Access to company documents confirmed for committee members

Pine Rivers and Ors v Group Training Association Queensland and Northern Territory Inc [2013] QCA 358, McMurdo P, Fraser JA and Atkinson J  (appeal from [2013] QSC 31)

The Queensland Court of Appeal unsurprisingly declares that members of the committee of an incorporated association are entitled to access and copy its business documents.

It is hard to believe that two members of an association had to resort to seeking the intervention and direction of the Supreme Court of Queensland to enforce the right of their representative members on the management committee to inspect and take copies of business documents of the association.  What is easier to believe is that there was factional disagreement between members of the association consisting of 35 members.  The application was made pursuant to sections 72 and 73 of the Associations Incorporation Act 1981 (Qld) which is similar, but not identical, to section 67 of the Associations Incorporation Reform Act 2012 (Vic).

Each member of the association was a Group Training Organisation which competed for government funds obtained by the Association for apprenticeship programs.  The management committee determined the allocation of funds to its members. S was CEO of a member and F the CEO of another member of the association. Each of S and F were elected as members of the management committee comprising seven members. S and F sought access to documents held by the association concerning, amongst other things, contracts between the association and relevant government departments and agreements for funding provided to members of the association.

In June 2012 the two members who S and F represented made application to the court for a direction that the association provide all members of the management committee with certain documents.  There was some suggestion that there was, or had been, preferential allocation of funding to some members. A special general meeting of the association held in July 2012 failed to pass resolutions that the documents be provided to all committee members.  Surprisingly, there was evidence that the chair of the management committee had not seen certain documents considered to be “commercial in confidence” and did not consider that he needed to see them in order to discharge his function as Chair of the committee.

The two applicant members argued that S and F (all four were appellants to the appeal) were entitled to examine the documents in order to discharge their “statutory and fiduciary duties” and, whilst there was no evidence of bad faith, the proper governance of the association required the documents to be made available to all members of the committee.  The appellants maintained that the resolution of members refusing to allow the committee access was ineffective and beyond power.

The primary judge held that the evidence in support was “vague”, the exact nature of the alleged “duties” was not established and the documents sought went beyond the term of appointment of S and F.  He noted that there was no specific provision entitling a committee member to documents and he was also influenced by the fact that the members in meeting had voted against production of them to the committee.  The judge was not satisfied that the requirements of s72 of the Act was satisfied and in any event, on discretionary grounds, dismissed the application.

On appeal, Fraser JA (McMurdo P and Atkinson J agreeing) pointed to the analogies between the duties of a director of a corporation and those of the member of the management committee of an incorporated association.  His Honour referred to a number of decisions where courts have decided that a director had a right to see and copy documents belonging to the company in order to perform their duties as director.[1]

Fraser JA disagreed with the primary judge that a member of an association had no right to ask the court to enforce the right of a member of the management committee to access its documents.  He noted that incorporated associations have “striking similarities” with companies, and critically, that the business and operations of the association must be controlled by a management committee.  There was no relevant distinction to be drawn between the director of a company who acts as its manager and agent and that of a member of the management committee of an incorporated association.  Both owe fiduciary duties to their organisations.[2]

Fraser JA saw no inconsistency between the omission from the Act of a provision specifically conferring a right to access the association’s documents and the implied prima facie right of a committee member to such access.  His Honour described r14(1)(a) – to the effect that the management committee ‘shall have the general control and management of the administration of the affairs … of the Association’ – as a ‘critical rule’.

As to the effect of the resolution put to members (which was defeated), his Honour reasoned that it could not deprive a management committee member of access to documents considered necessary to fulfil his or her duty in managing the Association.  The provision of the Act (s60) and rules imposed that obligation on the management committee rather than on its members.

Passing reference was made to Cameron v Hogan, it being noted that it ‘has no enduring relevance in relation to applications by members of incorporated associations to enforce rights given to members by the association’s rules’. [43]

Having decided that the primary judge was wrong in deciding that the members were not entitled to insist that S and F be permitted access to the documents, Fraser JA considered whether there was any discretionary basis to refuse the relief sought.  He noted that the association did not allege that S and F were acting other than for a bona fide purpose and that they had a prima facie right to inspect and copy the documents without having to give any reason.  The fact that the documents predated their appointment was not to the point and there was no relevant delay in making the application.

Fraser JA said it was also no answer to the application that the documents included contracts made by the association and other parties agreed to be kept confidential – it being noted that such an agreement could not of itself preclude inspection by a member of the management committee acting in good faith. He concluded: ‘Of course management committee members who do inspect and take copies of the Association’s confidential documents are obliged to keep the documents confidential and use them only for the purpose of fulfilling their duties to the Association’ [49][3].

A direction was made that the association perform and observe its rules by producing the documents identified to current members of the management committee.  The association was ordered to pay costs.

Ian Percy – CommBar Profile