Director-General of Social Services v Chaney

[1980] FCA 87

Re: KEITH WILLIAM STEPHENSON and JOHN ANDREW MASTERSON
And: R. SQUIRES; R. HERBERT; G. HOLLAND; L. CARLSON; B. CARRAD; C. DUNLOP; R.
EADIE; R.A. DOWDELL; P. JACOBS; C. LUCAS; M. MARCHANT; P. MARKHAM; G. McGIRR;
M. TERP
N.S.W. No. 12 of 1980
Industrial Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

INDUSTRIAL DIVISION
NEW SOUTH WALES DISTRICT REGISTRY
J.B. Sweeney J.

CATCHWORDS

Industrial Law - Duties of Officer of Organization towards Members - Use of Resources of Organization to advantage certain Members and disadvantage others in an election - News Sheet issued by Secretary in breach of resolution of Federal Council

Conciliation and Arbitration Act, 1904, S.141

HEARING

SYDNEY

#DATE 19:6:1980

ORDER

The Respondent, R.A. Dowdell, perform and observe the rules of the Flight Stewards Association of Australia by refraining from further publishing and distributing any News Sheets of the Association which contravene the resolution carried at a meeting of the Federal Council of the Association held in Sydney on Monday, the 24th day of March, 1980 pursuant to Rule 12 of the Rules of the Association.

JUDGE1

This is an application by two members of the Federal Council of the Flight Stewards Association of Australia ("the Association"). A number of respondents were served with the application, of them Mr. Dowdell, the Federal Secretary, Mr. Squires, the Federal President and Mr. Eadie, a Federal Councillor appeared. It appears however, that substantial orders are sought only against Mr. Dowdell. The Orders sought are:

1. That the respondent perform and observe the rules of the said organization by refraining from further publishing and distributing any News Sheets of the Association which contravene the resolution carried at a meeting of the Federal Council of the Association held in Sydney on Monday, the 24th day of March, 1980 pursuant to Rule 12 of the Rules of the Association.

1. That the respondent R.A. Dowdell perform and observe the rules of the organization by withdrawing from circulation and for distribution all remaining copies of News Sheet No. 19 dated May 9, 1980, of the said Association in accordance with the resolution carried at a meeting of the Federal Council of the Association held in Sydney on Monday the 24th day of March, 1980 pursuant to Rule 12 of the Rules of the Association.

The case raises, once again, questions as to the duties of an officer of an organization towards his members, particularly in circumstances where an election is pending.

Mr. Dowdell is the only full time officer of the Association and has held that position for approximately eight years. Elections are shortly to be held within the Association, nominations have already closed and the ballot is to be held between 21 June next and 21 July next.

It has long been held by this Court and its predecessors that an officer of an organization owes a fiduciary duty to its members (See Carling v. Platt, 80 C.A.R. 283, per Dunphy J. at p. 292-3 and per McIntyre J. at p. 306-7). This has sometimes been referred to as an implied rule of an organization, (See Short v. Wellings, 72 C.A.R. 84; Lyons v. Degan, 27 June 1978 unreported and Kanan v. Hawkins, 14 September, 1979 unreported; Re A.P.T.U. Ex parte Wilson, 28 A.L.R. 330 at p. 334 and 336-7; See also Re Elections for Officers in Electrical Trades Union, 3 F.L.R. 86 per Joske J. at p. 91).

I am quite satisfied that such an officer does have a fiduciary duty owed to his members, one aspect of which is that he must not use the resources of the organization to advantage certain members and to disadvantage others in an election. He is of course quite entitled to electioneer. The prohibition is against the use of resources of the Association to the advantage of some and to the disadvantage of other candidates.

The elections about to be conducted are for the election of members to the Federal Council, including the Federal Secretary. Mr. Dowdell's evidence was that he was not a candidate for that office. It is quite clear, however, that the election is a strongly contested one. One group of candidates, among whom are the two applicants, has chosen as its label, the term "S.W.E.A.T." and is proceeding to campaign under that title. It appears that there has for some time been antipathy, perhaps mutual, between Mr. Dowdell and the S.W.E.A.T. team, including the two applicants.

In March, 1979, the Federal Council directed the Federal Secretary to submit to it, for its approval, any News Sheets he proposed to issue. A subsequent General Meeting of members recommended the rescission of this resolution and this was done in July 1979. At this time and up until the time of the events complained of, the Federal Secretary was pursuing a campaign concerning alleged violence by passengers being carried by Qantas Airways. This was done by the issue of extensive newsletters, some of which at least were quite heated and emotional in content.

On 24 March, 1980, a meeting was held of the Federal Council. At this meeting standing orders were suspended and a motion censuring the Federal Secretary carried. During argument the validity of these resolutions was attacked on the ground that no proper notice of the intention to deal with them was given to the Federal Secretary. They are not directly in issue in these proceedings, but relevant only to show the bad feeling between the S.W.E.A.T. group and the Federal Secretary. At the same meeting a further resolution was moved:

"That in accordance with Joske J., who said sitting as a Judge of the Commonwealth Industrial Court,

"A Secretary should realise that even though his own office may be in jeopody (sic) in an election, while he remains Secretary he has a duty to all members to behave fairly and impartially."

To this end Federal Council directs the Federal Secretary to refrain from using the Association News Sheets to promote himself and his policies. Neither will the Federal Secretary denigrate or enter into argument in the Association News Sheet with anyone who nominates and takes part in the election campaign. Federal Council warns the Federal Secretary that should he in Federal Council's view misuse members funds by disregarding this resolution the Federal Council will have no alternative than to seek legal advice and if necessary take legal action. This resolution once carried to apply equally to all other members of Federal Council."

The rules prescribe that a member desiring to raise business at a meeting of the Federal Council should advise the Federal Secretary, whose duty it then is to prepare an Agenda item. The Rules further provide that a member of the Council desiring to place business before the meeting, not on the Agenda paper, must obtain the consent of the majority of members present. It was submitted that this rule was mandatory and that consequently the resolution of 24 March, 1980 was not validly carried.

The argument was that the Federal Secretary had not been advised and consequently the item not placed on the Agenda. It was also claimed that a separate procedure to obtain the consent of the members present at the Council meeting was necessary.

However, it is to be noted that the Rules provide for a Federal Council of 17 members, 5 of whom may form a quorum. The members do not represent branches of the Association, but are elected by various industrial groups in the membership. Since the requirement may be dispensed with by the consent of all those present, the Rule does not serve the same purpose of notifying, for example, branches of an organization, so that they may have an opportunity of considering matters and instructing their delegates.

In my view the rule is not mandatory but is properly to be construed as directory only. In this case, the minutes disclose that the resolution was carried and although, in the case of other resolutions, persons voting against are shown, there is not shown in this case that any persons abstained or voted against the resolution. It was clearly carried by a majority of those present and I think that is a sufficient giving of consent and a substantial compliance with the Rule.

"You 'consent' to the doing of that which you are yourself doing; therefore where A, who was tenant for life and also protector of the settlement, executed a disentailing deed, he gave his 'consent' thereto . . . although it was not expressly stated in the deed that he consented thereto, and although he did not accurately realise some of the limitations of the property (Re Wilmer (1910) 2 Ch. 111)."

It may be added that at a subsequent meeting of the Federal Council on 29 April, 1980, the Minutes of 24 March, 1980 were confirmed. Mr. Dowdell was present at the meeting and is not shown as having raised any objection to the Minutes including this resolution being confirmed.

Mr. Dowdell subsequently convened a General Meeting of members for 28 April, 1980. The Rules provide for General Meetings to be held quarterly and contain no express provision dealing with the manner in which they are to be convened. The Rules further provide that the Federal Council has the right to declare attendance at any General Meeting as compulsory. No question was raised before me as to the validity of the action of the Secretary in convening the meeting. But the question of his declaration that attendance be compulsory was raised. I am quite satisfied that he had no such power. The effect of the declaration of the meeting as compulsory was to make any member not attending liable to fine by the Council and the other effect, of course, was to convert the meeting to a stop-work meeting, thus causing a re-scheduling of flights by Qantas.

At the meeting a very long report was given by Mr. Dowdell dealing with the campaign being waged concerning flight stewards and passengers on aircraft. He concluded by saying:

"I am convinced that Qantas will not take this Association seriously until it demonstrates its unity and determination on this issue as the members did on June 28 last year. I therefore propose to formally move the three resolutions on notice."

He then moved a resolution that until the Secretary was able to report that a satisfactory proposal had been received from Qantas, no alcoholic liquor was to be dispensed to passengers in any class on any Qantas flight as from 0700 hours on May 1, 1980. He also proposed certain other action. An amendment was moved to this resolution that the ban on liquor should become effective from 15 May, 1980. This was accepted by Mr. Dowdell. A further resolution was moved by one of the applicants and supported in debate by the other. It was in the following terms:

. . . . . "The Federal Secretary to call on Qantas for an immediate meeting. The F.S.A.A. to be represented at this meeting by a negotiation team comprising of the Federal Secretary and a minimum of 4 Councillors to be drawn from the Federal Executive and the Safety Committee.

This negotiation team will then report to a special meeting of Federal Council. If a satisfactory proposal is not forthcoming from Qantas, Federal Council will revue (sic) what options (including points A and B from the motion) are open to compel Qantas to make every effort to alleviate in-flight violence.

Members will be notified of the results of this meeting with Qantas and the actions, if any, that Federal Council recommends be taken.

The A.F.A.P. and A.H.A. will be advised of this decision."

This amendment was carried and Dowdell's resolution defeated. A resolution was then moved endorsing the Federal Secretary's action in convening the meeting and providing that "For the protection of our members against victimisation by Qantas this meeting shall be deemed to be a Compulsory General Meeting of Members." This resolution was carried and the meeting then adjourned to a time and place to be advised by the Federal President and Federal Secretary.

The day following the General Meeting, on 29 April, 1980, a meeting of the Federal Council was held. At that meeting one of the applicants moved that the Federal Council direct the Federal Secretary to communicate with Qantas seeking a meeting with them within the next three days. A resolution was further carried in these terms "that the Federal Secretary publish a News Sheet informing members of Federal Council's action today 29/4/80 in regard to the Compulsory General Meeting of 28/4/80. Also included will be a report of results at that Compulsory General Meeting."

That meeting was held and a series of proposals was thereafter made to the Association by Qantas indicating certain action it proposed to take and dealing with other requests made by the Association.

The Association was represented at the meeting by the Federal Secretary and four Councillors, but the Federal Secretary appears to have chosen to remain silent at the meeting. The meeting was held on 1 May, 1980 and on 5 May, 1980, the reply was sent to the Association by Qantas. The reply outlined a number of points which had been made on behalf of the Association at the meeting and gave Qantas' views on them setting out certain steps it proposed to take. In addition Qantas expressed the hope that there would be a continuing dialogue on matters mutually concerning it and the Association.

It is not part of my task to evaluate the problem of violence by passengers or to express a view on any of the proposals made by Qantas or the Association. On 9 May, 1980, the respondent, Dowdell, issued the circular complained of. It appears on the letterhead of the Association on the same type of paper and in the same type as were earlier circulars issued dealing with this problem. It is signed by Mr. Dowdell as Federal Secretary. It appears to have been distributed to members in the same way as were earlier circulars from the Association.

No specific evidence was put before me as to the costs involved in the preparation, dispatch and distribution of the circular to the 1750 members, but I think it a proper inference that some costs were necessarily involved. It was claimed on behalf of the respondent that the circular "was within the authorisation and direction of a resolution of the Federal Council held on 29 April, 1980." That resolution has been set out.

It provided that the News Sheet should inform members of Federal Council's action on 29/4/80 and that there should be a report of results at the Compulsory General Meeting. What actually appeared was very different. The phrase "results at the meeting" seems to me one carefully chosen and would have been properly complied with by setting out the various resolutions and amendments proposed and the voting on them at the meeting.

The circular issued was very far from this. Moreover, the circular issued did not inform members of Federal Council's decisions on 29 April. What the circular did was to set out that the Federal Secretary's recommendation had been rejected and that instead the meeting agreed to a proposal of the two applicants to hold talks with Qantas.

In strong terms and terms derogatory of the applicant and the S.W.E.A.T. group it proceeded to criticise what they had done. It claimed that the success of their amendment delighted Qantas and was publicly hailed by it. It then proceeded to say that this had wrecked a disability claim. The actual terms used were:

"Why was "Qantas delighted"? Because of the success of the Stephenson/Masterson/SWEAT amendment saved Qantas from paying a $60 disability allowance to every Association member, back-dated to November 29, 1979 which we could and should have got from a Board of Reference on May 1, 1980 - four days after the general meeting was held.

Our Solicitor Mr. Macken was ready to present that claim to a Board of Reference on May 1: our evidence was ready and was fully documented and every Association witness had been interviewed by Mr. Macken."

It went on to claim that the continuing cost to every one of the Association's members was between $40 and $60 per week. It claimed that members had been shouted down by an organised group of supporters of S.W.E.A.T. and proceeded to claim that it was simply useless to look for any significant improvement in salaries, allowances, professional status, conditions of work including an early end to violence in the air.

It may well be that many members would have viewed, with a good deal of scepticism, the claim that the $60 per week allowance was certain to have been won, but the circular quite clearly was a violent attack upon the two applicants and other members of the S.W.E.A.T. group and coming as it did, long after the meeting of members and the meeting of the Federal Council, it not only cannot be regarded as issued in compliance with the direction at the 29 April, meeting, but must be treated as one designed to advantage some candidates and disadvantage those of the S.W.E.A.T. team.

Moreover, it was a clear breach of the direction in the resolution of 24 March, 1980 which set out a passage from the well known judgment of Joske J. and then directed the Federal Secretary that he should not denigrate or enter into arguments in the Association News Sheets with those who nominate or take part in the election. It should be noted that this resolution, in fairness, applied collectively to all other members of the Federal Council.

The document clearly purported to be a News Sheet of the Association and was even marked as News Sheet No. 19. The Secretary, in issuing it in the manner in which he did, is in my view in breach of his duty to behave fairly and impartially in his office. He was moreover, in breach of the resolution of 24 March, 1980 and the News Sheet cannot be regarded as being in any sense a compliance with the resolution of 29 April, 1980.

In my view, the News Sheet was not issued for any purpose other than that which I have indicated. In it Mr. Dowdell said that he saw "no point in calling any future special general meetings in the absence of a clear demand by members that they understand what is involved and support our efforts to get it." By "our efforts" is clearly meant the series of resolutions he had put to the meeting.

In these circumstances, I think an Order should be made and the Order will be in terms of Order No. 1 of the Rule to Show Cause. So far as Order No. 2 is concerned there seems to me no machinery for withdrawing any remaining copies of the News Sheet No. 19 and indeed there is no evidence before me that there are any such News Sheets still in existence.

The Order of the Court is:

That the Respondent, R.A. Dowdell, perform and observe the rules of the said organization by refraining from further publishing and distributing any News Sheets of the Association which contravene the resolution carried at a meeting of the Federal Council of the Association held in Sydney on Monday, the 24th day of March, 1980 pursuant to Rule 12 of the Rules of the Association.