The Art Gallery of Western Australia Foundation Rules 1989

The Rules introduce several interconnected concepts. Foundation: a statutory body whose objects are both those in section 28A(4) of the Act and the additional objects listed in rule 2. Membership: an individual or body corporate that has made qualifying gifts totalling at least $5,000 within a five‑year period (or $4,000 for periods ending before the 2018 amendment). Membership is not open to everyone; it requires a financial contribution. Categories of membership: six tiers defined solely by cumulative gift amounts in a rolling five‑year window: Member ($5,000), Fellow ($15,000), Benefactor ($50,000), Governor ($100,000), Vice Patron ($500,000) and Patron ($1,000,000). These categories are hierarchical; a donor can progress upward by making additional gifts. Council of the Foundation: the governing body responsible for control and management, consisting of the chairman (or deputy) of the Art Gallery Board, the Director of the Art Gallery and three to seven appointed members. The Council must not act contrary to requirements of the Board. Friends of the Foundation: a public register that the Council may create for supporters who are not full members. This is a lower‑cost association; the Rules leave qualifications entirely to Council discretion. Qualification by gift: rule 3 details how gifts in cash or kind count, how undertakings to give over up to five years are treated as gifts made (deeming), and how testamentary bequests are valued at half the amount. Cessation of membership: natural persons hold membership until resignation or death; bodies corporate hold it for 15 years unless they re‑qualify. Non‑compliance with a gift undertaking within one month of a notice from the Foundation causes automatic cessation unless the Board determines otherwise or prior gifts already qualify the person for a lower category. Financial provisions: the Council must keep accounts satisfactory to the Art Gallery’s accountable authority, and records must be open for inspection by Council members and Board members. Execution of documents: deeds require two Council members to sign, seal and deliver; other documents require two signatures. General meetings: at least one annual general meeting per year, plus special meetings as called. Quorum is the lesser of 50 members or 10 per cent of members, but must include two Council members (one being the Director or an appointed member). Voting is one vote per member on a show of hands, with proxies allowed for bodies corporate. These rules mimic standard incorporated association governance but with the unique twist that the Board of the Art Gallery holds veto power over the Council’s actions.

The Rules directly affect a narrow group: the Foundation itself (as an entity), its Council members and individuals or bodies who apply for membership. Members are the primary affected parties. They incur the cost of making gifts or fulfilling undertakings. In return they receive a formal status category and the right to attend and vote at general meetings. Bodies corporate receive membership for a finite 15‑year term unless they donate again. Members also gain the right to inspect the Foundation’s accounts (rule 16(2)). Council members assume fiduciary‑like duties of control and management. They must attend meetings, avoid conflicts (though not explicitly stated), and can be removed for bankruptcy, unsoundness of mind, imprisonment for 12 months or more, or absence from three consecutive meetings without leave. Council members serve for up to six consecutive years. The Board of the Art Gallery (governed by the Act) is indirectly affected: it must approve the appointment of Council members, determines the value of in‑kind gifts, can grant honorary membership, and receives minutes of Council and general meetings. The Board also sets requirements that the Council must follow (rule 7(2)). The Director of the Art Gallery sits on the Council ex officio, as does the chairman (or deputy) of the Board. Staff of the Art Gallery: the Assistant Director - Administration and the Executive Officer of the Foundation may attend and participate in Council meetings but cannot vote. Friends of the Foundation: a permissive category with no statutory rights; the Council may set qualifications and has discretion to establish the register. The general public is not directly affected, but taxpayers may ultimately bear the cost of tax deductibility of donations if the Foundation is endorsed as a deductible gift recipient (though the Rules do not address tax status). The Rules do not affect private businesses unless they choose to become members for reputational or networking benefits. There is no compulsion to join. The Rules do not restrict competition; they merely create a donor club. However, the high minimum entry barrier ($5,000) means that the Foundation effectively targets high‑net‑worth individuals and corporations, potentially skewing governance toward the interests of large donors. The Rules also create a two‑tier system: full members and the lesser ‘Friends’ category, which may reduce the incentive to become a full member if Friends enjoy similar benefits without the donation requirement.

Duties of the Council: rule 7(1) makes the Council responsible for “control and management of the affairs of the Foundation and the furtherance of the objects of the Foundation.” This is a broad duty of stewardship. Rule 7(2) imposes a negative duty: the Council must not take any action contrary to requirements of the Board as made known from time to time. This subordinates the Council to the Board. Rule 16(1) requires the Council to keep accounts satisfactory to the Art Gallery’s accountable authority, maintain proper records, ensure money is properly brought to account, payments are correctly made and authorised, and adequate control is maintained over incurring liabilities. Rule 12(2) requires the Council to submit an annual report (including financial statements) to the annual general meeting. Rule 9(5) and 12(7) require the Council to cause accurate minutes of Council meetings and general meetings to be recorded, preserved and a copy sent to the Board. Rights of the Council: rule 10 gives the Council power to do everything necessary to achieve the Foundation’s objects, including employing persons or agents and paying reasonable fees. The Council may form committees and delegate matters (rule 11). Rule 17 allows the Council to authorise execution of documents by two members. Duties of the Board: under rule 3(3), the Board determines the value of gifts in kind. Under rule 3(7), the Board may grant membership to a deserving person not otherwise qualified. Under rule 7(3), the Board appoints Council members (after consultation with the Council). The Board may also determine whether to allow a member whose undertaking is in default to retain membership (rule 3(5)(a)). Rights of members: under rule 14, each member present in person has one vote on a show of hands and on a poll. Rule 15 allows bodies corporate to appoint a representative, and any member may appoint a proxy to vote. Rule 12(1) gives members the right to attend the annual general meeting. Rule 16(2) gives members a right to inspect the Foundation’s accounts during normal office hours (though this right is limited to Council members and Board members; rule 16(2) says “members of the Council and members of the Board” , not general members. Actually reading carefully: “open … for inspection by members of the Council and members of the Board.” So general members do not get this right. That is important. Rights of Friends: the Rules are silent on any rights for Friends; the Council may determine qualifications but does not give Friends voting or inspection rights. Duty of members: members who have given an undertaking to make future gifts must comply within one month of a notice, or membership ceases automatically (rule 3(5)). There is also a duty to keep the Foundation informed of an address in Western Australia for notice purposes (implied by rule 12(4)). Duty of Council members: rule 8 sets forth grounds on which the office becomes vacant, including bankruptcy, unsound mind, imprisonment or absence from three consecutive meetings. There is no explicit duty of care or loyalty beyond these, but common law fiduciary duties likely apply.

The Rules themselves do not create criminal penalties or fines. Enforcement is internal. Cessation of membership is the primary sanction. Under rule 3(5), if a member with an outstanding undertaking fails to make the promised gift within one month of a notice from the Foundation, membership ceases automatically unless the Board determines otherwise or the member’s prior gifts already qualify for a lower category. This is a strict default mechanism with no right of appeal to an external body. Vacation of office for Council members (rule 8) occurs automatically on resignation, bankruptcy, unsoundness of mind, imprisonment for 12 months or more, or absence from three consecutive meetings without leave. There is no provision for suspension or warning; the vacancy takes effect immediately. The Council can grant leave of absence to avoid the three‑meeting rule. Disqualification from holding office is implicit: an undischarged bankrupt or person of unsound mind cannot serve, and if they become such while holding office, the office is vacated. No monetary penalties are provided for the Foundation itself if it fails to comply with the Rules. However, the Board of the Art Gallery could potentially take action under the Act if the Foundation acts contrary to Board requirements. The Act (not reproduced here) probably gives the Board supervisory powers. The Rules do not provide for suspension of the Foundation or removal of the Council as a whole, but the Board controls appointments and could refuse to reappoint members. No external enforcement body is specified. The Rules are not enforced by courts or regulators in the ordinary sense; they operate as an internal constitution. Breach of a duty by a Council member could potentially give rise to a claim for breach of fiduciary duty or negligence at general law, but the Rules do not prescribe a penalty. No criminal offence is created by the Rules. However, if the Foundation were to misapply funds, the Criminal Code or Financial Management Act 2006 (WA) might apply. The Rules require accounts to be kept to the satisfaction of the accountable authority of the Art Gallery, which presumably is a public sector officer under the Financial Management Act 2006. That Act may impose penalties for false accounting. The Rules also require that money be “properly brought to account” and “payments are correctly made and properly authorised” (rule 16(1)). Breach of those duties could be a disciplinary matter for the Art Gallery’s accountable authority but the Rules themselves do not specify consequences. Overall, the enforcement architecture relies on internal governance and the Board’s ability to direct the Council.

The Rules are made under the Art Gallery Act 1959 (WA), specifically under section 28A which empowers the Governor to make rules for the Foundation. The Act is the parent statute and the Rules must be consistent with it. Section 28A(4) of the Act states the Foundation’s primary objects; rule 2 adds further objects that must not conflict. The Rules also interact with the Financial Management Act 2006 (WA) because the Council must keep accounts to the satisfaction of the “accountable authority of the Art Gallery” (rule 16(1)). That accountable authority is likely the Director or Board under the Financial Management Act 2006, which imposes standards for record‑keeping, internal control and reporting. The Rules do not expressly reference the Associations Incorporation Act 2015 (WA) or the Corporations Act 2001 (Cth). The Foundation is not an incorporated association or a company; it is a statutory body. Therefore those Acts do not apply to its internal governance. However, if the Foundation were to employ staff, it would be subject to the Industrial Relations Act 1979 (WA) or the Fair Work Act 2009 (Cth). The Rules do not address employment law. Tax law is relevant but not mentioned. Donations to the Foundation may be tax‑deductible if the Foundation is a deductible gift recipient (DGR) under the Income Tax Assessment Act 1997 (Cth). The Rules do not guarantee DGR status; separate endorsement by the Australian Taxation Office is needed. The Foundation may also be a public benevolent institution or a fund for cultural purposes. The Rules’ classification of members by gift size could affect the Foundation’s status as a public fund if it is seen as primarily benefiting members rather than the public. However, the Foundation’s objects are to raise money for the Art Gallery, which is a public institution. The Charities Act 2013 (Cth) could also apply if the Foundation is a charity. The Rules do not contain a clause about winding up or distribution of surplus assets. The Act presumably governs dissolution. The Rules interact with the State Records Act 2000 (WA) because the Foundation must keep minutes and records that are likely state records. The requirement to send minutes to the Board (a government board) implies those records may be subject to public access under the Freedom of Information Act 1992 (WA), though the Rules do not say so. The Rules also interact with the Public Sector Management Act 1994 (WA) if the Director or other ex officio members are public service officers. The Rules do not create any evidentiary presumptions or privileges. They do not override privacy laws; any personal information about donors must be handled in accordance with the Privacy Act 1988 (Cth) if the Foundation is an organisation covered by that Act, or under WA privacy principles if applicable.

The Rules were originally made on 27 January 1989 and published in the Western Australian Government Gazette on that day (pp. 285‑287). They were initially cited as The Art Gallery of Western Australia Foundation Rules 1989. A reprint (Reprint 1) was produced as at 2 April 2004, consolidating the Rules up to that date with no amendments recorded. The only substantive amendment occurred in 2018 via the Art Gallery of Western Australia Foundation Amendment Rules 2018, gazetted on 28 December 2018 (pp. 4884‑4885). That amendment had a split commencement: rules 1 and 2 (citation and commencement) came into effect on 28 December 2018; the remaining rules (presumably rule 3 and any consequential amendments) came into effect on 29 December 2018. The 2018 amendment made three changes. First, it amended rule 1 to change the citation from The Art Gallery of Western Australia Foundation Rules 1989 to Art Gallery of Western Australia Foundation Rules 1989 (dropping the introductory article). Second, it amended rule 3(2) to increase the minimum gift for membership from $4,000 in a five‑year period to $5,000 in a five‑year period. This was introduced as a new paragraph (a) for $5,000, with the former $4,000 threshold moved to a new paragraph (b) but only for periods that ended before the commencement of the amending rules. In effect, existing members who qualified under the old $4,000 threshold retain their membership, but new applicants must meet the $5,000 threshold. Third, rule 4(1) was amended to increase all category thresholds? Actually, rule 4(1) appears unchanged; the thresholds for Fellow, Benefactor etc. are not mentioned in the amending rules text but the compilation table shows rule 4 was amended. The Gazette text of the amendment rules is not fully reproduced here, but the compilation note says rule 4(1) was amended. Possibly the $4,000 transitional provision was inserted as rule 4(1A). Indeed the current rule 4(1A) is new, allowing persons who made gifts of at least $4,000 before the 2018 commencement to qualify as members. The amendment also likely updated the references to the new citation. No other amendments have been made. The Rules have not been repealed or replaced. The only change in nearly 30 years was a threshold increase, likely to adjust for inflation. The absence of frequent changes suggests the Foundation’s membership structure has been stable, though the 2018 increase may reflect a desire to maintain real donation levels. The compilation table also notes that the citation was changed, and the current version is a compilation incorporating both the original and the 2018 amendment.

There is no reported litigation concerning these Rules. No cases interpreting the Rules have been identified in standard legal databases. This is unsurprising given the Rules are internal governance provisions for a charitable foundation, not a regulatory instrument with binding effect on third parties. The potential for litigation is low. Disputes could theoretically arise over membership cessation (rule 3(5)), vacation of office (rule 8), or the Council’s management of funds. However, the Rules provide internal mechanisms: the Board can determine cases of default (rule 3(5)(a)) and the Council can grant leave of absence for meetings (rule 8(e)). Any external challenge would likely be on procedural fairness grounds if a member were expelled without proper notice. But the clear language of rule 3(5) makes cessation automatic upon failure to comply within one month of notice, leaving little room for discretion. A member could argue that the Foundation’s notice was not properly delivered, but rule 12(4) only requires sending notice to the last known address; accidental omission does not invalidate proceedings. Council members could challenge removal on grounds of procedural unfairness if the Council did not grant leave or if the grounds were not made out. The bankruptcy and imprisonment grounds are objective. Vacancy for absence from three consecutive meetings requires that the member had notice of the meetings; if notice was not given, the absence might not count. No case law on point exists. Because the Foundation is a statutory body under the Art Gallery Act 1959, the Supreme Court of Western Australia would have jurisdiction under the Supreme Court Act 1935 (WA) to grant declaratory relief or issue prerogative writs if the Foundation or its Council acts ultra vires. For example, if the Council took action contrary to Board requirements (rule 7(2)), the Board could seek an injunction. Any litigation would likely be between the Board and the Council, not between private members. There is no evidence of such disputes. The Rules are too narrow to generate significant precedent. The lack of litigation history may indicate that the Foundation operates smoothly, or that the costs of challenging internal decisions outweigh the benefits. Potential litigants (members) have limited financial stake: membership confer prestige rather than property rights. The right to vote at general meetings is minor. Therefore litigation is improbable. This history suggests the Rules impose low legal risk on participants.

Several traps await the unwary. Automatic cessation of membership for non‑payment of undertaking: rule 3(5) provides that if a member who has given an undertaking to make future gifts fails to comply within one month of the Foundation’s notice that a gift is due, membership ceases automatically. No grace period beyond one month. The Board may determine otherwise, but that is discretionary. A member who misses the notice or cannot pay promptly loses membership without a hearing. No right for general members to inspect accounts: rule 16(2) opens accounts for inspection by “members of the Council and members of the Board”, not ordinary members. The annual general meeting receives a financial statement, but members cannot independently verify the books. This limits transparency. Bodies corporate hold membership for only 15 years: rule 5(2)(b) caps corporate membership at 15 years unless the body re‑qualifies with further gifts. A company that made a single large donation decades ago may find its membership has lapsed without notice. The Foundation is not obliged to remind. Council members must include a specific quorum requirement at general meetings: rule 13 requires that a quorum for a general meeting must include two Council members, one of whom must be the Director or an appointed member. If the Council members do not attend, the meeting cannot proceed even if 10 per cent of members are present. This gives a small number of Council members effective veto power over general meetings. Proxy and representative rules are broad: rule 15 allows a member to appoint a proxy for such period and upon such conditions as the appointer determines. That could allow a member to appoint a proxy for multiple meetings, potentially enabling a minority to control voting. No conflict of interest provisions: the Rules do not require Council members to declare interests. This is a gap compared to modern governance standards. A Council member who is also a major donor could vote on decisions affecting their own gift. Execution of documents requires two Council members: rule 17 says deeds must be signed, sealed and delivered by 2 members. If only one signs, the document may be invalid. Small mistakes in execution can have binding consequences. No provision for electronic signatures: the Rules were written in 1989. They allow execution by “telex or facsimile transmission” for resolutions (rule 9(6)) but not for documents. The compilation does not update for electronic signatures. Cessation of membership for death or bankruptcy: for natural persons, membership ceases on death (rule 5(2)(a)). No provision for transfer of membership to an estate. Council members cannot serve more than 6 consecutive years: rule 7(4) prevents reappointment beyond 6 consecutive years, but does not say they cannot be reappointed after a break. So a member could serve 6 years, sit out one year, and return. Leave of absence for Council meetings: rule 8(e) allows the Council to grant leave to avoid vacation of office for absence. But the rule is silent on how leave is requested or granted, creating uncertainty. Board can override Council actions: rule 7(2) says Council must not take any action contrary to Board requirements. The Board can make requirements known “from time to time”, potentially allowing last‑minute directions that frustrate Council decisions. No appeal mechanism: a member who loses membership or a Council member who is removed has no right of appeal under the Rules. The only avenue is judicial review.

Compliance obligations under the Rules fall on two entities: the Foundation (acting through the Council) and individual members. For the Council: it must hold regular meetings (rule 9), keep accurate minutes and send copies to the Board (rule 9(5) and 12(7)). It must hold an annual general meeting as soon as practicable after each financial year (rule 12(1)). It must prepare an annual report including financial transactions and a statement of financial position, to submit to that meeting (rule 12(2)). It must give at least 7 days’ notice of general meetings to all members at their last known Western Australian address (rule 12(4)). It must determine the procedure for its own meetings but ensure a quorum of at least 3 members (unless it resolves otherwise) (rule 9(2)). It must ensure accounts are kept to the satisfaction of the accountable authority of the Art Gallery (rule 16(1)). Those accounts must be open for inspection by Council and Board members (rule 16(2)). It may establish a Friends register and set qualifications (rule 6). When it wants to execute documents, it must pass a resolution authorising execution and then have two Council members sign (or sign, seal and deliver for deeds) (rule 17). It must ensure Council members do not act contrary to Board requirements (rule 7(2)). It must ensure that any committee it creates reports back to it (rule 11). For members: an individual must make at least $5,000 in qualifying gifts within five years to remain a member (or have qualified under the transitional $4,000 threshold); bodies corporate must do the same but membership lasts 15 years. Members who have given undertakings must fulfil them within one month of a Foundation notice, or risk automatic cessation (rule 3(5)). Members who wish to resign must give written notice to the chairman of the Council (rule 5(1)). Members who want to vote at general meetings should attend in person or appoint a proxy in writing (rule 15). They should keep the Foundation informed of their current Western Australian address so they receive notices (rule 12(4)). For the Board: it must determine the value of any gift in kind (rule 3(3)). It must appoint Council members after consulting the Council (rule 7(3)(c)). It can grant honorary membership to deserving persons (rule 3(7)). It can allow a defaulting member to retain membership (rule 3(5)(a)). It must provide requirements to the Council from time to time (rule 7(2)). Practical steps: the Council should adopt a meeting schedule, a minute‑taking protocol and a financial record‑keeping system that meets the accountable authority’s standards. It should maintain a register of members showing gift history, category and undertaking status. It should send notices of meetings by post or electronic means (though the Rules only require sending to a known address; electronic is permissible if agreed). It should ensure that the annual general meeting quorum is satisfied: the lesser of 50 or 10 per cent of members, but always including two Council members (rule 13). It should retain all minutes and financial records for at least 7 years to comply with state record‑keeping laws. It should periodically review Council membership to ensure no one exceeds 6 consecutive years. For members: track gift commitments and ensure payments are made before the one‑month notice period expires. If a member wishes to resign, notify promptly to avoid continuing obligations. Bodies corporate should assign a representative under rule 15(1) to attend meetings. Compliance is largely administrative. The greatest risk is inadvertent cessation of membership due to missed payments or notices. The Council should send reminders. The Rules impose no external reporting to government, only to the Board and members at the AGM. The Foundation should also comply with any applicable tax laws to maintain DGR status; this is not in the Rules but is critical for donor incentives. Overall, compliance is straightforward but requires attention to deadlines and quorum requirements.