Lessons from a High-Profile Not-for-Profit Governance Dispute: Board Control, Asset Recovery and Employment Fallout
Not-for-profit organisations (“NFPs”) occupy a unique space in the Australian legal and governance landscape.
They are mission-driven, volunteer-supported and heavily reliant on public trust. When governance breaks down, it can escalate
rapidly — sometimes across multiple courts, multiple legal disciplines and multiple years.
Boss Lawyers, a Brisbane commercial litigation and not-for-profit governance firm, acted in a series of proceedings arising from
one of Queensland’s most widely reported NFP governance crises. The dispute involved urgent Supreme Court applications, asset-recovery
litigation in the Magistrates Court and, later, an unfair dismissal claim before the Fair Work Commission.
Although the identities of the parties are not the focus of this article, the lessons are universal for any charity, public benevolent
institution, school, association or not-for-profit experiencing governance stress.
This article outlines the key learnings from that dispute and provides practical guidance for not-for-profit boards managing high-stakes governance disputes.
1. When Not-for-Profit Governance Collapses, It Collapses Fast
The dispute began with competing claims to board control of an NFP. A founder, supported by a group of members, purported to convene a meeting
to replace the board. The incumbent directors disputed the validity of the meeting and the authority of those attempting to remove them.
In the NFP sector, founder’s syndrome — where the founder gradually accumulates influence inconsistent with proper governance
structures and the organisation’s constitution — remains a leading cause of breakdown.
When combined with poor record-keeping, unclear constitutions and volatile internal politics, disputes can escalate into full-blown litigation within days.
Key takeaway: NFP boards must ensure their constitutions are clear, enforceable and regularly reviewed.
Ambiguity creates opportunities for competing interpretations, contested meetings and costly governance disputes.
2. Supreme Court Governance Proceedings: Restoring Board Control and Stabilising Operations
To resolve the governance deadlock and protect the organisation’s assets, the board commenced urgent proceedings in the
Supreme Court of Queensland.
The application sought, among other things:
- Declarations regarding the validity (or invalidity) of the contested members’ meeting;
- Confirmation of the composition of the lawful board under the organisation’s constitution;
-
Injunctions restraining individuals from holding themselves out as directors, accessing the organisation’s premises
or interfering with staff and daily operations; and - Orders relating to control of digital assets, including websites, email accounts and cloud-based financial software.
The Court’s intervention was essential. Governance disputes can paralyse an organisation, compromise funding and undermine
compliance with the ACNC Governance Standards. In the NFP space, the appearance of instability can also affect relationships
with donors, partners and government agencies.
Key takeaway: In serious not-for-profit governance disputes, speed matters.
Supreme Court applications for declaratory and injunctive relief are often the only mechanism to restore operational stability and board control.
If your charity is facing a similar dispute, our
commercial litigation team
can advise on whether urgent court relief is appropriate.
3. Magistrates Court Asset Recovery: Regaining Control of Vehicles, Systems and Records
As the governance dispute unfolded, several items of organisational property remained in the possession of former office-holders.
These assets included operational equipment and digital infrastructure essential for the charity’s service delivery and financial oversight.
The board initiated proceedings in the Magistrates Court of Queensland seeking orders for delivery up of property.
The Court ultimately ordered the return of:
- a motor vehicle used for the charity’s operations; and
- the organisation’s accounting software subscription, including transfer of access credentials.
The Court also ordered the respondent to pay the organisation’s costs of the application.
Without control of its assets and accounting systems, the organisation faced operational, financial and compliance risk.
Key takeaway: NFPs must maintain clear records of asset ownership and ensure access to financial and operational systems
is never concentrated in a single individual. Court proceedings for recovery of property are often necessary to regain financial oversight
and restore accountability.
4. Employment Law Fallout: The Fair Work Commission Enters the Picture
Governance disputes frequently spill over into employment law. In this case, following the Supreme Court and Magistrates Court litigation,
a former senior officer brought an unfair dismissal claim in the Fair Work Commission.
The matter proceeded to a contested hearing. The Commission examined:
- the background to the governance dispute;
- the directions given by the board;
- compliance with the Small Business Fair Dismissal Code; and
- whether there was a valid reason for termination and procedural fairness.
Ultimately, the Commission dismissed the claim, finding the dismissal was consistent with the Code and supported by the evidence.
Key takeaway: Governance issues often create parallel employment risk.
Boards must ensure HR processes remain disciplined, documented and procedurally fair even when dealing with high-stress governance failures.
Our team regularly advises on employment law disputes and unfair dismissal claims
linked to board-level conflict.
5. Digital Assets Are Now Central to Not-for-Profit Disputes
One of the more modern dimensions of NFP disputes is the centrality of digital assets:
- websites and domain names;
- social media accounts;
- email systems and cloud-based collaboration tools;
- accounting, donor and fundraising platforms; and
- document repositories and CRM systems.
Loss of control over these systems can cripple an organisation even while litigation progresses.
In this dispute, the courts were required to make orders concerning the transfer and control of digital property — a scenario
becoming increasingly common in charity governance disputes.
Key takeaway: Boards must treat digital assets as core organisational property. Robust password policies, multi-factor authentication,
director-level oversight of key systems and clear succession processes are essential.
6. What This High-Profile Governance Dispute Teaches Every Not-for-Profit Board
This dispute highlights several recurring themes that every charity and not-for-profit board should consider.
a) Constitutions Must Be Followed – and Enforceable
Vague or dated constitutions create fertile ground for personal power struggles.
Boards should periodically review and update their governing documents to align with contemporary governance expectations
and the organisation’s actual operations.
b) Founder-Centric Cultures Need Clear Governance Boundaries
Founders play vital roles in charities, but the law places responsibility on the board of directors.
Clear role definitions, delegated authority policies and board charters reduce the risk of personality-driven decision-making.
c) Early Legal Intervention Prevents Escalation
Unchecked disputes can quickly require multi-jurisdictional litigation across superior courts, lower courts and tribunals.
Early engagement with experienced dispute lawyers
often prevents escalation and preserves options.
d) Digital and Physical Assets Both Require Strong Controls
Losing access to operational systems, bank accounts or accounting software can threaten the organisation’s survival.
Asset registers, IT governance and succession planning for key system access are critical risk management tools.
e) Multi-Forum Exposure Is Common
Governance disputes can trigger:
- Supreme Court proceedings for declarations and injunctions;
- Magistrates Court applications for recovery of property;
- Fair Work Commission claims and other employment disputes;
- ACNC interest and potential regulatory action; and
- Intense media and public scrutiny.
Boards must prepare for a holistic risk environment and coordinate strategy across all forums.
7. Final Reflections: Governance Disputes as Existential Risk for NFPs
This high-profile governance dispute demonstrates how quickly a not-for-profit can face existential risk when internal relationships
and governance structures break down. Urgent injunctive relief, property recovery and employment litigation became necessary simply
to restore operational control and ensure compliance with legal obligations.
For NFPs — especially those with strong founders, complex stakeholder environments or rapid growth — having clear governance structures
and decisive legal strategies is paramount.
Boss Lawyers regularly assists charities, not-for-profits and public benevolent institutions with:
- governance disputes and board conflicts;
- director and member meetings, constitutions and board processes;
- asset recovery and urgent injunctions;
- employment and unfair dismissal issues arising from governance breakdowns; and
- compliance with ACNC and regulatory expectations.
If your organisation is experiencing governance challenges or a potential board dispute, a confidential discussion may assist
in preventing escalation.
