Diener v Rooty Hill and District Racing Pigeon Club Inc
Most charities and not-for-profits are required to maintain a register of members. However, over time, some organisations lose track of who their members are and fail to maintain a member register. Others fail to follow the process prescribed by their rules when adding and removing members. The recent decision in Diener v Rooty Hill and District Racing Pigeon Club Inc1(Diener) serves as a timely reminder to ensure that your register of members is accurate and members are properly added and removed.
Obligation to maintain a register of members
Companies are required to maintain a register of members.2 A company’s register of members must include the following information:
- the name, address and date of entry on the register for each current member;3 and
- the name, address and date of ceasing to be a member for each individual that ceased to be a member within the last seven years.4
Similarly, most incorporated associations are required to maintain a register of members in accordance with the state or territory legislation under which they are incorporated.5 For example, in Victoria, an incorporated association’s register of members must include the following information:
- the name, membership class, address and date of entry on the register for each current member;6 and
- the name and date of ceasing to be a member for each former member.7
The model rules in many jurisdictions and most organisations’ governing documents (such as their constitution or rules) also typically provide for the obligation to maintain a register of members, including by adding and removing details as and when people become or cease to be members.
Benefits of maintaining a register of members
Maintaining a register of members is essential not only for compliance with an organisation’s statutory obligations and governing document, but for identifying who an organisation’s members are at any given time. This can assist an organisation to determine:
- who must be given notice of general meetings (and how they can be contacted);
- who can attend and participate in general meetings (including by voting), making key decisions for the organisation;
- who is liable to any membership fees imposed by the organisation;
- who is liable to contribute towards the payment of any debts and liabilities of the organisation; and
- who can enforce the organisation’s governing document against it.8
Failing to maintain a register of members may be in breach of an organisation’s statutory obligations and governing document. It may also undermine the legitimacy of decisions made in general meeting, including the election of the governing body and changes to the governing document. If this is not resolved, the organisation may become mired in a protracted dispute concerning membership, which can be highly disruptive and lead to costly court proceedings (as was the case in Diener).
Diener
In Diener, 17 purported members of the Rooty Hill and District Racing Pigeon Club Inc (Association) commenced proceedings against the Association in the Supreme Court of New South Wales, claiming that they were members and entitled to be given notice of general meetings (among other matters). The purported members sought to challenge decisions made in two separate meetings in 2017 at which the Association elected a new committee and approved a new constitution.
The Association adopted the model rules prescribed for New South Wales associations upon incorporation on 25 February 1991. However, in practice the Association did not comply with the model rules but operated informally according to unwritten rules as understood by its members. Additionally, the Association did not maintain a register of members. Instead, the Association informally recognised “members” as those who attended annual general meetings over time, participated in the Association’s pigeon racing activities and paid annual membership fees.
Most of the purported members were informally “members” of the Association at some point in time, but had long since stopped participating in the Association’s affairs. They never formally applied for (or were admitted to) membership in accordance with the model rules. They also never formally resigned from membership in accordance with the model rules. Relevantly, to resign under rule 6 of the model rules, a member was required to pay any outstanding membership fees to the Association and notify the secretary of their intention to resign.
The Court’s decision
The main issue considered by the Court was whether the purported members had “resigned” from membership by conduct even though they had not paid any outstanding membership fees or given written notice of their intention to resign. In considering this issue, the Court observed that:
- generally, a member can unilaterally resign, if there are no adverse consequences for the Association;
- if there is a condition for the Association’s benefit (such as payment of outstanding fees), members cannot unilaterally resign unless they comply with that condition;
- compliance with a condition for the Association’s benefit can be waived by the Association, in which case a member may resign in other ways;
- members may resign by conduct, in addition to by words;
- “conduct” may include lack of involvement, failure to participate in affairs and/or voluntary disregard of the obligations of membership over a continuous period of years; and
- mere inactivity for a period that is not consequential is different to conduct that manifests an intention to no longer be a member.
The Court found that all but two of the purported members had resigned from membership, due to their lack of participation in the Association’s affairs for a prolonged period of time. Accordingly, they were not recognised as members of the Association and thereby not entitled to be given notice of meetings of the Association. The Court also said in obiter that, even if the purported members had been properly admitted to membership (which it was not required to determine), it would not have exercised its discretionary power to correct the register to reinstate their membership due to their long delay and failure to clearly explain the reason for seeking reinstatement.
The Court’s decision decision confirms that there are circumstances in which an organisation may be entitled to remove individuals from its member register even if those individuals have not formally resigned. It also highlights the importance of compliance with processes under a governing document for the admission and removal of members and maintaining an accurate member register. This will ensure that an organisation has certainty regarding the identity of members, who are responsible for making key decisions (including, for most organisations, electing board or committee members, amending governing documents and winding up). As Justice Robb concluded, “if anything is established by these proceedings it is that it is fundamentally in the interests of [organisations and their] members to ensure that records are properly kept so that the membership [can] clearly be established from time to time”.
Further reading
The decision in Diener is available on the NSW Caselaw website.
The Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) has published a Case Note on the decision in Diener.
How we can help
Our For Purpose team helps charities from the ground up, from establishing a legal entity to applying for charity registration with the ACNC. If you have any issues concerning your organisation’s membership (including reinstating a compliant register following a period of operating outside your organisations governing document), our team can assist you to navigate them swiftly and compliantly.
Contact us
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.
1 [2024] NSWSC 27.
2Corporations Act 2001 (Cth) s 168(1)(a).
3Corporations Act 2001 (Cth) s 169(1).
4Corporations Act 2001 (Cth) s 169(7).
5Associations Incorporation Act 1991 (ACT) s 67; Associations Act 2003 (NT) s 34; Associations Incorporation Reform Act 2012 (Vic) s 56; Associations Incorporation Act 2015 (WA) s 53. In New South Wales and South Australia, an association’s governing document must address its register of members: Associations Incorporation Act 2009 (NSW) sch 1 cl 2; Associations Incorporation Act 1985 (SA) s 23A(1)(c)(i). In Queensland and Tasmania, each jurisdiction’s model rules include a framework for setting up and maintaining a register of members.
6Associations Incorporation Reform Act 2012 (Vic) s 56(2).
7Associations Incorporation Reform Act 2012 (Vic) ss 56(3)-(4).
8In most jurisdictions, an incorporated organisation’s governing document has effect as a contract between the organisation and each of its members: Corporations Act 2001 (Cth) s 140(1); Associations Incorporation Act 2009 (NSW) s 26(1); Associations Incorporation Act 1981 (Qld) s 71(1); Associations Incorporation Act 1985 (SA) s 23(1); Associations Incorporation Reform Act 2012 (Vic) s 46; Associations Incorporation Act 2015 (WA) s 21.