Health Services Union v Asmar (Administration Decision)

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FEDERAL COURT OF AUSTRALIA

Health Services Union v Asmar (Administration Decision) [2025] FCA 689  

File number(s): VID 917 of 2024
Judgment of: DOWLING J
Date of judgment: 25 June 2025
Catchwords:

INDUSTRIAL LAW - registered organisations - application for approval of scheme of administration - where organisation in interim administration - application and relief sought supported by some respondents - application and relief sought not opposed by any respondent - factors relevant to determining if branch “ceased to function effectively” and no “effective means under the rules” to enable effective function - finding that organisation had ceased to function effectively - finding that no effective means under the rules to enable effective function - finding of no substantial injustice - declaration and orders made approving scheme of administration

PRACTICE AND PROCEDURE - declaration based on agreed facts - nature of a contradictor - separate and independent consideration of agreed facts

Legislation:

Conciliation and Arbitration Act 1904 (Cth) s 171D (repealed)

Evidence Act 1995 (Cth) s 191

Fair Work Act 2009 (Cth)

Fair Work (Registered Organisations) Act 2009 (Cth) s 323

Federal Court of Australia Act 1976 (Cth) s 21
Cases cited:

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) [2017] FCAFC 113; 254 FCR 68

Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 3) [2015] FCA 583

Australian Competition and Consumer Commission v Australian Medical Association (WA Branch) [2001] FCA 1471; 114 FCR 91

Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665

Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513

Australian Competition and Consumer Commission v EDirect Pty Ltd (in liq) [2012] FCA 976; 206 FCR 160

Australian Competition and Consumer Commission v MSY Technology (No 2) [2011] FCA 382; 279 ALR 609

Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; 201 FCR 378

BMI Ltd v Federated Clerks’ Union of Australia (NSW) Branch (1983) 51 ALR 401; 76 FLR 141

Brown v Health Services Union [2012] FCA 644; 205 FCR 548

Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; 201 FCR 378

DMH20 v Minister for Home Affairs [2023] FCAFC 31; 296 FCR 256

R v Joske; Ex parte Shop, Distributive and Allied Employees’ Association (1976) 135 CLR 194

Re Application of Gallagher; Re Federated Cold Storage & Meat Preserving Employees Union of Australia (1983) 6 IR 78

Re Compaction Systems Pty Ltd and the Companies Act [1976] 2 NSWLR 477

Re Health Services Union [2009] FCA 829; 187 IR 51

Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; 216 CLR 53

Sankey v Whitlam (1978) 142 CLR 1

United Firefighters' Union of Australia v United Firefighters' Union of Australia, Union of Employees, Queensland [2022] FCA 145

Williams v Hursey

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Details
Case
[2025] FCA 689
Decision Date

CaseChat Overview and Summary

In Health Services Union v Asmar, the Health Services Union applied to the Fair Work Commission for a declaration that the Victorian No.1 Branch had ceased to function effectively and that there were no effective means under the Union’s rules to enable it to function effectively. The application was made under s 323 of the Fair Work (Registered Organisations) Act 2009 (Cth). The court was required to decide whether the Branch had ceased to function effectively and whether there were no effective means under the Union’s rules to enable it to function effectively. The court had to consider the agreed facts, the submissions of the parties, and the principles established by previous decisions. The court found that the Branch had ceased to function effectively and that there were no effective means under the Union’s rules to enable it to function effectively. The court approved a scheme for the Union to take action to enable the Branch to function effectively. The court found that there would be no substantial injustice to the Union or its members if the scheme was approved.
The court’s reasoning was based on the agreed facts and the principles established by previous decisions. The court found that the Branch had ceased to function effectively because it had been diverted by the General Manager’s proceedings and had failed to deal with a complaint against Ms Asmar. The court also found that there were no effective means under the Union’s rules to enable the Branch to function effectively because it had difficulties in managing staff and had failed to comply with the court’s interlocutory orders. The court approved the scheme proposed by the Union because it was consistent with the purpose of s 323 and would enable the Branch to function effectively without doing substantial injustice to the Union or its members.

Orders

Orders of the court

1. Pursuant to section 323(2) of the Fair Work (Registered Organisations) Act 2009 (Cth), the scheme attached in the Appendix is approved as the scheme for the taking of action by the Health Services Union to enable the Victorian No.1 Branch to function effectively.

2. Mr Charlie Donnelly be appointed administrator of the Victorian No.1 Branch under the scheme approved in order 1.

3. All offices of the Victorian No.1 Branch of the Health Services Union, identified in the attached Annexure to the Appendix, are vacated.

4. In the event of any difficulty arising from the implementation of the scheme approved in order 1, the administrator and the parties shall have liberty to apply on 48 hours written notice.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The Union, Ms Asmar and Mr Eden were each represented at the hearing of this application. Those parties jointly filed and relied upon an Amended Statement of Agreed Facts dated 15 January 2025 and a Statement of Further Agreed Facts dated 2 May 2025. By the Statement of Further Agreed Facts, the Union, Ms Asmar and Mr Eden agree that the Branch has ceased to function effectively and that there are no effective means under the Union’s rules to enable it to function effectively. The Union tendered affidavits from four other respondents, Ms Barclay, Ms Jacks, Mr Hargreaves and Ms Stone. Those respondents deposed to having “read and consent[ed] to” a declaration that the Branch has ceased to function effectively and an order approving the scheme of administration proposed by the Union. None of the remaining respondents appeared at the hearing. None of the respondents opposed the relief sought by the Union or put forward any different facts from those contained in the Amended Statement of Agreed Facts and the Statement of Further Agreed Facts. The Act provides that the Court may determine what notice is to be given of the application made by the Union. On 2 May 2025, I ordered that the Union publish a notice on its website, on the Branch website, on the Union Facebook and Instagram page, and on the Branch Facebook page. That notice explained the Union’s application, the scheme sought by it, and the date and place for the hearing of the Union’s application. In response to that notice, Ms Jacinta Knight, a former member of the Union, appeared at the hearing. Ms Knight said that she had been a member of the Union for “30-odd years”, and that the Union had “forgotten its prime directive of representing the members”. Ms Knight’s submission is set out in more detail below. No other submissions made in response to the notice were brought to the attention of the Court. I have considered and assessed the submissions, agreed facts, and other evidence before the Court. In all of the circumstances, and for the reasons that follow, I find that the Branch has ceased to function effectively, and that there are no effective means under the rules of the Union to enable it to function effectively. These reasons and orders also approve and attach a scheme for the Union to take action to enable the Branch to function effectively.THE LEGISLATIVE PROVISIONS – SECTION 323 The Union brings this application pursuant to s 323(1) of the Act. That section, as is clear from the above, empowers the Court to declare that a part of an organisation has “ceased to … function effectively” and that there are no “effective means” under the rules that would enable the organisation to function effectively. Such an application may be made by the organisation or a member of the organisation with sufficient interest in relation to the organisation. Once the Court makes a declaration pursuant to s 323(1), s 323(2)(b) authorises the Court to approve a “scheme for the taking of action” to “enable the branch … to function effectively”. Pursuant to s 323(3), the Court may also give ancillary or consequential directions it considers appropriate. Under s 323(4), the Court must not make any orders unless satisfied they would not do “substantial injustice” to the organisation or any member. Section 323(6) provides that the orders and directions of the Court prevail over the rules of the organisation.HISTORY AND PRINCIPLES

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I take from the submissions of the consenting parties that the impact of the General Manager’s proceedings on the effective function of the Branch is that it has diverted time and resources of the Branch away from representing the industrial interests of members. Additionally, the General Manager’s proceedings has provided a further object for which the BCOM is divided in its response.Decision of the BCOM to take no action about Ms Macks’ complaint against Ms Asmar or abide by the demands of the National Executive on 23 August 2024 The consenting parties also draw attention to the complaint made by Ms Brianna Macks against Ms Asmar on 13 August 2024. Ms Macks’ complaint charged Ms Asmar with misappropriation of Union funds, substantial breach of the rules, gross misbehaviour in relation to her office, and gross neglect of duties in the conduct of her office. Ms Macks’ complaint relied on the contents of the 26 March 2024 letter. Ms Macks’ complaint was made pursuant to rule 54 of the rules, which confers responsibility on the BCOM to investigate grievances and disputes submitted by its members. On 23 August 2024, the National Executive demanded that the BCOM deal with Ms Macks’ complaint as a matter of urgency. The consenting parties say that the BCOM never met to hear and determine Ms Macks’ complaint. Rather, at an 11 November 2024 BCOM meeting, the BCOM resolved to take no action in relation to the complaint. I consider that these circumstances are demonstrative of the BCOM failing to carry out its duties under the rules of the Union (including rule 39(a)) and support a conclusion that the Branch has ceased to function effectively.The standing down of Jake McGuinness The consenting parties additionally drew the Court’s attention to the BCOM’s resolution on 11 November 2024 to stand down Mr Jake McGuinness, the Branch’s Chief Communications Officer, and direct him not to perform any employment duties or attend the Union offices pending an external investigation into unspecified allegations of gross misconduct. The Union’s Further Amended Concise Statement provides that this action occurred after Mr McGuinness had provided information to the Union’s solicitor for the purposes of this proceeding. The consenting parties say that this event is relevant to the overall assessment of whether or not the Branch ceased to function effectively. The connection between this matter and the Branch’s effective function is that it demonstrates the Branch’s difficulties in managing staff. This Court’s interlocutory findings The consenting parties noted two of the Court’s interlocutory findings. The first is Health Services Union v Asmar (No 2) [2024] FCA 1442, where I relevantly found that it was appropriate to make orders restraining Ms Asmar from carrying out her duties as Branch Secretary and restricting the ability of the respondents to dismiss, discipline or change the duties and work practices of Branch Employees: at [133]. My orders to this effect were made on 13 December 2024. The second interlocutory finding relied on by the consenting parties is my order approving a scheme of interim administration pending the hearing and determination of the Originating Application. This order was made on 23 December 2024.

Ratio Decidendi

Legal Principle Established

Section 323 of the Act has its origins in s 171D of the Conciliation and Arbitration Act 1904 (Cth). Both provisions are in substantially the same terms. Section 171D was inserted in the Conciliation and Arbitration Act by amendments made in 1974. The amendments were the result of the Report of the Committee of Inquiry on Co-Ordinated Industrial Organisations delivered in 1974 by the Honourable John Sweeney, a Judge of the Australian Industrial Court. The Report provided that the proposed s 171D was a section “giving power to the Court to resuscitate any part of an organisation which has ceased to exist and where there are no practicable means within the rules of the organisation by which it can be reconstituted”: see Report at p 41. Section 171D as inserted was directed not only at a branch or part of an organisation that had ceased “to exist” but also those that had ceased to “function effectively”. In the last two decades, the so called “resuscitation” of parts of organisations under s 323 of the Act has manifested as applications brought by federal unions for the Court’s approval of a remedial scheme of administration for a federally or state-registered union or branch: see, e.g., ReHealth Services Union; Brown; United Firefighters' Union of Australia v United Firefighters' Union of Australia, Union of Employees, Queensland [2022] FCA 145. The following principles emerge from that history of s 323, together with its words, the broader statutory scheme within the Act, and its previous consideration. First, authorities dating back to s 171D of the Conciliation and Arbitration Act emphasise that whether a branch or body of an organisation has ceased to function effectively and whether there are no effective means under the rules by which it can be enabled to function effectively are questions of fact: R v Joske; Ex parte Shop, Distributive and Allied Employees’ Association (1976) 135 CLR 194 at 218 (Mason and Murphy JJ). An affirmative answer to those questions indicates the existence of a state of affairs that is sufficient to justify the Court granting a declaration pursuant to s 323(1), subject to the Court ensuring that such an order would not do substantial injustice to the organisation or a member. Second, s 323 of the Act is to be construed liberally and beneficially. Smithers J made observations to this effect about s 171D in Re Application of Gallagher; Re Federated Cold Storage & Meat Preserving Employees Union of Australia (1983) 6 IR 78 at 81, referred to with approval in ReHealth Services Union at [12] (Tracey J) and Brown at [32]-[34] (Flick J), as follows: Considerable novelty may be appropriate in a scheme submitted under s 171D. It would seem that the court should be guided not by any narrow interpretation of s 171D, but should respond to the purpose of that section in the context of the Act.…Section 171D is in the midst of the sections last mentioned and stems from the intention of parliament to revive the effective management and administration of organisations when governing bodies have become defunct or impotent or are unable to function effectively because the rules failed to speak effectively in the relevant current circumstances. Its provisions should therefore be liberally construed.