Anderson, L. v Johnson, T.A
[1990] FCA 137
•06 APRIL 1990
Re: LEWIS ANDERSON
And: T.A. JOHNSON; R. LUCKMAN; M.G.H. PITT; J.E. O'BRIEN;
R.A. BALDWIN; R. CAVANAGH; R. WINKWORTH; G. MAIN; J. CAMP;
R. HENDRICKS; M. FARMER; G. ABBOTT; R. GERAGHTY; R. DONNELLY; W. HAGGER;
W. PALMER; J. GANDINI; T. BRADY; A. KENNY; W. CAMPBELL and S. SIERINK
No. V I7 of 1990
FED No. 137
Industrial Law
22 FCR 326
33 IR 40
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY
INDUSTRIAL DIVISION
Gray J.(1)
CATCHWORDS
Industrial Law - registered organisation - rules - performance or observance - use of organisation's funds and resources to campaign for affirmative vote in amalgamation ballot - whether disbursement for "ordinary purposes" or "extraordinary purposes" - whether contrary to implied limitation in rules - whether applicant took all reasonable steps to have the matter resolved within the organisation.
Words and phrases - "ordinary purposes" - "extraordinary purposes".
Industrial Relations Act 1988 ss. 209, 235, 239, 240, 242, 243, 244.
Industrial Relations (Consequential Provisions) Act 1988 ss. 3, 5.
Industrial Relations Regulations, reg. 82.
Conciliation and Arbitration Act 1904 (repealed), s. 158D.
HEARING
MELBOURNE
#DATE 6:4:1990
Counsel for the applicant: H. Borenstein
Solicitors for the applicant: Ryan Carlisle Needham Thomas
Counsel for the respondents
(except 7th and 8th
respondents): J.W. Shaw QC and S. Marshall
Solicitors for the respondents
(except 7th and 8th Slater and Gordon as agents for
respondents): Turner Freeman
Counsel for the 7th and 8th
respondents: M.D. Carn
Solicitors for the 7th and
8th respondents: Gill, Kane and Brophy
ORDER
The Court orders that the respondents and each of them perform and observe the rules of the Electrical Trades Union of Australia:
(a) by refraining from using or permitting the use of the resources and funds of the Electrical Trades Union to campaign for an affirmative vote in the ballot for the proposed amalgamation between the Electrical Trades Union of Australia and the Australasian Society of Engineers, other than for the preparation and lodgement of a statement of the kind contemplated by s.244(3)(a) of the Industrial Relations Act 1988;
(b) by treating as null and void and of no effect the resolution of the national executive of the Electrical Trades Union of Australia at its meeting on 10th March 1990 as follows: "The National Executive authorises the National Secretary to appoint two full time amalgamation officers to work as directed by him in promoting the proposed amalgamation with the ASE among the membership of the Union, particularly in Victoria.
Liberty is reserved to any party to apply before 5th June 1990 on seven days' notice in writing to each other party.
Note: Settlement and entry of orders is dealt with by O.36 of the Federal Court Rules.
JUDGE1
This proceeding was commenced by rule to show cause granted on 13th March 1990. The applicant is a member of the Electrical Trades Union of Australia ("the Union"), an organisation of employees, registered pursuant to the Industrial Relations Act 1988 ("the Act"). He is president of the Victorian branch of the Union. The applicant and the respondents together constitute the national council of the Union.
Under rule 10(a) of the Union's rules, the control of the Union is vested in the national council, which consists of the national secretary and delegates from each branch of the Union. Various specific powers of the national council are set out in rule 10(b). They include such things as:
"(2) To decide upon the policy of the Union in all matters affecting the members. ......
(15)To take such steps in accordance with the Rules as it may consider necessary for the enforcement of the Rules and in furtherance of the objects of the Union."
Under rule 10(c), the national council has power to "expend moneys for carrying on the business of the Union and employ necessary assistance...".
Rule 14 provides for a national executive; some of the respondents constitute the national executive. By virtue of rule 15(a), "in the interval between meetings of the National Council the National Executive shall have charge of the business of the Union and shall be directly responsible to Council for any action taken." There follows a proviso under which any two branches by demand of their representative members on the national executive may call for the review of any decision made by the national executive. In the event of such demand being made the decision is not to be implemented and the executive is required forthwith to convene a meeting of the national council to review the decision. The national council is required to meet within seven days of the making of the demand.
Certain other provisions of the rules of the Union are relevant. Rule 3 sets out, under the heading "Objects", the purposes for which the Union is established. Among the many purposes are those found in paragraph (n), "To make financial provision for carrying out the objects set out herein." and paragraph (v), "To amalgamate with kindred organisations." Rule 20 should be set out in full:
"20 - CONTROL OF NATIONAL EXECUTIVE AND NATIONAL COUNCIL BY MEMBERS
(1) If in any period of four months,
(a) any two State Councils, or
(b) members totalling 5% of the total financial membership of the Union by petition,
shall request that a referendum of members be held on a proposal that National Council or the National Executive take or refrain from taking any specified action or adopt or refrain from adopting any specified policy in the conduct of the Union's business the National Executive shall within fourteen days appoint a Returning Officer (not being the holder of any other office in nor an employee of the Union or a Branch or Sub-Branch of the Union) who shall forthwith proceed to conduct a referendum of members in all branches on the proposal. Such referendum shall be by secret ballot of all of the members of the Union who are financial for the quarter preceding the date of the commencement of the ballot, provided that if a proposal, the subject of a request under this Rule, be adopted by the National Council or the National Executive as the case may be, no referendum shall be held under this Rule.
(2) The result of the referendum shall be given effect to by the National Executive or the National Council as the case may require."
Some of the provisions of rules 27 and 28 are also important:
"27 - PROPERTY AND FUNDS OF THE UNION General -
(a) Subject to the provisions of Federal Law the funds and property of the Union shall be under the control of the National Council and the National Executive. ....
(b) The National Executive shall have power to raise and disburse funds for administrative purposes of the Union.
(c) The funds of the Union shall be divided into two classes, as follows:-
(1) The National Fund: The funds which are allocated to and the expenditure of which is administered by the National Council, viz: Twelve-and-a-half per centum of the contributions and entrance fees collected by each Branch... . The levies raised by the Council. Fines inflicted by the Council. Contributions, payments or receipts to the Council from any source. Such other property or funds as are deemed to be part of the National Fund.
....
(2) The Branch Funds - The funds of the Union which are allocated to and the expenditure of which is administered by each Branch, and which shall be managed and controlled in accordance with the Rules of that Branch shall consist of:
(i) Eighty-seven and one-half per centum of the entrance ees
(sic.) and contributions paid by the members of the Branch...
(ii) Levies raised by the Branch.
(iii) Contributions, payments or receipts to the Branch from any other source.
(iv) Such other property or funds as are deemed to be part of the Branch Fund. ....
(g) No Branch Executive except as herein provided, shall have power to vote a sum exceeding five per centum of its accumulated funds, with a maximum of one thousand ($1,000), at any Branch Executive meeting for any purpose other than that of administration, provided that upon application by a Branch the National Executive may authorise such Branch to exceed the abovementioned amount. ....
(h) General - The National Fund of the Union may be disbursed or (sic) ordinary purposes by the National Council and National Executive by ordinary resolution but the funds of the Union shall not be disbursed for extraordinary purposes unless such disbursements be authorised by resolution of the National Council confirmed by resolutions of special general meetings or specially summoned State Council meetings of each of the Branches.
(i) If it is proved that any officer of the Union has dealt fraudulently or illegally with the funds he shall be liable to prosecution by the law and expulsion from the Union. ....
(k) The funds of the Union shall be devoted to the objects set out in these Rules. .... .
28 - RAISING ADDITIONAL FUNDS
(a) National Levies - If the National Council or National Executive desires at any time to raise additional funds for any specific purpose, the matter shall be referred to the Branches, and in the event of a majority of the members present at specially summoned meetings in a majority of the Branches voting in favour of the proposal, each Branch shall provide for raising its allotted share of the money required, either by taking it from its accumulated funds or by requesting the National Council or National Executive by resolution to strike a levy upon its members which shall not exceed two dollars ($2.00) per week. Upon receipt of such request the National Council or National Executive may strike or impose a levy for any specific purpose upon all or any part of the members, and such levy need not be upon the members and may not compel all members to contribute equally to it. ....".
On 3rd March 1988, a special meeting of the national council was held. The meeting discussed a proposal for the Union to amalgamate with the Australasian Society of Engineers ("the ASE"). There was also discussion as to a proposal to amalgamate with the Vehicle Builders Employees Federation of Australia ("the VBEF"). At that time, the Conciliation and Arbitration Act 1904 ("the C. and A. Act") was in force. Each of the Union, the ASE and the VBEF was an organization registered under that Act. Since 1st March 1989, the C. and A. Act has been repealed and replaced by the Act, with the consequence that each registered organization under the C. and A. Act is now to be treated as a registered organisation under the Act. See ss. 3 and 5 of the Industrial Relations (Consequential Provisions) Act 1988. The national council passed the following resolution:
"Persuant (sic.) to Section 58D of the Conciliation and Arbitration Act this National Council proposes an amalgamation between the Electrical Trades Union of Australia and the Australasian Society of Engineers."
A similar resolution was passed with respect to the VBEF. The reference to s.58D of the C. and A. Act is erroneous. Section 158D of the C. and A. Act required, as a step towards the amalgamation of two organizations, the passage of a resolution by the committee of management of each of the organizations concerned, proposing amalgamation with the other or others. Despite the passage of resolutions proposing amalgamation with the ASE and the VBEF, it appears that progress has been made only in respect of an amalgamation with the ASE.
On 4th August 1988, the State Council of the Victorian branch passed a resolution, "That the Victorian Branch of the Union does not support Union amalgamation with the Society of Engineers (A.S.E.) only and will oppose such amalgamation." That resolution was conveyed by the respondent Luckman, the secretary of the Victorian branch, to the respondent Johnson, the national secretary, by letter dated 9th August 1988.
At its meeting on 20th and 21st July 1989, the national executive approved some proposed amalgamation rules and referred them to the national council of the Union at its national conference. The national executive also passed the following resolution:
""That a fund be established for publicity in favour of amalgamation with the A.S.E. Such fund to be $100,000 and to be raised by a levy on Branches in proportion to the membership calculated by Rule 10(e) for the income year of 1988. Further, that the Fund be controlled by the Executive Committee and that the A.S.E be requested to contribute a proportional amount for publicity."".
At a meeting on 16th October 1989, the national executive resolved to spend $50,000 from the national fund to support an affirmative vote in an amalgamation ballot. The precise form of this resolution was not in evidence. The November 1989 edition of the Union's journal, ETU news, was devoted in large part to publicity for the proposal to amalgamate with the ASE. It is unnecessary to set out any of the material from that journal, but it is fair to say that the journal advocated the proposal strongly.
At a further meeting on 8th February 1990, the national executive resolved to refuse the Victorian branch permission, pursuant to rule 27(g), to spend any funds in organising or conducting a campaign in opposition to the amalgamation of the ASE and the Union in direct contravention of the national council decision to amalgamate. This resolution was reported to a meeting of the branch executive of the Victorian branch on 15th February. The branch executive directed the applicant to write to the respondent Johnson, seeking information concerning the funding of the campaign in the amalgamation ballot. By letter dated 16th February 1990, the applicant wrote to the respondent Johnson in the following terms:
"The Victorian Branch Executive at its meeting held on 15th February, 1990 requested me to write to you as explained in the following motion that was carried: The Victorian Branch President, write to the National Secretary concerning the one sided use of Union funds in favour of the "yes" case, re - the ETU/ASE amalgamation. The Victorian Branch Executive notes the National Executive decision of the 8th of February, 1990 concerning the Branch funds to promote the "no" case. It is requested that the following questions be answered before 5 pm. on Tuesday 20th of February, 1990.
1. Where is the provision of funds for the "no" case?
2. That equal or any funds for the promotion of the "no" case campaign be provided.
3. How much has already been spent on the "yes" case?
4. What and how is future spending to be done?
5. How much did the amalgamation ETU news special edition cost?
6. How much funding has the Government provided towards amalgamation. (i.e.) for and against. I look forward to your early response.".
The respondent Johnson did not reply to this letter until 22nd March. In the meantime, on 1st March, the branch executive of the Victorian branch resolved to authorise the applicant immediately to instigate Federal Court proceedings "to protect the Victorian branch position on this matter".
The procedure for amalgamation of organisations is now laid down in Division 7 of Part IX of the Act. By s.235, the approval of a designated presidential member of the Australian Industrial Relations Commission must be sought. After some procedural steps, if the designated presidential member is satisfied that the amalgamation would further the objects of the Act and that there is a community of interest between the organisations concerned in the amalgamation in relation to their industrial interests, the presidential member is required by s.239 to declare that he or she is satisfied as to those matters. Sections 240 and 242 provide for the approval by the presidential member of the submission of the amalgamation to ballot. Section 243 then requires the Industrial Registrar to arrange for the conduct by the Australian Electoral Commission of a secret postal ballot of the members of each of the organisations on the question whether they approve the proposed amalgamation. The person conducting the ballot is required by s.244(1)(b) to publish notice of the ballot and of the commencing and closing days of the ballot, not less than three months before the commencing day of the ballot. Regulation 82 of the Industrial Relations Regulations provides for the form of notice of the ballot, and for the publications in which it is to appear, in addition to the Australian Government Gazette. Certain of the provisions of s.244 are of considerable importance in the present case; they are as follows:
"(3) Not less than 2 months before the commencing day of the ballot or ballots:
(a) the organisation concerned may lodge with the Industrial Registrar a written statement of not more than 2,000 words in support of the proposed principal amalgamation and, if the scheme for the amalgamation contains an alternative provision, of each proposed alternative amalgamation; and
(b) at least the relevant number of members of the organisation may lodge with the Industrial Registrar a written statement of not more than 2,000 words in opposition to the proposed principal amalgamation or, if the scheme for the amalgamation contains an alternative provision, to the proposed principal amalgamation or any proposed alternative amalgamation or any 2 or more of them; and, subject to subsection (4), a copy of each statement shall accompany the ballot paper or ballot papers sent to the persons entitled to vote at the ballot or ballots.
(4) If 2 or more statements in opposition to the amalgamation are duly lodged with the Industrial Registrar:
(a) a designated Presidential Member shall prepare, or cause to be prepared, in consultation, if practicable, with representatives of the persons who lodged each of the statements, a written statement of not more than 2,000 words in opposition to the amalgamation based on both or all the statements and, as far as practicable, presenting fairly the substance of the arguments against the amalgamation contained in both or all the statements; and
(b) the statement prepared by the Presidential Member shall accompany the ballot paper or ballot papers as if it had been the sole statement lodged under paragraph (3)(b).
(5) The regulations may make provision for ensuring equitable presentation of argument for and against a proposed amalgamation in periodical publications of the existing organisations, and the branches of the organisations, concerned in the amalgamation after the notice has been published under subsection (1) in relation to the amalgamation.
(6) In this section:
"relevant number", in relation to an organisation, means:
(a) 5% of the total number of members of the organisation; or
(b) 250;
whichever is the lesser."
Application has been made to the designated presidential member in accordance with s.235. On 2nd February 1990, Deputy President Moore of the Australian Industrial Relations Commission made the declarations contemplated by s.239 of the Act in respect of the amalgamation between the Union and the ASE, and approved the submission of the amalgation to ballot, pursuant to s.240.
On 14th February 1990, notices were published in various newspapers, stating that a secret postal ballot of the members of the Union is to be conducted on the question whether they approve the proposed amalgamation with the ASE. The commencing date of the ballot is 15th May 1990 and the closing date is 5th June 1990.
At a meeting on 10th March 1990, the national executive of the Union resolved as follows:
"The National Executive authorises the National Secretary to appoint two full time Amalgamation Officers to work as directed by him in promoting the proposed amalgamation with the ASE among the membership of the Union, particularly in Victoria."
By the rule to show cause, as amended at the trial, the applicant seeks the following orders, pursuant to s.209 of the Act:
"That the respondents and each of them perform and observe the rules of the Electrical Trades Union of Australia ("the union") -
(1) by treating as null and void and of no effect the resolution of the National Executive at its meeting of 20th and 21st July, 1989 as follows:- "That a fund be established for publicity in favour of amalgamation with the A.S.E. Such fund to be $100,000 and to be raised by a levy on Branches in proportion to the membership calculated by Rule 10(e) for the income year of 1988. Further, that the Fund be controlled by the Executive Committee and that the A.S.E. be requested to contribute a proportional amount for publicity".
(2) by treating as null and void and of no effect the resolution of the National Executive at its meeting of 16th October, 1989 to expend $50,000 from the National Fund to support the "Yes" vote in the forthcoming amalgamation ballot.
(3) by refraining from using or permitting the use of the resources and/or the funds of the union to support the proposed amalgamation between the union and the Australasian Society of Engineers.
(4) by refraining from using or permitting the use of the union magazine to publish material in support of the said amalgamation.
(5) by treating as null and void and of no effect the resolution of the National Executive at its meeting on 10th March, 1990 as follows:
'The National Executive authorizes the National secretary to appoint two full time Amalgamation officers to work as directed by him in promoting the proposed amalgamation with the ASE among the membership of the Union, particularly in Victoria.'"
At the trial on 28th March, Mr. Borenstein of counsel appeared for the applicant. Mr. Shaw QC and Mr. Marshall of counsel appeared for the respondents except the seventh and eight respondents, Mr. Main and Mr. Winkworth. The seventh and eighth respondents, who are also members of the Victorian branch executive, appeared by Mr. Carn of counsel, and consented to the orders sought.
Mr. Shaw conceded that, in the light of the provisions of rule 28(a) of the rules of the Union, the resolution of the national executive at its meeting on 20th and 21st July 1989, to establish a fund of $100,000 to be raised by a levy on branches, could not have effect. At the very least, it would be necessary to put that resolution to specially summoned meetings of the branches, and no effect could be given to it unless such meetings in a majority of branches voted in favour of the proposal to raise additional money. There is no evidence that those steps have been carried out. Mr. Shaw submitted that it would be inappropriate to make absolute the orders sought in the rule to show cause with respect to that resolution, as there was no evidence of a likely expenditure of funds from such a fund, the fund itself being non-existent at this stage. Mr. Borenstein did not press for an order in respect of the proposed levy. His case concentrated upon the resolution of 16th October, with respect to the expenditure of $50,000 and the resolution of 10th March, with respect to the engagement of two amalgamation officers. The validity of these resolutions was challenged on two alternative bases. First, it was argued that the expenditure of moneys pursuant to each of these two resolutions would involve those moneys being "disbursed for extraordinary purposes", within rule 27(h), and could not be undertaken without a resolution of the national council confirmed by resolutions of special general meetings or specially summoned state council meetings of each of the branches. In the second place, reliance was placed upon the principles referred to in Scott v. Jess (1984) 3 FCR 263, at pp 286-289, and Tanner v. Maynes (1985) 7 FCR 432, at pp 440-441. In particular, reliance was placed on the fourth principle, that the funds and property of an organisation may not validly be used to support one candidate or group of candidates in an election, or one point of view in a plebiscite, to the exclusion of another candidate or other candidates or the opposite point of view, or to campaign against a candidate or candidates in an election or a point of view in a plebiscite.
Before coming to these arguments, it is necessary to deal with an argument put by Mr. Shaw, and based on s.209(3) of the Act. That sub-section provides that the Court may refuse to deal with an application for an order under s.209 unless it is satisfied that the applicant has taken all reasonable steps to try to have the matter the subject of the application resolved with the organisation. It was contended by Mr. Shaw that the applicant had not taken any reasonable step to have the matter the subject of this application resolved within the Union.
The steps which Mr. Shaw suggested were open to the applicant were to attempt to initiate the conduct of a referendum of members of the Union, pursuant to rule 20, and thereby to overturn the decisions of the national executive, to attempt to persuade two branches to call for review of the decisions of the national executive pursuant to rule 15(a), thereby causing the resolutions not to be implemented, or to move for recommittal or rescission of the resolutions. In the case of recommittal or rescission, Mr. Shaw could not point to any express provision of the rules of the Union under which recommittal or rescission might be effected; he relied on the general proposition that a decision-making body has power to unmake its previous decisions upon further consideration. Mr. Shaw pointed out that the only positive step taken by the applicant before commencing proceedings was his letter of 16th February to the national secretary, which letter was interrogative, and did not call upon the national executive to refrain from implementing its decisions, much less to set them aside.
In Troja v. Curran (Federal Court of Australia, Keely J., 12th May 1989, unreported), a submission that s.209(3) of the Act is intended to convey that there is a legislative policy that prima facie matters should be dealt with internally was rejected. At pp 22-23 of his reasons for judgment, Keely J. said:
"Applications under s.209 may relate to a wide range of matters - as they did for many years under s.141 of the previous Act. The circumstances relating to an application may be such that it is a matter of great importance to the applicant member and/or to the organisation and/or to the membership of the organisation that there be a speedy and final determination by the court on the matter the subject of the application. Those circumstances might be more likely to exist - although they would not necessarily exist - in respect of applications by...a member claiming that an organisation, or one of its branches, is proposing to expend Union funds and that it is not authorised to do so."
The present case is one in which the validity of resolutions authorising the expenditure of funds is in question. Any delay in approaching the Court for a determination of the validity of the resolutions might mean that the funds of the Union are depleted while such delay occurs. In such circumstances, as Keely J. said, it is in the interests of the Union itself and its members, as well as the applicant, that there be a determination of the issues. Compare Buchanek v. Jones (Federal Court of Australia, Gray J., 26th April 1989, unreported), at pp 5 and 6 of the reasons for judgment.
At the very least, in cases where expenditure of funds may be occurring, it should be possible to point to steps which an applicant might have taken and which would fit readily the description "reasonable". An applicant is not to be denied relief simply because there was open to him or her some step under the rules which might conceivably have led to a resolution of the issue which he or she seeks to raise before the Court. An applicant is not required by s.209(3) to engage in conduct the result of which is purely speculative. In the present case, it is apparent on the evidence that the decision to pursue amalgamation with the ASE has broad support from the decision-making bodies in most branches of the Union. It is therefore likely that the decisions to spend money promoting the amalgamation would have similar support. To require the applicant to attempt to prevail upon the committees of management of the other branches, in the hope of securing their agreement to a call for review under rule 15(a) or a referendum under rule 20(1)(a), would not be reasonable in the circumstances. In addition, steps had been taken by others within the Victorian branch of the Union to procure the requisite number of signatures on a petition to force a referendum on the question whether the proposed amalgamation should proceed, pursuant to rule 20(1)(b). That attempt failed. In the light of that, it would be unreasonable to expect the applicant to have attempted a similar exercise in respect of the resolutions which are now challenged. The suggestion that the applicant should have sought to persuade the national executive to reverse its decisions is also one which does not commend itself as reasonable. The presence of specific review provisions in rule 15(a) may suggest that the powers of the national executive to review its own decisions are limited to the circumstances referred to in that rule. Even if this were not so, the applicant would have had every right to regard himself as attempting to appeal from Caesar to Caesar if he had asked the national executive to reconsider.
The applicant can be criticised justly for having delayed after the passing of the resolution concerning the expenditure of $50,000 in October 1989. Section 209(3) does not provide for any bar to relief as a result of delay. The best that can be said is that the applicant had available to him a period of time in which he might have taken one or more of the steps which Mr. Shaw suggested as appropriate. The view that I have taken, however, is that it is not reasonable to expect the applicant to have taken those steps before coming to court. Accordingly, it is not appropriate to refuse him relief under s.209(3) of the Act if he is otherwise entitled to relief.
The primary attack of the applicant on the resolutions of the national executive was on the basis that the expenditure of funds to promote the amalgamation, and to engage persons to promote the amalgamation, was a disbursement for extraordinary purposes, and could only be authorised by resolution of the national council confirmed by resolutions of special general meetings or specially summoned state council meetings of each of the branches, pursuant to rule 27(h). This argument raised the difficult question of the distinction between ordinary and extraordinary purposes in the expenditure of funds.
Such an issue involves initially a question of characterisation. Mr. Borenstein sought to characterise the expenditure as being for the purpose of amalgamation, and contended that an amalgamation, as a rare event, which would change the nature of the Union if effected, was properly described as extraordinary. Mr. Shaw characterised the expenditure as for the purpose of conveying to the members a policy decision of the national council, namely to amalgamate with the ASE, and promoting among the members a favourable view of this policy decision. On his argument, there could be nothing extraordinary about so promoting a policy decision of the national council among the Union's members. In Lewis v. Maynes (1988) 27 IR 113, at p 124, I said:
"Whatever test is adopted for distinguishing between ordinary and extraordinary purposes, it will involve characterisation of the purpose of a particular disbursement. Given that the purpose of every disbursement must be within the confines of the objects of the union, such a process of characterisation can never be particularly easy."
The present case is one which illustrates the truth of that proposition. There can be no doubt that communication with members of a registered organisation about the policies adopted by its governing body is a proper, and perhaps even a necessary, part of the operations of the organisation. This was recognised in Scott v. Jess, at p 286. Where the policy decision concerned is one which would have a dramatic effect on the shape of the organisation if it were carried into effect, the purpose of the expenditure may nevertheless be regarded as the publicising of a policy decision. A problem arises when the implementation of the policy decision requires a vote of the members, and a positive vote will carry into effect the policy and produce a dramatic change in the organisation. Then the argument becomes one whether the funds are being expended merely to publicise the policy decision, or to produce the result of the implementation of the policy. The two purposes are intertwined to the extent that it is difficult to say that one prevails.
It is unnecessary to resolve all of these difficulties in the present case, because of the view which I take about the expenditure of funds for the purpose of procuring amalgamation. For the purposes of this case, I am content to assume the correctness of Mr. Borenstein's argument that the purpose of the expenditure is characterised properly as to effect an amalgamation with the ASE.
In Lewis v. Maynes, the Court considered the meaning of the phrases "disbursed for ordinary purposes" and "disbursed for extraordinary purposes" in a provision in the rules of a registered organisation. After reviewing the somewhat limited authorities, and the statutory history of the phrases "ordinary purposes" and "extraordinary purposes", the Court said at pp 127-128:
"In construing the phrases...their previous general application must be borne in mind. Attention should be directed, not to whether the purpose of a particular disbursement is ordinary or extraordinary for a branch, or even for the union itself, but rather to whether it would be ordinary or extraordinary for an organisation of an industrial kind. Deference to the view of the majority in McClure v Mitchell ((1974) 24 FLR 115, at p 118) might require the words to be construed by a reference to employee organisations, and perhaps to employee organisations of a similar size. The result is that the question to be asked with respect to each disbursement is whether it is for a purpose normally carried out by large industrial organisations of employees. Something which is not so normally carried out, although falling technically within the objects of the union, would be an extraordinary purpose."
It is appropriate to follow that line of reasoning in the present case, especially having regard to the probability that the phrases "ordinary purposes" and "extraordinary purposes" came into the rules of the Union because of their presence in earlier times in a requirement under the C. and A. Act for the registration of associations as organizations. An additional factor in the present case, which indicates clearly the intention that the phrase "ordinary purposes" in rule 27(h) is intended to be wider than merely administrative purposes, is the specific power in rule 27(b) for the national executive to disburse funds for administrative purposes.
The question is, therefore, not whether amalgamation is a rare event in the history of the Union, but whether it is an ordinary activity for a registered organisation of a similar size. The evidence is that the Union has some eighty thousand members. It is therefore among the reasonably large organisations registered under the Act. There is considerable evidence that a number of organisations are engaged in activities directed towards amalgamation with other registered organisations. The provisions of the Act concerning procedures for amalgamation have been summarized earlier in these reasons for judgment. It is fair to say that they make the process of amalgamation easier for an organisation than did the equivalent provisions in the C. and A. Act and the regulations made under it. This indicates that the intention of parliament when it substituted the Act for the C. and A. Act was to encourage amalgamations. The policy of the Australian Council of Trade Unions favours the amalgamation of unions to form larger, more efficient units. On evidence put forward by the applicant, forty-six organisations registered under the C. and A. Act or the Act have amalgamated to form twenty-three organisations between 1973 and early 1990. Six of those forty-six were organisations of employers. The respondent Johnson gave evidence of his knowledge of the extent of activity directed towards amalgamation in the trade union movement at present. I am satisfied that there is a substantial amount of such activity. At the present time, having regard to the activities of reasonably large industrial organisations, it is not to be regarded as extraordinary to expend funds in respect of an actual or proposed amalgamation.
It is true that the Union has not amalgamated previously. The mere fact that this proposed amalgamation may be a first, if it occurs, cannot operate to make it an extraordinary purpose for the disbursement of funds. A useful analogy is that of marriage. A person may marry only once in the course of his or her life, but it can hardly be said that, in our society, marriage is an extraordinary event for a person.
For these reasons, I reject the contention that rule 27(h) of the rules of the Union operates to prevent the national executive from deciding to expend the funds of the Union on promoting the proposed amalgamation.
The remaining question is whether such expenditure is prohibited on the application of the principles laid down in Scott v. Jess. Those principles, as approved in the joint judgment of Evatt and Northrop JJ. in Tanner v. Maynes, at p 441, are as follows:
"a. "It is proper, and perhaps necessary, for an organisation to communicate with its members about the affairs of the organisation and matters which may be of interest to the members." b. "In the expenditure of the funds and the use of the resources of an organisation, its objects and powers are to be interpreted broadly, so that any action which can fairly and reasonably be regarded as falling within those powers and objects will be valid." c. "A power given to a person or persons by the rules of an organisation must be exercised in good faith and for the purpose for which it is given, not for some ulterior or extraneous purpose." d. "The funds and property of an organisation may not validly be used to support one candidate or group of candidates in an election, or one point of view in a plebiscite, to the exclusion of another candidate or other candidates or the opposite point of view, or to campaign against a candidate or candidates in an election or a point of view in a plebiscite."".
The second and third of those principles are not in issue in the present case. The power of the Union to use its funds and resources in the process of amalgamation with another registered organisation is not challenged. Nor are the resolutions of the national executive attacked on the basis that they result from lack of good faith, or from an ulterior purpose. As was the case in Scott v. Jess, the question is whether the first principle is cut down by the fourth, to the extent that expenditure which would otherwise fall within the express powers in the rules of the Union is prohibited impliedly.
It should be noted that the fourth principle has been phrased in terms applicable to elections and to plebiscites of members. Mr. Shaw argued that a statutory ballot in a process of amalgamation of two organisations was in a category altogether different from elections or plebiscites, and the fourth principle should not apply to such a statutory ballot at all. His argument was that whereas elections are for the purpose of choosing those persons who will be entrusted with the making of policy, and plebiscites are part of the policy making process itself, an amalgamation ballot is the result of the policy making process. A policy decision has already been taken by the decision-making body of an organisation entrusted with that responsibility, and the amalgamation ballot is merely the execution of that decision.
This argument cannot be accepted. In requiring a ballot of the members of an organisation to approve a proposed amalgamation, parliament has obviously intended that the decision whether to amalgamate or not is to be one for the members of an organisation. A ballot is not to be seen merely as a formality, consequent upon the making of a policy decision within a governing body. It is the real decision-making process. There is every reason why the principle under which there is an implied prohibition on the use of the funds and resources of an organisation to achieve a particular result by voters should apply. I therefore hold that the powers to expend funds expressed in the rules of the Union are subject to an implied limit preventing such expenditure on campaigning for a particular result in an amalgamation ballot.
This conclusion does have some practical consequences which create some difficulty. The first is as to the period of time during which the implied limitation operates. Mr. Shaw contended for an operation only from the date on which the ballot papers are sent to members entitled to vote. Such a limited operation would be largely ineffective, since campaigning after the ballot papers have been sent is unlikely to have a very great effect in any event. Undoubtedly, the bulk of any expenditure on campaigning in respect of an amalgamation ballot would be incurred prior to the posting of the ballot papers. It will be remembered that the operation of the fourth principle in Scott v. Jess and Tanner v. Maynes with respect to elections has been confined to the period of actual conduct of the elections, once nominations have been lodged. As yet, there is no decision as to the period during which the principle operates in relation to a plebiscite, although it is clearly improper to forward with the ballot paper a document advocating a vote for one side: see Lyons v. Deegan (1978) 35 FLR 430, especially at pp 442-443. In the case of an amalgamation ballot, there is only one date from which the principle could operate sensibly, namely the date of notification by advertisement of the ballot, pursuant to s.244(1)(b) of the Act. Once the necessary advertisements are published, the ballot must be regarded as in progress, and the funds and resources of an organisation may not be used to campaign for a particular result of it.
This conclusion leads to the second practical problem. By s.244(3), provision is made for lodging with the Industrial Registrar written statements in support of or in opposition to a proposed amalgamation. A specific power is given to an organisation to lodge a statement in support of an amalgamation. It follows that the preparation and lodging of such a statement must be regarded as an exception to the prohibition on the use of the funds and resources of the organisation. There is no difficulty about such a view, if the preparation and lodging of the statement are seen to be done pursuant to the specific statutory power. Mr. Borenstein argued that the prohibition continued to apply, unless the organisation allocated funds for the preparation of both a statement in support of and a statement in opposition to the proposed amalgamation. In my view, such a construction is untenable. The Act itself, in s.244(4), contemplates that two or more statements in opposition may be received by the Industrial Registrar. There is no provision under which those preparing a statement in opposition are required to notify the organisation that they are doing so. An organisation would not have the machinery for choosing between those groups preparing statements in opposition, and it would not be consistent with the nature of the principle prohibiting the use of funds and resources to require an organisation to fund all opponents of the proposed amalgamation. I am therefore of the view that the preparation and lodging of the statement contemplated by s.244(3)(a) of the Act falls outside the operation of the implied prohibition. The date for the lodging of such a statement in respect of the proposed amalgamation between the Union and the ASE has passed, but it may be necessary to make an exception in respect of the preparation of the statutory statement in any orders made, in case there are outstanding payments to be made in respect of that task.
It should be noted that the provisions of s.244(5) of the Act are consistent with the view that I have taken. That sub-section provides that the regulations may make provision for ensuring equitable presentation of argument for and against the proposed amalgamation after the notice of the ballot has been published. The Court was informed that no regulations had yet been promulgated pursuant to this power. The power is clearly based on the view that, once the notice of the ballot has been published, it would be beyond the power of an organisation to publish one-sided argument with respect to the proposed amalgamation.
It follows from what I have said that the applicant must succeed, at least in some respects, in obtaining the relief which he seeks. As has already been pointed out, the first order sought by the applicant is unnecessary, since the resolution of the national executive of July 1989 is conceded to be inoperable in the absence of the carrying out of the steps required by rule 28. The second order sought, with respect to the resolution of the national executive on 16th October 1989, is too broad. That resolution was valid at the time when it was passed, in that the national executive possessed ample power to communicate and advocate to members of the Union the policy decision taken in favour of amalgamation with the ASE. That power continued to operate up until the publication of notice of the ballot on 14th February 1990. Thereafter, further expenditure pursuant to the resolution fell outside the powers given by the rules, except so far as it related to the preparation of the statement contemplated by s.244(3)(a) of the Act. In my view, the situation would now be covered adequately by the making of an order somewhat in the form of the third order sought by the applicant, with an express reservation with respect to the statutory statement. The fourth order sought would then be unnecessary. The resolution of 10th March 1990 was plainly beyond power, as it fell within the period between the publication of notice of the ballot and the conduct of the ballot itself. An order in the form of the fifth order sought should be made, compelling the respondents to treat it as null and void.
It may be that, even in the absence of regulations made pursuant to s.244(5) of the Act, the respondents are able to reach some agreement with those in the Union who desire to advocate a negative vote in the ballot, so that the campaigns of both sides can be funded equitably out of the resources of the Union. It that case, a blanket prohibition on the use of the funds and resources of the Union would be unnecessary, and inconsistent with the principles laid down in Scott v. Jess and Tanner v. Maynes. For that reason, liberty will be reserved to apply in the order which is made. It is not intended that such liberty to apply should be used by any party for the purpose of inviting the Court to approve the text of some specific publication which is proposed to be distributed to members. The purpose is to enable the parties to return to the Court if they are able to negotiate an agreement under which the funds and resources of the Union may be used legitimately to advance the arguments of both sides.
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