Dawson, D. v Keays, T

[1988] FCA 783

JUDGMENT No. 7.8.. 3 7 .... 88-

CATCHWORDS

Industrial law -	registered organizati	on - performance an,	d
observance	of rules - interim	orders	- rule excluding

unfinancial branch from national council - questions of

validity of rule and denial of natural justice - whether

requirement that all branches be treated equally as regards

contributions to national funds - whether Court should order interim arrangement not complying with the rules for

collection of subscriptions within	one branch.
I
Conciliation and Arbitration Act 1904	s.141(2)

DAVID AWSON V. TERRENCE KEAYS, JOHN DENNIS, BEVERLY

MCLEAN, SUSAN EDWARDS, WILLIAM HALE, DIANNE HAMILTON, KERRY

WNOVAN, BERNIE BOWEN, MARK WOODHAMS and ALAN RISELY and THE

UNION OF POSTAL CLERKS AND TELEGRAPHISTS

No. NSW I16 of 1988

GRAY J.
SYDNEY
28TH JULY 1988

.

IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY	)	NO. NSW I16 Of 1988
1
INDUSTRIAL DIVISION	)
BETWEEN:

DAVID DAWSON

Atmlicant

First Respondents

and

8

THE UNION OF POSTAL CLERKS

AND TELEGRAPHISTS

c Second Respondent

JUDGE: Gray J.

PLACE: Sydney

- DATE: 28th July 1988

EX TENPORE REASONS FOR JUDGMENT

This is the return of a notice of motion seeking

interim orders pursuant to s.141(2) of the Conciliation and Arbitration Act 1904 ("the Act"). The applicant is a member of the Union of Postal Clerks and Telegraphists ("the

Union'), an organization registered pursuant to the Act. He

is the Secretary of the New South Wales branch of the Union.

The persons described as the first respondents are members of

the National Council	of the Union. The second respondent is
the Union itself.

Rule 8.1

of the rules of the Union currently “The annual subscription for Members in receipt of adult rates of pay shall be, commencing from the beginning of the

provides:

first pay period in April of each year,

one per cent per annum of the minimum

rate of the Postal Clerk/Telegraphist
range as at the first of January of that

year, and for Members not in receipt of

the adult rate of pay, the annual rate of

subscription shall be fifty per cent of

the adult rate of subscription, per

annum. Subscriptions are payable in

advance to the General Secretary at the

official address o € the union or payable

fortnightly by wab of an authorised

fortnightly deduction from salary equal to one twenty-sixth of the annual rate of subscription.”

Prior to 29th April 1988, that rule provided	for payment to
the branch secretary at the official address	of the branch.

Rule 10 of the rules of the Union constitutes the conference
as the supreme governing body of the Union. The conference
consists of certain officers and delegates from branches,

exercising voting power in proportion to the numbers of

financial members in their respective branches. Rule 10.3

provides:  “No branch s all be entitled to

representation on any Conference unless

all moneys due to the National Council

shall have been paid in accordance with Rules 26.1 and 26.3 and all returns and financial statements required by the Australian Conciliation and Arbitration

Act, for the time being in force, shall

have been received by the General

Secretary from such Branch on or before
the last day of the month immediately

preceding that in which the Conference is

held.	All moneys due means amounts due
under Rule	26.3 and any other amounts

which the Branch has acknowledged as a

debit. "

Rule 16 constitutes	a National Council, consisting of certain
officers and a representative of each branch. Rules	26.1 and
26.2 provide:

"26.1 To meet the general management

expenditure Qf the Branches of the
Union the General Secretary shall
on behalf of the National Council
remit to each Branch in monthly

instalments a rate of subscription

distribution th equal o

percentage,	as	hown	for	each
state,	of	each	adult	Member's

annual subscriptions.

NEW SOUTH WALES	4 0 %
VICTORIA 53%
QUEENSLAND 55%

SOUTH AUSTRALIA/NORTHERN TERRITORY

14%

WESTERN AUSTRALIA 14%

TASMANIA 74%

in the case of Members not in

receipt of the adult rate of pay

amount subscription the f

distribution shall be equal to 50%
of the junior rate of subscription.

Nothing in these rules shall render

any debt or obligation to the

National Council prior to this

sub-rule coming into effect,

inoperative or otherwise nugatory.

26.2 Any Branch which is three months in
arrears in payment of any monies
due to the National Council shall

and	rights	forfeit	all
representation in the deliberations of the conference, and the National
Council and shall not be eligible
for re-admission thereto until all
monies owing to the National
Council has been paid."

Prior to 29th April 1988, rule 26.1 provided:

"26.1 To meet the general management

expenditure of National the

Council, each Branch shall remit

to	the	General	Secretary,	in
monthly	instalments,	a	rate	of

capitation e*al to the percentage

as shown for each State, of each

adult	Member	' S	annual
subscriptions.
New South Wales	50%
Victoria	50%
Queensland	48%
South Australia/
Northern Territory	30%
Western Australia	30%
Tasmania	20%

In the case of Members not in

receipt of the adult rate of pay

the amount of capitation payable
shall be equal to 50% of the junior

rate of subscription."

By letter dated 15th July 1987, Messrs. Slater and Gordon,

solicitors, wrote to the applicant in the following terms:

"Dear Sir,
RE: FAILURE TO PAY OF FEES DUE

We act on behalf of The Union of Postal

Clerks and Telegraphists (National

Office).
We are instructed to advise that as a
result of your Branch being three months
in arrears in payment of fees due to the

National Council, all rights and

representation in the deliberations of
Conference and the National Council are

forfeited.

Your Branch will not be re-admitted

thereto until all fees owing to the

National Council have been paid.

Please forward all outstanding fees due
to the National Council to the General

Secretary immediately.

Please ensure that OUT reference is noted

on any correspondence returned to our

office.

Yours faithfully,	;
SLATER AND GORDON"

c

A rule to show cause was granted on 30th June 1988, calling

on the respondents to show cause why the following orders

should not be made:

"l.	That the First Respondents and each of them perform and observe the rules of the organisation by allowing the attendance of National Council delegates, duly elected in accordance with the rules, from the
New South Wales Branch of the Second
Respondent until such time as those
delegates are heard in accordance
with the rules af national [sic. 1
justice on the question of their
ability to attend such meetings.

2.  Sub-rule 26.1 of the rules of the

Second Applicant contravenes

sub-section 140(1) insofar as it

discriminates againstmembers inNew
South wales as against members in
Queensland, Tasmania, the Australian
Capital Territory, South Australia,
the Northern Territory, and Western
Australia and thereby imposes upon

members in New South Wales

conditions, obligations Or

restrictions which, having regard to

the objects of the Act and the

purposes of the registrtation [sic.]
of organisations under the Act, are oppressive, unreasonable or unjust or are otherwise contrary to law.
3.	That the First Respondents perform and observe the rules of the Second Respondent by treating as void any and every decision of the Federal
Council effecting members of the New
South Wales Branch made t'a meeting

from which delegates from New South

Wales Branch were excluded or of
which they were not given otice.
4. Such further'	or	other	orders,
whether	interim or final	as	the

nature of the case may require."

Mr. Rothman, of counsel for the applicant, outlined

the case to be put for the applicant.	In summary it is as
follows. First, the New South Wales branch is entitled to	be

heard on the question of its exclusion from conference and

the National Council, or at least on the question of the

applicability of rules 10.3 and 26.2 to the branch.	Second,
on the proper construction of the earlier version	of rule

26 .l, the New South Wales branch was only required to pay each month one-twelfth of one-half of the subscriptions

received in the previous financial year, not monthly

instalments of half of each adult member's subscriptions paid

in the current year. On this basis, it is said, the New South Wales branch was not unfinancial in July 1987 for the

l.

purposes of rules 10.3 and 26.2. Third, both the old and the

present versions of rule 26.1 contravene s.l4O(l)(c) of the .

Act, by imposing on members conditions, obligations or

restrictions which, having regard to the objects of the Act

and the purposes of the registration of organizations under
the Act, are oppressive, unreasonable and unjust. The gist
of the argument is that, whilst members are treated equally

by the rules as to the amounts they pay as subscriptions,

they are treated unequally in terms of the division of their

subscriptions between the national office and their

respective branches. Fourth, the passage of the amendments

l

to rules 8.1 and 26.1, to which I have referred was otherwise

than in accordance with the rules of the Union, so those

amendments are void and of no effect, although	e Industrial
Registrar gave his certificate to them under s.139(4)	of the

Act on 29th April 1988. The gist of this argument is that

the amendments were purportedly adopted by the conference in

December 1987, in the absence of any delegates from New South

Wales, who were wrongly excluded.

It will be seen that the rule to show cause, as stands at present, is an inadequate vehicle for the case it

which the applicant wishes to put. It makes no reference to the amendments to the rules or to the validity or otherwise

of any decision of the conference. Further, the exposition of

the applicant’s case reveals several other difficulties. It has been held that rules in terms similar to rules 10.3 and

26.2,	whereby unfinancial branches are deprived of their
rights to attend and vote at meetings of federal governing	.
bodies, have not contravened s.140; see Geneff v. Peterson (1980) 49 F.L.R. 64 at p.67, Geneff v. Peterson (1984) 8

I .R . 189 at pp.191-192, and Krantz v. Federated Clerks

Union of Australia (1984) 8 I.R. 454 at pp. 455-456.

The attempt to imply a requirement that a branch be

heard before being debarred runs into the problem that the

rules make no provision for any decision to be made by the

conference or the National Council on whether a branch is

I

entitled to attend and vote. If in fact and in law a branch

has not complied with the rules, it has no entitlement. Only the Court can determine whether such entitlement exists, if it is disputed.

Mr. Rothman attempted to argue that, despite the

clear lack of entitlement to attend and vote, a residual

discretion existed to allow a disentitled branch to

participate, and that the New South Wales branch should have

been heard on the exercise of this discretion. This argument

conflicts directly with the words of rule 26.2, "...and shall

not be eligible for readmission thereto.. .", which tend to

suggest that neither the conference	nor the National Council
has any power to admit	a branch excluded by operation of the

rule. Even if this were not so, a real doubt must exist

whether the New South Wales branch has a right to compel the

exercise of any discretion which may exist,	O K a right to be
heard if such discretion were exercised.

It was conceded by Mr. Rothman that the

construction of rule 26.1 now advanced was not in accordance

with previous practice. On the face of the rule, nothing

obviously compels a reading of it in the way in which the

applicant would now like it to be read. There appears to be

no dispute on the facts that the New South Wales branch has
delayed making payments in accordance with what appears to
have been the accepted view of rule 26.1. In the applicant’s
own affidavit he refers to an approximate eight months time

difference between the receipt of subscriptions and the

payment of fifty per cent thereof to the national office.

This delay is unexplained. Nor is there any clear evidence

which would enable a finding to be made that, even on the

construction which the applicant seeks to put on the old rule

26.1, the New South Wales branch was not unfinancial	at any
relevant time.
There is no authority of which I am aware to the effect that an organization is required	by s.140 of the Act

to treat all of its members equally In terms of the division

of their contributions between federal and branch control.

Such authority as does exist tends to the contrary; see

Scott v.	Jess (1984) 3 F.C.R. 263 at p. 288. Section 133A
of the Act does not, on its	face, impose any requirement of

equality of treatment of members in different branches, in

respect of the division between federal and branch funds.

In argument on the earlier version of rule 26.1,

Mr. Rothman put that s.140 does not prevent an organization

under its rules spending money unequally,	for example, to
subsidize smaller branches, once	it is collected, but does

prevent an Organization treating members unequally in the

collection and division of moneys. I € this argument be

correct, and I express no final view on that,	it may well be
that the present form of rule	26.1 is valid. It provides for
8

central collection, with payment of different percentages for

different branches. It is hard to see a significant

difference between a rule in that form and a rule enabling a federal governing body to distribute money among branches,

without specifying in advance the relative amounts	to be
distributed.

From an affidavit filed on behalf of the

respondents, it appears that advice was given to the New

South Wales branch of the December 1987 conference and that

the branch was asked	to inform the national office of the
names of its	delegates. This was presumably on the basis that
the New South Wales branch might pay	the moneys owing and
ensure the rights of its delegates to attend and vote.	No
response was received from the New South Wales	branch.
Subsequently a copy of the minutes and resolutions	of the

conference were sent to the New South Wales branch. Further,

a copy of the application for the certificate of the .

Industrial Registrar with respect to the rule amendments made

at that conference was forwarded to the New South Wales

branch on 6th January 1988. The certificate was given on

29th April 1988. Despite this, the applicant's case appears to have been drawn up on the basis of the old form of the rules and his challenge to the passage of the amendments was

not expressed until the hearing of this notice of motion.

It is proper to conclude from all of these matters

1

that the applicant's case for principal relief is not strong.

The connection between the case made and the rule	to show
cause and the motion	for interim orders is somewhat obscure
and some further facts need to	be set out.

Most of the members of the Union are employed by the Australian Postal Commission; the remainder are employed

by the Australian Telecommunications Commission. The	bulk of
members pay their subscriptions	by fortnightly deductions

from salary in accordance with rule 8.1. The form of

authority for such deduction	in use in New South Wales is	in
evidence.	It	authorises payment to the Union of Postal

Clerks and Telegraphists, New South Wales branch. After the

rule amendments were certified on 29th April 1988, the

Australian Postal Commission was notlfied of them and

requested to forward subscriptions deducted from salaries to

the general secretary in accordance with the rules. On or

about 12th June 1988 a payment was made by the Australian ,

Postal Commission to the general secretary. Thereafter, the
general secretary was told that the New South Wales branch
had objected to the new arrangement and that the Australian

Postal Commission would not pass on any further subscriptions

deducted until the matter was cleared up. Some members of

the New South Wales branch have sent standard form letters to

the	Australian	Postal	Commission,	pucporting	to	demand
compliance	with	the	instructions	in	their	deduction

authorities to forward moneys to the New South Wales branch.

l

The Australian Postal Commission continues to deduct

subscriptions from the salaries of the Union’s members

employed by it in New South Wales, and to hold those moneys.

The result is that both the national office of the Union and

the New South Wales branch are experiencing financial

difficulties. In order to ensure the continued operation of the Union, both nationally and in New South Wales, it is desirable that on an interim basis the moneys collected be

made available to be used. No order can be made directed to

the Australian Postal Commission, which is not a party to the

proceedings. The orders sought in the notice of motion are:

“1. The First and Second Respondents

refrain from requesting employers

of members of the	NSW Branch of the
Second Respondent	to forward union

fee payroll deductions to the
Second Respondent at its National

office.

2. The First and Second Respondents

notify employers of members of the
NSW Branch of the Second Respondent

that such employers should continue

payments to the NSW Branch of the

Second Respondent in accordance with previous practice."

The applicant swears in an affidavit in support of

the notice of motion:

"I am authorized on behalf of the members

of the committee of management ef the New

South Wales branch of the second

respondent to undertake to send	50 per
cent of the amount received	by way of
payroll deductions	to the national office
immediately upon	its recelpt, and further
to give an undertaking to	the court that

the branch will pay to any party

adversely affected by the interlocutory injunckion such compensation, if any, as the caurt thinks just in such manner as the court directs."

What the applicant seeks, therefore, is an arrangement whlch

does not conform with the current provisions of the Union's rules. The orders sought would have the effect of reviving the old rules, both as to the identity of the recipient of any payments from the Australian Postal Commission and as to

the amount which the New South Wales branch retains. Such
results are sought in	a proceeding in which the applicant has

not, either by application to amend the existing rule to show cause, or by application for a further rule to show cause, raised any express challenge to rule 18 .l at all, or any

express challenge to the amended rule 26.1, based on the

manner of its adoption. These considerations should be

enough to seal the fate of the application for interim

orders. There are, however, other considerations, not the	.
least of which are the apparent weakness of the	applicant's

case for principal relief and the unexplained delay which has
occurred in the making of any challenge to the adoption to

the rule amendments in 1987.

Three possible courses exist for the future: the

Australian Postal Commission could pay to the national

office, the Australian Postal Commission could	pay to the New
South Wales branch,	or the Australian Postal Commission could

l

pay to no one. It does not lie in the Court's power to

compel the Australian Postal Commission to pay	to anyone and
the respondents have not applied	f o r any rnteram orders for
payment to them. The orders sought	by the applicant would
give the greatest chance of payment being made. On	the other

hand they would advantage the applicant and the New South Wales branch in a situation in which, for reasons already

given, they should not, and perhaps cannot,	be advantaged. I
am extremely doubtful as	to the efficacy of the undertakings
offered by the applicant. They cannot	be given on behalf of

the New South Wales branch, which has no capacity as	a legal
entity. To the extent	to which they are given on behalf of
the members of the committee	of management, they are vague as

to the identity of the persons giving the undertakings and may be unenforceable If the composition of the committee of management changes. Further, they are given on behalf of persons not parties to the proceeding.

A refusal of the orders sought by the applicant

would leave the rules to operate as they stand	at present.
Members of the Union who do not pay subscriptions	by one or
other of the methods specified in rule	8.1 will be in breach

of the rules and unfinancial. It would therefore be in their interests to authorise the Australian Postal Commission to pay their subscriptions deducted to the general secretary.

To the extent to which the Australian Postal Commission may

be motivated to pay moneys to the general secretary,	it may
draw some comfort from the proposition that the Union is	the

8

legal entity entitled in law to the money, whether it is paid

to the general secretary or to the New South Wales branch office, and from the disclaimer of responsibility which is found in the form of authority for deduction.

One problem arises from the difference between the

amount to which the New South Wales branch was entitled under

the old form of rule 26.1, fifty per cent, and the amount o

which it is entitled under the present rule, forty	per cent.
If the moneys are paid	by the Australian Postal Commission to
the general secretary, no formal machinery exists to ensure
that that difference will	be returned to the New South Wales

branch, should	a challenge to the validity	of the current
rule 26.1 succeed.	If it is found that the amendment	to rule

26.1 was not adopted validly, that amendment will have been

void and never have come into effect. A claim for the

payment of the money to the New South Wales branch could be

included in relief sought under s.141 of the Act. If, on the

other hand, rule 26.1 is held to contravene s.l40(l)(c) of the Act, it will probably be held so to contravene in both

its old and new forms. Questions of the lack of effect of

the rule in each form, and of the consequences of such lack

of effect, will be difficult. It does not follow from	the
possible existence of such difficult questions that some
attempt should now	be made to ensure that the New South wales

branch will be entitled to receive the difference between

forty per cent and fifty per cent of subscriptions collected

l

from its members. For one thing, to sustain such a proposition, the applicant would have to treat as valrd the fifty-fifty division, in a proceeding in which he does challenge that division expressly.

There was a suggestion made that the Court should make some interim declaration as to the entitlement of either

the national office or the New South Wales branch to receive

the moneys from the Australian Postal Commission. I my view

it would be undesirable to attempt o make such a declaration

in general terms. Such an order would be seen as an attempt

to bind the Australian Postal Commisslon in a proceeding to

which it is not a party and in which its views have not been
heard.

For these reasons, in my view the preferable course ,

is to refuse the orders sought by the applicant and to allow

the current rules to operate according to their terms, at

least until they are the subject of formal and express

challenges.

I therefore propose to make an order dismissing the

applicant's motion. The orders I make are as follows:

1. The motion the subject of the applicant's notice of

l

motion filed on 15 July 1988 is dismissed.

2. The directions hearing is adjourned to a date to be

c fixed.

3. Liberty is reserved to any party to apply on seven days'

notice in writing to each other party.

Appearances

Mr. S. Rothman for the applicant

Solicitors for the applicant: Turner Freeman

Mr. H. Borenstein for the respondent

Solicitors for the respondent: Slater & Gordon

Date of Hearing: Thursday 28th July 1988.

. 18.

I c e r t i f y t h a t t h i s and the

preceding seventeen ( 1 7 ) pages are a

true Reasons copy th f for

Judgment	of	the Honourable	J u s t i c e
Gray.