4. Liability of management committee members

One of the benefits of incorporation is that members (including management committee members) and office bearers of the association are generally not liable for debts or liabilities of the association. However, this does not apply to liabilities incurred by, or on behalf of, the association before incorporation.

The most common form of liability incurred by an association is liability under contracts that it enters into. An association may also incur liability under tort law, e.g. for negligent acts done by the management committee, employees or volunteers. An association can also be liable under criminal law, for example, for fraud.

However, management committee members are not immune from personal liability. They have a duty to fulfil the functions of their office to the best of their ability. If a committee member or officer acts in bad faith or contrary to the rules of association, he or she may incur a personal liability, for example, if an officer enters into a contract against the instructions of the management committee. Likewise, if a management committee member acts negligently in the performance of his or her office, he or she may be held personally liable for any resulting loss or damage. (See the section on Insurance and Risk Management for information on insurance for office bearers/committee members.)

4.1 Duty of care and risk management

Incorporated associations have a general duty of care to ensure that the activities of the association do not cause harm, damage or injury to any participant or recipient of its services, or any other person who is reasonably likely to be affected. If, for example, someone is injured:

• while participating in a sporting event or school holiday program provided by the association; or
• while attending a childcare facility provided by the association;

and the injury is a foreseeable result of the association failing to exercise reasonable care in providing these services, then the association will be liable for any loss or damage suffered.

With this in mind, management committees need to ensure that the standard of care provided is reasonable in order to minimise the risk of liability. The committee should identify and evaluate the risks for all activities. In situations where harm is more likely to occur or there is a greater risk of harm, a higher degree of care is required. For example, a higher degree of care and supervision is required for young children taking part in physical games than for children sitting listening to stories being read.

An example of duty of care:

4.2  Codes of conduct

Increasingly, management committees are developing codes of conduct for management, staff and volunteers. A code of conduct defines the expectations that the association has about the behaviour of people involved in the group's activities. While a code of conduct can theoretically cover a range of behaviours, it cannot be discriminatory, unreasonable or advocate unlawful activities.

A code of conduct for committee members might deal with the following topics:

• Complying with all policies, procedures and rules of the association;
• Attendance and participation in management committee meetings and the work of the management committee;
• Clarifying who has authority to speak on behalf of the association;
• Maintaining confidentiality;
• Behaving in a manner that does not obstruct the association's pursuit and fulfilment of its objectives;
• Behaviour that is respectful of diversity, is non-discriminatory and upholds the association's values (if defined); and
• Behaviour that does not abuse, physically, sexually or verbally, any member of the association, staff, volunteers or members of the public.