For more information about the Club Code of Practice and Best Practice Guidelines, contact:

Transcription

1 For more information about the Club Code of Practice and Best Practice Guidelines, contact: The Code Administrator at ClubsNSW on or by

2 TABLE OF CONTENTS CLUB CODE OF PRACTICE PART A: INTRODUCTION AND APPLICATION 2 What is the Club Code? Why is the Code Necessary? Objectives of the Code Scope of the Code Conflict with Legislation Best Practice Guidelines Citation Definitions PART B: CODE COMMITMENTS 4 Legal Obligations Club Constitutions Conduct of Directors, Management and Staff Commitment to the Communities in which Clubs are Located Contracts with Key Executives Human Resource Management and Industrial Relations Procurement of Goods and Services and Capital Works Responsible Provision of Gambling Responsible Service of Alcohol Financial Management and Reporting Privacy and Confidentiality PART C: MONITORING AND ADMINISTRATION 9 PART D: CODE ENFORCEMENT - RESPONSIBILITY, REVIEWS AND SANCTIONS 10 Responsibility of Clubs to Co-Operate with the Code Authority Dealing with Alleged Breaches Sanctions that may be Imposed by the Code Authority Reporting Review of Sanctions Failure to Comply Naming and Enforcement of Sanctions APPENDICES 13 BEST PRACTICE GUIDELINES 14 MAJOR CAPITAL WORKS 15 PROCUREMENT OF GOODS AND SERVICES 24

3 BENCHMARKING CLUB PERFORMANCE 29 REMUNERATION OF CLUB EXECUTIVES 34 OVERSEAS TRAVEL 38 BOARD OPERATION 43 Appendix 1: Model Board Charter 48 Appendix 2: Model Board Agenda 49 FINANCIAL REPORTING 54 COMMUNITY SUPPORT 57 COMPLAINTS HANDLING 65 CONDUCTING DISCIPLINARY PROCEEDINGS 67 CONDUCT OF BOARD ELECTIONS 72

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5 CLUB CODE OF PRACTICE ClubsNSW, September

6 PART A INTRODUCTION AND APPLICATION WHAT IS THE CLUB CODE? OBJECTIVES OF THE CODE 1. A statement of common standards of conduct for all Clubs that are members of ClubsNSW. 2. An expression of the Club Industry s underlying values of honesty, fairness, integrity, compassion and community. 3. A single, plain-english point of reference for the duty of care and due-diligence expectations of Club communities served. WHY IS THE CODE NECESSARY? 4. The governance demands upon Clubs continue to grow and become more complex. The conduct of Club Directors and managers is closely scrutinised by Club members, regulators, policy makers, trade unions and the media. By adhering to the Code, Clubs can have greater confidence that they are meeting their responsibilities to all stakeholders. 5. Club Directors, management and staff are custodians of significant member assets and have an obligation to ensure that the administration and management of the Club is conducted with efficiency, fairness and integrity. In particular, the service of food and alcohol, and provision of gambling and other entertainment facilities demand high standards of responsible governance and administration. The Code reminds all those in leadership positions of their obligations and provides a framework for effective Club performance. 7. To promote consistently high standards of practice across the Club Industry; 8. To bolster pride and confidence amongst Club Directors, managers, employees, members, suppliers and volunteers; 9. To increase community trust in the effectiveness, accountability and transparency of Club administration; and 10. To guide and support Clubs in fulfilling their mission and their obligations to all stakeholders. SCOPE OF THE CODE 11. This Code of Practice sets standards of conduct for Clubs who are members of ClubsNSW. 12. An alleged breach of the Code by a Club that is a member of ClubsNSW will be dealt with in accordance with Part D of the Code. CONFLICT WITH LEGISLATION 13. Where there is any conflict or inconsistency between the Code and any Commonwealth or State legislation or regulation, that legislation or regulation will prevail to the extent of the conflict or inconsistency. ClubsNSW, September

7 INTRODUCTION AND APPLICATION BEST PRACTICE GUIDELINES 14. ClubsNSW periodically issues Best Practice Guidelines for key areas of Club operation. By following them, Clubs can minimise their risk of breaching the Code, or government regulations. (See Appendix 2 for a list of Best Practice Guidelines). CITATION 15. This Code may be cited as the Club Code of Practice. DEFINITIONS 16. In this Code, unless the context requires otherwise: Affiliates means affiliated Associations including: Bowls NSW; Golf NSW; RSL & Services Club Association; Leagues Clubs Australia; and the Federation of Community, Sporting and Workers Clubs; Club Managers Association Australia is a union representing professional managers of Clubs; Club Industry means all licensed Clubs in New South Wales, whether or not they are members of ClubsNSW; Code Administrator means the individual authorised to investigate and prepare a report to the Code Authority on complaints against Clubs involving alleged breaches of the Code; Code Authority means the authority established under clause 51 of the Code; Senior Management means the CEO/Secretary Manager/General Manager and other senior executives of a Club; 1 Natural Justice means the right to a fair hearing free of bias; individuals should not be penalized by decisions affecting their rights or legitimate expectations unless they have been given prior notice of the matter, a fair opportunity to answer it, and the opportunity to present their own case. Patron means a person visiting a Club or using a Club s facilities including, but not limited to, a Club; Staff means employees of a Club other than the management. Systemic Failure means a pattern of conduct or repeated Code breaches, that points to a serious and/or structural flaw in organisational practice. ClubsNSW means the Registered Clubs Association of NSW, a State organisation registered under Section 222 of the Industrial Relations Act. ClubsNSW is the peak body for the Club Industry, representing registered Clubs in New South Wales; Code means this Code of Practice as revised and published by ClubsNSW from time to time; 1 While there is normally a clear delineation between elected officials and paid staff, in some smaller clubs that rely heavily on volunteers to fulfil management duties, Board Directors may sometimes be considered senior management. ClubsNSW, September

8 PART B CODE COMMITMENTS LEGAL OBLIGATIONS 17. Because the provision of gambling, food services and alcohol are core activities, we accept that the Club Industry is highly regulated and that we have a responsibility to be fully informed as to our legal compliance obligations. 18. In particular, we will ensure that our Directors, management and staff are informed about the primary instruments regulating Clubs, particularly the Registered Clubs Act 1976 (and Regulations), the Corporations Act 2001, the Gaming Machines Act 2001 (and Regulations) and the Liquor Act 2007 (and Regulations). 19. We will provide adequate training and supervision to ensure compliance with all relevant laws relating to the Club Industry. 2 of natural justice in dealing with disciplinary matters Where there is any inconsistency between our Club constitution and any State or Federal legislation, the legislation will prevail We are committed to promoting fair and democratic elections and maximising member involvement by adhering to relevant law and following appropriate procedures for the conduct of Club elections We will have in place speedy, responsive, accessible and userfriendly procedures for dealing with complaints. CONDUCT OF DIRECTORS, MANAGEMENT AND STAFF 25. We will pursue the aims and purpose of our Club by: CLUB CONSTITUTIONS 20. We will have, in our constitution or elsewhere, a clear expression of our aims, purpose and governance structure as an organisation. This will be clearly communicated to members. 21. We will have procedures in our constitution for dealing with unacceptable behaviour by patrons. We are committed to ensuring that these procedures are faithfully followed and will apply the principles 2 See Appendix a. making decisions that are consistent with these aims/purpose and the interests of members; b. complying with any relevant legislative, industrial and administrative requirement and keeping up to date with any changes to these requirements; For assistance in conducting disciplinary proceedings refer to the Guideline for the Conduct of Disciplinary Proceedings. Note: there may be instances where the Club constitution is silent on matters that are addressed in legislation or regulations. Club Directors and Managers should take steps to ensure that procedures contained in the club constitution are consistent with statutory requirements. See: Guideline for the Conduct of Board Elections. ClubsNSW, September

9 CODE COMMITMENTS c. maintaining adequate documentation to support any decisions made; d. treating each Club member and employee with due courtesy and respect; e. providing access to continuing professional development for managers, Directors and staff; f. achieving operating efficiencies in accordance with Board policies; 6 g. obtaining value for Club money spent; 7 h. contributing to a safe, healthy and discrimination-free Club environment; and i. not taking or seeking to take improper advantage of any Club information gained in the course of our appointment (in the case of Directors) or employment (in the case of managers/staff) We will deal promptly and effectively with information received that relates to matters that may lead to a material loss to our Club. COMMITMENT TO THE COMMUNITIES IN WHICH CLUBS ARE LOCATED 27. We acknowledge our responsibility to the community in which our Club is located in relation to key revenuegenerating activities, in particular the provision of gambling and alcohol Benchmarks for operating efficiencies are contained in the Guideline for Benchmarking Club Performance. Examples of waste and extravagance may include, but are not limited to: private use of Club vehicles, telephone or other assets; or sending more representatives than necessary on overseas study tours. Examples of taking improper advantage of Club information may include: benefiting (either themselves, a family member or an associate) improperly from the disposal of Club assets such as equipment or land; the improper awarding of a contract for the provision of goods and services; or the improper awarding of a contract for major capital works. See also clauses 39 and We will comply with all relevant noise control measures and, when necessary, work with local councils and the Environment Protection Authority to resolve noise-related issues. 29. As a not-for-profit community organisation, we will meet our ClubGRANTS 10 and other social obligations and maximise our financial commitment to and support for community projects within the means of the Club. CONTRACTS WITH KEY EXECUTIVES 30. We will ensure that all senior management have a contract that details their terms of employment, including roles and responsibilities, the form of their remuneration, and an appropriate termination clause. These contracts will be reviewed by our legal advisors before being approved by our Club s Board of Directors. 11 HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS 31. We are committed to promoting best practice human resource management and industrial relations between our Club management and employees. With the full support of the Board of Directors, our Club manager(s) will ensure the appropriate terms and conditions of the Award and other relevant industrial instruments are The ClubGRANTS Scheme facilitates clubs in NSW contributing to the provision of front-line services to their local communities and helps ensure that the disadvantaged in the community are better positioned to benefit from the substantial contributions made by those clubs. An employment contract template is available from ClubsNSW. ClubsNSW, September

10 CLUB CODE OF PRACTICE applied at all times. This includes effectively managing disputes that may occur in the workplace from time to time We will make the continuing professional development and training of our Club managers and other employees a priority. PROCUREMENT OF GOODS & SERVICES AND CAPITAL WORKS 33. We are committed to ensuring that Club procurement of goods & services and capital works represents quality and good value, is subject to a proper tendering process with competitive quotes, and is done in the best interests of the Club and its members. 34. We have in place and are committed to following a sound framework for major procurements 13 of goods & services and capital works based on the following criteria: a) All major procurements and capital works will be properly defined, documented, cost planned and approved in accordance with Board policy; b) All major procurement and capital works projects will be subject to a risk assessment analysis; and c) All major procurements and capital works will be subject to appropriate written contracts with the chosen supplier in accordance with Board policy. Nothing in this Code applies to the resolution of industrial disputes or employment related disputes between a Club and its employees. For assistance in determining what constitutes major procurements refer to the Guideline for the Procurement of Goods, Services and Major Capital Works. 35. If a Director of our Club has a real or potential material personal interest relating to the Club s procurement of goods & services or major capital works, the nature of that interest will be disclosed at the earliest possible meeting of the Board and any conflicted Director(s) will absent themselves from the Board s consideration of the procurement or project. 36. Properly documented selection criteria will be used to appoint suppliers and service providers for major procurements. 37. The Board of Directors will act diligently and in the best interests of the Club in approving and overseeing procurement of goods & services and major capital works. RESPONSIBLE PROVISION OF GAMBLING 38. We support the provision of a responsible gambling environment for all patrons of our Club by: a) Informing and training staff to ensure they are familiar with all legislative requirements of licensed venues that offer their patrons gambling activities; b) Ensuring all staff who have gambling-related duties are trained in the Responsible Conduct of Gambling (RCG) and can respond appropriately to a request for assistance from a problem gambler or a concerned other; c) Implementing policies to encourage responsible practices in promotions related to gambling; ClubsNSW, September

11 CODE COMMITMENTS d) Informing patrons and staff of the Club s responsible gambling policy and the availability of support services for problem gamblers; and e) Establishing a responsible gambling environment where anybody requiring assistance with a gambling problem will be handled with respect and discretion, and referred to services that can assist (such as a local cost-free gambling counselling service &/or selfexclusion). RESPONSIBLE SERVICE OF ALCOHOL 39. We will demonstrate our commitment to the responsible service of alcohol by: a) Providing approved training of management and staff in the responsible service of alcohol; 14 b) Refusing to serve alcohol to persons who are obviously or visibly affected by alcohol; c) Avoiding the promotion of alcohol in a way that could encourage minors to seek to purchase or to consume alcohol; d) Avoiding the promotion of alcohol in a way that could encourage the excessive consumption of alcohol; e) Refusing alcohol service to under age persons and requiring the presentation of Proof of Age and other approved forms of identification before providing services to persons we suspect of being minors; f) Making Club patrons aware of their responsibility under the law in respect of the supply of alcohol to minors and intoxicated persons; and g) Not supporting any pricing practice which encourages the excessive consumption of alcohol. FINANCIAL MANAGEMENT AND REPORTING 40. Financial management practices will be consistent with the appropriate standards Financial decisions will be consistent with the Board s approved goals and approved budgets. 42. The Board will oversee and ensure adherence to approved budgets. 43. The Board will establish boundaries and limits regarding: a) capital investments; b) remuneration and benefits; c) protection of assets; d) tendering; e) cost containment; and f) efficient use of labour. 44. The Board will obtain from management prompt and detailed reporting where limits and boundaries are exceeded. 45. Financial reports that accurately reflect the true financial position of the Club will be provided for each Board meeting. 46. The operation of financial systems and financial safeguards will be subject to external audit at least on an annual basis. 14 Trainers must be approved by the Office of Liquor, Gaming and Racing. 15 See: Guideline for Financial Reporting. ClubsNSW, September

12 CLUB CODE OF PRACTICE PRIVACY AND CONFIDENTIALITY We acknowledge that, as a membership-based organisation, our Club is entrusted with personal information. We will comply with our duties under the Privacy Act 1998 (as amended in See Section 16: Anti Discrimination and Privacy ClubsNSW, September

13 PART C MONITORING AND ADMINISTRATION 48. A Code Authority and Code Administrator will oversee compliance with the Code. 49. The Code Authority is appointed by the Board of ClubsNSW. It is made up of an independent Chair and two or more persons selected for their knowledge of the Club Industry and its regulatory framework, including the Code of Practice. All determinations are made by consensus agreement. 50. The Code Administrator will be appointed by ClubsNSW. 51. The Code Authority will report to the Board of Directors of ClubsNSW annually or more frequently, if deemed necessary. ClubsNSW, September

14 PART D CODE ENFORCEMENT - RESPONSIBILITY, REVIEWS AND SANCTIONS RESPONSIBILITY OF CLUBS TO CO- OPERATE WITH THE CODE AUTHORITY 52. Our Club will ensure that it: a) co-operates with the Code administrator and Code Authority, and provides information about any alleged breach of the Code; and b) monitors its compliance with the Code. DEALING WITH ALLEGED BREACHES The Code administrator will receive complaints about alleged breaches of the Code by Clubs and will consult with Clubs in respect of the alleged breaches and make recommendations to the Club, if necessary, about the alleged breach and the Club s compliance with the Code. 54. The Code administrator may receive submissions from both the complainant and the Club, as well as any other individual or organisation deemed relevant, about alleged breaches of the Code. The Club will have an opportunity to make representations to the Code Authority in respect of the steps taken to address the matter and to prevent the alleged breach or breaches recurring. This information will be compiled by the Code Administrator and provided 17 The scope of Code enforcement procedures is limited to alleged breaches of the Code. It does not include resolution of complaints by individuals or organisations against Clubs which would normally be dealt with by the Club s internal complaints handling process. See: Guideline on Complaints Handling. to the Code Authority for consideration. 55. The Code Administrator will provide reports to the Code Authority concerning the facts of alleged breaches of the Code. 56. The Code Authority will determine the outcome of alleged breaches of the Code. 57. Where a report is made under clauses 59 and 60, the Code Administrator will advise the Club of the Code Authority s determination. 58. If, after considering representations from the Club, the Code Authority is of the opinion that the steps taken for rectification or to stop the breach or breaches recurring are inadequate, the Code Authority will advise the Board of the Club in writing and give notice to the Club whether or not it proposes to impose sanctions on the Club for non-compliance with the Code and what the sanctions will be. SANCTIONS THAT MAY BE IMPOSED BY THE CODE AUTHORITY 59. If the Code Authority finds that a Club has: a) committed a breach of the Code; or b) committed a series of breaches of the Code indicating systemic failure, it may recommend one or more of the following sanctions: ClubsNSW, September

15 CODE ENFORCEMENT - RESPONSIBILITY, REVIEWS AND SANCTIONS that the matter be rectified in line with the Code Authority s determination; that particular remedial steps be taken by the Club in accordance with a specified timetable; that staff, management or Director training be undertaken; that an apology be offered (if appropriate); that financial compensation be made (if appropriate); that the Club perform a specified community service; that a compliance audit be undertaken; that corrective advertising be placed; that the Club be named either immediately and/or in the ClubsNSW annual report as having breached the Code; recommend to the Board of ClubsNSW that the membership of the offending Club be cancelled; or refer the matter to the Minister for Gaming and Racing or other Government Authority for further action. 60. Where the Code Authority is of the view that a breach of the Code has not occurred, then both the complainant and the Club are advised and the matter is concluded. Where the Code Authority is of the view that a breach of the Code has occurred, and the steps taken to rectify the matter and prevent its recurrence are satisfactory, the Code Authority will advise both the complainant and the Club in writing of that conclusion. 61. The Code Authority will not impose sanctions for at least 20 business days after notice under clause 63 has been given. The Club will have an opportunity during this period to make further representations for the Code Authority s further consideration. If at the end of that period the Code Authority is still of the opinion that: a) there has been a breach or a systemic failure; or b) there has been a breach or a systemic failure and the steps taken for rectification and to stop the breach or breaches recurring are inadequate; the Code Authority may impose further sanctions. 62. When imposing any sanctions on a Club, the Code Authority will have regard to: a) the objectives and purpose of the Code; and b) the severity of the breach of the Code and the appropriateness of the sanction; c) the degree to which the Club cooperated with the Code Administrator and the Code Authority during the investigation and adjudication of the matter. 63. Where a Club does not cooperate with the Code Administrator or does not comply with the determination of the Code Authority, it will be considered a serious breach of the Code regardless of the nature of the original complaint. The Code Authority may avail itself of any sanction under clause 59. ClubsNSW, September

16 CLUB CODE OF PRACTICE REPORTING 64. The Code Authority may report to the Board of ClubsNSW or an appropriate agency in respect of its activities but it shall not publicly disclose the name of a Club that is alleged to have breached the Code or on whom sanctions have been imposed, or any information that might identify the Club, unless it recommends that the Club be named immediately or in the annual report or unless the Club consents. 65. Any complaint against a Club that is not a member of ClubsNSW will be referred to the NSW Office of Liquor, Gaming and Racing or other relevant body. REVIEW OF SANCTIONS 66. A Club that is sanctioned under this Code may request that the sanction be reviewed by the Board of ClubsNSW and, in that case, if the Board considers that there are grounds for review, the Board may refer the matter to the Code Authority for reconsideration. relation to the matters contained in the report. NAMING AND ENFORCEMENT OF SANCTIONS 69. The Code Authority, after considering any submission made by the Club under clause 68, may determine to name a Club immediately or in the annual report as having failed to comply with the Code and set out the nature of the non-compliance in a report to the Board of ClubsNSW. 70. The Board of ClubsNSW may direct the Code Administrator to take such steps as it believes appropriate to enforce any sanctions imposed by the Code Authority. The Board of ClubsNSW may take other disciplinary actions against the member in accordance with the ClubsNSW constitution. FAILURE TO COMPLY 67. The Code Authority will report to the Board of ClubsNSW any failure by a Club to comply with a sanction imposed on it and recommend action to be taken by the Board. 68. A copy of the report to the Code Authority by the Code Administrator will be given to the Board of the Club and the Club is entitled within 20 business days of receiving that report or in such further period as the Code Authority may permit to make a submission to the Code Authority in ClubsNSW, September

17 APPENDICES APPENDIX 1 Listed below are the main Acts that apply to all Clubs. Note: this is not an exhaustive list and Acts are not presented in alphabetical order. NSW STATE LEGISLATION 1. Registered Clubs Act Gaming Machines Act Gaming Machines Tax Act Liquor Act Charitable Fundraising Act Fair Trading Act Industrial Relations Act Annual Holidays Act Long Service Leave Act Lotteries and Art Unions Act Public Lotteries Act Racing Administration Act Work Health and Safety Act Apprenticeship and Traineeship Act Unlawful Gambling Act Smoke-free Environment Act Food Act Anti-Discrimination Act 1977 COMMONWEALTH LEGISLATION 19. National Gambling Reform Act 20. Corporations Act Privacy Act Trade Practices Act Income Tax Assessment Act A New Tax System (Goods and Services Tax) Act Anti-Money Laundering and Counter-Terrorism Financing Act Sex Discrimination Act Disability Discrimination Act Registered and Licensed Clubs Award 2010 ClubsNSW, September

18 BEST PRACTICE GUIDELINES ClubsNSW, September

19 Best Practice Guideline: MAJOR CAPITAL WORKS 1. PURPOSE This Guideline aims to assist ClubsNSW Members dealing with major capital works projects by: setting out the main steps that should be followed in evaluating, planning and managing capital works projects; considering the key questions that need to be made at various stages; and describing the main criteria for selecting outside experts to assist with the project. Given the wide variety of types and sizes of Clubs, the term major is a relative one. By the same token, projects vary in complexity, size and importance. The resources spent on appraisal of projects should be in proportion with the cost of the project, its degree of complexity, risk and the size of the Club. In general, more detailed appraisal criteria should be applied to projects which: are estimated to have a capital cost in excess of $500,000 or 2.5% of last audited total revenue; involve complex or specialised issues or untried technology; or are unique and unprecedented in the Club industry. 2. DEFINITIONS Disposal of core property is defined as per the Registered Clubs Act EBITDA means earnings before interest, taxes, depreciation and amortisation. Fixed assets are tangible Club assets such as land, Club buildings and facilities, accommodation and sporting facilities. Major capital works are improvements, replacement or additions to Clubs fixed assets. 3. BACKGROUND Among the most important decisions Clubs make are those relating to refurbishments, extensions or other major capital works. Clubs rely on improvements to fixed assets such as buildings, plant and equipment, parking, etc to provide services to members and attract new patronage. Major capital works involve a combination of materials, plant, equipment and labour and can include, for example: New equipment (e.g. air conditioning); Refurbishments (e.g. carpeting, kitchen fit-out); Extensions; and Redevelopment of Club land (e.g. residential development). 4. GUIDING PRINCIPLES Major capital works should be commissioned and implemented in the best interests of Club members in line with these principles: Projects should be properly researched and analysed in respect to market feasibility and the long term strategic position of the Club; ClubsNSW, September

20 BEST PRACTICE GUIDELINES Projects should be properly defined, documented, cost planned and approved; Projects should be subject to appropriate contracts with the chosen supplier; Clubs should seek legal advice on contracts associated with major capital works; Club members should be provided information and given opportunities to comment at regular intervals during the planning and execution of major capital works projects; The Board of Directors should act diligently and in the best interests of Club members in approving and overseeing major capital works projects; Directors should avoid any conflicts of interest in relation to a capital works project of the Club; Proper processes should be used to appoint third parties. Where non-price criteria are used to select these third parties, these criteria should be documented; and Legal requirements should be adhered to. 5. DISPOSAL OF CORE PROPERTY There are controls on the disposal of core property of a Club 18. If the project involves the disposal of core property, it should be conducted in accordance with Sections 41J of the Registered Clubs Act Since 2004, section 41J of the Registered Clubs Act has imposed very strict controls on the disposal of Club land. Section 41J 18 Note: the Registered Clubs Act 1976 defines core property as a Club s defined premises (the Club house), any facilities provided for members and guests (car parks, bowling greens, golf courses etc), but allows Members to declare property as non-core. includes the concepts of core property and non-core property. All land owned or occupied by a Club is classified as either core property or non-core property for the purposes of section 41J. Core property is: the defined premises/licensed premises of the Club, that is the Clubhouse; any facility provided by the Club for the use of members of the Club and their guests. This is intended to catch facilities such as car parks, bowling greens, golf courses and tennis courts. However, it has potentially wider implications and may include other land; and any other property which the members at a general meeting, by a resolution passed by a simple majority, declare to be core property. In other words, any land owned by the Club can be designated as core property by the members. Non-core property is all land of the Club which is not core property. While these definitions of core and noncore property are contained in section 41J, the section also provides that the ordinary members of a Club can pass a resolution at a general meeting to have core property declared to be non-core property and vice versa. Accordingly, a block of land which is used for the Clubhouse or facilities such as a golf course or bowling green or Club car park is core property. However, the ordinary members could pass an ordinary resolution to have the land declared to be non-core property. The relevance of the distinction between core and non-core property relates to how land can be disposed of. A Club can only dispose of core property in accordance with section 41J(3) which requires: ClubsNSW, September

21 MAJOR CAPITAL WORKS the disposal to be approved by a resolution passed by a majority of the ordinary members of the Club; the disposal must be by way of public auction or open tender conducted by an independent real estate agent or auctioneer; and the property must be valued by a registered valuer within the meaning of the Valuers Act Dispose of property in section 41J means to sell, lease or licence the property or to otherwise deal with the property in such manner as may be prescribed by the Regulation. This provides for a broad definition of disposal. Clubs need to be aware whenever they are dealing with any of their core property that a transaction may be a disposal for the purposes of section 41J, even if the Club does not believe it is disposing of any of its land. Exceptions to section 41J Clause 19 of the Registered Clubs Regulation sets out exceptions to section 41J of the Act. If an exception listed in the Regulation applies to a particular transaction, section 41J will not apply to the disposal of that core property. Of course, if the Club is disposing of non-core property section 41J will not apply at all. The exceptions to section 41J in clause 19 are expressed as follows: Section 41J (3) of the Act does not apply in relation to the disposal of any core property of a registered Club in any of the following circumstances: i. the property is being leased or licensed for a period not exceeding 10 years on terms that have been the subject of a valuation by a registered valuer, ii. iii. iv. the property is being disposed of to a wholly owned subsidiary of the Club, the property is being leased or licensed to a telecommunications provider for the purposes of a telecommunication tower, the disposal of the property involves calling for expressions of interest and a subsequent selective tendering process, and the disposal and disposal process has been approved by a majority vote at a general meeting of the ordinary members of the Club, v. the property is being sold by private treaty, but only if it failed to sell at public auction or open tender following compliance with the requirements of section 41J (3) of the Act, vi. the terms and nature of the disposal (including details of the parties, property, price and valuation) are disclosed to the ordinary members of the Club, and the disposal is approved at a general meeting of the ordinary members of the Club, vii. the Director has, on application by the registered Club, approved of the property being disposed of otherwise than in accordance with section 41J (3) of the Act. Section 41J (3) of the Act does not apply in relation to the leasing or licensing of any core property of a registered Club if the lease or licence: i. is granted to a person for the purpose of enabling the person to provide goods or services exclusively to members of the Club and their guests and to other persons attending the Club in accordance with a functions authority held by the Club under section 23 of the Act, or ii. is granted to a person for the purpose of enabling the person to provide goods or services to members of the ClubsNSW, September

22 BEST PRACTICE GUIDELINES Club and their guests and to other members of the public and the granting of the lease or licence for that purpose has been approved at a general meeting of the ordinary members of the Club. Section 41J (3) of the Act does not apply in relation to the disposal of any core property of a registered Club to a government department, statutory body representing the Crown, State owned corporation or local council. Reporting to members Section 41J(2) provides that the annual report of each Club must specify the land of the Club which is core property and the land which is non-core property as at the end of the financial year to which the annual report applies. Annual report is not defined in the Registered Clubs Act or the Corporations Act but it has traditionally been held to refer to the financial statements and accounts, directors report and auditor s report which are sent to members each year. The members do not approve or determine the classification between the Club s land as core property and non-core property. This is the task of the Board. Once allocated, the classification must be included in the annual report. A simple statement which sets out which land is core property and which land is non-core property is sufficient to meet the obligation under section 41J(2). However, this does not inform members of the effect of the allocation between core and noncore property. It is preferable that the consequences of the allocation be included in the annual report so that members are made aware. If a Club disposes of core property other than in accordance with the Registered Clubs Act, the OLGR can make application to the Supreme Court for an order: declaring a contract for the disposal of land void; that the land be transferred back to the Club; directing the payment of an amount or further amount in relation to the disposal of the land by the person to whom the Club has disposed of the land; and such other orders as may be necessary. The Director General could also take disciplinary action against the Club under the Registered Clubs Act which could lead to removal of office of directors and/or the secretary, substantial monetary penalties and possibly cancellation of the Club s licence. 6. PRELIMINARY APPRAISAL All major capital works projects should be properly defined. This is a step-by-step process commencing with an initial brief, conceptual options with approximate cost estimates and early feasibility analysis. The systematic appraisal of all major capital works projects helps ensure the best choices are made and the best value for money is obtained. Before embarking on major capital works projects, Club Directors and management need to carefully consider and document their justification for planned expenditure. However, it is not enough to be satisfied the investment is justified in terms of need; it is also necessary to ensure that it produces its planned benefits to Club members and the wider community. ClubsNSW, September

23 MAJOR CAPITAL WORKS The preliminary appraisal should include a clear statement of the need which the project is designed to meet and how this will be achieved. It should identify all realistic options, including the option of doing nothing and, where possible, quantify the key elements of all options. It should assess the costs and benefits of all options, identify the preferred one, and recommend whether its benefits are sufficient to warrant incurring the costs. Costs include the initial capital cost and the ongoing costs generated by the use of the capital asset. Avoiding Premature Commitments All involved in the appraisal and management of projects should guard against the danger that when a project is mooted, it is given a degree of premature commitment. This should be avoided. A sequence of considered decisions generally will lead to progressively greater commitment of resources, but an irrevocable commitment to proceed should only be made after all appraisal stages have been satisfactorily completed and final approval obtained. These decision points should be clearly noted in the minutes of Board and/or relevant Committee meetings. Ability to Pay Before moving on to a detailed appraisal of the project, the Club needs to consider its capacity to pay for the project. It should be recognised at the outset that major capital works projects involve the Club investing in additional operating assets. If the Club intends to rely on a financial institution for funding, an initial approach should be made at this stage to assess likely repayment terms. planned major capital works project. This assessment should include: profit and loss projections showing the impact of the project on the main revenues and costs of the Club; balance sheet projections showing the impact of the project on the finances of the Club; and cash flow analysis - showing the impact of the project on cash flow. While the assessment does not have to be extremely detailed at this stage, it should be recognised a more accurate analysis will improve the confidence of members in the viability of the project and the Board s ability to deliver it. 7. DETAILED APPRAISAL If the preliminary appraisal is favourable, the proposal is further developed and defined, usually by a third party entity. Clubs should be aware of the different approaches for major capital works and carefully consider which is the most appropriate approach for their specific needs, remembering that the choice lays with the Club, not the third party entity. The way in which the Club allocates responsibilities to third parties throughout a project should be determined only once the Club has established its key needs and criteria for the project. Some common methods include: Design and Construction where the responsibility for the design, documentation and construction is contracted to a single entity; Design and Tender where the design is documented and then tenders At this stage, Clubs should conduct an assessment of the financial impact of the ClubsNSW, September

24 BEST PRACTICE GUIDELINES sought from a single contractor for construction 19 ; and Construction Management where a professional agent undertakes the management of the individual trade tendering for a management fee. The Club enters contracts directly with each trade rather than a single building contractor. At this stage, the Club should answer the following questions: Q1: Building upon the analysis done during the preliminary appraisal, what is the justification for the project? Clubs need to consider in detail: affordability; benefits to members; increase to patronage/revenue; benefits to community; special features being considered; necessity such as market demands, compliance upgrade, wear and tear, diversification of income, operational efficiencies, maintenance problems, etc; and conformity with the Club s medium to long term business plans and goals. Q2: Is there any design component? Clubs need to consider the design in the form of drawings and/or specifications that are needed to obtain approvals from authorities (if required) and to describe quality, extent, visual and other requirements of the Club. Consultants should be briefed on the Club s chosen procurement methodology to ensure 19 Note: such tenders can be sought in a number of formats. For example, lump sum, negotiated or novated (where the remainder of the design/documentation responsibility is novated or transferred to the contractor). documentation is appropriate to the Club s contractual needs. Q3: Does the Club have the resources to manage, supervise and accept construction risk? It often requires a high level of expertise to properly design, document and construct. Managing capital works projects is not part of Clubs core activities, so outside expertise may be required. In determining the Club s role, the Board should be aware that: a project manager who is an employee will need to be qualified 20 and be allocated sufficient resources and time; the Club will be deemed as being the Principal Contractor under the Work Health and Safety Act 2011 and will require a safety system and management practices which comply with Work Health and Safety Act 2011, and NSW Government Work Health and Safety Management System Guidelines 21 ; special insurances will be required; the Club will require expertise to properly manage the human resources needed on a construction project such as checking trade contractors credentials (work cover authority, insurances, workers compensation declaration forms, etc); and the Club will require qualified resources to establish formal contacts with trade contractors and purchase agreements with suppliers which establish scope, risk allocation, price, E.g. hold a builders licence issued by the NSW Department of Fair Trading and be properly trained in the management of Workplace Health and Safety in a major capital works environment The majority of capital works projects undertaken by Clubs involve at least some refurbishment of their current premises. This carries with it a high occupational health and safety risk and the need for complex staging to minimise the disruption to normal trading. ClubsNSW, September

25 MAJOR CAPITAL WORKS terms of payment, quality, time, warranties, maintenance requirements and other obligations. Q4: Has the Club addressed the key financial issues? A thorough financial analysis needs to be prepared at this stage quantifying financial costs (both current and ongoing capital) and specifying sources of funding. Key factors to consider in determining whether the Club should undertake the project are: Interest Coverage Ratio on Loans this is a calculation of the number of times interest owed is covered by EBITDA; Maximum Debt Level this is usually determined by a multiple of EBITDA. Financial institutions usually have a minimum benchmark. Note: It is important that the institution s lending criteria be properly understood; Cash flow this needs to be monitored closely so that the repayment can be met; Return on investment the Club should determine in advance how it intends to measure the results projected to flow from the expenditure. Not all major capital works will be measurable in strict dollar terms. For example, the return on a Club s investment in a sports field will be difficult to quantify in financial terms. However, major capital works that are planned to deliver commercial returns should be readily quantifiable; and Impact on current operations quantify potential disruption to business (e.g. gaming floor, car park etc). Information to Members Once the detailed appraisal has been completed and a decision made to proceed, members should be presented with information that addresses at a minimum, the 4w s (what, when, where, and why). Sufficient information should be provided to give members a clear understanding of the scope and nature of the project. 8. PROJECT IMPLEMENTATION Once the major capital works project is fully defined, documented and approved, further implementation can commence. For larger projects, Clubs should select an independent expert 22 to act on their behalf to manage the delivery of major capital works projects. The independent expert should, on behalf of the Club, arrange the employment of necessary consultants to define, design, document and gain approvals for the project. They should obtain at least three independent quotations for all sub/trade contractor and supplier works. In some circumstances the Club and independent expert may form the opinion that the lowest tendered price does not conform to the needs of the Club. An example may be the capacity of the service provider to perform the necessary works within time, cost and ability, including Work Health and Safety. In that circumstance, the next lowest price should be used, providing it conforms to the needs of the Club. 22 An independent expert could for example be an experienced quantity surveyor. It is suggested that clubs use the Business Register on the Australian Institute of Quantity Surveyors (AIQS) website to locate an AIQS member who is subject to the AIQS Code of Conduct, professional indemnity insurance requirements and professional standards of practice ClubsNSW, September

26 BEST PRACTICE GUIDELINES When making a decision it is important that Clubs document the reasons why, and why not, a particular action was taken. For example, Clubs should document why an organisation was suitable and why another was not suitable. Selection of Third Parties In most cases Clubs will need the expertise of a number of outside specialist organisations to enable major capital works projects to be defined, documented, cost-planned and approved. Third parties include consultants, architects, engineers, suppliers, builders, managing contractors, project managers and sub/trade contractors, among others. 23 A combination of price criteria and non price criteria may be used to select these third parties. The selection criteria should be documented then conscientiously applied. For example, selection criteria for a construction project should establish whether the company is a qualified construction company that can act as the Principal Contractor. Club Directors need to ensure the company: has necessary insurances (professional indemnity, contract works, public liability and workers compensation); holds a builder s licence; has an occupational health and safety system in place which complies with Work Health and Safety Act 2011, and NSW Government Work Health and Safety Management System Guidelines edition 4 (or the most recent); has a track record, references, experience, etc; and 23 is to be formally evaluated against the non price criteria listed below. ClubsNSW can provide a list of suppliers with extensive expertise and knowledge of the club industry. Clubs may make a selection by comparing capable organisations using non price criteria, provided that fees and charges are reviewed by a qualified independent 24 quantity surveyor (with relevant experience) engaged by the Club. Non price selection criteria typically include: Intellectual property from past work; Industry knowledge and specialty expertise 25 ; Adequacy of insurances; References/reputation; Financial viability; Resources available/capacity to perform; Work Health and Safety compliance; Unique product or services; Industrial and workplace relations; Qualifications (e.g. builder s licence); Contractual adequacy; Guarantees/risk taking offered; No conflicts of interest with Board and management; Transparency of costs; and Weighing against other alternatives. Subject to the above points, Clubs can negotiate with one company to achieve a desired outcome, provided that fees and charges by the company are reviewed by a qualified independent quantity surveyor (with relevant experience) engaged by the Club. Clubs may also employ an independent specialist at key milestones throughout the project to undertake an audit role by checking progress is as expected A quantity surveyor is usually required by banks if debt funding is involved. Due to the unique nature of the Club industry, industry knowledge and experience should be highly valued ClubsNSW, September