Clarke v Mayne

[1988] FCA 651

CATCHWORDS

Industrial Law - resolution declaring Branch unfinancial

thus preventing Branch representatlves on national council

orders should be made preventing election from taking place	from voting in national council elections - whether interlrn
- whether a rule concernrng declarations of unfinanciallty
contravenes s.140 of the Act - meaning of colleglate
electoral system and direct voting system - whether a
serious question to be tried - balance of convenience.
Conciliation and Arbitration Act 1904 s.4, s.133, s.140, s.141
Conciliation and Arbitration Regulations r.ll!~(l)(d)(v)
RALPH DESMOND CLARKE & ANOR.

and

JOHN PETER HAYNES	& ORS.
NORTHROP J. 25 OCTOBER 1988
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA )

1

SOUTH AUSTRALIA DISTRICT REGISTRY ) S.A. Nos. S L 8 of 1988

)

INDUSTRIAL DIVISION	)
BETWEEN:

RALPH DESMOND CLARKE & ANOR.

Applicants

and

JOHN PETER UAYNES & ORS

Respondents

COURT: NORTHROP J.

DATE:	25 OCTOBER 1988
PLACE:	MELBOURNE

EX-TEMPORE REASONS FOR JUDGMENT

In the events whlch ave occurred, there 1s

presently before the Court motions for interlm orders in matters S.A. No.5 of 1988 and S.A. No.8 of 1988. Matter S.A. No.5 is an application brought under s.141 of the

Conciliation and Arbitration Act 1904 ("the Act"). The rule

to show cause by which that appllcation was commenced was

granted by Fisher J. on 20 July 1988 and was granted on the

appllcatlon of the appllcants Clarke and Prlest, who are members of the Federated Clerks Unron of Australla, ("the Union") an organization under the Act. The applicants are attached to the South Australian branch of the Union. The

.

.

respondents to that proceeding are the members of the

national council of the Union, but do not include any

national councillors from the Central and Southern Queensland
branch of the Union nor from the South Australian branch of
the Union. The order sought by the rule to show cause is as

follows:-

"That the respondents do observe the Rules of the

organization by treating as null and void the

resolution that the South Australian Branch	of the
Federated Clerks Union of Australia be declared

unfinancial which resolution was passed by the

National Council of the Union and declared by the

National Secretary on 30th June 1988".

The first directions hearing of that matter was

held on 1 August 1988. On that occasion directions were

given as to the filing and serving of contentions of fact and

of law. Those directions were not complied with.

The other matter before the Court is S . A . No. 8 of

1988. This is an application under 5.140 of the Act in which Messrs. Clarke and Priest are the applicants and the Unlon 1 s the respondent. There were a number of orders sought in that

rule to show cause, but I do not propose to read them since

difficulties arose as to the formulation of what, in reality,

was being sought. The first directlons hearing in matter

S.A. No. 8 was S October 1988. In each matter	a notice of
motion returnable on	S October 1988 was filed seeking orders

in substance that the two applications be heard together, and in each case seeking an interim order in the following form, namely an order:-

"Restraining the r spondent and Wllliam T.

Thornton, the Returning Offlcer, from conducting

elections pursuant to Rule 2 2 of the Rules of the

Respondent for the offlces of Natlonal President,

Deputy National President and Assrstant National

Secretary at the meeting of the Natlonal Councll

scheduled to ccur on 1st November 1988 and

subsequent days in Canberra, A.C.T.“

The dlrectlons hearlng In matter S.A. No. 5 of 1988
came on for further directlons on 5 October, at the same time

as the first directions hearing In matter S.A. No. 8 of 1988

and at the same time as the two motlons. During those

directions hearings, which were heard together, discussion

ensued as to the form of the orders sought, partlcularly in

matter S.A. No. 8. The need for urgency became apparent

because of the fact that the pendlng national council meeting

was due to commence on 1 November 1988 and the result flowlng

from the current position was that the national council

members elected by the South Australlan branch were belng

denred the right to attend that meeting of national council,

to vote at hat meeting of natlonal councll and to

partlclpate in the electlon of the three natlonal officers of
the Union, being the national president, the deputy natlonal

president, and assistant national secretary. Directions were

given that there would be leave glven to amend the form of

the orders sought in matter S.A. No.8 of 1988, that notrces

of contentions of fact and of law be served and flled by the

applicants in each matter withln speclfled tlmes and that

there be notices of contantlons of fact and of law served and

filed by the respondents withrn a certaln time thereafter,

that any further affidavlts to be relled upon to be served

.

and filed within certain times with the intentlon that the matters come on for hearing on 2 4 October 1988 in Melbourne, and two days were mentioned, namely, 2 4 and 25 October being the days when the matters could be heard. Apparently, there was some confusion among the parties as to whether the Court

would have further time to hear the matters, but, havlng

regard to the commitments of the Court, those two days only
were available for the hearing of the matters. The motions
for the interim relief were also adjourned to 2 4 October,
although the comment was made that, if the main matters were
determined, there would be nothing for the motions to operate
upon. Attention was also drawn to the fact hat the
returning officer, MC Thornton, was not a respondent to

either application and that no orders could be made agalnst

him without giving him the opportunity of being heard.

The applicants complied wlth the directions, but the respondents did not. As a result, when the matters came on for hearing on 2 4 October, the applicants were not ready to proceed because of the recent receipt of documentatron.

The matters did not come on for formal hearing until the

matters could not be determined finally in a day and a half,	afternoon on 2 4 October. It soon became apparent that the
or, for that matter, two days, and thls was a matter that should have been obvious to the partles at a much earller t ime .

The orders sought in matter S.A. No. 8 of 1988 were

finally formulated and presented to the Court on 2 4 October,

and are as follows, but	1	add one word, namely "Declaring".
They were orders:-

Declaring that sub-rule 15(4) of the National

Rules the of Rules the of R spondent

(hereinafter called "the Rules") contravenes

s.140(1) of the Conciliation E, Arbitration

Act 1904 (hereinafter called "the Act").

Declaring that the Rules of the Federated

Clerks' Union of Australia contravene Section

140(1) in a speclfic respect in that:-

They are contrary to Section 133(l)(a)	of
the Act.
They are contrary to Section 133(l)(f)	of
the Act.

They fail to make a provision requlred by

Section 133(l)(a) of the Act.

They fail to make a provlsion required by

Regulation 115(l)(d)(v) of the Conclllatlon and Arbitration Regulations.

They impose conditions or restrictions on

members which, havlng regard to the objects

of the Act and the purposes of the

registration of organizations under the Act

are oppresslve, unreasonable and unjust.

During the course of submissions, the applicant

moved the Court for orders that M C Thornton be added as a

respondent and sought orders for the abridgement of time to

enable him to be served and the matter brought back on for

hearing before the commencement of the meetlng of the

national council on 1 November 1988 because i t was at that

meeting that the election of the three offlcers concerned was

to take place. For reasons then given, that motlon was

refused. Accordingly, it followed that, having regard to the
fact that Hr Thornton was not a party to the proceedings, the
motions already referred to must be refused, but nevertheless
the interim matters proceeded on the basis that there should

be interim orders, and, in the event, the interim orders

should be in the form of the orders sought in matter S . A .

No.5 of 1988, namely, that the respondents, being members of

the Union, and each of them take no further step zn the

elections currently being held for the positions of deputy

national president, national president and assistant natlonal

secretary	respectively	of	the	Federated	Clerks	Union	of
Australza	after	the	close	of	nominations	at	noon on 1

November 1988.

These are interlocutory proceedings and, in

accordance with well-established principles, where the Court has not had time to investigate the matters fully, any views

expressed are of a tentative nature only; any findings of

fact are of a tentative nature only and to that extent do not

affect in any way the final determination of the matters.

Having regard to those factors,	I do not propose to deal at
any great length with the submisszons made	o r the reasons why
I come to the view which	I do, but it is necessary to state

in broad outline just what the issues are.

There has been, for a number of years, a degree of

disputation within the Federated Clerks Union of Australia

and its branches. The Union itself comprises eight effective

branches, and under the rules, each branch elects	a	certain
number of members to the national council, the number of

councillors elected from each branch depending upon the

number of members in each branch. The national councillors

are elected from each branch by a vote of all members of the branch concerned, although the elections within the branches take place at different times. It 1s obvious that under rule

16, the number of national council members depends upon	the
number of members In each branch.	In other words, ~t is a
variable number.

In addition to these elected national councillors,

there are	four officers who are members	of the national
council but who are not elected	by the membership of	the

Unlon itself. They are elected by and from the membership of

the national council, including themselves. These four

officers comprise the national president, deputy national

president, national secretary, and assistant atlonal

secretary. At the moment, there are 36 members of national

council including the four national offlcers. The election

of the national councillors is pursuant to branch rules. The national councll meets every two years, although there 1s

provision for meetings at other times,	and there is provision
for a national executrve which conslsts of a smaller	body

elected by and from the natlonal council, and national

executive committees, a smaller body still, which	has certain
powers conferred upon	It by the rules.

The rules contain within them provislon as to the

funds of the union, and contaln provlslon as to who controls those funds. For present purposes, reference need be made only to the sustentation fund which is a fund which must be paid by the branches to the federal body to be controlled by

that federal body, the national council, national executive, and national executive committee. Rule 15 of the rules of

the union is headed "Branch Payments," and eals with

payments of funds to the national body including sustentation

fees. Under rule 15(2), provislon is made that the

sustentation fees, being contributions basically, are to	be
paid at certain times each year. Rule	15(4) is a rule which

empowers the national council declare to a branch

unfinancial. If it is so declared, the members of national

council elected by that branch are deprived of their right to

attend any meeting of national council or to vote on any

question. There is	a proviso to that rule which, for present
purposes, does not seem to affect the position although it	1s

noted that the contentions of the Union are that if the

sustentation fund is unpaid, or if the sustentation fees are

unpaid, and a direction to pay is made, and they are paid

within a specified period, the declaratlon shall not be made,
with the result that the branch does not become unfinanclal
but retains its full rights of attendance at meetings and

voting rights.

In the present case, there was a delay in the

payment of the sustentation fees by the South Australian

branch, but eventually they were paid pursuant to a cheque

posted on 23 June 1988, but not received by the federal

office until 29 June 1988. In the meantime, and following

correspondence, the national secretary, pursuant o the

provisions of the rule, conducted a vote of the members of

the national council on the question of whether the South

Australian branch should be declared unfinancial under rule lS(4).

About thls time, electrons In the Vlctorian branch resulted in a change in the office holders of the national council representing the Victorian branch, but accordlng to the material before the Court, a ma~ority of votes In support of the declaration of unfinanclality under rule 15(4) had been received on 23 June at a time before the new natronal councillors received accreditation €or the purposes of taking over therr positions on the natlonal councll. By way of aside, it is noted that it seems a strange result that the replies to the ballot were recelved on the same day on which they went out in respect of some branches but not of others, but I was informed from the bar table that facsimlle transmission did play some part ln that matter. In any event, on 30 June, the result of the ballot was declared by the national secretary with the result that he South Australian branch was declared unflnanclal. That 1s the resolution which is being challenged in matter S.A. No.5 of 1988.

The challenge is based on a number of grounds,

although not all are stated in the contentions of fact and of law. They include the clalm that rule 15(4) is contrary to sub-section 140(1) of the Concillatlon and Arbitration Act, and therefore any resolution based upon that sub-rule 1 s of no effect. Rellance is placed also upon an allegatlon that the powers authorising the vote were not exercised bona fide

for the purpose of rule 15(4), but were exercised in order to

retain control of the Union by the group whlch then had the

numbers on the national council. That latter allegation is

denied, and there is evidence before the Court on each side

on that issue. In any event, there 1s also evidence before

the Court that after 30 June, demands were made for the

payment from the South Australian branch of other funds which

were not paid, and that subsequently a further declaration

was made by resolution under 15(4) of the rules of the Unlon
declaring the South Australian branch unfinanclal with the

consequences flowlng from that. That resolution is not the

subject of the challenge before me in these proceedings.

Even if the orders sought in matter	S . A .	No.	5	of	1988	are
made, no useful	results	would	follow	since	the	later
declaration	would	bar	the	South	Australian	national

councillors from voting.

In the s.140 matter, that 1s S.A. NO. 8 of 1988,

there is an order being sought under the first limb of

sub-section 140(5D) of the Act, namely that sub-rule 15(4)

contravenes sub-sectron 140(1). If a declaration is made to

that effect, then as from the date of the declaration, that

sub-rule is deemed to be vold as against all persons. That

invalidity, however, only operates prospectively. But that

does not prevent	a party in other proceedlnqs, say, under
s.141	from arguing that any resolutlon based upon the rule
cannot be relied upon because the rule	on which it 1s based

contravenes sub-section 140(1) and if in those proceedlnqs

the Court is satisfied that that is the case, that 1s

sufficient grounds for orderrng that the resolution which

relies upon that rule should be treated as being null and

void. In this respect, the two actlons, S . A . No. 5 of 1988

and S.A. NO. 8 of 1988 overlap.

The second order sought in S . A . No. 8 1s under the

second limb of sub-section 140(5D) namely that the rules

contravene sub-section 140(1) in a speclfied respect. The effect of a declaration being made under that limb is that the Union IS given a time within which to amend its rules to bring them into conformity with the Act. If at the expiration of that time, that has not been done, the

Industrial Registrar has power to amend the rules to brlng

them into conformity and his amendments then are treated as

the rules of the Union.

In the present case, the second order being sought

in S . A . No. 8 of 1988 does not really assist in a consideration of whether interim orders should be made or

not. It is the first order sought which 1s the essential one for present purposes.

Under sub-section 140(10) the Court 1s empowered at any time after proceedings have been instituted to make such Interim orders as it thinks fit in relatlon to matters raised

in the proceedings, but it should be noted that in S.A. No. 8

of 1988 the Union is the only respondent. There is simllar power conferred by sub-section 141(2), which empowers the Court, after proceedings have been instrtuted, to make any

such interim order as it thinks fit in relatlon to the

matters to which the proceedings relate. The authorities

show that the power conferred to make interim orders 1s very wide and is designed to enable lustice to be done between the parties.

These two matters are being heard together, but

insofar as power is concerned,	I am satisfied that in an
appropriate case, orders can	be made under sub-section 141(2)

of the kind being sought on an interim basis by the

applicants. The question	is whether those orders should	be
made.

I am satisfied that there is a serious questlon to

be tried in this case, and this depends upon the requlrement

of paragraph 133(l)(a) of the Act whlch provldes that:

“133(1) In addition to the conditions referred to in sub-section 132(2), the conditrons to be complled with by associations applying for registration as Organizations and by organizations include a condltlon

that the rules of the association or organization-

(a)	shall provide for the election of the holder of each office within the association or
organization either by-
(i) a direct votrng system; or
(ii) a collegiate electoral system being, in

the case of a full-tlme office, a one-tler

collegiate electoral system;”

In the present case, the three offices whlch are to

be filled by electlon are all offlces, the holders of which

are full-time officers and therefore come withln

sub-paragraph 133(l)(a). In order to understand that sub-section, reference should be made to the meaning glven to the phrase, "collegiate electoral system" in sub-sectlon 4(1) of the Act and the phrase, "direct voting system," and I read each of those definitions:

""Collegiate electoral system", in relation to an election for an office in an organizatlon, means a method of election comprising a flrst stage, at whlch persons are elected to a number of offices by a direct

voting system, and a subsequent stage or subsequent
stages at which persons are elected by and from the
persons elected at the next preceding stage;

"Direct voting system", in relation to an election for an office in an organization, means a method of election at which all flnancial members, or all financial members included in such branch, section or other division, or in such class, as is appropriate,

having regard to the nature of the office,	are,
subject to reasonable provisions wlth respect	to
enrolment, eligible to vote;"

It is clear that on the direct applrcation of those definitions in the present case the three officers concerned are not officers who come wlthin thrs type of electoral system. They are not elected by a direct votlng system and they do not come withrn a collegiate electoral system because part of the electorate consists of persons, being the four

national officers, who are not elected by the members	themselves; in other words, by the first college. The
malority of natlonal councillors are elected by members from a branch, but the four national officers are not so elected. Sub-section 4 ( 5 ) , however, protects them in this case. That sub-section is a very complex sub-section and is as follows:

"(5) For the purposes of the application of the

definltion of "collegiate electoral system" in sub-section (1) in relation to an election for

an office in an organrzatlon, an electoral

system that otherwise complies with that

definition shall be deemed to comply with that
definition otwithstanding that the persons
comprising a body of persons by and from whom

persons are elected at any stage subsequent to

the first stage include persons (not exceedlng

in number 15% of the total number of the body) who are the holders of offices entltling the holders to membership of that body (which may include the office to which the election relates) but are not members of that body by vlrtue of an election in accordance with that definition, being persons each of whom has held such an office (whether the one office or not)

at all times since being elected to such an

office under a collegiate electoral system, or a direct voting system, as defrned in sub-section

(1) ."

In the present case, there are 32 national council
members who are elected directly by members of the Union.

That is the first stage, the first college, and it is only if

that number were	to reduce to 26 that the four national
officers would constitute more than	15 per cent of the total

number of that body. So under normal circumstances the

electoral system for the national officers provided by the

rules complies with paragraph 133(l)(a) of the Act.

It was argued, however, that rule 15(4) has the

effect of defeating that requlrement. It was argued broadly

that the effect of rule 15(4) is that if a branch is declared unfinancial and the members of the natlonal councll elected by that branch lost their rights to attend meetings and to

vote, this in fact destroys the first college which formed

part of the electoral system and therefore there is, in

reality, non-compliance a with the rule in paragraph

133(l)(a)(ii). In other words rule 15(4) does not conform to

sub-section 140(1).

It was also argued that if, as a result of a number of branches belng declared unflnanclal, and at the moment there are two, the number of the natlonal counclllors elected to the first college could be reduced to 2 6 or lower and If that did happen then again there would be a non-compllance with paragraph 133(l)(a)(ii).

Thls case illustrates the dlfflculties that can arise in deciding whether theKe should be an order under the flrst limb of sub-section 140(5D) or the second limb. Rule

15 is headed "Branch Payments". It does affect the voting rights on national councll if a declaration is made under Rule 15(4), and it may be that there is a non-compliance with

paragraph 133(l)(a)(ii), but if that is the case an order

would normally be made under the	second limb of sub-section
140( 5D).

The argument put on behalf of the applicants was

answered by counsel for the respondents In both matters in a

wrth an administrative method of ensuring that the branches number of ways. It was contended that rule 15(4) was dealing	pald the fees they were requlred to pay and that in reality
it was no different from the case of an unfinancial member of an organization not being entitled to vote at an election. The argument was put in a number of other ways and there
seemed much force in those arguments.

.

It is sufficient for me to say at this stage that do see an issue ralsed as to the construction of rule I

15(4)

and as to whether ule 15(4) does In fact contravene

sub-section 140(1) of the Act, although it must be remembered

that the requirement of section 133 cannot be determined by

looklng at	a particular rule;	it is necessary to look at all
the rules.

Having regard to all the submissions put to me I

have formed the view that there is an issue but I have formed

the view that the strength of the case put by the applicant

on thls point is not strong. In case of Interlocutory relief

the strength of the case raised by the issue in the

proceedings does have a bearing on the overall result.

Because I have come to the view that there is an

issue to be tried, it is necessary to turn to the other

ground namely the balance of convenlence. These two aspects

are not mutually exclusive. The Court must make a decislon

havrng regard to all the circumstances, but i IS

well-established that in a case where the applicant can show

a very strong case, a very strong likelihood of success, the

balance of convenience In hls favour may be less In order to
justify the grantlng of an rnterlocutory ~n]unctlon or order
than in the case where the strength of the applicant's case

is not strong.

In the present case, I have formed the oplnion

that, on the balance of convenience, orders should not be

- 1, -

,

made. There are a number of reasons why I have come to that view. First, the issues raised in these proceedings have been obvlous for some time, as least since July when the flrst of these applicatlons was commenced. It should have been reallsed then that the lmportance of the natlonal council meeting on 1 November was a very relevant factor, but despite that knowledge, which should have been accepted, the matter proceeded at a very slow pace. It was not untll S October, when the matter came on for dlrections again, that any sense of urgency arose; but even then there had not been any real analysis of what the Issue was until the hearing of the Interim applrcatlons. So to some extent I have regard to the apparent delay on the part of the applicants in this case.

Secondly, the electrons to the national offices

actually commence before the flrst day of the meeting of the national councll when the returning officer is required to call for nominations. For present purposes, I do not need to conslder any difficultles that arise or that might arise ~f between the time of the calllng of nominations and the first

members of the national council change. That is an issue	day of the natronal council meeting the persons who are
whlch mlght have to be decided later or in other proceedings.
Elections within an organlzatlon are very Important and play a basic role In the control of organizations. If an
election is invalid, drfficultles do arise. There are
provislons under Part IX of the Act whereby electlon
inquiries can be lnstrtuted and I f they are rnstltuted the
Court is given very wide powers to inqurre into those
irregularities and is given very wide powers to make interlm
orders to maintarn a posltlon pending the result of the
inquiry. There are also powers conferred upon the Court to deal with other problems arlsrng in situatlons where a committee of management, for some reason or other, is lnvalid
or cannot function. In my opinion, havlng regard to the
delays in this matter, the electron has reached such a stage
that the Court should allow that election to continue. It
would be unwise for the Court in a case like thls, where I
have formed a view that the submissions In support of the
validity of rule 1 5 ( 4 ) are not strong, that the Court should
interfere with such an essential part of the functions of an organization and its members.

Thirdly, insofar as the claim 1s based upon the

allegations that the exercise of power was not bona flde for

the purpose of the power, there is a very strong Issue of

fact raised In those matters. I have not had time to

investigate those matters at all, but again, havlng regard to

the importance of elections, I am not disposed to exercise my

discretion In favour of the applicants based upon that part

of their argument. In any event, a later declaratlon of

unfinanciality stlll remains. This is a case where the

appllcants could have brought the matter on at a much earller

date when the Court could have glven more time to the matter.

They did not do so. Thrs 1s a case also where there is a

subsequent declaration of unfinanciality. There are no

proceedrngs relating to that, but if rule 15(4) is invalld, then that subsequent declaration would have no standing at all. Apparently the national officers had some doubt about the effect of the first declaration of lnvalidlty and for a short time the national council members elected by the South Australian branch were permitted to vote, but then the second declaration was made and they were deprived of their vote.

Fourthly, the orders sought on an interlm basis could have the effect of creating grave uncertainty for a long period of time until the Court 1s able to determine finally these matters. It is important that the election take place. I have expressed an opinion previously, and I express it again, that when an election does take place, until that election is set aside or an rnterim order made under Part IX of the Act, the persons elected are to be

treated as if they were the properly and duly elected persons under that electlon. Any electlon to take place at the national council will be treated in the same way.

Having regard to all the circumstances, includlng the strength of the applicants' case and the balance of	convenlence and the delays occasloned by the applicants, this
1s not a case, in my opinion, where the Court should make the interim orders sought. Accordrngly the motions are refused.

F

ATTACHMENT A

Title of Action : Ralph Desmond Clarke & Anor. v.

John Peter Maynes & Ors.

File Number : S.A. Nos. 5 & 8 of 1988

Dates of Hearing : 24 L 25 October 1988

Judgment Delivered : 25 October 1988

Counsel f o r Applicants : M r R. Kenzie Q.C. with

M r P. A. Heywood-Smith

Solicltors f o r Applicants :	Johnston Withers McCusker
L Co.
Counsel f o r Respondents	: Dr. C. Jessup Q.C. with

Mr A. Cavanough

Solicitors for Respondents: Reilly Ahern L Kerin

Si qned . h. .dm . .

Date 25 October 1988