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2.5 Duty of care

When you agree to be an office bearer on the board or committee of an incorporated association such as a sporting club, you will have a duty of care. Under common law, this means you have the same duties as directors and share responsibility for the effective management of the club on behalf of its members. You also owe fiduciary and statutory duties to the club.

As a rule, an office bearer must:

  • Take all reasonable steps to monitor the management of the club
  • Acquire a working knowledge of the business of the club
  • Keep informed of the club’s activities and manage the risks of club practices
  • Be familiar with the financial status of the club by regularly reviewing financial statements
  • Make enquiry into matters revealed by financial statements where necessary or prudent.

Breach of these duties can personally result in serious repercussions for the office bearer. The courts take a dim view of dishonest and reckless conduct by imposing heavy fines, awarding damages, and, on occasions, imprisonment.

2.4.1 Duties

a. Duty of good faith and honesty

Office bearers are given broad discretion to manage a business under the constitution of the incorporated association.  An overarching duty of good faith applies to the exercise of this discretion. Like most common law duties, the duty of good faith and honesty arises at common law because office bearers are regarded as being in a position of trust with respect to their incorporated association.

This duty requires office bearers to consider the interests of the members of the club holistically. In circumstances of insolvency or near insolvency, the duty to act in the best interests of members is overridden by a duty to act in the best interests of creditors.

b.Duty to act for a proper purpose

Since office bearers are fiduciary agents, powers given to them can only be exercised for the purposes for which they are given.  Office bearers may not exercise their powers to obtain private advantage.

c.Duty of care, skill and diligence

Breach of duty occurs when an office bearer is reckless in exercising his or her office.  Proper performance is dictated by several circumstances, including the type of club, its size and nature, the composition of its board and the distribution of work between office bearer and other officers and volunteers.  

Background, qualifications and management responsibilities are also taken into account when determining whether an office bearer has complied with their duties. 

d.Duty to avoid conflict and to disclose interests

An office bearer should not allow a conflict of interest to compromise their position in the club.  Personal interests or other duties, such as a shareholding or being an office bearer of another company, must not be brought into conflict with their duty to the club.  This overlaps with the duty to act in good faith and for a proper purpose.

Some situations which give rise to conflicts of interest are:

  • The office bearer taking advantage of opportunity: An office bearer may not use their position to make a profit.  If they do, they must account to the club for the profit made.
  • The office bearer taking advantage of an opportunity where the club is unable: An office bearer has an obligation not to profit personally from their position as an office bearer, and not to allow a conflict to arise between their duty as an office bearer and their own self-interest. 
  • The office bearer contracts with the club: These are voidable at the option of the club. This includes contracts in which office bearers have an indirect interest. The fairness of the contract is irrelevant, and this is applied as a strict rule. The contract may be validated by ratification at a general meeting, provided there is full disclosure.
  • Conflict of external duties with office bearers: If an office bearer holds an office or property with duties in conflict with their duties as office bearer of the club, they should declare these once they are aware of the conflict at the next board meeting.
     

2.4. 2 Financial duties

Financial management is not the sole responsibility of the Treasurer. All office bearers have a role and duties vary according to the size of the club, whether it’s affiliated or not, if the workforce is paid or volunteer and the range of activities offered.

More information

Your state or national body is a good first port of call for advice and assistance.

Disclaimer

As with any resource, this does not replace obtaining legal advice on each sport specific requirement and it is recommended you do so. 

The information provided in this resource is for your information only.  The authors and the NSW Office of Sport accept no responsibility for the accuracy of the information or your reliance upon it.