Bogar v Campbell

[1995] IRCA 109

C A T C H W O R D S

UNION RULES - construction - admissibility of affidavit evidence as to "the whole of the context" in which rules adopted - whether more difficulty in construing rules establishes existence of ambiguity - whether possibility that no legal practitioner settled rules drafted by a union official is relevant to construction of rules - whether evidence is admissible as to what persons did purportedly under the rules, in managing the affairs of the union.

The Life Insurance Company of Australia Limited v. Phillips (1925) 36 CLR
60 at 71 and 83

R v. Aird; Ex p. Australian Workers' Union (1973) 129 CLR 654 at 659

Short v. F.W. Hercus Pty. Ltd. (1993) 46 IR 128 at 133-136

Codelfa Construction Pty. ltd. v. State Rail Authority of New South Wales
(1982) 149 CLR 337 at 352

FREDA BOGAR

- AND -

G. CAMPBELL, D. CAMERON, D. HARRISON, J. CORSETTI, D. GOODGER, G. HARRIS, I. JONES, B. FRASER, S. MAURICE, N. MARSHALL, J. ROYLE,
J. SPEIGHT, M. NICOLAIDES, R. KEATING, M. TUMBERS, D. MOWBRAY,
J. SHARP-COLLETT, K.PECKHAM, G. ADAMS, D. SMITH, P. NOACK,
C. FRIZZIERO, B. MARTIN, P. JOHNSTON AND M. MCGILL

No. VI 1809/94

KEELY J.
MELBOURNE
24 March 1995

IN THE INDUSTRIAL RELATIONS           )
COURT OF AUSTRALIA  )  VI: 1809/94
VICTORIA DISTRICT REGISTRY          )

BETWEEN

FREDA BOGAR  Applicant

- AND -

G. CAMPBELL, D. CAMERON, D. HARRISON, J. CORSETTI, D. GOODGER,

G. HARRIS, I. JONES, B. FRASER, S. MAURICE, N. MARSHALL, J. ROYLE,
J. SPEIGHT, M. NICOLAIDES, R. KEATING, M. TUMBERS, D. MOWBRAY,
J. SHARP-COLLETT, K. PECKHAM, G. ADAMS, D. SMITH, P. NOACK,

C. FRIZZIERO, B. MARTIN, P. JOHNSTON and M. McGILL
  Respondents

REASONS FOR RULING ON APPLICANT'S MOTION

24 March 1995  Keely J.
           The applicant has moved, on notice filed on 3 March 1995, for an order that the respondents not be permitted to tender in evidence and rely upon the affidavits of George Campbell, sworn 23 December 1994, of William Richard Watson, sworn 13 January 1995, and of Thomas Desmond Ryan, sworn 24 February 1995, or any oral or other evidence to the same effect.  As the hearing of the rule to show cause is to commence on  10 April 1995, it is in the interests of all parties that the court should rule on that motion as soon as possible because of the potential effect of the ruling on the preparation of their cases.

I have read the contentions of fact and law filed by the parties and the transcript of the submissions advanced on March 8 and 16 by counsel for the parties.  It is convenient to refer to the following submissions, contained in the respondents' contentions, filed on 13 February 1995 i.e. before the filing of the applicant's motion:

"13.(a) the Rules of the Union have to be construed having regard to the whole  of the context in which the rule was adopted;

(b) on this approach the Court is entitled to receive evidence . . . . .relating to the time when and the circumstances under which the rules were made:  it extends to evidence concerning the general purpose and policy surrounding the adoption of the rule and its construction against that background and the consistency and fairness which results from such an approach.

14.In looking at the full context and receiving evidence as to that context the Court is not required to find that an ambiguity exists:  the evidence itself and the context may raise the ambiguity and that ambiguity may be resolved by reference to extrinsic material."

In R v Metal Trades Employers' Association;  Ex parte Amalgamated Engineering Union, Australian Section (1951) 82 CLR 208 Kitto J. said, at 263:

"I have not discussed, because I think it irrelevant, an argument based upon an examination of the legislative history of various sections of the Act, from which the conclusion was attempted to be drawn that s. 29(b) is limited to authorising orders for the making good of past breaches of orders or awards.  Not only was the argument inconclusive, but in my opinion it was inadmissible;  for it appealed to earlier enactments, not for the purpose of removing any uncertainty in s. 29 (b), either patent or latent, but for the purpose, first of introducing uncertainty into plain words, and then of resolving the difficulty thus illegitimately created.  This method of dealing with a statute is not permissible: Aristide Ouellette v Canadian Pacific Railway Co (1925) A.C. 569, at pp. 575, 576."

Gray J. in  PKIU v Davies Brothers Ltd (1986) 18 IR 444 said at 449:

"Care must be taken, of course, not to create an ambiguity by bringing into consideration external factors which may be used legitimately to resolve an ambiguity if one exists."

Reference should also be made to the reasons for judgment of Wilcox J. in Bell v Gillen Motors Pty. Ltd. (1989) 27 IR 324 at 330-332. I may add that I agree, with respect, with the opinion there expressed by his Honour, at 331, as to the statement of Isaacs ACJ in Pickard v John Heine & Son Limited (1924) 35 CLR 1 at 9.

I accept the submissions put by the applicant's counsel that the mere complexity or difficulty of construing a document does not, of itself, mean that the document is ambiguous.  As Knox C.J. said in The Life Insurance Company of Australia Limited v Phillips (1925) 36 CLR 60 at 71:

"But the general rule is that extrinsic evidence is not admissible in order to prove that the intention of the parties was other than that appearing on the face of the instrument.  And the fact that the words of the instrument are capable of more than one meaning is not sufficient to justify the admission of extrinsic evidence of the meaning intended by either party.  In Stewart v Kennedy [No 1] (1890) 15 App. Cas. 75, at p. 103 Lord Watson said: `The fact that the construction of a term in the contract is attended with doubt and difficulty, evidenced it may be by the different meanings attributed to it by Courts or individual Judges, ought not, in my opinion, to prevent its receiving its full legal effect, according to the interpretation finally put upon it by a competent tribunal.'"

In the same case Starke J said (at 83):

"It must be remembered that a document `is not ambiguous by reason only that it is difficult of construction.  If it is finally held to bear a particular construction that must govern its legal meaning, notwithstanding any difficulty that the Courts may have felt in arriving judicially at the construction'."

On the material before the court I am not prepared to uphold the respondents' submission that the rules create a "complex and ambiguous position which may be understood only by the receipt of extrinsic material." 

The respondents' counsel referred to Atwood Oceanics Australia Pty. Ltd., v. Commissioner of Taxation (1989) 30 IR 58 at 64-65, where Lee J. quoted the comments of Barwick CJ in R v Aird; Ex p. Australian Workers' Union (1973) 129 CLR 654 at 659, which included the following passage:

"In this respect, it is proper, in my opinion, in the present case to acknowledge that the eligibility clause will have been drawn, more likely than not, by union officials more familiar with the practical affairs of industry than with the niceties or subtle nuances of language."

It should be noted that the Chief Justice's opinion was expressly limited to "the present case" and was based upon a finding "that the eligibility clause will have been drawn, more likely than not, by union officials . . . . "  A similar comment was made by Isaacs J in Australasian Society of Engineers v Smith (1913) 16 CLR 537 at 559, namely, "the plain and business like statement of members of the trade . . ." In my opinion neither case supports the respondents' submission. Nor do the observations of Black CJ in Roughan v Day (1991) 31 FCR 581 at 584-585.

The respondents' counsel also sought to rely upon the reasons for judgment of Burchett J. in Short v F.W. Hercus Pty. Ltd. (1993) 46 IR 128 at 133-136. I am simply lost in admiration at the sheer beauty of his Honour's language. For example:

"Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken.  When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment.  There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground.  True, sometimes it does stand as if alone.  But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used.  Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed.  In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read." (at 134).

and again:

"Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language.  "Sometimes", McHugh J. said in Saraswati v The Queen (1991) 172 CLR 1 at 21, the purpose of legislation "can be discerned only by reference to the history of the legislation and the state of the law when it was enacted" (at 135).

It is not surprising that the respondents' counsel attempted to gain support from such elegant language.  However, in my opinion his Honour's reasons for judgment, which carefully reviewed the authorities, do not support their submissions in this case.

On the material presently before the court I am unable to find  that the relevant rules were not settled by a legal practitioner.  I have not overlooked the evidence that Mr. Watson's duty "was to draft the new rules" (paragraph 4 of his affidavit - see also the oral evidence of Mr. Campbell).  However the evidence is not inconsistent with the possibility that the draft rules were settled by either counsel or solicitor.  The court raised that possibility with the respondents' senior counsel (transcript p.122) and suggested that that possibility "could be looked at" and also said that the absence of evidence on that matter "could so readily be cured by a short affidavit".  At a later stage (transcript pp.146 - 147) reference was made to "getting instructions" but no further material has been placed before the court.

I am unable to uphold the respondents' contentions of fact and law that:

" . . . . apart from ambiguity, in looking at the rule in the wider context the Court should receive evidence which will demonstrate:

(a)that at the time of amalgamation with the Metal Workers

Union the CWU and FPU was in a parlous financial state;"

(b)      that . . . . negotiations with the AMWU on amalgamation recognised that there had to be a rationalisation of officers and paid officials from the CW and FPU, and that the debt of the Union (being in the order of $750,000) would not allow the creation of any further full-time positions;

(c)that . . . . as a result of those negotiations it was agreed and

well understood that there would be no full-time Federal Officers
  of the Food and Confectionary Division of the amalgamated union...

(d)that the history of the Food Preservers Union and the

amalgamated CW & FPU demonstrates a policy of honorary Federal/National offices usually being held by members elected to other offices . . . . which themselves were full-time paid positions;

(e)       that under informal transitional arrangements previous Branch officers of the CW & FPU will retain full-time positions in the amalgamated AMEU, but on retirement from office, those positions will revert to honorary positions."

I accept the submissions by the applicant's counsel that:

". . . . firstly the construction of rules of an organisation, and particularly so in a case such as this where the rules have been put in place as a result of an amalgamation ballot, cannot be approached in the same way as one would approach the interpretation of a consensual document or a contractual document or an award even.  Secondly, it is submitted that . . . . . an unambiguous document in the sense that has been referred to in the decisions - must be interpreted as it stands and that an ambiguity is not demonstrated simply by pointing to the difficulty of construction.  Thirdly, . . . . if extrinsic evidence is to be admitted, an ambiguity must be identified.  We say there is none here . . . . in any event the material that is sought to be adduced here as extrinsic material ought not to be received because it does not have the sufficient connection with the individuals whose decision has led to these rules being the rules of the union.  And finally we say that on any score the admission of the negotiations [which Mr. Campbell authorised Mr. Watson to take up with Mr. Ryan and Mr. Frizziero - set out in the affidavits of Mr. Campbell and Mr. Watson] is completely improper and we rely upon the passage in Mason J's judgment in Codelfa in support of that."

In connection with that last matter, Mason J in Codelfa Construction Pty. Ltd. v. State Rail Authority of New South Wales (1982) 149 CLR 337, dealing with the question of the admissibility of evidence as to negotiations prior to a contract, said (at 352):

"It is here that a difficulty arises with respect to the evidence of prior negotiations.  Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract.  To the extent to which they have this tendency they are admissible.  But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable.  The point is that such statements and actions reveal the terms of the contract which the parties intended            or hoped to make.  They are superseded by, and merged in, the contract itself.  The object of the parole evidence rule is to exclude them, the prior oral     agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible
           meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting.  We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract."

The applicant's motion is upheld as to paragraphs 5, 6, 8, 9, 10 and 11 of the affidavit of Mr. Watson with its attachments WRW 1, 2 and 3.  In respect of Mr. Campbell's affidavit, the applicant's motion is upheld as to paragraphs 3 (save for the first nine lines), the last sentence of paragraph 4, and paragraphs 5, 6 and 7 (save for certain matters which appear to be common ground).

As to various statements in Mr. Ryan's affidavit, I should refer to some passages in the address by the respondents' senior counsel:

" So that is all historical, not merely repeating the terms of the rules, but setting out how the rules in fact operated." (transcript p.125).

". . . . having the rules alone will not be sufficient because . . . . they make broad provision or they are silent and you have to have additional evidence about what the organisation did, in fact." (transcript p.125.). 

"so the rules alone do not really assist, you have got to understand how they operated.  It is the industrial reality, in part, approach, what really happened." (transcript p.126.)

As indicated to the respondents' senior counsel during his address, I do not accept that in this case evidence is admissible as to what persons actually did in running the affairs of the relevant unions over a period of years.  On the assumption that their actions were purportedly made under the rules, they would nonetheless represent no more than the opinion of those persons as to what the rules permitted them to do - an opinion which (like the opinion of any legal practitioner or court) might have been wrong.  Those statements by Mr. Ryan are not admissible in evidence.

As to the remaining parts of the affidavits of Mr. Watson, Mr. Campbell and Mr. Ryan the court will not rule at this stage that that evidence, including the history of the rules of the unions, is inadmissible but that decision does not prevent the applicant from renewing, at the trial, her objection to its admissibility.

I certify that this and the preceding
eight pages are a true copy of the
reasons of the Honourable Justice Keely
for ruling on the applicant's motion,
filed on 3 March 1995.

-  Associate:
  Date:   24 March 1995

Counsel for the Applicant:  Mr. H. Borenstein
Solicitor for the Applicant:  Slater & Gordon
Counsel for the Respondent:  Mr. W.R. Haylen Q.C. & Mr. J.P. Wallace
Solicitor for the Respondent:  Taylor & Scott

Date of Hearing:  8 & 16 March 1995

Date of Ruling:  24 March 1995