Central Queensland Fuel Services Pty Ltd v Graham Kent, Kenneth Thompson, Kenneth Bowen, Christopher Goodchild, Steven Hughes and Ross Lake
[1994] IRCA 81
•12 Sep 1994
C A T C H W O R D S
INDUSTRIAL LAW - registered organisation - rules - performance and observance - interim orders - whether proceeding commenced on proper authority - whether officer of organisation validly suspended from duties - whether interim order should be made - whether conduct of meeting to hear charges should be restrained - whether bias by members of board of management - whether proxies able to participate.
Industrial Relations Act 1988 ss. 195(1)(c), 209.
CENTRAL QUEENSLAND FUEL SERVICES PTY. LTD. V. GRAHAM KENT, KENNETH THOMPSON, KENNETH BOWEN, CHRISTOPHER GOODCHILD, STEVEN HUGHES AND ROSS LAKE
NO. VI 1551 of 1994
Judge:GRAY J.
Place:MELBOURNE
Date:12TH SEPTEMBER 1994
IN THE INDUSTRIAL RELATIONS )
)
COURT OF AUSTRALIA ) No. VI 1551 of 1994
)
VICTORIA DISTRICT REGISTRY )
B E T W E E N:
CENTRAL QUEENSLAND FUEL SERVICES PTY. LTD.
Applicant
- and -
GRAHAM KENT, KENNETH THOMPSON, KENNETH BOWEN,
CHRISTOPHER GOODCHILD, STEVEN HUGHES and ROSS LAKE
Respondents
JUDGE: Gray J.
PLACE: Melbourne
DATE: 12th September 1994
REASONS FOR JUDGMENT
The Australian Petroleum Agents and Distributors Association ("the Association") is an organisation registered pursuant to the Industrial Relations Act 1988 ("the Act"). John Christopher Robinson holds the office of executive director within the Association. That office is an elected office. It also entitles Mr. Robinson to be a member of the board of management of the Association, which has the management and control of the Association, pursuant to r. 48 of the Association's rules.
On 18th April 1994, the board of management met in a special meeting, at which it considered a number of issues connected with Mr. Robinson's position. A number of resolutions were carried at that meeting, consequent upon discussions about the affairs of the Association and its dealings with a company called Clifford Parkhurst and Associates Pty. Ltd. ("Clifford Parkhurst"). One of the resolutions involved the conduct of an independent review into the finances of the Association by Coopers and Lybrand, a firm of accountants. That review was designed to have regard to a number of matters that may have affected Mr. Robinson's position.
Although elected as executive director of the Association and carrying out duties on a substantially full time basis, Mr. Robinson was not paid directly by the Association. Instead, Clifford Parkhurst, of which Mr. Robinson was a director, was paid a substantial fee for his services. He in turn was paid a salary and was given other benefits by Clifford Parkhurst.
A resolution passed at the meeting of the board of management of 18th April 1994 was in the following terms:
"that the Chief Executive Officer, John Christopher Robinson be directed to co-operate with the
(a)independent review by Coopers and Lybrand
(b)any advices from Phillips Fox re the conduct of the matters raised in the President's notice of 5/4/94
(c) and that further, John Christopher Robinson perform only those duties as executive director as directed by the President (Mr. G.B. Kent) until such reviews are complete."
It appears from further evidence that Coopers and Lybrand delivered a report dated 5th May 1994. The board of management met again on 19th May 1994. Mr. Robinson was not present at that meeting. Consequent upon that meeting, Mr. Robinson received two letters from the chairman of the board of management of the Association. One letter read as follows:
"Dear Mr. Robinson,
I have been instructed by the Board of Management of the Association to write to you in relation to your position as Executive Director of the Association, and the substantial conflicts of interest which have arisen between the appointment and your previous directorship and present employment by Clifford Parkhurst & Associates Pty Ltd, details of which are set out in the report prepared by Coopers and Lybrand and dated 5th May 1994, a copy of which is now enclosed for your perusal.
The Board of Management has carefully considered that report, together with a letter of legal advice relating thereto from Phillips Fox solicitors, as well as a letter from your solicitor Mr Michael Brereton. It is the decision of the Board that you should be invited to resign as Executive Director of the Association immediately. It is our view that it would be in the best interests of both the Association and yourself for these matters not to be the subject of acrimonious public debate, and if you are prepared to hand in your resignation this would go a long way to avoiding unnecessary injury to the reputations of yourself and the Association. If you are in agreement then I suggest that we meet as soon as possible to work out a course of action.
I am instructed by the Board to advise you that if your resignation be not forthcoming by 5.00pm tomorrow Friday 20th May, 1994, the Board intends to convene a Board meeting to remove you from the office of Executive Director pursuant to the provisions of 77 to 79 of the Rules of the Association, on the grounds of gross misbehaviour, gross neglect of duties and a substantial breach of the Rules of the Association - details of which are as set out in the Coopers and Lybrand report.
I look forward to hearing from you by 5.00pm tomorrow."
The second letter reads as follows:
"Dear Mr. Robinson,
As you are aware, the board of management has been supplied with various material which requires the urgent consideration and attention of the board. In light of the serious nature of the matters raised, and in particular in light of the contents of the Coopers & Lybrand report which has been supplied to you, the board has unanimously resolved, pursuant to Clause 94(c) of the constitution, to direct you to carry out no further duties of any nature in your capacity of Executive Director effective forthwith until further notice."
Rules 78 and 79 of the rules of the Association provide as follows:
"78.A person shall not be dismissed from an office in the Association unless:-
(i)He has been found guilty of:-
(a) misappropriation of the funds of the Association;
(b) a substantial breach of the Rules of the Association;
(c) gross misbehaviour;
(d) gross neglect of duties; or
(ii)he has ceased to be eligible to hold such office.
79.A person shall not be found guilty of any of the matters referred to in Clause 78 unless a resolution to that effect is passed by a majority of the Board at a meeting of which the person has been given 21 days' notice of:-
(i)the date and place of the meeting;
(ii)the resolution to be passed; and
(iii)full particulars of the alleged offence, and
at which he shall be given the opportunity of being heard."
Rule 94(c) provides:
"The Executive Director shall carry out such other duties as may be required by these Rules or directed by the Board from time to time."
Mr. Robinson did not resign, as invited to do by the first of the letters of 19th May. Accordingly he was advised subsequently that charges would be brought against him, relating to some of the matters specified in cl. 78 of the rules of the Association. Correspondence between Mr. Robinson's solicitor and the solicitors for the Association has ensued, in which a number of issues have been raised. It is unnecessary to go to those matters in detail. One of them concerned requests on behalf of Mr. Robinson for the provision of particulars of the charges. Another concerned requests by him for the provision of a copy of the minutes of the meeting of 19th May, at which he was not present. There has also been correspondence relating to the question of alleged bias of members of the board of management, arising out of the contents of the letters of 19th May.
In the result, a meeting of the board of management has been scheduled for tomorrow, 13th September 1994, to deal with the charges. On Friday, 9th September, a substantial quantity of documentary material was delivered to Mr. Robinson's solicitor, together with a letter indicating that the matters to be considered by the board on 13th September would be confined to certain nominated issues.
On 8th September 1994, I granted a rule to show cause to the applicant, calling upon the respondents to show cause why they should not be ordered to perform and observe the rules of the Association by:
treating as null and void any resolutions, decisions or acts supporting or giving effect to the letter of 19th May 1994 from the chairman of the Association to Mr. Robinson, relating to the decision by the board of management of the Association to proceed to remove Mr. Robinson from the office of executive director of the Association;
2. treating as null and void any resolutions, decisions or acts supporting or giving effect to the letter of 19th May 1994 from the chairman of the Association to Mr. Robinson, in which the Association purported to suspend Mr. Robinson from his office and employment with the Association;
treating as null and void any resolutions, decisions or acts purporting to support or give effect to a notice of proposed resolutions for dismissal dated 9th August 1994, addressed to all national board members, including Mr. Robinson;
providing Mr. Robinson with access to minutes of the meetings of the board of directors held in April and May 1994, together with any supporting documentation;
5. paying to Mr. Robinson his remuneration and entitlements as from April 1994 to date.
The applicant in the proceeding is Central Queensland Fuel Services Pty. Ltd. That is because the rules of the Association appear to provide that members can be persons, firms or companies carrying on certain activities. Those members which are firms or companies can in turn be represented for practical purposes by natural persons. Mr. Robinson claims to be the natural person representing Central Queensland Fuel Services Pty. Ltd., which is claimed to be a member of the Association.
The matter has come on before me today for the purpose of hearing and determining the applicant's claims for interlocutory orders. Counsel for the applicant has said that certain of those interlocutory orders cannot be dealt with today, because consideration needs to be given to the question whether the documents supplied last Friday contain all of the particulars necessary to satisfy the demands made on behalf of Mr. Robinson. In addition to that, the provision last Friday of the minutes of the meeting of 19th May 1994 has tended to defuse somewhat the issue of whether any order should be made for the provision of those minutes. The concentration has been on the issue of whether I should order the postponement of the meeting fixed for tomorrow to consider the charges, and whether I should deal in some way with the purported suspension of Mr. Robinson.
An initial point also arose, namely, whether the applicant has commenced the proceeding on proper authority. It appears that no meeting of the board of directors of Central Queensland Fuel Services Pty. Ltd. has been held to discuss the question whether this proceeding should be commenced in its name. Mr. Robinson claims to be the managing director of that company, and to have spoken to one of the other two directors, a Mr. Brown, and to have received Mr. Brown's approval for the commencement of the proceeding. He has not spoken to the other director who is Mr. Robinson's former wife, who, he believes, would not support anything that he wishes to do.
In the circumstances, it seems to me that I am not in a position to hold that the proceeding has been commenced without proper authority. There must be many occasions when companies have legal proceedings commenced in their names without resolutions of their boards of directors to do so. The position can, of course, be regularised by subsequent ratification by the board of directors of the action taken in the name of the company. In the circumstances in which I have oral evidence from Mr. Robinson, who says he has two votes on the board of directors, that he would support such a resolution and that he believes Mr. Brown would support such a resolution, it seems to me inappropriate to strike down the proceeding at this stage.
As to the question of the suspension of Mr. Robinson from his duties as executive director, counsel for the respondents has been driven to concede that no proper authority appears to exist for the shorter letter of 19th May 1994, notifying Mr. Robinson that he was to carry out no further duties in that capacity. The resolution of 18th April, even if valid, does not support the proposition that Mr. Robinson could be directed by the chairman to carry out no further duties until further notice. The resolution itself seeks only to restrict the duties that Mr. Robinson could carry out, and only until the completion of the review which was being established. No resolution appearing in the minutes of the meeting of 19th May appears on its face to support the suspension from duty of Mr. Robinson, although it must be conceded that there is a considerable amount of vagueness in some of the resolutions which were passed.
There is additionally the issue in relation to suspension which arises from the provisions of s. 195(1)(c) of the Act. It is that provision which requires r. 78 of the rules to be in the form in which it appears. A real issue must arise as to whether a statutory prohibition on the removal from office of an elected person, without certain steps being carried out, includes the suspension from office of such a person. Rule 94(c) of the Association's rules does not appear to support a suspension from all duties.
It was suggested that there were discretionary considerations that should prevent the making of an order dealing with the purported suspension. I do not consider that to be the case. The rules of the Association oblige the executive director to carry out certain duties, and in my view there is no ground for the Court to hold its hand, when it appears that the person still elected to that office is being prevented from carrying out any of those duties. It was also said that if the meeting scheduled for tomorrow is to proceed, Mr. Robinson will be too occupied by that to carry out any of his duties under the rules. It cannot be known whether, even if I refrain from stopping the meeting scheduled for tomorrow from going ahead, that meeting will go ahead and reach a conclusion. As will appear later in these reasons for judgment, all sorts of matters may prevent the completion of the board of management's deliberations tomorrow.
Accordingly, I propose to order on an interim basis that the respondents refrain from treating Mr. Robinson as having been suspended from the office of executive director, or of having been directed to carry out no further duties of any nature in his capacity as executive director.
That leaves the issue of whether tomorrow's meeting should go ahead. Counsel for the applicant relied heavily on the longer letter of 19th May 1994 as evidence of bias on the part of the members of the board of management. If it truly reflected the views of the board of management, that letter would give strong evidence of the formation of concluded views about a number of things. I refer to the reference to "the substantial conflicts of interest which have arisen" in the first paragraph and to the expressed intention to convene a board meeting "to remove you from the office of Executive Director" in the third paragraph.
The brief examination of the minutes of 19th May which I have had does not enable me to confirm, or indeed to refute, the allegation of bias on the part of the members of the board of management. As I have said, there is a considerable vagueness about the resolutions which are recorded in those minutes. There certainly must be some doubt whether they justify the terms of the chairman's letter on 19th May 1994.
Even if there were to be established a serious question whether the members of the board of management are biased, that would not be the end of the matter. Provision exists in r. 47E of the rules of the Association for a board member being unable to attend a meeting of the board of management. That wording could comprehend inability to attend such a meeting by reason of disqualification from dealing with the business of the meeting. In the event of inability to attend, the branch committee of the branch which the person represents may appoint any other duly elected office holder of that branch to attend as the absent person's proxy and vote on his or her behalf at the meeting. Provision is made for an instrument appointing the proxy.
It seems to me most appropriate that the Association should have the opportunity to conduct its board of management meeting in relation to Mr. Robinson appropriately, if it can. It will of course be open to Mr. Robinson to take objection to the presence of any person on that board of management, if a case for bias can be made out. It will also be open to Mr. Robinson to request any adjournment necessary to enable him to consider properly the material which has been delivered to him, if he can make out a case that its lateness has prevented him from giving it adequate consideration. In short, it will be necessary for the board of management, if it is to conduct its proceedings validly, to afford the procedural fairness which the law requires to be given to Mr. Robinson. I have no doubt that the board of management will be in receipt of legal advice at every turn as to the requirements of procedural fairness in the particular case.
It seems to me to be pointless to prevent the meeting going ahead until such time as the Court is able to try the issues which have been raised to date in this proceeding, and then to leave the matter to be resolved, perhaps in some other way, when those points are resolved. It is better to allow the meeting to go ahead. If it acts in a way which is inconsistent with the interests of Mr. Robinson, it will no doubt be open to the member of the Association whom Mr. Robinson represents to bring a further proceeding, or to seek amendment to the rule to show cause in the present proceeding, and to raise what will then be the real issues in dispute as to the conduct of the board of management's proceedings.
For those reasons, I propose to make the one interim order to which I have referred and to adjourn the consideration of other interim orders. It occurs to me that it might be best to adjourn the directions hearing to a date not very far into the future, so that, if necessary, the proceeding can be shaped appropriately at that stage.
The orders I make are in the following terms:
Until the hearing and determination of the proceeding or further order, the respondents and each of them perform and observe the rules of the Australian Petroleum Agents and Distributors Association ("the Association") by refraining from treating John Christopher Robinson as having been suspended from the office of executive director of the Association or as having been directed to carry out no further duties of any nature in his capacity as executive director of the Association;
2. the application in paragraph 1 of the applicant's claims for interlocutory relief is dismissed;
3. the hearing of the application in paragraph 2 of the applicant's claim for interlocutory relief and the directions hearing are adjourned to 26th September 1994;
4. liberty is reserved to any party to apply on 48 hours notice in writing to each other party.
Counsel for the applicant: Mr. S.J. Howells
Solicitors for the applicant: Michael Brereton & Co
Counsel for the respondents: Mr. R.R.S. Tracey Q.C. with Mr. L. Kaufman
Solicitors for the respondents: Phillips Fox
Date of Hearing: 12th September 1994
Date of Judgment: 12th September 1994
I certify that this and the preceding fourteen (14) pages are a true copy of the reasons for judgment of his Honour Justice Gray.
Associate:
Date:
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