1. [6]
    The parties provided the following agreed list of issues:

“1.Is the dispute justiciable?

  1. Pursuant to what power (if any) were the Decisions made?
  1. (a)
    Did the NQ Constitution confer any such power?
  2. (b)
    Did the NQ Affiliation and Membership Policy (Policy) confer any such power?
  1. If the Decisions were not authorised by the NQ Constitution or by the Policy should they be declared invalid and of no effect and NQ be ordered to reinstate to the Applicant the rights and privileges it enjoyed prior to the making of the Decisions?
  2. Is the Policy an invalid attempt to vary class rights contrary to section 246B(2) of the Corporations Act 2001 (Cth)?
  3. Is the Policy unconstitutional and therefore invalid because:
  1. (a)
    It is inconsistent with the NQ Constitution and therefore not authorised by the NQ Constitution?
  2. (b)
    It is an unauthorised amendment to the Constitution?
  1. Is the Policy and its enforcement oppressive within the meaning of section 232 of the Corporations Act 2001?
  2. If the answer to either or both of questions 4 or 5 above is ‘yes’, should the Policy be declared invalid and of no effect and NQ be ordered to reinstate to the Applicant the rights and privileges it enjoyed prior to the making of the Decisions?
  3. If the answer to question 6 is ‘yes’, should the Respondent be ordered to terminate the Policy and reinstate to the Applicant the rights and privileges it enjoyed prior to the making of the Decisions?
  4. In the alternative to questions 3 to 8 above:
  1. (a)
    In making the Decisions did the Respondent afford natural justice to the Applicant?
  2. (b)
    Was the Respondent subject to and did it breach an implied term of cooperation in the Policy by failing to give the Applicant access to the re-affiliation form prior to making the Decisions?
  3. (c)
    Were the Decisions oppressive within the meaning of section 232 of the Corporations Act 2001?
  4. (d)
    If the Respondent failed to afford natural justice to the Applicant or breached an implied term of cooperation, or if the Decisions were oppressive (per questions 9(a), (b) and (c):
  1. (i)
    Should the Decisions be declared invalid and of no effect, or set aside?
  2. (ii)
    Should the Court order the Respondent to reaffiliate the Applicant for the 1 April 2021 to 31 December 2021 affiliation period?”
  1. [7]
    During oral submissions, the respondent raised a further issue about whether sections 124 and 125 of Corporations Act 2011 (Cth) (“Corporations Act”) authorised the decisions.  This may be understood as a third sub-issue in issue two in the agreed list of issues.  Both parties provided further written submissions addressing this issue after the hearing concluded.
  2. [8]
    In relation to issue one, the respondent initially submitted that none of the applicant’s claims were justiciable because they involved the internal affairs of a private voluntary organisation.[1]  However, the respondent retreated from this position in oral submissions.  Ultimately, the respondent conceded that, because the respondent is a company limited by guarantee rather than an unincorporated association, all of the agreed issues are justiciable, except for issues nine (a) and nine (b).[2]
  3. [9]
    In my view, this dispute can be resolved on the basis of issues two, three and four of the agreed list of issues.  It is therefore unnecessary to deal with the issue of justiciability or any of the other agreed issues. 
  4. [10]
    For the reasons that follow, I find that the decisions were not authorised by the Constitution, the respondent’s Affiliation and Membership Policy (“the Policy”) or sections 124 and 125 of the Corporations Act.  In addition, the Policy itself is invalid as it attempts to vary class rights in contravention of section 246B(2) of the Corporations Act. The applicant is entitled to declaratory relief.

The first decision

  1. [11]
    On 6 October 2020, the respondent held a board meeting.  At that meeting, the board discussed concerns that had been raised about the conduct of members of the applicant.   The board minutes state:

“The Chair provided the Board with a status update regarding the ongoing concerns with Ipswich Netball Association. The Board were appraised of the complaint to Q Sport, NA Integrity unit. INA approaches to the media and emails sent to other Associations.

The Board resolved that immediate action must be taken.

Director Marie Kavanagh was questioned about her interactions with INA including social media photos and complaints that she was aware of that were not brought to the attention of the Chair.

The Board considered the negative impacts and costs to staff, government funding, partners, and other affiliates. The Board also considered the:

  1. Community who want to play netball
  2. Season planning
  3. People on (sic) Staff and Reputational issues
  4. Preparedness for a few months of continued adverse publicity as the matter continues to payout (sic) in the media

The Board directed Management to meet with Ipswich Council regarding the lease. The Board requested Management prepare a club focussed strategy and communications plan.

The Board resolved that no Director should be communicating with INA and expressed there was deep disappointment at being forced to go down this path.

The Board resolved unanimously to not renew INA affiliation.” (emphasis added)

  1. [12]
    The minutes do not identify the source of the board’s power to not renew the applicant’s affiliation.

The second decision

  1. [13]
    The second decision was made at a board meeting on 1 February 2021.  On this occasion, the board was provided with a paper outlining the applicant’s conduct, the relevant provisions of the Constitution, options for dealing with the applicant’s conduct and recommendations.
  1. [14]
    The executive summary to the board paper stated:

“The conduct of the Ipswich Netball Association (INA) Management Committee, particularly over the last 12 months, has been very damaging to the brand and reputation of Netball Queensland (NQ) and netball as a sport.

The public and private campaign against NQ, NQ Directors and NQ staff contravenes NQ's values driven culture and the values articulated in our Strategic Plan (collaborative, brave, authentic, inclusive and innovative) which all rely on a backbone of trust.

The decision, actions and behaviours in question include:

  1. (a)
    a deliberate and ongoing campaign to discredit the former NQ Chair, CEO and the NQ Board;
  2. (b)
    cancellation of opportunities for netball participation (competitions and events) without reasonable efforts to collaborate on alternative solutions; 
  3. (c)
    refusal to meet with or engage with NQ management or Board to discuss issues and attempt conciliation and/or resolution;
  4. (d)
    a proactive campaign to use various media outlets to discredit NQ and publish inaccurate information; and
  5. (e)
    a proactive and extensive campaign to discredit NQ with various stakeholders including Netball Australia, the Queensland State Government and QSport.”
  1. [15]
    The board paper then set out the details of what it described as the applicant’s discrediting campaign, lack of participation, refusal to engage and media leaks.
  2. [16]
    The board paper stated that consideration had been given as to whether the applicant had breached membership obligations under the Constitution.  It set out the following clauses for ease of reference:

“Clause 5 Membership

Under clause 5.3 of the Netball Queensland Constitution, each Member Association will:

  1. (iii)
    at all times act for an on behalf of the interest of the Company, the Members and Netball
  1. (viii)
    act in good faith and loyalty to maintain and enhance the Company and netball, its standard quality and reputation for the collective and mutual benefit of the Members and Netball;
  2. (ix)
    at all times operate with and promote mutual trust and confidence between the Company and the Members, promote economic and sporting success, strength and stability of each other and work cooperatively with each other in the pursuit of the Objects
  1. (xi)
    not do or permit to be done any act or thing which might adversely affect or derogate from the standards, quality and reputation of netball and its maintenance and development

Clause 6 Cessation of Membership

Under clause 6.1 (e) if a member no longer meets the requirements for membership under clause 5 they ceases to be a member.

Clause 7 Grievances and Discipline of Members

All Members are subject to NQ's jurisdiction. The Directors in their sole discretion may refer an allegation (which in the opinion of the Directors is not vexatious, trifling or frivolous) by a complainant (including a Director or a Member) that a Member has:

  1. (i)
    breached, failed, refused or neglected to comply with a provision of this Constitution, the Policies or any other resolution or determination of the Directors or any duly authorised committee; or
  2. (ii)
    acted in a manner unbecoming of a Member or prejudicial to the Objects and interests of the Company or Netball, or both; or
  3. (iii)
    prejudiced the Company or Netball or brought the Company or Netball or themself into disrepute; for investigation or determination either under the procedures set down in the Policies or by such other procedure and/or persons as the Directors consider appropriate. During investigatory or disciplinary proceedings under clause 7, a respondent may not participate in Netball, pending the determination of such proceedings (including any available appeal) unless the Directors decide continued participation is appropriate having regard to the matter at hand. The Directors may include in any Policy or Policies a final right of appeal to an independent body outside the control of the Netball.”
  1. [17]
    The board paper stated that the affiliation process was usually conducted in March, so a decision would need to be made on the applicant’s affiliation prior to March.  The paper then set out a number of options for the board to consider:

“In moving forward, the Board has several options:

  1. continue to seek a meeting with INA; 
  2. sanction INA under the provisions of the Constitution and Policies;
  3. suspend INA unless and until the INA Management Committee stands down;
  4. expel INA under the provisions of the Constitution; and/or
  5. support the establishment of a new association in the region to foster growth of the sport and foster unity.”
  1. [18]
    I note that options two and four (the sanction and expulsion options) both referred to such a decision being made under the Constitution and policies.  However, no reference was made to the Constitution or policies in relation to option three (the suspension option).  Indeed, no reference was made to the suspension option being made under any power.
  2. [19]
    The board paper recommended that the board resolve to “approve to suspend INA unless and until the INA Management Committee stands down and Management be directed to establish a permit and competition at the Springfield site to mitigate any risk to clubs and players in the region”.  It provided a draft resolution to “Suspend INA unless and until the INA Management Committee stands down”.
  3. [20]
    At the meeting, the board discussed the board paper and the applicant’s conduct.  The minutes from that meeting state:

“The Board considered the paper presented in the Board pack regarding Ipswich Netball Association which included the duties and obligations of the NQ Board and the Member Association under the Constitution. The Board resolved not to re-affiliate Ipswich Netball Association unless there was major change in the Management Committee. The Board resolved to request a meeting with INA to discuss the issues of 2020 and be considered for future affiliation.

The Board requested Management review the affiliation process.” (emphasis added)

  1. [21]
    The board did not cite the power it was exercising when it made the decision not to re-affiliate the applicant.   As noted, the board paper considered this as an option but, unlike with the sanction and expulsion options, it did not identify any power to make this decision. 
  2. [22]
    The respondent did not warn the applicant, prior to either the first or second decision, that it was considering making those decisions.  In addition, the applicant was not notified prior to the first or second decisions of what actions it was alleged to have taken constituting a breach or breaches of the respondent’s code of conduct or the Constitution, or how any such actions constituted a breach.
  3. [23]
    The applicant was not provided with the board paper until 17 August 2021, when it was provided with material for this matter.  The respondent did not inform the applicant after the second decision that it had resolved to not re-affiliate the applicant unless there was major change in the management committee.

The third decision

  1. [24]
    The respondent’s board met again on 15 March 2021, when it re-considered the applicant’s affiliation.  The minutes from that meeting state: 

“The Board considered affiliation of Ipswich Netball Association.

The INA management committee had not changed rather a change in position of the committee had occurred at the recent AGM. The committee was not attending leaders conference and no assurances had been given to date in relation to conduct. The INA committee had requested the Board consider affiliation of INA for 2021.

The Board considered the ongoing correspondence from Marie Kavanagh's lawyers and the link between the Kavanagh proceedings and INA. The Board resolved not to consider affiliation of INA until after the AGM and SGM with assurances in relation to conduct and civil and responsive communication.

Action: The Company Secretary was directed to write to INA in relation to affiliation. Management were directed to work with INA clubs on a solution for resumption of play for the region.” (emphasis added)

  1. [25]
    The minutes do not record what power was purportedly being exercised by the board in resolving not to consider affiliation of the applicant. 
  2. [26]
    The applicant was not afforded a formal hearing prior to any of the first, second or third decisions in relation to any alleged breaches of the code of conduct or the Constitution.  However, representatives of the respondent met with representatives of the applicant on 20 February 2021 and on 30 March 2021 to discuss whether the respondent would be willing to reaffiliate the applicant.
  3. [27]
    The respondent’s position, since 30 March 2021, has been that it would be willing to re-affiliate the applicant if the members of the applicant’s management committee each gave the respondent written assurances as to their conduct in the same or similar form to the written assurances that each of the respondent’s board members are required to give to the respondent (“the re-affiliation condition”). 
  4. [28]
    The applicant has, to date, refused to comply with the re-affiliation condition, and claims that the respondent cannot require it to do so.
  5. [29]
    On 28 April 2021, the applicant was advised by email that it was not affiliated with the respondent.  The letter stated:

“Further to the letter from Clyde and Co to your solicitors on 20 April 2021, I confirm again that Ipswich Netball Association (INA) is not affiliated with Netball Queensland for 2021 as the required assurances of the Board were not provided by 31 March 2021.

Netball Queensland's insurer has been notified that INA are no longer covered by the national insurance program as has Ipswich City Council. In addition, access to MyNetball, the Eva App and Netball Connect have been removed. As a courtesy your website will remain active for 7 more days.

In addition, any carnivals or competitions that INA are running are no longer sanctioned by Netball Queensland.

Participation in regional, local and state level competitions sanctioned by Netball Queensland will not be available to INA.

Finally, Netball Queensland is bound by the Netball Australia Privacy Policy. The data you have requested in your email of 26 April 2021 to World Sport Action contains personal information and as such we cannot provide the data at this time.”

  1. [30]
    The applicant has not provided the respondent with any form of declaration signed by the members of its management committee. However, by letter dated 24 June 2021, the applicant stated that it was willing to provide any assurances consistent with those required of other members.  Further, Ms Virtue’s affidavit filed 26 July 2021 confirmed that the applicant was willing and able to provide assurances in line with clauses 5.2 and 5.3 of the Constitution.
  2. [31]
    The respondent did not send the applicant a link to the affiliation renewal form for the period 1 April 2021 to 31 December 2021.  The respondent did not invoice the applicant for its annual membership fee.
  3. [32]
    On 24 June 2021, the applicant’s solicitors requested that the respondent provide the affiliation renewal form and invoice.  These documents have not been provided.

Issues two and three: were the decisions authorised?

  1. [33]
    It is desirable to begin by dealing with issues two and three of the agreed list of issues, which deal whether the decisions were authorised.  The parties’ submissions on this issue raise five issues:
    1. (a)
      First, how should the decisions be characterised?  In particular, is “affiliation” synonymous with “membership” in the context of the Constitution and Policy?
    2. (b)
      Second, did the Constitution confer on the board the power to make a decision to not affiliate or re-affiliate the applicant?
    3. (c)
      Third, did the Policy confer on the board the power to make a decision to not affiliate or re-affiliate the applicant?
    4. (d)
      Fourth, if the decisions were not authorised by the Constitution or the Policy, were they authorised by sections 124 and 125 of the Corporations Act?
    5. (e)
      Fifth, if the decisions were not authorised by the Constitution, the Policy or the Corporations Act, what orders should be made?

Characterisation of the decisions

  1. [34]
    The decisions were each expressed in slightly different terms or with different conditions.  The first decision resolved “to not renew INA affiliation”.  The second decision resolved “not to re-affiliate Ipswich Netball Association unless there was major change in the Management Committee”.  The third decision resolved “not to consider affiliation of INA until after the AGM and SGM with assurances in relation to conduct and civil responsive communication”.  Despite these differences, each decision is expressed as a decision about the applicant’s “affiliation”.
  2. [35]
    The parties disagree about the meaning of affiliation under the Constitution and the Policy.  The respondent submits that, in the context of the Constitution and the Policy, the terms affiliation and membership are synonymous.  The respondent submits that the Constitution and the Policy do not create a system where an organisation can be a Member Association but not an Affiliated Member Association.  This, it submits, would create a second-class membership, which is not contemplated by the Constitution. As such, the respondent submits that the decisions, which were expressed as decisions not to affiliate or re-affiliate the applicant, were really decisions to terminate the applicant’s membership of the respondent.
  3. [36]
    The applicant submits that the terms affiliation and membership are not used as synonyms in the Constitution and the Policy.  The decisions speak for themselves and should be characterised as decisions about the applicant’s affiliation. 
  4. [37]
    To determine whether the terms “membership” and “affiliation” are synonymous, it is necessary to set out the relevant provisions of the Constitution and Policy.

The Constitution and membership

  1. [38]
    The general principles that apply to the interpretation of a company’s constitution are the same as those that apply to the interpretation of any commercial contract.  However, it is also necessary to take into account the special characteristics of a company’s constitution, both generally and specifically, in determining the manner in which these principles apply.[3]  The Full Federal Court in HNA Irish Nominee Limited v Kinghorn[4] considered the principles applying to a construction of a company constitution:

“[42]In giving a commercial contract a business like interpretation, it is necessary to consider the language used by the parties, the circumstances addressed by the contract and the objects that it is intended to secure. International Air Transport Assn v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at 160 [8] per Gleeson CJ; see too at 174 [53] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ.  A corporate constitution has the effect of a contract between the company and each of its members, the company and each director and secretary, as well as the members amongst themselves (s 140(1) of the Act). The range of surrounding circumstances available as aids to the construction of such a contract is perhaps more limited than in other cases. This is because constitutions, and replaceable rules, can be amended at different times and in different circumstances.” 

  1. [39]
    The Constitution states that there are three categories of members: Member Associations; Legacy Life Members; Individual Members; and such other categories that are created by the Board. 
  1. [40]
    The admission of members is set out in clause 5.2 of the Constitution:

“A person will become a Member, and the Directors will direct the Company Secretary to record their name in the register of Members kept by the Company, only upon meeting the criteria applicable to the relevant category of membership set out in this Constitution and provided the Member has submitted an application, which is accepted by the Directors, in which the Member undertakes to: 

  1. (a)
    be bound by this Constitution, the Statutes and Regulations and the Policies (including Policies specific to the relevant category of Membership);
  2. (b)
    pay the fees and subscriptions determined to apply to the Member under clause 8; and 
  3. (c)
    support the Company in the encouragement and promotion of its Objects.”
  1. [41]
    The Constitution then specifically refers to each category of membership and clause 5.3 of the Constitution deals with Member Associations:

“(a)Member Associations are those entities recognised by the Company responsible for the efficient administration of Netball in accordance with the Objects.

  1. (b)
    Unless otherwise determined by the Company and subject always to clause 5.2, at the time of adoption of this Constitution, the first Member Associations of the Company will be those entities which are currently recognised by the Company as the recognised controlling body for the Netball in their respective area.”    
  1. [42]
    Clause 5.3(b) refers to members in the applicant’s position who, prior to the Constitution, were recognised by the respondent as the recognised controlling body for Netball in their respective area.  So, upon satisfying clause 5.2, the applicant was one of the first Member Associations and it is uncontentious that, prior to the decisions, the applicant was a Member Association of the respondent’s company.
  2. [43]
    Clause 5.3(c) sets out a number of matters that the Member Association will do as a member of the respondent’s company: 

“Each Member Association will:

  1. (i)
    have objects that align with those of the Company as stated in clause 2 and do all that is reasonably necessary to enable the Objects to be achieved, having regard to any legislation applicable to that Member Association; 
  2. (ii)
    effectively promulgate and enforce the Constitution and Policies of the Company and the Statutes and Regulations; 
  3. (iii)
    at all times act for and on behalf of the interests of the Company, the Members and Netball; 
  4. (iv)
    be responsible and accountable to the Company for fulfilling its obligations under the Company’s strategic plan as revised from time to time; 
  5. (v)
    provide the Company with copies of its audited accounts, annual report and associated documents immediately following its Annual General Meeting; 
  6. (vi)
    provide the Company with copies of its business plans and budgets from time to time and within 14 days of request by the Directors; 
  7. (vii)
    be bound by this Constitution and the Policies and the Statutes and Regulations; 
  8. (viii)
    act in good faith and loyalty to maintain and enhance the Company and netball, its standards, quality and reputation for the collective and mutual benefit of the Members and Netball; 
  9. (ix)
    at all times operate with and promote mutual trust and confidence between the Company and the Members, promote economic and sporting success, strength and stability of each other and work cooperatively with each other in the pursuit of the Objects;
  10. (x)
    maintain a database of all clubs, officials and members Registered with it in accordance with the Policies and provide a copy to the Company upon request from time to time by the Directors in such means as may be required;
  11. (xi)
    not do or permit to be done any act or thing which might adversely affect or derogate from the standards, quality and reputation of netball and its maintenance and development; and
  12. (xii)
    advise the Company as soon as practicable of any serious administrative, operational or financial difficulties, assist the Company in investigating those issues and cooperate with the Company in addressing those issues in whatever manner, including by allowing the Company to appoint an administrator to investigate, conduct and manage its business and affairs, or to allow the Company itself to conduct all or part of the business or affairs of the relevant Member Association and on such conditions as the Company considers appropriate.”
  1. [44]
    In my view, clause 5.3(c) imposes obligations upon a member of the respondent that has been admitted in the category of a Member Association.  At the time of applying for membership, an applicant does not need to satisfy the obligations that are set out in clause 5.3(c).  However, once admitted as a member, a Member Association must comply with these obligations as set out in clause 5.3(c).  A failure to do so would be in breach of the Constitution and render the Member Association liable to discipline and sanction pursuant to part 7 of the Constitution.  
  2. [45]
    Clause 5.3(d) then sets out several matters which Member Associations must do in relation to their own constitutions.  The purpose of this clause is to ensure that the Member Association’s constitution is consistent with the respondent’s constitution and to advise, assist and co-operate with the respondent in relation to any serious administrative, operational or financial difficulties the Member Association is having. 
  3. [46]
    Clause 6.1 sets out the circumstances in which a person ceases to be a member which include, relevantly:

“A person ceases to be a Member on:

….

  1. (c)
    the termination of their membership according to this Constitution or the Policies;

…

  1. (e)
    and without limiting the foregoing, that Member no longer meeting the requirements for membership according to clause 5.”
  1. [47]
    The respondent submits that Clause 6.1(e) is crucial, for it must necessarily confer power upon the respondent to determine if a member no longer meets the requirements for membership under clause 5. 

The Constitution and affiliation

  1. [48]
    The Constitution does not provide a process for, or definition of, “affiliation” to the respondent. The term “Affiliated Member” appears twice in the Constitution but is not defined.  It appears first in the definition of registration in clause 1.1(u), which provides:

“Registration means the registration or affiliation of an Individual Member or an Affiliated Member with a Member Association, such registration being in the form of a signed application form, and in the case of Individual Members, their consent to membership of the Company as required by clause 5.2. Registered has a corresponding meaning.”

  1. [49]
    The definition of Registration is relevant to clause 5.3(c)(x), which stipulates that each Member Association will:

“[M]aintain a database of all clubs, officials and members Registered with it in accordance with the Policies and provide a copy to the Company upon request from time to time by the Directors in such means as may be required;”

  1. [50]
    In my view, use of the terms “affiliation” and “Affiliated Member” in the definition of Registration and, in turn, the use of the defined term “Registered” in clause 5.3(c)(x), supports an interpretation that affiliation in the Constitution does not relate to a Member Association being affiliated with the respondent. Rather, the terms “affiliation” and “Affiliated Member” refer to the registration or affiliation of an Individual Member or an Affiliated Member with a Member Association. 
  2. [51]
    Clause 12.3 then distinguishes between a Member Association and an Affiliated Member in setting out who is eligible to hold office as a director. 

“12.3 Eligibility

  1. (a)
    For the period from the date of this Constitution a person who:
  1. (i)
    is an employee of the Company, a Member Association or an Affiliated Member; or
  2. (ii)
    holds an Official Position with a Member Association or an Affiliated Member; or
  3. (iii)
    was a Director of the Company and clause 12.8 applies,

(each a disqualifying position) may not hold office as a Director.”

  1. [52]
    I note that by referring to a Member Association “or” an Affiliated Member, the Constitution treats these as distinct concepts.

The Policy, affiliation and membership

  1. [53]
    Clause 19.1 states that the directors may, from time to time, make policies. Clause 19.2 specifies that a policy is subject to the Constitution, must be consistent with the Constitution and, when in force, is binding on all members and has the same effect as a provision of the Constitution.
  2. [54]
    There were two relevant versions of the Policy before the Court.  The first is version 9, which came into force on 10 February 2020.  Version 11 would have applied at the time of the first and second decisions, but the respondent has not adduced either version 10 or 11 into evidence.  The applicant proceeded on the assumption that version 9 of the Policy was materially similar to version 11 and the respondent did not dispute such an assumption.  The second relevant version of the Policy is version 14, which came into effect on 26 February 2021.  It was applicable at the time of the third decision.
  3. [55]
    As the third decision is the operative decision, it is convenient to focus on version 14 of the Policy. Unless otherwise stated, all further references are to version 14 of the Policy.
  4. [56]
    The Policy commences by setting out its purpose and applicability. It states, relevantly:

“Purpose

The purpose of this Policy is to outline the requirements of, and procedures for, affiliation and membership of Netball Queensland (NQ), including registration and renewals.

Applicability

…

This Policy applies to NQ Affiliated Member Associations and Affiliates (collectively referred to as Members), Individual Members and Participants as those terms are defined and used in the Constitution…”

  1. [57]
    In the applicability section, the Policy refers back to terms “as defined and used in the Constitution”.  That statement is productive of some confusion because the Policy gives Members a definition (NQ Affiliated Member Associations and Affiliates) that is different to the definition of members in the Constitution.  Affiliated Member Associations and Affiliates are not included in the categories of members set out in clause 5.1 of the Constitution
  2. [58]
    In addition, whilst Member Associations are defined in the Constitution, the terms Affiliated Member Associations and Affiliates are not.  In the Constitution, the term Affiliated Member is used in the context of the requirement in clause 5.3(x) that Member Associations maintain a database of members registered with them.
  3. [59]
    Although the term Affiliates is not defined in the Constitution, clause 3 of the Policy defines Affiliates as follows:

“3.1An Affiliate shall be:

  1. (a)
    those entities registered with Netball Queensland as “Affiliates”; and
  2. (b)
    any entities which the NQ Board approves as “Affiliates” from time to time.

3.2Applicants for Affiliate Membership must be engaged in pursuits complementary to the objects of Netball Queensland as outlined in the Constitution, including:

  • Community Netball Clubs;
  • Queensland state and non-state schools;
  • Tertiary Institutions;
  • Regional Netball Hubs;
  • Indoor Netball Centres;
  • League licence holders and teams competing in NQ competitions (as set out in Team Participation Agreements);
  • special interest multi-sport associations, such as Police Citizen Youth Clubs and the YMCA; and
  • any other organisation, group, or peak body involved in the delivery of netball that does not qualify for Association membership.”
  1. [60]
    Further understanding of what Affiliate means can be gained from the respondent’s Code of Conduct and Integrity Policy and Disciplinary Procedures Regulations, which define “affiliate” as follows:

“Affiliate means an organisation recognised by NQ as conducting Netball competitions or programs whose participants are not necessarily registered with a Member Association.”

  1. [61]
    The Policy does not define Affiliated Member Associations.
  2. [62]
    Part 1 of the Policy sets out the benefits of affiliation and membership.  Clauses 1.1 to 1.3 state, relevantly:

“Benefits of Affiliation and Membership to Netball Queensland

1.1Entities who affiliate with NQ have access to a wide range of programs, competitions, intellectual property, education, development and training, member services and benefits from participation at the grass roots through to elite level netball. 

1.2The benefits of affiliation with NQ include (but not limited to):

  1. (i)
    affiliation to Netball Australia, the recognised peak body for Netball in Australia and recognised member of the International Netball Federation;
  2. (ii)
    recognition as an affiliate of netball’s peak governing body in Queensland which may, among other things, be a requirement and/or advantage in securing grants and funding;
  3. (iii)
    the ability to contribute to and influence the direction of netball as a sport, including (where applicable) through voting on the election of Board Directors, joining Horizon Three project committees and working groups, and participating in other strategic forums and member conferences;
  4. (iv)
    access to state-wide crisis management including the leadership and coordination of crisis management response plans, risk management solutions and advocacy for members in emergency response situation such as the COVID-19 global pandemic;
  5. (v)
    access to a range of governance, sport development and professional development services, including advice on constitutional matters, policy templates, a member protection framework, operating procedures, and complaint resolution support;
  6. (vi)
    a cost effective and sport-specific insurance program;
  7. (vii)
    advocacy and representation of and for netball at local, State and Federal levels of Government including liaison and advocacy for state-wide infrastructure planning and funding;
  8. (viii)
    a comprehensive and nationally recognised coach and umpire education program and accreditation pathway;
  9. (ix)
    pathways and programs for athletes, officials and coaches to further their netball pursuits along the high performance pathway;
  10. (x)
    access to a membership database system that facilitates self- registration, participant information management, competition management, live scoring, communication tools, accreditation recording and learning resources;
  11. (xi)
    access to a range of competitions and events at regional, local and state level, and for schools and education providers; and
  12. (xii)
    a premier state league competition, the HART Sapphire Series and Ruby Series, which provides Queensland’s best talent with elite level competition.

1.3NQ will provide access to benefits, services and programs only to Members. Therefore, any club, team or other organisation must be affiliated to NQ or their respective Member…”

  1. [63]
    Part 2 of the Policy then sets out the Member Association terms and conditions, and clauses 2.1 to 2.3 deal with the period of affiliation and fees payable:

“Member Association Terms and Conditions

2.1 The annual Member Association affiliation period for 2021 shall be from 1st April to 30 December 2021 to facilitate a realignment of the annual affiliation process. Moving forward, the affiliation period will align with the calendar year, being 1 January to 31 December of each year. To ensure that affiliation is renewed prior to the next calendar year and the opening of individual registrations, Member Associations and Affiliates will be invited to undertake re-affiliation around November each year. Therefore, NQ will open the reaffiliation process for the 2022 season in November 2021.

2.2 Each Member Association must pay an Annual affiliation fee prescribed by the Netball Queensland Board. Fees must be paid by the due date or a late fee may be applied.

2.3 The annual membership fee payable by each Association is calculated on the number of total members registered with each Association and is set out in Schedule “A”.”

  1. [64]
    Clause 2.4 sets out conditions of affiliation and requirements of each Member Association:

“2.4 It is a condition of affiliation and requirement of each Member Association to:

  1. (i)
    complete and submit the Netball Queensland Affiliation Application Form and provide copies of all documentation requested;
  2. (ii)
    register every individual member (players, coaches, umpires, managers, committee members and volunteers) of the Association in the NetballConnect platform 
  3. (iii)
    provide a complete record of participation data for non-member participation activities. For clarity this means declaring all programs, events and competitions delivered or facilitated by the Member Association (product data) and the participation data collected through these offerings (customer data). This data is critical to optimise NQ’s ability to advocate for netball.

Whilst not a condition of affiliation, we strongly recommend that Member Associations register with the Sport AUS Game Plan capability platform and undertake at least the four foundation module assessments during the affiliation period (i.e. by December 2021). This is an excellent tool for supporting the capability of member associations and clubs and NQ staff will provide support for Members to take up this opportunity.”

  1. [65]
    Clause 2.7 then impose additional requirements on Member Associations if they offer services and participation opportunities to players in a certain age group:

“2.7 If a Member Association offers services and participation opportunities for participants aged up to and including 10 years, it is a requirement of affiliation that they be registered as a NetSetGO Accredited Centre unless otherwise approved by Netball Queensland in writing.”

  1. [66]
    Clause 2.8 imposes an additional condition for Member Associations to be eligible for affiliation:

“2.8 For Member Associations to be eligible for affiliation they must not have any outstanding fees (> 30 days from date of invoice) owing to Netball Queensland as at the affiliation date.”

  1. [67]
    Clause 2.9 sets out the circumstances in which an application for affiliation may be refused, or membership suspended, not renewed or terminated:

“2.9 A Member Association that establishes, supports or allows another domestic based netball competition which is not affiliated with Netball Queensland, may have its affiliation application refused or, if affiliated, may have its membership suspended, not renewed or terminated.”

  1. [68]
    Clause 5.1 refers to “affiliated Member Associations” in the context of setting out the requirements for registration and provides:

“5.1 It is the responsibility of every affiliated Member Association, Affiliate and their affiliated Clubs to ensure every individual Participant is registered with NQ through the NetballConnect platform. Valid, accurate and complete data must always be entered and maintained, for every individual member, including players and non-players using the prescribed system and procedures.”

  1. [69]
    Part 9 of the Policy refers to an “affiliation agreement” and provides:

“Affiliation Agreement

By applying for affiliation to NQ, Member Associations and Affiliates agree to be bound by:

  1. (i)
    Code of Conduct and Integrity
  2. (ii)
    NQ Policies and Procedures
  3. (iii)
    Member Obligations outlined in Section 5 of the Constitution.

These instruments are important in fostering a vibrant healthy culture within the netball community.”

Is affiliation the same as membership? 

  1. [70]
    The Constitution provides a regime for membership of the respondent. Under the Constitution, upon being made a member, an organisation acquires certain rights and obligations, which depend on their category of membership. For example, the Constitution only imposes the obligations in clause 5.3(c) upon Member Associations.
  2. [71]
    Unlike a Member Association, an Affiliated Member has no rights and obligations imposed by the Constitution.  The Constitution only refers to an Affiliated Member or affiliation in two places:
    1. (a)
      in clauses 1.1(u) and 5.3(x), in the context of the obligation of Associated Members to keep a database of members registered with it; and
    2. (b)
      in clause 12.3, in defining who is eligible to be a director of the respondent.
  3. [72]
    In each of these places, the Constitution distinguishes between the concepts of a Member Association and an Affiliated Member. Clauses 1.1(u) and 5.3(x) refer to the “registration or affiliation of … an Affiliated Member with a Member Association”. The process of affiliation contemplated by these clauses is something that occurs as between a Member Association and Affiliated Members, not between Member Associations and the respondent.  Clause 12.3 refers to a person who is an employee or official position holder with a Member Association “or” an Affiliated Member.
  4. [73]
    The Constitution provides for a membership process but not for an affiliation process. There is no reference in the Constitution to affiliation being a process that a Member Association is required to undertake with the respondent.
  5. [74]
    In my view, as far as the Constitution is concerned, the terms membership and affiliation are not synonymous.
  6. [75]
    Then there is the Policy.  The respondent has the power to make policies.  However, any policy must be subject to, and consistent with, the Constitution.
  7. [76]
    It must be said from the outset, that the Policy is poorly drafted.  No clear definitions are provided, and the use of the similar terms affiliation, Affiliates and Affiliated Member Associations is prone to confusion.  Matters such as the Policy’s purpose, object and surrounding circumstances can throw light on the meaning of this unclear language.[5]
  8. [77]
    The respondent submits that specific acknowledgment in the Policy that, for a Member Association, affiliation and membership are synonymous is provided for in clause 2.9, which provides:

“2.9 A Member Association that establishes, supports or allows another domestic based netball competition which is not affiliated with Netball Queensland, may have its affiliation application refused or, if affiliated, may have its membership suspended, not renewed or terminated.” 

  1. [78]
    In my view, clause 2.9 does not specifically acknowledge that affiliation and membership are synonymous.  Rather, it is framed in a way that also envisages two different processes being in place; one process for affiliation and another process for membership. 
  2. [79]
    The respondent also refers to clause 1.3 of the Policy, which states:

“1.3 NQ will provide access to benefits, services and programs only to Members. Therefore, any club, team or other organisation must be affiliated to NQ or their respective Member.” 

  1. [80]
    The respondent states that this clause refers to the respondent’s benefits, services and programs only being provided to Members, and then states that, therefore, organisations “must be affiliated to NQ”.  The respondent submits that this is entirely inconsistent with a Member Association being able to retain some type of membership without being affiliated with the respondent.
  2. [81]
    However, the respondent only partially quotes the clause, which provides that clubs, teams and other organisations “must be affiliated to NQ or their respective Member”.  Clause 1.3 is inherently confusing by the use of the terms “Members” and then any club, team, or other organisation being affiliated with their “respective Member.” If the term “Member” is given the collective meaning as set out in the Policy’s applicability section, then Clause 1.3 reads as follows:

“NQ will provide access to benefits, services and programs only to Members (Affiliated Member Associations and Affiliates). Therefore, any club, team or other organisation must be affiliated to NQ or their respective Member (Affiliated Member Associations and Affiliates).”

  1. [82]
    If this is the case, then clause 1.3 is circular and non sensical.
  2. [83]
    In my view, clause 1.3 makes sense when any club, team or other organisation must be affiliated to NQ or their respective Member (as defined in the Constitution). A sensible reading of clause 1.3 distinguishes between an affiliate, the respondent and a member of the respondent’s company.
  3. [84]
    In addition, the respondent refers to the Macquarie Dictionary definitions of member, membership, affiliate and affiliation, where:
    1. (a)
      member is defined, relevantly, as each of the persons composing a society, party, community, or other body;
    2. (b)
      membership is the state or status of being a member;
    3. (c)
      affiliate is defined, relevantly, as to unite or associate as a branch or part, for example “to affiliate with the ACTU”; and
    4. (d)
      affiliation is the state of being affiliated.
  4. [85]
    The respondent notes that some of these meanings are interchangeable. For example, the respondent submits that a trade union may affiliate with the Australian Council of Trade    Unions (“ACTU”). However, it would also be accurate to describe that trade union as being an ACTU member, as it would be one of “the persons composing” the ACTU. 
  5. [86]
    In my view, the dictionary definitions of these words say little about the meaning of the term Affiliated Member Associations under the Constitution and the Policy given that the terms Member and Affiliates are specifically defined. Member is specifically defined in clause 5.2 of the Constitution, and a different definition of Members is provided in the applicability section of the Policy. Affiliates is defined in part 3 of the Policy.
  6. [87]
    Finally, the respondent submits that the Policy uses the words affiliation and membership interchangeably.  However, if this submission were accepted, the Policy would be rife with tautologies, including:
    1. (a)
      the title of the Policy as the “Affiliation and Membership Policy”;
    2. (b)
      the statement that the purpose of the Policy is to regulate the requirements of and procedures for “affiliation and membership”; and
    3. (c)
      the title of clause 1, “Benefits of Affiliation and Membership to Netball Queensland”.
  7. [88]
    In addition, whilst the phrase “Affiliated Member Associations” is used in the applicability section and clause 5.1 of the Policy, elsewhere the Policy refers to “Member Associations”.  This indicates that a distinction is deliberately being drawn between those Member Associations with affiliation and those without.
  8. [89]
    Further, the Policy refers to a Member Association applying for affiliation in part 9, which states:

“Affiliation Agreement

By applying for affiliation to NQ, Member Associations and Affiliates agree to be bound by:

  1. (i)
    Code of Conduct and Integrity
  2. (ii)
    NQ Policies and Procedures
  3. (iii)
    Member Obligations outlined in Section 5 of the Constitution.

These instruments are important in fostering a vibrant healthy culture within the netball community.”

  1. [90]
    In addition, clause 2.8 states:

“2.8 For Member Associations to be eligible for affiliation they must not have any outstanding fees (> 30 days from date of invoice) owing to Netball Queensland as at the affiliation date.”

  1. [91]
    These clauses imply that affiliation is an extra step that Member Associations may apply and be eligible for.
  2. [92]
    The separation of the status of affiliation from that of membership is further reinforced by a much earlier version of the Policy which has been adduced by the respondent.  Unlike the later versions of the Policy it defines “Affiliated Member” as “A Netball Queensland approved Member Association who has completed all related affiliation requirements as prescribed in this policy”.  This indicates that, according to this previous Policy, one must first be a Member Association, then apply for affiliation, to become an Affiliated Member.  The Policy has not fundamentally changed since this previous version to displace such an interpretation.
  3. [93]
    Throughout the Policy, the term affiliation is separated from the term membership.  As I have noted, if affiliation and membership were the same thing, then the Policy would be rife with tautology.  However, the name of the Policy and its statement of purpose speaks for itself.  It is an Affiliation and Membership Policy, which refers to two different concepts. 
  4. [94]
    In my view, in the context of the Constitution and the Policy, the terms affiliation and membership are not interchangeable; each is distinct and distinguishable from the other.  Accordingly, the terms affiliation and membership are not synonymous.
  5. [95]
    The decisions were expressed as decisions not to renew the applicant’s “affiliation”, not to “re-affiliate” the applicant and not to consider “affiliation” of the applicant unless certain conditions were complied with.  I accept the applicant’s submissions that they should be characterised as decisions about the applicant’s affiliation and not the applicant’s membership.

Did the Constitution confer the board with power to make the decision?

  1. [96]
    The respondent submits that the proper construction of the Constitution is that the respondent had the authority, not only to make the decisions, but also to impose the re-affiliation condition.
  2. [97]
    The respondent made detailed submissions about why the Constitution granted the board the power to determine whether existing members and applicants qualified for membership of the respondent.  In particular, the respondent submits that clause 6.1(e) of the Constitution (which provides that a person ceases to be a member if they no longer meet the requirements of membership in clause 5) must confer power on the respondent to determine whether a member no longer meets those requirements.
  3. [98]
    Ultimately, the respondent submits that the decision and the imposition of the re-affiliation condition were determinations that the applicant no longer met the requirements imposed by clause 5 on Member Associations, including (at a minimum) clauses 5.3(c)(iii),[6] (viii),[7] and (xi),[8] but that if its management committee members gave the assurances required, the respondent would accept that the clause 5 requirements were met.

Consideration

  1. [99]
    The respondent’s submissions are predicated on the basis that the decisions concerned the applicant’s membership. They did not.
  2. [100]
    In my view, the decisions speak for themselves and purported to not affiliate, re-affiliate or consider the affiliation of the applicant with the respondent. They were not, in terms, decisions to terminate the applicant’s membership.
  3. [101]
    Whether the respondent has the power to terminate the applicant’s membership under clause 6 of the Constitution is of no relevance to whether the respondent had the power to determine:
    1. (a)
      “to not renew INA affiliation”;
    2. (b)
      “not to re-affiliate Ipswich Netball Association unless there was a major change in the Management Committee”; or
    3. (c)
      “not to consider affiliation of INA until after the AGM and SGM with assurances in relation to conduct and civil responsive communication”.
  4. [102]
    Further, in my view, even if the terms affiliation and membership were synonymous, the Constitution did not provide the respondent with the power to make the decisions.  I agree that the respondent has the power to determine whether an entity has breached the Constitution or that they no longer meet the requirements for membership according to clause 5. 
  5. [103]
    However, the respondent was obliged to exercise such a power in accordance with the Constitution and policies. The discipline of members is dealt with pursuant to clause 7 of the Constitution. Clause 7.2(a) states that the directors may make policies, including for the discipline of Members and for the termination of Members. Clause 7.2(b) and (c) then state:

“(b) The Directors in their sole discretion may refer an allegation (which in the opinion of the Directors is not vexatious, trifling or frivolous) by a complainant (including a Director or a Member) that a Member has:

  1. (i)
    breached, failed, refused or neglected to comply with a provision of this Constitution, the Policies or any other resolution or determination of the Directors or any duly authorised committee; or
  2. (ii)
    acted in a manner unbecoming of a Member or prejudicial to the Objects and interests of the Company or Netball, or both; or
  3. (iii)
    prejudiced the Company or Netball or brought the Company or Netball or themself into disrepute; for investigation or determination either under the procedures set down in the Policies or by such other procedure and/or persons as the Directors consider appropriate.

(c) During investigatory or disciplinary proceedings under this clause 7, a respondent may not participate in Netball, pending the determination of such proceedings (including any available appeal) unless the Directors decide continued participation is appropriate having regard to the matter at hand.”

  1. [104]
    The respondent has two policies that deal with such matters:
    1. (a)
      the Code of Conduct and Integrity; and 
    2. (b)
      the Disciplinary Procedures Regulation. 
  2. [105]
    The Code of Conduct and Integrity states that all members must comply with the respondent’s constitution and policies, and sets outs the disciplinary sanctions which may be imposed against a Member Entity.  Those sanctions include (relevantly):
    1. (a)
      suspension from participation in a game or games;
    2. (b)
      exclusion, suspension or expulsion from a competition; and
    3. (c)
      such other disciplinary sanctions or measures as is appropriate in the circumstances including as provided for in the respondent’s regulations (including the Disciplinary Procedures Regulations).
  3. [106]
    The final catch-all sanction would, in appropriate circumstances, encompass termination of membership.
  4. [107]
    The objectives of the Disciplinary Procedures Regulations are to:
    1. (a)
      define the procedures to enable grievances to be heard, investigated and determined;
    2. (b)
      enshrine the right of a party to be heard;
    3. (c)
      establish independent and impartial bodies; and
    4. (d)
      ensure matters are dealt with fairly and expeditiously.
  5. [108]
    The Disciplinary Regulations apply to the determination of infringements and or sanctions under the Code of Conduct. The Disciplinary Regulations sets out a process for breaches of the Code of Conduct and Integrity, which include providing:
    1. (a)
      written particulars of the alleged infringement;
    2. (b)
      notice of the possible sanctions; and
    3. (c)
      the opportunity to respond to the allegations within 14 days.
  6. [109]
    None of this occurred in relation to the decisions made by the respondent.
  7. [110]
    In my view, the respondent’s board could not cease the applicant’s membership pursuant to clause 6.1(c) or (e) of the Constitution for the reasons they now articulate. That would be a matter for consideration and determination pursuant to the Code of Conduct and Integrity and the Disciplinary Regulations.
  8. [111]
    Hypothetically, the board could cease a Member Association’s membership pursuant to clause 6.1(e), without reference to the Code of Conduct and Integrity and the Disciplinary Regulations if the Member Association no longer met the definition of a Member Association as set out in clause 1.1(u) of the Constitution.  In such circumstances, if the Member Association was no longer the legal entity representing a geographic area or group of clubs, it would no longer meet the requirements of clause 5 of the Constitution.  Such a determination would not require recourse to the Code of Conduct and Integrity or the Disciplinary Regulations.
  9. [112]
    In any event, all of this is hypothetical as none of the decisions in any way suggested that membership was ceased in accordance with clause 6.1 of the Constitution.  In addition, the decisions did not relate to the applicant’s membership, but rather were decisions about the applicant’s affiliation.
  10. [113]
    Further, the decisions were not made pursuant to the Code of Conduct and Integrity or Disciplinary Regulation.
  11. [114]
    The Constitution did not confer any such power for the respondent’s board to make the decisions.  In my view, the applicant’s membership could only be ceased in accordance with clause 6.1 of the Constitution and this has not occurred. 

Did the Policy grant the board the power to make the decision? 

  1. [115]
    The respondent submits that the Policy gave the respondent the authority to make the decisions not to affiliate or re-affiliate the applicant, as well as to impose conditions on its re-affiliation.
  2. [116]
    The respondent refers to the Policy’s purpose which is to “outline the requirements of and procedures for, affiliation and membership of Netball Queensland (NQ), including registration and renewals”.  Accordingly, the respondent submits that, if there are requirements for renewals, then it must follow that failure to meet or comply with those requirements gives power to refuse renewal. Those requirements would otherwise be pointless. 
  3. [117]
    The respondent also refers to clause 2.8, which expressly contemplates that a Member Association may not be eligible for re-affiliation, and clause 2.9, which expressly contemplates the refusal of a re-affiliation application. The respondent submits that it must necessarily be the case that, if an entity no longer meets the requirements for membership of the respondent, the Policy gives the respondent the power and authority to make that determination and refuse reaffiliation and, furthermore, to impose pre-conditions to ensure that the membership requirements are met before permitting re-affiliation.

Consideration

  1. [118]
    It should be noted at the outset that the respondent’s submissions are premised on the idea that affiliation and membership are synonymous and use the terms interchangeably.  The terms are not synonymous.  The Constitution sets out the circumstances in which membership can be terminated and these cannot be circumscribed by any application of the Policy.
  2. [119]
    The real question is whether the Policy confers a power on the board to refuse affiliation or impose conditions on re-affiliation.
  3. [120]
    Under the Policy, Member Associations are affiliated for a period of one year.  The Policy requires members to undertake a re-affiliation process annually and pay an annual affiliation fee.  Clause 2.4 of the Policy provides:

“2.4 It is a condition of affiliation and requirement of each Member Association to:

  1. (i)
    complete and submit the Netball Queensland Affiliation Application Form and provide copies of all documentation requested;
  2. (ii)
    register every individual member (players, coaches, umpires, managers, committee members and volunteers) of the Association in the NetballConnect platform
  3. (iii)
    provide a complete record of participation data for non-member participation activities. For clarity this means declaring all programs, events and competitions delivered or facilitated by the Member Association (product data) and the participation data collected through these offerings (customer data). This data is critical to optimise NQ’s ability to advocate for netball…”
  1. [121]
    Clause 2.7 imposes a further “requirement of affiliation” that Member Associations intending to offer opportunities for participants under 10 must be registered as a NetSetGo Accredited Centre, unless otherwise approved.
  2. [122]
    Clause 2.8 provides that Member Associations must not have any outstanding fees owing to be “eligible for affiliation”.
  3. [123]
    Clause 2.9 provides a power to refuse an affiliation application on the basis that a Member Association establishes, supports or allows another domestic based netball competition which is not affiliated with Netball Queensland.
  4. [124]
    I accept that the Policy grants the respondent the power to refuse affiliation on the basis that the conditions in clauses 2.4, 2.7, 2.8 or 2.9 have not been met.
  5. [125]
    However, the respondent’s decisions to refuse affiliation or prescribe conditions on the applicant’s affiliation were not made on the basis that the conditions and requirements in the Policy had not been met.  Indeed, the third decision was to not even consider the applicant’s affiliation until the applicant provided certain assurances. 
  6. [126]
    There is no provision in the Policy to refuse an application for affiliation for any other reason than set out in clauses 2.4, 2.7, 2.8 or 2.9.  I note, for example, that in the Constitution, the respondent may, at its discretion, refuse to accept a person as an Individual Member and cannot be required or be compelled to provide any reason for such rejection.  The Policy does not contain any such general right of discretion to refuse affiliation.
  7. [127]
    In my view, once the three conditions in clause 2.4 are fulfilled then, unless clauses 2.7, 2.8 or 2.9 of the Policy apply, there is no mechanism to refuse affiliation.  The decisions clearly did not refuse affiliation pursuant to clauses 2.7, 2.8 or 2.9.
  8. [128]
    In this case, the respondent did not send the applicant a link to the affiliation renewal form for the period 1 April 2021 to 31 December 2021.  Accordingly, the applicant could not submit the form for the respondent to consider pursuant to clause 2.4.
  9. [129]
    The Policy sets out the requirements and procedures for an administrative annual review for affiliation.  It does not provide the power to refuse affiliation for considerations outside those that are stipulated in the Policy.  Nor does it confer the power to not even consider the application for affiliation unless certain assurances were given.
  10. [130]
    The Policy did not confer the power for the respondent to make the decisions.  
  11. [131]
    All of this, of course, is predicated on the basis that the Policy is valid. However, for reasons discussed later, in my view, the Policy is an impermissible variation of class rights under the Corporations Act and is therefore invalid.

Do sections 124 and 125 Corporations Act grant the board the power to make the decisions?

  1. [132]
    The respondent referred to sections 124 and 125 of the Corporations Act for the first time in oral submissions.  The respondent submits that, even if the Constitution and Policy did not authorise the decisions, the board had the power to make the decisions because of the operation of sections 124 and 125 of the Corporations Act.
  2. [133]
    Section 3 of the Constitution sets out the scope of the respondent’s powers:

“Solely for furthering the Objects under clause 2, the Company, in addition to any other powers it has under the Corporations Act, has the legal capacity and powers of a company limited by guarantee as set out under section 124 of the Corporations Act.”

  1. [134]
    Clause 13.1 of the Constitution allows the directors to exercise the respondent’s powers and provides:

“The Directors are to manage the Company's business and may exercise those of the Company's powers that are not required, by the Corporations Act or by this Constitution, to be exercised by the Company in General Meeting.”

  1. [135]
    Section 124(1) of the Corporations Act provides:

“A company has the legal capacity and powers of an individual both in and outside this jurisdiction. A company also has all the powers of a body corporate, including the power to:

  1. (a)
    issue and cancel shares in the company;
  2. (b)
    issue debentures (despite any rule of law or equity to the contrary, this power includes a power to issue debentures that are irredeemable, redeemable only if a contingency, however remote, occurs, or redeemable only at the end of a period, however long);
  3. (c)
    grant options over unissued shares in the company;
  4. (d)
    distribute any of the company's property among the members, in kind or otherwise;
  5. (e)
    grant a security interest in uncalled capital;
  6. (f)
    grant a circulating security interest over the company's property;
  7. (g)
    arrange for the company to be registered or recognised as a body corporate in any place outside this jurisdiction;
  8. (h)
    do anything that it is authorised to do by any other law (including a law of a foreign country).

A company limited by guarantee does not have the power to issue shares.”

  1. [136]
    The broad powers conferred by section 124(1) are subject to section 125 of the Corporations Act, which provides:

“(1) If a company has a constitution, it may contain an express restriction on, or a prohibition of, the company's exercise of any of its powers. The exercise of a power by the company is not invalid merely because it is contrary to an express restriction or prohibition in the company's constitution.

(2) If a company has a constitution, it may set out the company's objects. An act of the company is not invalid merely because it is contrary to or beyond any objects in the company's constitution.”

The respondent’s submissions

  1. [137]
    The respondent submits that the effect of sections 124 and 125 of the Corporations Act, together with clause 13.1 of the Constitution, is that the respondent’s board could do anything it wished to do, unless expressly prohibited by a clause in the Constitution.  It submits that this included the power to make the decisions (being decisions not to affiliate the applicant unless certain assurances were given).
  2. [138]
    The respondent submits that the applicant has failed to establish that the Constitution expressly prohibited the respondent from making the decisions and, as a result, the board had the power to make the decisions.  It is not for the respondent to show that the Constitution granted power to make the decisions.  Rather, it is for the applicant to show that the Constitution restricted the board from exercising that power, and that the Policy did not confer the power.  The respondent submits that, only if the applicant can show these things, can it be said that the decisions were not authorised. 
  3. [139]
    The respondent submits that the company has the power to make decisions about membership.  Consequently, if the Constitution and the Corporations Act do not confine the exercise of that power to the company in a general meeting, and if the Constitution does not restrict the board’s power to make those decisions, then the board had the power to make the decisions, or to authorise executive management to do so.

The applicant’s submissions

  1. [140]
    The applicant submits that the respondent confuses questions of corporate capacity and the authority of different organs of the company.  Section 124 of the Corporations Act does not answer the question of the respondent’s authority to make the decisions, but rather deals with a more basic question of corporate capacity.  The distinction was explained in Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd,[9] where the Court rejected the argument that there was a restriction on the exercise of the company’s powers in that case, but said:

“Of course the exercise of any power, however important or unimportant, must be carried out by one or more of the organs of the company in conformity with requirements of its memorandum and articles of association as well as with the general law, including the provisions of the Code.”

  1. [141]
    The applicant submits that the decisions were made in breach of the Constitution, which, under section 140 of the Corporations Act, forms a statutory contract between the respondent and its members, including the applicant.  The decisions should therefore be declared invalid.  This conclusion is urged by the applicant irrespective of whether the Court considers that the Constitution contains an express limitation on the exercise of the respondent’s power as contemplated by section 125 of the Corporations Act.

Consideration

  1. [142]
    I agree that sections 124 and 125 of the Corporations Act do not answer the question of the respondent’s authority to make the decisions, but rather deal with a more basic question of corporate capacity.  In Rolled Steel Products (Holdings) Ltd v British Steel Corp & Ors (“Rolled Steel”)[10] Browne-Wilkinson LJ explained the difference between corporate capacity and the authority of a particular organ of the company to make a decision by analogy to the position of a trustee:

“In my judgment, for this purpose the position of a company is analogous to that of a human being who has fiduciary powers. If two trustees convey trust property in breach of trust, the conveyance is not void. As human beings they have the capacity to transfer the legal estate: their capacity to transfer flows from their status as human beings, not from the powers conferred on them as trustees. Even if their powers under the trust instrument did not authorise the conveyance, the legal estate will vest in the transferee. Beneficiaries under the trust would be entitled, if they learnt in time, to restrain the execution of such conveyance in excess of the powers of the trustees. If the beneficiaries only discovered the position after the conveyance, the transferee, if he took with notice, would be personally liable as a constructive trustee and the property conveyed could be recovered: but the conveyance would not be a nullity. So in the case of a limited company, if a transaction falls within the objects of the company (and is therefore within its capacity) it is effective to vest rights in a third party even if the transaction was carried out in excess or abuse of the powers of the company. If the members of the company learn of what is proposed in time, they will be able to restrain such transaction: if they only discover the facts later, their remedy lies against those who have wrongly caused the company to act in excess or abuse of the company's powers. If a third party has received the company's property with notice of the excess or abuse of powers, such third party will be personally liable as a constructive trustee and the company will be able to recover the property.

…

The critical distinction is, therefore, between acts done in excess of the capacity of the company on the one hand and acts done in excess or abuse of the powers of the company on the other. If the transaction is beyond the capacity of the company it is in any event a nullity and wholly void: whether or not the third party had notice of the invalidity, property transferred or money paid under such a transaction will be recoverable from the third party. If, on the other hand, the transaction (although in excess or abuse of powers) is within the capacity of the company, the position of the third party depends upon whether or not he had notice that the transaction was in excess or abuse of the powers of the company…” (citations omitted)[11]

  1. [143]
    These observations were made in the context of the common law ultra vires doctrine, according to which acts done in excess of a company’s capacity were void. On the other hand, acts that were not beyond the capacity of the company, but were beyond the authority either of the board of directors or a majority of shareholders, were not void as against third parties.
  2. [144]
    The ultra vires doctrine has now been abolished by section 125 of the Corporations Act.  Austin J set out the legislative history of section 125 in Hillig v Darkinjung Pty Ltd (“Hillig”):

“20 Section 125, which took its present form in the Company Law Review Act 1998 (Cth), was based on s 68 of the Companies Act 1981 (Cth) and Companies Code 1981 (Cth), introduced by amendment to that legislation in 1983 and then amended in 1985. It was part of a package of legislative amendments made for the purpose of abolishing the doctrine of ultra vires in its application to registered companies, by giving the company all the powers of a natural person, while allowing companies to have constitutional provisions restricting or prohibiting the exercise of any of their powers: see Explanatory Memorandum to the Companies and Securities Legislation (Miscellaneous Amendments) Bill 1983 (Cth), para 188. Section 68(1A) of the Companies Code said that the rules of the company may contain an express restriction on, or express prohibition of, the exercise by the company of a power of the company. That is equivalent to the first sentence of the present s 125(1). Section 68(1) to (3) said that if a company acted contrary to an express restriction in its constitution, the company and any officers knowingly concerned contravened the section, though they were not guilty of any criminal offence. Then subsections (4) and (5) said that the exercise of the power was not invalid by reason only of the contravention. Section 68(4) and (5) correspond, though not precisely, with the second sentence of the present s 125(1), the main difference being that the present section does not state that failure to comply with an express provision of the constitution is a contravention.”[12]

  1. [145]
    Section 125 of the Corporations Act is relevant to the question of a company’s capacity to engage in transactions and the validity of those transactions as between companies and third parties.
  2. [146]
    However, in my view, sections 124 and 125 of the Corporations Act do not affect the question of the authority of directors or other organs of the company to exercise the company’s powers or to the availability of remedies to restrain acts that would be in excess of that authority. To conclude otherwise would render otiose section 140 of the Corporations Act, which provides:

“(1) A company's constitution (if any) and any replaceable rules that apply to the company have effect as a contract:                                                                                                   

  1. (a)
    between the company and each member; and
  2. (b)
    between the company and each director and company secretary; and
  3. (c)
    between a member and each other member;

under which each person agrees to observe and perform the constitution and rules so far as they apply to that person…”

  1. [147]
    That conclusion derives further support from the judgment in Darvall v North Sydney Brick & Tile Co Ltd (“Darvall”).[13]  In that case, Bryson J considered an argument that section 68 of the Companies Code (the precursor to section 125 of the Corporations Act) precluded the plaintiff shareholder from bringing an action against the company on the basis that the directors had not complied with the company’s rules in deciding to distribute cash and shares by way of interim dividend.[14]  His Honour stated:

“I see nothing in this group of sections which could operate to diminish the enforceability among the members and the company of the contractual obligations among them arising out of the memorandum and articles of association…”[15]

“…[A] general amendment of the law relating to capacity of companies was not intended to change and did not fundamentally change the law as between the members and the company where rights among those persons are based on contractual obligations among them and not based on limits set by the law in its operation on each particular company on that company's powers.”[16]

  1. [148]
    Similarly, in ANZ Executors & Trustees Company Limited v Qintex Australia Limited (“Qintex”),[17] McPherson J (with whom Lee and Mackenzie JJ agreed) held that:

“The purposes of ss 67 and 68 are sufficiently achieved if, despite deficiencies in corporate capacity, the validity of corporate dealings with outsiders is made unimpeachable. Beyond that point the legislation does not affect to abrogate restrictions, explicit or implicit, on the exercise of directors’ or shareholders’ powers.”[18]

  1. [149]
    It must be acknowledged that there are textual differences between section 68 of the Companies Code and section 125 of the Corporations Act in its current form.  In particular, I note that the Companies Code contained a statutory statement of object in section 66C, which provided:

“The object of section 67-68 is –

  1. (a)
    to abolish the doctrine of ultra vires in its application to companies; and
  2. (b)
    without affecting the validity of the dealings of a company with outsiders, to ensure that the provisions of the rules of a company are give effect to by the company’s officers and members, and those sections shall be construed, and have effect, accordingly.” (emphasis added)
  1. [150]
    The italicised words made it clear that section 68 was not intended to affect the obligation of officers and members to comply with the rules of a company.  There is no equivalent express statement of the purpose of section 125 of the Corporations Act.
  2. [151]
    Despite this, I am satisfied that sections 124 and 125 were not intended to excuse directors or other organs of a company from their contractual obligations to comply with the company’s constitution under section 140 of the Corporations Act.  As Austin J observed in Hillig:

“[25] …If it were otherwise, some other sections of the Corporations Act generally regarded as expressing important principles of company law would be rendered otiose - for example, s 201M (which provides an act done by a director is effective even if the director's appointment did not comply with the company's constitution), s 129(1) (which entitles a person to assume that a company's constitution has been complied with) and s 129(2) (which entitles a person to assume that anyone who appears from ASIC's records to be a director or company secretary has been duly appointed). A large body of company law dealing with the consequences of a company organ, such as the board of directors or the company in general meeting, failing to comply with constitutional requirements for decision-making, and the potential scope for the curative application of s 1322, would have to be revised to cater for the application of s 125(1). If s 125(1) were applied in a case of non-compliance with requirements for the amendment of the company's constitution, the result would be at odds with s 136(3), which permits the company's constitution to provide that a special resolution to modify or repeal the constitution does not have any effect unless a further requirement specified in the constitution has been complied with. It is improbable that the legislature intended s 125(1) to affect these parts of company law, and clear from the Explanatory Memorandum to the 1983 Bill that the drafters had no such intention.”[19]

  1. [152]
    In my view, there is nothing in sections 124 and 125 of the Corporations Act which could operate to diminish the enforceability among the members and the company of the contractual obligations among them arising out of the memorandum and articles of association. 
  2. [153]
    The consequence is that the respondent’s board was obliged to exercise any power to made decisions about the applicant’s affiliation in accordance with the Constitution and the Policy.  That is the case regardless of whether the Constitution contained any express limitations on the exercise of that power.  The applicant, as a member, was entitled to commence proceedings against the respondent to enforce its contractual rights under section 140(1)(a) of the Corporations Act.

Consequences of the finding that the respondent lacked the authority to make the decisions

  1. [154]
    In my opinion, the decisions were not authorised by the Constitution or the Policy.  Further, I have found that sections 124 and 125 of the Corporations Act, together with clause 13.1 of the Constitution, did not enable the respondent to make the decisions.  Accordingly, the decisions were not authorised and are invalid. However, the originating application did not seek such an order nor any associated relief. 
  2. [155]
    Issue three on the agreed list of issues was whether, if the decisions were not authorised, they should be declared invalid and of no effect and whether the respondent should be ordered to reinstate on the applicant the rights and privileges it enjoyed prior to the decisions.
  3. [156]
    Despite not being particularised in the originating application, clearly the issue of whether the respondent had the power to make the decisions and the consequential relief was considered by both parties as a fundamental issue to be determined.
  4. [157]
    At the hearing, there was some discussion about what the appropriate order would be if I found that the decisions were not authorised. Counsel for the applicant submitted orally that the appropriate order would be a declaration that the decisions were invalid, as well as an order that the respondent, upon fulfilment of the conditions in clause 2 of the Policy, re-affiliate the applicant. Counsel for the respondent acknowledged that consequent orders could be made but did not make clear submissions as to what they should be.
  5. [158]
    However, the applicant also asks the Court to go further and declare the Policy itself invalid and of no effect.

Issue four: was the Policy an invalid attempt to vary class rights?

  1. [159]
    Issue four on the agreed list of issues is whether the Policy is an invalid attempt to vary class rights contrary to section 246B(2) of the Corporations Act.  Section 246B sets out the circumstances in which a company with a constitution may very or cancel shares and provides:

“246B Varying and cancelling class rights

If constitution sets out procedure

  1. (1)
    If a company has a constitution that sets out the procedure for varying or cancelling:
  1. (a)
    for a company with a share capital—rights attached to shares in a class of shares; or
  2. (b)
    for a company without a share capital—rights of members in a class of members;

those rights may be varied or cancelled only in accordance with the procedure. The procedure may be changed only if the procedure itself is complied with.

If constitution does not set out procedure

  1. (2)
    If a company does not have a constitution, or has a constitution that does not set out the procedure for varying or cancelling:
  1. (c)
    for a company with a share capital--rights attached to shares in a class of shares; or
  2. (d)
    for a company without a share capital--rights of members in a class of members;

those rights may be varied or cancelled only by special resolution of the company and:

  1. (e)
    by special resolution passed at a meeting:
  1. (i)
    for a company with a share capital of the class of members holding shares in the class; or
  2. (ii)
    for a company without a share capital of the class of members whose rights are being varied or cancelled; or
  1. (f)
    with the written consent of members with at least 75% of the votes in the class.
  1. (3)
    The company must give written notice of the variation or cancellation to the members of the class within 7 days after the variation or cancellation is made.
  1. (4)
    An offence based on subsection (3) is an offence of strict liability.”
  1. [160]
    The applicant’s submissions are predicated on the proposition that I have already accepted; that the Policy distinguishes between affiliation and membership. The applicant submits that the Policy purports to vary the rights of Member Associations, by requiring Member Associations to be affiliated and providing that certain benefits are available only to affiliated members. 
  2. [161]
    The respondent submits that section 246B(2) is not engaged for the following reasons:
    1. (a)
      The applicant is a Member Association of the respondent, which is a membership category provided for in clause 5.1(a) of the Constitution.
    2. (b)
      The respondent has taken no steps to change the voting rights or any other rights of Member Associations (nor has it sought to change any of the applicant’s rights, in the event that it re-affiliates). 
    3. (c)
      Even if the Policy could be regarded as something that varied the rights of Member Associations, the making of such a policy is provided for in the Constitution and accordingly, section 246B(1) would be engaged (not section 246B(2)).
    4. (d)
      The respondent would be required to follow the procedure set out in the Constitution for putting the Policy in place, which it did.
  3. [162]
    Counsel for the respondent submitted that:

“[The Policy] doesn’t make two classes. You are either a member association who’s in or you are a member association is out.  You are not half in. You’re not a member association but a non-affiliated one in some sort of half category. You’re simply not.  Now, there’s – we say there’s nothing in the constitution or the policy that would have you read it in that way.”

  1. [163]
    The respondent submits that the applicant has misunderstood the effect of the Policy.  It does not create two classes of Member Associations, with one class being “affiliated” with the respondent, and the other class not.  Rather, the respondent submits that the Policy provides for annual renewal of status as a Member Association, following which a Member Association either remains a member or ceases to be a member. 
  2. [164]
    The respondent submits that a number of provisions in the Constitution expressly contemplate that membership of the Respondent is not perpetual:
    1. (a)
      Clause 5.6(b) expressly deals with the position of members vis-à-vis the respondent if their membership ceases or is terminated.  That distinction itself contemplates that membership may be ended by a decision of the respondent against the member’s wishes (as opposed to a voluntary decision not to renew). 
    2. (b)
      Clause 8.1(a)(ii) provides for members to pay annual subscription fees, re-affirming the concept of membership being an annual membership, that needs to be renewed each year.
    3. (c)
      Importantly, clause 6.1(c) which provides for termination of membership according either to the Constitution or a policy.
    4. (d)
      Even more importantly, clause 6.1(e) which provides for automatic cessation of membership if the Member is “no longer meeting the requirements for membership according to clause 5”. 
  3. [165]
    In my view, the Constitution does not provide for annual renewal of the status as a Member Association, following which a Member Association either remains a member or ceases to be a member.
  4. [166]
    The Constitution sets out how the applicant can become a member and the circumstances in which the applicant ceases to be a member.
  5. [167]
    Part 5 of the Constitution governs the admission to membership of the respondent.  Once a person or entity has been admitted as a member pursuant to clause 5.2, then, in my view, they remain a member until their membership ceases pursuant to Part 6 of the Constitution. In my view the Constitution does not provide a membership on an annual basis. 
  6. [168]
    The Constitution does not stipulate that membership is only for a certain duration.  The Constitution provides for the admission of members and the cessation of membership.  Clause 6.1 of the Constitution states that a person ceases to be a Member on:
    1. (a)
      resignation;
    2. (b)
      death;
    3. (c)
      termination in accordance with the Constitution or a policy; 
    4. (d)
      ceasing to exist; or 
    5. (e)
      no longer meeting the requirements for membership according to clause 5.  
  7. [169]
    None of those paragraphs suggest annual renewal is required. Rather, pursuant to clause 6.1, membership endures until terminated by one of those particular events. 
  8. [170]
    Further, I note that the Constitution deals with fees and subscriptions in section 8:

“8.1 Membership Fee

  1. (a)
    The Directors must determine from time to time:
  1. (i)
    the amount (if any) payable by an applicant for membership;
  2. (ii)
    the amount of the annual subscription fee payable by each Member, or any category of Members;
  3. (iii)
    any other amount to be paid by each Member, or any category of Members, whether of a recurrent or any other nature; and
  4. (iv)
    the payment method and the due date for payment.
  1. (b)
    Each Member must pay to the Company the amounts determined under this clause 8 in accordance with clause 8.1(a)(iv).

8.2 Non-Payment of Fees

Subject to clause 5.3(a), the right of a Member to attend and vote at a General Meeting is suspended while the payment of any undisputed subscription or other amount determined under clause 8 is in arrears greater than 90 days.”

  1. [171]
    I note that clause 8.1 of the Constitution contemplates fees payable by an applicant for membership and also an amount of annual subscription, which suggests  a one-off membership fee with ongoing subscription fees. 
  2. [172]
    Further, clause 8.2 the Constitution makes it clear that membership endures even if fees are not paid.  Such a clause contemplates that that membership endures despite non-payment of annual subscription fees.  Membership is not an annual affair.
  3. [173]
    In Gaiman v National Association for Mental Health,[20]  like this case, there was no statement in the constitution to the effect that membership was of yearly duration.  The constitution in that case also provided that membership would cease in certain circumstances (including where requested to resign).  It too provided for an annual subscription to be paid.  Megarry J held there was a right of membership until that membership was terminated in accordance with the articles.[21]
  4. [174]
    The applicant’s right of membership continues until it is ceased in accordance with part 6 of the Constitution.  Clause 6.1 of the Constitution provides for cessation of membership.  In my view, membership of the respondent only ceases in accordance with clause 6.1 and does not require annual renewal.    
  5. [175]
    Member Associations form one class of members (the others being Legacy Life Members and Individual Members). Constitutionally, the classes have different rights.  For example, Individual Members do not have the right to receive notice of, attend and vote at general meetings, whereas Member Associations do.
  6. [176]
    The Policy purports to vary the rights of Member Associations of the respondent by requiring Member Associations to be affiliated and providing that certain benefits are available only to affiliated members.  
  7. [177]
    I note that counsel for the respondent, when submitting that affiliation and membership were synonymous, made the following submission:

“…. we say that being – to be affiliated or to have affiliation is one and the same as membership.

And that reading is the only reading that makes sense because – for two reasons:  the first is there is no evidence at all that there is any sort of – you might say second-class member association of Netball Queensland, where we say, “You, Ipswich, are no longer an affiliated member because you wouldn’t meet these conditions, but you’re now merely a member association.  You’re still a member, but you’re in this – you’re in the – you’ve moved into this different class, this sort of non-affiliated membership class.”  There’s no such class.  There’s no such category; it doesn’t exist. 

You are either – we say you are either a member or you are not, and we say at the moment Ipswich are not.  They’ve complained about the fact that, as a result of a decision that was made, the consequence is that they’re not, but there’s no – you are either fish or fowl.  There’s nothing else in between…”

  1. [178]
    However, in my view membership and affiliation are different with the result being that, by requiring affiliation of Member Associations, the respondent has indeed created a “second-class” Member Association; a Member Association who does not obtain the benefits of an Affiliated Member Association.
  2. [179]
    The division of Member Associations into those who are affiliated and those who are not, and the conferral of the benefits described in clause 1.2 of the Policy only upon affiliated Member Associations, constitutes a variation of class rights within the meaning of section 246C(3) of the Corporations Act, which provides:

“(3) If the members in a class of members in a company without share capital are divided into further classes of members, and after the division the rights of all of those members are not the same:

  1. (a)
    the division is taken to vary the rights of every member who was in the class existing before the division; and
  2. (b)
    members who have the same rights after the division form a separate class.”
  1. [180]
    Further, the Policy purports to deprive non-affiliated Member Associations of rights they previously enjoyed under the Constitution, specifically the right to convene and vote at general meetings and nominate, elect and dismiss directors at general meetings.[22]  This constitutes a variation of class rights pursuant to section 246C(4) of the Corporations Act, which provides:

“(4) If the rights of some of the members in a class of members in a company without a share capital are varied:

  1. (a)
    the variation is taken to vary the rights of every other member who was in the class existing before the variation; and
  2. (b)
    members who have the same rights after the variation form a separate class.”
  1. [181]
    The Constitution allows directors to make policies but it does not set out a procedure for varying or cancelling the rights of members in a class of members.  Accordingly, section 246B(2) of the Corporations Act is engaged.  Section 246B(2) provides that those rights may only be varied by special resolution passed at a meeting of the class of members whose rights are being varied  or with the written consent of 75% of the members.
  2. [182]
    On its face, the Policy was simply approved by the CEO. It follows that the Policy is ineffective to vary class rights in relation to Member Associations.  Accordingly, the Policy is invalid where it imposes an affiliation process upon a Member Association.

Conclusion

  1. [183]
    As I have found that the decisions were not authorised and invalid (issues two and three) and further that the Policy as it relates to affiliation of Member Associations is invalid (issue four), it is not necessary for me to consider the other issues raised in the agreed list of issues. 
  1. [184]
    I declare that:
    1. (a)
      the decisions of the respondent made on 6 October 2020, 1 February 2021 and 15 March 2021 (as set out in paragraph four of my reasons) were not authorised and are invalid;
    2. (b)
      the respondent’s “Policy Number -001 – Affiliation and Membership Policy” purports to vary class rights of Member Associations without complying with section 264B(2) of the Corporations Act and is invalid to the extent that it refers to and requires the affiliation of Member Associations.
  2. [185]
    I order that the respondent reinstate the applicant’s rights and privileges as a Member Association of the respondent. 
  3. [186]
    I will give the parties an opportunity to consider these reasons before they are required to file and serve short written submissions on the question of costs.  I encourage the parties to agree on an order for costs.
  4. [187]
    However, if this cannot occur, then the parties should agree on a timetable for the exchange of written submissions.  If it is appropriate, I will then deal with the question of costs on the papers, unless either party requests a hearing.  In order to facilitate that process, I will adjourn the question of costs to a date to be fixed.

Footnotes

[1]  Citing Cameron v Hogan (1934) 51 CLR 358 at 370-371 (per Rich, Dixon, Evatt and McTiernan JJ).

[2]  See Harrington & Ors v Coote & Anor (2013) 119 SASR 152 at [4]-[5], cited with approval by Dalton J in McCleverty v Australian Karting Assoc Ltd  [2015] QSC 323 at footnote 1.

[3] Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 236 ALR 561 at [56]-[59], [123]- [124], [236]

[4]  [2010] FCAFC 57

[5] Benstead v Clark [2007] WASC 219 per Beech J at [56].

[6]  To, at all times, act for and on behalf of the interests of the Company, the Members and Netball.

[7]  To act in good faith and loyalty to maintain and enhance the Company and netball, its standards, quality and reputation for the collective and mutual benefit of the Members and Netball.

[8]  To not do or permit to be done any act or thing which might adversely affect or derogate from the standards, quality and reputation of netball and its maintenance and development

[9]  (1990) 3 ACSR 649 at 671-672 per Ormiston J. 

[10]  [1986] 1 Ch 246.

[11] Rolled Steel Products (Holdings) Ltd v British Steel Corp & Ors [1986] 1 Ch 246, 303-304, quoted with approval by Bryson J in Darvall v North Sydney Brick & Tile Co Ltd (No 4) (1988) 14 ACLR 474, 483.

[12] Hillig v Darkinjun (2006) 201 FLR 148 at [20].

[13] Darvall v North Sydney Brick & Tile Co Ltd (No 4) (1988) 14 ACLR 474.

[14]  Ibid at 482. 

[15]  Ibid at 484.

[16]  Ibid at 485.

[17]  [1991] 2 Qd R 360

[18]  Ibid at 370.

[19] Hillig v Darkinjung Pty Ltd (2006) 201 FLR 148 at [25].

[20]  [1971] Ch 317

[21]  Ibid at 336.

[22]  See clauses 11.1(b) and (c); 11.2(c) of the Constitution, as well as clause 1.2(iii) of the Policy.

Close

Editorial Notes

  • Published Case Name:

    Ipswich Netball Association Inc v Netball Queensland Limited

  • Shortened Case Name:

    Ipswich Netball Association Inc v Netball Queensland Limited

  • MNC:

    [2021] QSC 348

  • Court:

    QSC

  • Judge(s):

    Wilson J

  • Date:

    17 Dec 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
ANZ Executors & Trustee Co Ltd v Qintex Australia Ltd[1991] 2 Qd R 360; [1990] QSCFC 67
2 citations
Jump To
Cite 1 - [1991] 2 Qd R 360
Cite 2 - [1991] 2 Qd R 360
Benstead v Clark [2007] WASC 219
1 citation
Jump To
Cite 1 - [2007] WASC 219
Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1990) 3 ACSR 649
1 citation
Jump To
Cite 1 - (1990) 3 ACSR 649
Cameron v Hogan (1934) 51 CLR 358
1 citation
Jump To
Cite 1 - (1934) 51 CLR 358
Darvall v North Sydney Brick & Tile Co. Ltd (1988) 14 ACLR 474
3 citations
Jump To
Cite 1 - (1988) 14 ACLR 474
Cite 2 - (1988) 14 ACLR 474
Cite 3 - (1988) 14 ACLR 474
Gaiman v National Association for Mental Health [1971] Ch 317
1 citation
Jump To
Cite 1 - [1971] Ch 317
Harrington v Coote (2013) 119 SASR 152
1 citation
Jump To
Cite 1 - (2013) 119 SASR 152
Hillig v Darkinjung Pty Ltd (2006) 201 FLR 148
3 citations
Jump To
Cite 1 - (2006) 201 FLR 148
Cite 2 - (2006) 201 FLR 148
Cite 3 - (2006) 201 FLR 148
HNA Irish Nominee Ltd v Kinghorn [2010] FCAFC 57
1 citation
Jump To
Cite 1 - [2010] FCAFC 57
International Air Transport Association v Ansett Australia Holdings Limited & Ors (2008) 234 CLR 151
1 citation
Jump To
Cite 1 - (2008) 234 CLR 151
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 236 ALR 561
1 citation
Jump To
Cite 1 - (2006) 236 ALR 561
McCleverty v Australian Karting Association Ltd [2015] QSC 323
1 citation
Jump To
Cite 1 - [2015] QSC 323
Rolled Steel Products (Holdings) Ltd v British Steel Corp & Ors [1986] 1 Ch 246
3 citations
Jump To
Cite 1 - [1986] 1 Ch 246
Cite 2 - [1986] 1 Ch 246
Cite 3 - [1986] 1 Ch 246

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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