The cost of getting club governance wrong.
Every golf club will eventually face a difficult governance decision. A member complaint. Allegations of misconduct. A disciplinary hearing. A board decision that divides members. The question is not whether these situations will arise, but whether the club is prepared when they do.
In the September issue of Australian Golf Digest, Brad Clifton observed, in his story titled “Board games”, that “as Australian golf continues to experience record participation and increasing commercial investment, the message from the research is clear: better governance may prove just as important to a club’s future as the quality of its fairways and greens”.
The article considered why good governance matters. But what happens when governance is tested? When a complaint is made, a member faces disciplinary action or a board must make an unpopular decision?
Recent legal disputes in Australia and England demonstrate how quickly governance issues can escalate into significant organisational risks. In both cases, boards expelled members believing they were acting in the club’s best interests. Both decisions were challenged in court. Yet the outcomes were dramatically different. The key distinction was not the allegation itself, but the process followed by the club.
Two recent cases provide a useful illustration of the difference between governance that protects a club and governance that exposes it to unnecessary risk.
Club A investigated allegations that a member had engaged in conduct unbecoming of a member and ultimately decided to expel them. The member challenged the decision in court. However, the court found the club had followed its disciplinary procedures, provided the member with an opportunity to respond and conducted a fair process throughout. As a result, the club successfully defended its decision. Importantly, the court was not concerned with whether the decision was right or wrong, but whether the process had been fair.
Club B expelled a member accused of submitting an altered scorecard. When the member challenged the decision, the court found the disciplinary process was fundamentally unfair, citing procedural deficiencies and apparent bias. Describing the process as the “antithesis of fair”, the court ordered the member be reinstated. The club reportedly incurred legal costs exceeding £300,000 over several years of litigation. The lesson was clear: the issue was not the allegation itself, but the club’s failure to follow a fair and defensible process.
What separates clubs that navigate difficult situations successfully from those that do not is rarely a question of resources. Stronger clubs establish clear rules, defined responsibilities and disciplinary procedures before problems arise. As these examples show, litigation rarely turns on the allegation itself. More often, it turns on whether the club followed a fair process.
The challenge for clubs is that difficult situations rarely come with clear answers. Under the pressure of conflicting accounts and competing interests, boards can be tempted to focus on achieving outcomes quickly and can lose sight of the due process necessary to resolve disputes fairly.
Strong governance comes from diligent preparation. A constitution that clearly outlines decision-making powers. A board charter that defines the role of directors and sets expectations for conduct. By-laws that reflect the realities of a modern club. Individually, these documents may seem administrative. Collectively, however, they provide the framework that helps boards respond with calculation, consistency and fairness when difficult circumstances arise.
Most clubs would not think twice about investing in irrigation infrastructure, course maintenance equipment or clubhouse improvements. Yet disputes arising from bad governance can quickly exceed the cost of many planned capital projects.
Viewed through that lens, governance documents are not only administrative necessities – they are effective risk-management tools. A contemporary constitution, clear by-laws, defined disciplinary procedures and a well-functioning, informed board can help prevent complaints from becoming disputes and prevent necessary disputes from turning into expensive litigation.
Governance is often viewed as an administrative exercise until something goes wrong. When disputes arise, however, a club’s constitution, by-laws and disciplinary procedures rapidly become some of its most important risk-management tools.
McInnes Wilson Lawyers is a national commercial law firm with a dedicated sports and entertainment sector. They work with sporting organisations, clubs, boards and business leaders across Australia to manage governance, risk and disputes with confidence. For more information, visit mcw.com.au
