The Queensland Supreme Court, in a rare case on the meaning of the terms of state funding agreements, has rebuffed some Departments’ requests for the production of internal documents from a grantee.

Sisters Inside[1] is a charitable non-profit association providing programs to women and girls to address factors leading to criminalisation and to offer opportunities to break the cycle of recidivism.

Its programs are funded by community fundraising and State and Commonwealth grants.

The issues arose under its Queensland State Government (State) funding agreements with different departments with slightly different contractual terms, but the parties agreed for the purposes of this hearing that the differences were not material.

In 2021 the State informed Sisters Inside that it proposed to conduct a financial and compliance audit and sought specified documents. The Departments were aware that a number of management committee members had resigned in recent times and concerns had been raised regarding potential governance failings and financial mismanagement at Sisters Inside.

Sisters Inside advised the Departments that some of the requested documents were:

  • outside those related to the funding; and
  • were not connected to the funding provided by the State or the State funded services they provided, such as “how charitable funds are being banked, managed and accounted for” and “will include a review of how financial management and governance is conducted … including compliance with ACNC requirements”.

The Court considered whether the request for documents was for carrying out a performance review, an audit or whether the Departments had impermissibly sought documents for another purpose, that is, investigation of breaches under the Community Services Act 2007 (Qld) (Act).

In summary, the Court did not consider the request for documents by the State to be a valid request under the terms of the funding agreements as:

  • the issue of concern, which was only said to relate to a potential breach of the Act, was not relevant to the use of funds under the funding agreements and was not properly the subject of a performance review or audit under the funding agreement;
  • the State had not requested documents within the terms of the funding agreement consistently with the funding it identified it wished to review, given that it sought documents dating back to 2017; and
  • under some funding agreements, the power to audit the grants and/or donations under the service agreements was not preserved after termination.

The Department and the organisations were ordered to come back to Court with appropriate orders given its decision.

The decision shows that Departments must confine their requests for documents from funded organisations to the terms of the funding agreement or the terms of the relevant statutory provision.

[1] Sisters Inside Inc v State of Queensland [2022] QSC 130

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