Resolving disputes

Learn how disputes in incorporated associations are handled, when to seek legal help and the role of NSW Fair Trading. 

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The purpose of the legislation is to enable incorporated associations to function as self-governing legal entities, with their constitutions serving as a contract between the incorporated association and its members.

The management committee of an incorporated association must oversee its administration and ensure decisions are made in the incorporated association's best interests.

Part of this responsibility also involves resolving internal disputes between:

  • members in their capacity as members
  • members and the incorporated association.

The management committee is a group of members democratically elected by the incorporated association’s members.

From time to time issues may arise and the members may challenge a committee if they don’t follow their constitution.

The Associations Incorporation Act 2009 (the Act) requires an incorporated association's constitution to outline a process for resolving internal disputes between members and the incorporated association. These provisions are in place to help resolve disputes quickly and fairly.

If no such process is specified, then the procedure outlined in Clause 10 of the Model constitution will apply.

This includes, but is not limited to, addressing and resolving internal disputes related to:

  • membership
  • meeting procedures
  • the validity of meetings and appointments
  • the removal of committee members.

Should these matters proceed to mediation, arbitration, or determination by the NSW Supreme Court, NSW Fair Trading will act in accordance with any agreements, directions, or orders related to the issue.

Steps to resolve an internal dispute

 

1

Discussion with the parties involved

The first step is to try to resolve the dispute directly with the parties involved. Most incorporated associations are open to receiving feedback and are willing to address concerns.

2

External mediation

Every incorporated association's constitution must provide for dispute resolution procedures. Where the incorporated association has adopted the model constitution, if the dispute is between:

  • 2 or more members of the incorporated association, (but only in their capacity as members), or
  • 1 or more members and the incorporated association,

you must refer it to a NSW Community Justice Centre (CJC) for mediation. 

CJC services are:

  • free
  • impartial
  • undertaken by professionally trained mediators who have no prior connection or relationship with either the disputing parties or the incorporated association.

Their primary role is to support the parties in achieving an agreed resolution.

Where mediation fails to resolve the dispute within 3 months, the dispute is to be referred to arbitration.

You may wish to seek appropriate legal advice or use an alternative dispute resolution (ADR) service.

For information on ADR services, you can:

3

Legal proceedings

Pursuing legal action through the courts should be considered a final measure. Parties are encouraged to seek legal advice and explore all other possible options before taking this step.

Holding a special general meeting

In certain situations, the incorporated association, in accordance with its constitution, may convene a special general meeting of all members of the incorporated association to address and resolve concerns.

If the Model constitution is in effect, clause 25 allows the management committee to call a special general meeting at its discretion or upon receiving a written request from at least 5% of the total membership.

See more information about special general meetings.

Vote of no confidence

The Act does not include provisions relating to a vote of no confidence. The legal effect of such a vote under the Act is unclear.

However, the constitution of an incorporated association requires the grounds on which, or reasons for which, a casual vacancy in the office of a member of the committee occurs.

When NSW Fair Trading will act

NSW Fair Trading’s role is to ensure incorporated associations comply with the Act, including monitoring financial reporting and other obligations. It has powers to take action where there is evidence that the dispute involves a breach of the Act.

Any complaint received must be supported by clear evidence of a potential breach. NSW Fair Trading has the power to determine how we will address non-compliance.

There are substantial penalties in place for providing false or misleading information in particular circumstances.

Find out about how to make a complaint about an alleged breach of the Act and how NSW Fair Trading will handle your complaint.

When NSW Fair Trading will not act

NSW Fair Trading cannot intervene in internal disputes.

NSW Fair Trading does not:

  • intervene in complaints that are frivolous or vexatious
  • intervene in matters governed by the incorporated association’s constitution
  • intervene in employment matters - these are matters for Fair Work Commission
  • investigate an alleged theft of incorporated association funds or other criminal matters - these are matters for NSW Police
  • intervene in matters regarding the quality of service the incorporated association provides - the agency you need to contact for these matters will differ depending on the services being provided
  • provide legal advice.

Where to get help

You may get legal help from the following sources:

Also, Justice Connect has free 'self-help' legal resources. These include fact sheets and guides for incorporated associations. 

Ask NSW Fair Trading a question

If you are unable to find the information you need, you can call us on 1800 502 042 between 8:30am and 5pm, Monday to Friday.

NSW Fair Trading can only provide information based on the content available on the website and cannot provide legal advice. 

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