In the matter of the Conciliation and Arbitration Act 1904 and in the matter of an application pursuant to section 171C of the said Act by the Australian Building Construction Employees and Builders Labourers Federation

[1978] FCA 26

26       78

JUDGMENT No. ........ ....-../ ........ ....

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I N THE MATTrR of the Conciliation and

Arbitration Act, 1904

. .	AND IN TIIE MATTER of an application
pursuant to Sectlon 171c of the said A c t

JUDGES MAKING ORDER: J.B. SWEEXEY, EVATT, KEELY JJ.

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DATE OF ORDER: 20 April, 1070

ORDER OF TIE COTnT:

The Court determines that an iqvalidity has occurred !:I

the imposition and collection of a levy by the said

Organjsation when it was an association on all its

membexs of $4 for the period teqinning the first day oi

April, 1975 and a further $4 f x the period beqinning

' I

the firbt day of September, 1975 ASD THE CO':RT BY Ti.~JG1.5mV -

having satisfied itself that the order hereinafter appearing

would not do substantial injustice to the Organisatlor. or

to any nember or creditor of the Organlsation or to any

person .having dealings with the Organisation	TIIE	C C X J R T Z
MAJORTTY ORDERS:

1. That the imposition of the said levy of $8 payabl?

as to $4 for the period beginnins 1 April, 1975 al;d

I	as to a further $4 for the period beginning	1 September,
?

1975 be and the same is hereby validated.

2.   That notwithstanding the validation of the said levy,

the continuous financial membership of any member of

the Organisation shall not he or be deemed to be

interrupted or otherwise affected for any purpose by

reaaon of such person's nonpayment or late payment

of the said levies or either of them.

3.

That. notwithstanding the validation of the said levy,

no person who is or was at any time a member of the

. v

Orgenisation and who has bsfore the date of this order failed to pay the whole or any part of the said levies or either of them, shall be liable to pay to

the Organisation any part of the moneys so unpaid by

him and this Order may be pleaded in any court	as a
defence to any claim for such moneys.

4. Leave to apply is reserved to either party on 40 hauls

notice	..
..

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' IN THE FEDERAL COURT	)
1

OF AUSTRALIA	1	N.S.W. NO. 4 Of 1978
1
INDUSTRIAL DIVISION	)
IN THE MATTER cf the Conciliation
and Arbltration Act, 1904
AND IN THE MATTER of an application
pursuant to Sectlon 17112 of the said I

I

Act by THE AUSTRALIAN BUILDTNG !

CONSTPUCTION EXPLOYEES AND BUILDERS

LABOURERS FEDERATION -

J.B. SWEENEY J.

EVATT J. l

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JUDGMENT FOR REASONS l

This is an application by the Australian

Building Construction Employees and Builders Labourers

Federation (the Union) pursuant to s.171~ of the

Conciliation and Arbitration Act ("the Act") for a

determination of the question whether an invalidity

hae occurred in the management of the organisation and

for consequential orders. Mr. M. Einfeld Q.C. and Mr.

M. Moore appeared for the Union and Mr. R.J. Turner

for Brian Victor Rix. Mr. Rix WLS an applicant for an

inquiry into an irregularity in a ballot in July, 1977

to which reference is made later in this judgment.

Mr. Rix was served by direction of the Court.

He was syccessful in his application and an order made

for a new ballot which has not yet been concluded. He

~ among others opposed the levy and the group for a long

period denied the legality of the levy and refused to

pay it. The ballot has not yet concluded. Mr. Rix

therefore was at arms length with many of the present

controllers of the union. His attitude as expressed

'by his solicitors was that he did not oppose the

valida€ion providing nothing was done in it which

would affect the position of a candidate who had

previously 'been ruled ineligible to contest an election

by reason of late payment of the levy. m. Rix may

fairly be regarded as an opponent of the levy and we

attach significance to the attitude he adopted and

have had regard to it in the decision in this matter.

By direction of the Cmrt, copies of the

application were served on each branch of the Union. In addition, by direction of the Court, an advertisement

in the following terms was insert.ed in a metropolitan

daily circulating in each of the capital cities of

States where there were branches and a daily newspaper

circulating in Newcastle and Canberra:

"AUSTRALIAN BUILDING CWSTRUCTION EMPLOYEES

AND BUILDERS LABOURERS FEDERATION

An application for validation of the levy

imposed in April and ssptember, 1975 will

be heard by the Feder.il Court of Australia

at Law courts Building, Sydney on Thursday,

9th March, 1978 at 10.15 a.m. Copies of

the application may be inspected at the

------ office of the Union or at the

Registry of the court.

Geoffrey Edwards and Co.

Solicitors for the Applicant,

302 Pitt Street, Sydney."

. .

1                In addition, by direction of the court, the branches were advised when the hearing was adjourned

1

and notice given to them of the date, time and place

of the adjourned hearing. The decision of the court

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1                -that the levy had been invalidly imposed was widely circulated and indeed appears to have been reported to branch meetings. It is, we think, of significance

that no members or group of members sought to appear

on the hearing. The evidence before us consisted of

, two affidavits of Mr. Wallace, Federal Treasurer and

Victorian Assistant Secretary of the Union. In

addition, minutes of various branches relating to the

endorsement and documentary evidence of samples of

I

pamphlets advising members of tae levy were before us.

In this case the affidavit contained material which

was clearly hearsay evidence, bJt the court admitted

the affidavits. Our action in so doing was affected

by the circumstances of the particular case and it

should not be assumed that hearzay evidence will be

admitt5-d in all cases. Having admitted the hearsay

evidence, we think it clear that it has probative

value (Walker v. Walker 57 C.L.K. 630) and we have

BO treated it.

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.. The Union is now an organisation of employees

registered under the Act. Prior to 27 June, 1974 the

Union had been registered as an organisation of employ-

ees but on that date the Australian Industrial Court

deregistered it. It then continued as an association until 1976 when it sought and was eventually, on

7 October, 1976, granted registration as an organisation.

In November, 1974 the Union while functionlng

as an association imposed a levy on its members by

resolution of its Federal Council and this present

application arises from the manner in which that levy . .

was imposed. The imposition of the levy took place

while the Union was an association before it was reg-

istered as an organisation but the section clearly

extends to an association in those circumstances.

The validity of the imposition of the levy

came befzre the Court in January Df this year in a

judgment given by J.B. Sweeney J. on 23 January, 197%

in an inquiry into an election for offices in the

Union in July of 1977. The relevant rules provided

that the r'ederal Council had power to impose a levy.

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They furt3er provided that if the Federal Council adopted a resolution which had not appeared on the agenda pil-er for the Federal Council circulated as

required to the branches then the resolution could

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! take effect only after endorsement by a majority of

the branches. The resolution imposing the levy which

had not sppeared on the agenda pa.Der was carried

unanimously By the Federal Council and thereafter was

considered in various ways by six of the seven branches.

On an examination of the facts however the Court found

' in the case referred to that only two branches had

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endorsed the resolution, four others had considered

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it in various ways but had neither endorsed nor rejected

it and one branch had not considered it. The court

then found that the levy had not been validly imposed.

The levy was one of $4 for each of two periods

ending in 31 March,1976. The effect of non-payment of

the levy wae that members became unfinancial and rem-

ained unfinancial until the levy was paid. Unfinancial

members are deprived of some benefit-, under the rules

of the Union, including the right to nominate for office

! and to vote at elections.

In the application no:+ before us. the con-

i

clusions reached by J.B. Sweerey S. have been accepted

and indeed the invalidity re1 .ed on is the failure 'to

comply with the rules in havlng the Federal Council

resolurim so endorsed.

The material before us discloses that the

Federal Secretary, Mr. N. Gallagher, kept in touch

with the branches and sought infs-mation from them

about the branches' actions relating to the resolution

imposing the levy. The endorsemmt necessary was that

of a general meeting of members aad meetings appear

to have taken place monthly. By reason of his in-

quiries W.. Gallagher was ultimately informed by each

of the levy and to collect. The fact of the levy was widely circulated and was publicised in various pam- phlets and newsletters issued by the branches of the

of the State Secretaries that the levy had been en-

dorsed by his branch. The officers of the Union

appear to have accepted the advices from the State

Union. In addition, job meetings were held in a large

number of places at which discussions took place

concerning the levy and its purposes. Examples were

given to us of some of the publications to which

reference has been made and it is clearly not a case

where the levy was sought to be hidden from members

or there was anything clandestine i n the actions of the

officers or committee of managemelt. This is a union

where there is each year a considerable turnover o$

members and on material before us has since 1973 varied	l
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between L9 and 31 percent. T1.e levy was collected from

members who were members at any time during the period

of its application from 1 April, 1975 to 31 March. 1976.

It appears from such material that the vast majority of

members at those times have paid the levy. The total

amount paid was $173,480.95. It Pppears that in addi-

tion to the members working in the industry at any

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given time there is a percentage of members who secure

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employment in some other industry or are unemployed.

nominal book members. The estimate given us was that

They do not generally resign from the Union and remain

almost all persons actively engaged in the industry during the period when the levy was payable had paid

it and some proportion unidentifiable of those had

since left the industry or become unemployed. Some

thousands of new members have joined the organisation

since that time but they have not been requned to pay

the levy.

we accept that this is a case where the

officers acted in good faith. It is not a case where

. .

there was a defiance of the rules or a determination

to govern disregarding the rules. We think that it

was part of the duty of Mr. Gallagher as Federal

Secretary to examine the actions which had been taken

I

by the branches in the endorsement of the resolution

of the Federal Council particularly when such a large

sum of money was involved. Had he done this it bould

have been quite clear that in mme of the branches,

although the matter had been reported on to both com-

mittees of management and the members, there had bem

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1                no endorsement. There was clearly negligence on the

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'!	part of Mr. Gallagher, but we do not think that this
-I	is conclusive. are We concerned with the interests
.1	of the organisation and it should not be penalised for

4 negligence officer. the an of

I Considerable problems arise for the union

if the levy is not validated. Very large sums of money

have been expended for the purposes of the levy. It

was submitted on their behalf that in the circumstances

a member who had paid the levy would be entitled to sue

the Union to recover it. We do pot find it necessary

to determine this question.

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In addition, difficulties will arise in the

future in determining the amount of contributlons owing

by persons who were members during this period and if

the union, for example, is suing to recover contributions

._

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it may well be that the payments made in respect to the levy must be set off against other amounts due.

Either of these events could well mean that a member

who defaulted in his obligations under the rules was

in a substantially better position than a menber who

paid and continued to pay contri5utions in accordance

with the rules. If it were necessary for the union

to refund the amount of the levy, very considerable

difficulties would arise in doing so. The money has

been spent and the union in the first place would be

embarrassed at having to raiss an equivalent sum.

Machifiery difficulties such-ks loss of address, removal

and fciilure to notify	a change of address would also
arise.

subject to questions of consideration of

injustlce to members and other persons, we think it

a case where a remedy of the position is desirable.

Section 1 7 1 ~ forms part of a group of sectior,s

under Part IXA headed "Validatiig Provisions for

Organisations". The sections include S. 171B valldatinc;

certain .acts done in good faith even though Invalid

for reasons set out in the section: s.171D providing

for the reconstitution of a braxh or a part of a branch

of an organisation: s.171E providing for ccrtaln persons to be treated as members even if not validly admitted

and s.171F providing that on the expiration of four

years acts done by a collective body of an organisation

shall be deemed to have been done in complianre with

' .'.

the rules. Section 171G allows certain of the sections

to be declared by the Court to be applicable.

It is clear that the group of sections con- etitute an attempt by the legislature to provide methods

whereby the legal and effective functioning of organ- isations can be secured and to end the difficulties which have arisen in arbitral jurisdictions where

there has been a failure on the part of organisat$ons

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properly to comply with the rules.

The section was considered by the Court in

Allen v. Townsend 7 A.L.R. 261. The Court there said

“One purpose of the new Part IXA of the Act is to

give the court a wide jurisdiction to do what justice

and commcn sense require to remedy the situation which

arises when an invalidity occurs In union management,

elections or rule changes” and again -

“Whether this jurisdiction should be exercised

in any particular case involves reference to

the objectives of the Conclilation and Arbitration

Act. 1904-1975 and considerations of fairness

and justice. One of the ob~ectives of the Act,

underlined by the enactment of Part IXA therecz,

is the encouragement of the effectlve managencnt

of registered organisations in matters withln

their legitimate competence.

WrLere it is just and reasonable so to do they

should be relieved from frustrations which arise

merely from the failure m the observance of

some formal requirement.“

This latter passage we would emphasise does

not in any way limit the jurisdiction of the court to

cases where there has been a mere failure in the observ-

ance of some formal requirement. It is trite law that

the Australian arbitration system depends on the exist-

ence and functioning of organisations and the objects

of the Conciliation and Arbitration Act set out in s.2

emphasise this. Conciliation and arbitration set out

as objects in s.2(b) and s.2(c) are impossible unless

there are functioning representative bodies of employee;

and objects 2(e) and 2(f) emphesise the importance of

the encouragement of these bodies and their democratic

control. i l

In considering whethf-.r it is appropriate to

exercise the wide jurisdiction given to us, we must

dearly have regard to the objects of the Act. We arc

satisfied that orders made with a view to enabling an

organisation to function and operate effectively and les-ally willassist in achieving these objects and it will be appropriate to mPke such an order if

the Coart can satisfy itself tlwt such an order would

not do substantial injustice to the organisation or

to any member or creditor of tke organisation or to

any person having dealings with the organisation.

In the circumstances of this case we think

it is necessary only to conslder the position of

members. No creditor would be prejudiced in any way

nor does there appear to be any person having dealings

with the organisation who would be affected by the

order -

The orders sought ultimately were in the

following terms:

! 1. That the imposition and collection of each

of the said levies be and the same is hereby

validated.

2.   That notwithstanding the validation of the

said levy, the continuous financial member-

ship of any member of the organisation shall

not be or be deemed to be interrupted or

otherwise affected for any purpose by reason

of such person's non-payment or late payment

of the said levies or either of them.

3.   That notwithstanding the validation of the said levy no person whs is or was at any

time a member of the organisation and who

has before the date of thls order falled to

pay the whole or any' part of the said levies

or either of them, shall be liable to pay to

the organisation any part of the moneys so

unpaid by him and this order may be pleaded in any court as a defence to any clalm for such moneys. !

The effect of such orders will be that pursuant

to Order (2) there will be no i-kerruption to the con-

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tinuous financial membership of any member and by reasor,

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of Order ( 3 ) that no member pas:. or present who has not

paid the levy will be required in the future to do so.

It seems to us that if these orders are made

no injustice can possibly occur to any member.

A further consideration is whether it lies

within the power of the union to correct the problems

which have arisen itself without recourse to s.171c.

It is true that as from November, 1970 s.171B may afford

an answer to any allegation of invalidity, but we c m

see that problems may well arise in the meantime.

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we think it clear that, just as a rule may

not impose a retrospective obligation to pay contribu-

tions, so a levy may not be imposed retrospectively and that the rule dealing with levies does not authorise

the imposition now of a levy for the period 1 April,

1975 to 31 March, 1976. Any attempt then to impose the

levy now would fail. The most tk.at could be done would

be to impose a levy in the same amount payable in the

future and to exempt from payment all those persons who

had alrszady paid it. "his however seems a clumsy method

and would leave unsolved the position of the persons who

were members during the period of collection of the levy

whether they paid the levy or not and whether they are

still members of the Union or not.

Since we are of the view that it is not clearlv

within the power of the Union to correct the problem and

being satisfied that no substantial injustice would be caused to the members by the making of the Order, we makc the attached Orders.

1 Assoclate i

IN THE FEDERAL COURT

OF AUSTRALIA	I	N. S. W. No. 4 of 1978
INDUSTRIAL DIVISION
IN THE MATTER OF THE CONCILIATION
v
- and -
IN THE MATTER OF THE AUSTRALIA?'
BUILDIEG COXTXJCTlOi : ' E.PLOI'?Z'.
m B U I L i i 2 2 S L&OUl?ZRS E'EDXi..T:?jIi --
an organlsatlon of employees rc,glstes
under the sald Act
IN THE: MATTER of an application
Dursumt to Section 171C of -che

20 April 1978. Keely, J.

J[lDCMENT

This is an application for an order under S . 171 C

of the Conciliation and Arbitration Act (the Act). As I m

unable to agree with the decision of the Court I shall confine

myself to setting out the reasons why, in my view, the material

at present before the Court does not justify the making of the

orders sought. It will be necessary to briefly explain how

the application was heard on two 'occasions.

This matter initially came before the Court on

9 March 1978 (the earlier hearing) when Mr. Einfeld Q.C.

appeared with Mr. M. Moore for the applicant Federation.

, * I	2.
.

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Mr. Turner announced an appearance for Brian Victor Rix, who

was an applicant in proceedings under S. 159 of the Act (the

S. 159 proceedings) in which judgment was given by J. B. Sweeney .

on 23 January 1978. Mr. Turner stated that his client's interes-

was on ly to'ensure that any order made by the Court in the presen

matter would not affect the rulingin the S. 159 proceedings and

that he intended to make no submissions in relation to thls

matter. After asking to be excused from further attendance,

Mr. !brner remained in attendance throughout the hkaring but I

took no active part in the hearing by way of callink evidence,

cross-exanination or address, nor did he take any objection in

respect of any of the material' placed before the Court.

Section 171 C was inserted in the Act in 1974.

In R v. J,oske (1976) 10 A.L.R.	385 Mason and Murphy	JJ. said
(at p. MO) :-

I1 . . . it is for the court to develop and elaborate

criteria regulating thc discretion, having regrd

to the benefits which may be expected to flow i r o n

the making of an order under sub-s. (2)(a) and the

impact which such an order will have on the lntc,rests

of persons who may be affected.I'

As those criteria have not yet been developed, Mr. Einfelu was

asked at the earlier hearing to put submissions as to what

were the proper criteria in dealing with an application under

S. 171 C. He stated that he would do so but on the resumed

hearing said that he had decided not to make any such submissions.

..As the Court has heard no argument from the applicant

o r from any other person as to the proper criteria to be

applied, I have not formed any concluded views as to what

criteria are appropriate in considering an applicatlon under

s. 171 C. Prima facie it would appear that in order to obtain

h order under the section an applicant has to do more than

merely show that (a) an invalidity exists, and (b)"such an

order would not do substantial injustice to the organisation or

to any member or creditor of the organisation or to any p- arson

having dealings with the organisation." The section appears

i , I

I to contemplate that in some cases the order may do some (less

than substantial) injustice to members or other persons a 3

presumably the Court, before making an order which might have

such an effect, would need to be persuaded that some gooC

reason existed for making the order. Again, prima facle, it

would appear that the Court would not make any such order unless

satisfied (1) that the invalidity in question was not due to

any defiance of the requirements of the rules by the officers

concerned and (2) that those officers have acted bona	fid? in
all material respects.

In the absence of any argument as to the spprop-late

criteria, I shall simply consider whether the evidence presented

on behalf of the applicant has establlshed the case which :he

applicant itself sought to make. The way in which the c?se

f o r the applicant was put was stated by Mr. Einfeld as foli-ows :-

"The fact of the matte? is that why we are saymg

we come within this sectlon is because the levy

has been brought, in one form o r another, to the

attention of the members, and there has been, as

a result of that, a bellef formed by the State

..Secretaries, communlcated to Mr. Gsllagher and to

others, that the Branch had endorsed the resolutlon

and the levy. (transcrlpt p. 75)

At the initial hearlng W. Einfeld relied on t h e

affidavit of Norman Alexander Wallace, affirmcd 27 February 1978.

The applicant accepted and also sought to rely upon the flndicgs

, I

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in the reasons for judgment in the S . 159 proceedings. However

it was pointed out from the bench that, whilst he could rely

upon the findings in the reasons for judgment in so far as

they were findings against the prcsent appllcant (e.g. to

. .

establish the existence of the invalidity as part of its case),

he should place before the Court properly admissible evldence,

such as the minutes of various meetings, in order to establish

any necessary facts in the presert proceedings instead of

seeking to rely upon findings in the S . 159 proceedings whlch

were in favour of the present applicant. At the same tin?(. It

was indicated to Mr. Einfeld that the fact that his appllcatlon

was virtlially uncontested (and as a result objections to the . .

admissibility of evidme were unlikely) did not relieve the

Court of its responsibilities under the Act.

Members of the Court a l s o drew Mr. Einfeld's

attentior, to various matters requinng evidence. For exaTple

at the ea-lier hearing J. B. Sweeney J. said :-

"It might become important for us to have

information about eith2r whether the branches

have since consldered the questlon of the levy.

I mean since my judgmeyt, or alternatlvely, It

may flow from the evldmce, when we see the

members who have paid, something of the steps

taken . . . lf .

In an apparent attempt to supply chis information a further affidavit by Norman Alexander Mallace, affirmed and flled an

the day of the resumed hearing, stated (but on a hearsay basis)

that the rule in the S. 159 proceeding had been reported to

members at Branch meetings but had "not been the subject of

discussion at Branch Meetings in any other context other than

in Queensland . . .lf. The affidavit then quoted part of the

minute of the General Meeting of members of the Queensland

Branch on 7 February 1978 which ex t rac t inc luded the following :-

. . 'IBrother T. Smith asked what was t h e s i t u a t i o n

regarding the Federal Levy, t he Sec re t a ry r ep l l ed

and said t h a t h i s oplnion, the decis lon o f the ,Ju?Ze,

has been t h a t a s 1t was an admmistrat lve error and

appl icat ion should be made, and the cour t would

make it l e g a l " ( s i c ) .

i

It should perhaps be ment ioned tha t the l as t th ree l ines cf t h e

po r t ion of the minutes set o u t abr,ve cannot be reconci led !nth

the fol lowing passage f rom the rexons for judgment of

J. B. Swecney J. i n t h e S. 159 proceedings (at p. 25) :-

"A fu r the r ques t ion sc-ms t o me t o a r i s e whethei

it would be appropriate for ac t ion t o be t akpn

under S. 171 i n r e s p e c t of the levy. I have

formed no opinion a s ' t s t h i s , e i t h e r a s t o my

j u r i s d i c t i o n so t o do	m t h e propriety."
Another matter raised	from t h e bench a t t h e e a r l i e r

hear ing was the need for p roper ev idence tha t the members of

the Federel Council had a b e l i e f tha t the r e so lu t ion imposing

the l evy I1was subsequently endorsed a t general meetings of t h e

Victoria?, South Australian, Western Australian, Queensland.

Tasmanian and A.C.T. Branches of the Federation" as claimed in

paragraph 11 of t h e a f f i d a v i t of Iiorman Alexander Wallace aff1rr:ec

27 February 1978. On this aspec t it was po in ted ou t t o

Mr. Einfeld f rom the bench that the mater ia l in the a f f i d a v t

was hearsay. It was a l so po in t ea ou t that the Court sholllc?

know what was t h e b a s i s o f t h e a l l c g e d b e l i e f , i .e . t h e d e m l l e d

facts which it was c l a imed had l ed t o t he a l l eged be l i e f .

Mr. Einfeld replied IICertainly we can f i l l t ha t ou t " and a

l i t t l e l a t e r a g r e e d t h a t h e would need evidence as t o " t h e

bona f ide of t h e f e d e r a l c o u n c i l i n a c t i n g on t h e b e l i e f t h a t

there was an endorsement ( i . e . of t h e l e v y by the Branches)

and c o l l e c t i n g it".

In these circumstances Mr. Einfeld applied for

an adjournment of one week to enable him to have prepared

Ifall this material". That adjournment was granted. The

hearing resumed on 16 March 1978 when Mr. Einfeld tendered

a further affidavit of Norman Alexazder Mallace, sworn that

day (the later affidavit) together with a number of exhibits

i thereto including minutes of varirlus meetings. However,

despite the fact that counsel's attention had already been

\

drawn one week earlier to the need for admissible evldence

(as distinct from hearsay), in my view the later affidavit

upon which Mr. Einfeld sought to rely failed to supply the

necessary evidence on a proper basis.

The normal way of placing such evidence before t n e

Court would have been by filing an affidavit by each member of

the Feder31 Council (a) stating what his bellef was at the

material time as to whether a majority of the Branches had

endorsed the Federal Council decision on the levy, and (b)

setting out the information known to hlm at that time upon

which his belief was based. This was the course followec! in

respect of Norman Alexander Wallace (paragraphs 13 and 14 af

his later affidavit) but was not done in respect of any	of the
other members of Federal Council.

Instead of such affidalits being prepared and f--led

during the week's adjournment, the curious course followed. was

that the Federal Management Committee on 15 March 1978 carrled

a resolution which, inter alia, endorsed as "true and corrcct"

paragraph 11 of the earlier affidavit containing the inadxsslble

evidence which Mr. Einfeld at the earlier hearing had already

been told was hearsay.

..

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1

A resolution by a committee asserting that such

hearsay is "true and correct" does not meet the difficulty

. . -

it is a mere assertion unsupported by oral evidence or affidamt.

The resolution was	in the following terms	:-
. .

N. Gallagher, V. Dobinson, W. Morgan, K. Reynolds,	"Federal Management Committee constituted by refers to its previous resolutlon to seek
validation under S . 17'1 C of the Conciliation
and Arbitration Act of the imposltlon and collection of the Feder.al Rehabilltation levy
of $8 being made up of two $4 levies for the slx
monthly terms comencmg 1st Aprll, 1975 and 15t
October, 1975. Federal Management Coxnttee
ratifies and declares that appllcatlon is made

l	by the Australian Building Constructlon Employees
and Builders Labourers' Federatzon under S. :Tl C
of the Act to seek 'such validatlon and relatee
orders. Federal Manapment Comlttee ratlfies,
endorses and adopts the action of the Federal
Treasurer in making the affldavlt flled in the
said proceedings and sworn by h m on the 27th
February, 1978. In particular the Federel
Management Commlttee endorses as true and correct (and in accord with the recollectlon and belief? of those four firstnamed of its members who wele
members both of the Fedral Council and the
Federal Management Committee) paragraph 11 of
the said affidavit whlci states as follows :-

'It was at all materlal tines believed b the :

Federal Council of the Federatlon that T;!e

in paragraph 9 of

resolution refern3.d to

this my affldavi?; was subsequen-cly endorzed

at general meetzngs of the Victorlan, Sout.1

Australian, Westorn Australlan, Queenslacd,

Tasmanian, and A.C.T. Branches of the Fsd7ratlon

Consequently, stcps were taken through the

Branches to collrct each instalment of the

said levy, and it was In fact collected fi'?m

almost all of the members of the Federitloll

who were in active employment as bulldcrs

labourers between Aprll 1375 and June 13'76'.

Federal Management Committee further authorises the Federal Treasurer to make such further

affidavlts and glve such evldence ln thc procccd.m~s

on behalf of the Austral~an Employees and Bulldcrs Labourers' Fedcratlon Uillldlnc C m S t r u C L l 3 : 1

a5 1s

necessary t o place relevant evidence before the Ccurt" As I have indicated, the resolution is no evidence at

all as to what each member of Federal Council believed. Further*

it says nothing whatever as to the information known to eech

member of Federal Council and upon which such belief (if held)

was based. In view of what had been said at the earlier

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! l

hearing and in view of the adjournment of the matter for one . .

week at Mr. Einfeld's request to enable him to put the mat%er

in order, i find it most surprising that this course should have been followed instead of fililg further affidavits or

calling W.. rmesses. l

One possible explanatioq of the course followed

is that the members of Federal Council (other than the depcr,ent

Wallace) were not prepared to give evldence (a) that at the material time they believed that tle levy had been endorsed

by General Meetings of a majority of the Eranches, and (b)

setting out the information known to them at the time and u&on

which any such belief was based, No alternative explanakon

of the failure to place such evidence before the Court was

offered either by counsel or by Norman Alexander Wallace ?lho

gave oral evidence in the proceedings. Accordingly I m

left without admissible evidence from those persons who know

the facts on a matter central to the very way in which the case

was put for the applicant.

Paragraph 14 of the later affidavit of Norman

Alexander Wallace deposes to his sincere belief that the

.	resolution imposing the levy "had been endorsed by all the
Branches with the exception of New South Walest1 and I accept
his evidence as to his belief but t'nat belief was expressly

based upon a statement to hlm by ItN. Gallagher, General

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9.

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i	Secretary of the Federation that he spoke to all Stace
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Secretaries after their respectlve Branch meetings following
the impositlon of the levy and each of the State Secretarles
Informed Mr. Gallagher that the levy had been endorsed by his
Branchtt. lie affidavit as to the statement by N. Gallagher to
! I	the deponent Wallace is admissible evldence of the basis fola the
belief by Wallace.

However, it is not admlssible evidence as to the

truth of the contents of the statcrnent by N. Gallagher to the

deponent, i.e. it is not admissible evidence (i) that

N. Gallagher "spoke to all State Sscretaries after thcir

respective Branch meetings!! or-(ii) that "each of the State

Secretarits informed Mr. Gallagher that the levy had been

endorsed by his Branch". Further, there is no material at

all before the Court (even inadmissible evidence) as to what

the General Secretary himself belimed.

There is no admissible evidence from any source

that the General Secretary was ever told by each State

Secretary that a General Meeting of the Branch had "endorst (Itt

the levy Furportedly imposed by ths Federal Council. Afttr

the adjournnient to enable the necessary material to be properly

presented before the Court the only material on this issue put

I '	before the Court was hearsay. Fupther, it is not ipherently
probable that any such belief was held by each State Secretary
in respect of the Branches in New South Wales, South Australla,
Western Australia, Tasmania and the Australian Capital Territory.
No meeting was held of the New South Wales Branch and In i h e
other four Branches the members in general meeting not only
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did not endorse the levy (as found in the S . 159 proceedings)
but, on the material now before the Court, may well have bccn

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10.

unaware that they had the right to even consider whether to

endorse the levy or not. As J. B. Sweeney J. said in hls

judgment (p. 16) in the S. 159 proceedings, the resolution of

the South Australian General Meeting was consistent with various

possibilities including IIa belief that the Branch and its nercber

were bound by the decision and had no right to confirn or

otherwisett. It may be that the General Meetings In tk;? other

three Branches similarly believed that they ttwcre bound hy the

(Federal Council) decision and had no right to conflrm or

otherwisell. Thls possibility cannot be ignored on the present

state or" the material before the Court as there is evlSence of

the way tn which the members were misled in the two Ei-anchcs

(Victoria and Queensland) which were held in the S. ' l59

proceedings to have endorsed the levy at	a General Meeting -
a matter I shall deal with now.

In Victoria, where NI. Gallagher the General Secretary

was also State Secretary, a newsletter authorised by Nr. Callag?

could only have misled them into believing that the levy rlad

already neen authoritatively decided upon. The newslet-kr,

issued on behalf of the Victorian Branch before the Gcnc~-c.l

Meeting scheduled for 10 December 1974, said :-

It . . . because of thls and the cost incurred

by the necessity to intervene In Ncw South i:Tal<s

to preserve the Federation, the Federal Councll

. decided to introduce a 84.09 Rehabllltatlon Levy

'to recover some of the expense involved. Thls Levy applies to all Federatlon members".

It will be seen that the newsletter referred to the matter of

the levy as having been ttdecidedll and further stated t k t "Tkls

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i I 11.

Levy applies to all Federation nembersll. This statcmnt in

my view is misleading in that it would be likely to lead the

members t o believe that they were bound by the declsion of

Federal Council and had no right to confirm o r reject it.

In Queensland an attempt at a General Meeting to

rescind the endorsement was ruled out of order by the Chairxan

on the express basis that "the Fedlx-al Management Commlttee

had the right to impose levies undm Rule 8" . The re1evar.t

minutes show that at the Queensland General Meeting	on	I
28 January 1975 there was

'!put forward a further notlce of motlon that this

meetmg rescind the *28.00 levy lmposed by the

Federal Management Co;lunlttee and erdorsed by this

branch. The chairman informed the meetmg that

both of these motions would be dealt wlth at the

next general meeting".

At the next general meeting (on 25 February 1975) when that

notice of notion was reached the Chairman ruled the notice *If

motion out of order in the passage which I have just quotec.

A motion of dissent from the Chairloan's ruling was moved arid

defeated. At the next Queensland General Meeting on 25 Mzrch 1975

there was a further attempt to raise the question of the Fderal

levy. It was -

"moved that the $8.00 levy was unconstltutional.

The President, at this point, called Brother

Johansen to order and said that the mattcr had

been previously dealt with on a number a f occasims

and he ruled this motlon out of order."

The Court does not know whether the General Secretary

was ever informed by the Queensland Branch Secretary or ally other

Queensland Branch official of the notice of motlon glvel: ct the

P

General Meeting on 28 January 1975 that thc levyresolutlon cl?oul.d

rescinded. The absence of any evidence as to whether this was

known to the General Secretary is material because he sent to

all Branches (by letter dated 6 February 1975) an l'~pcn l e t t e r

to all members of the Federation". That letter included the

following passage :-

'I . . . to help meet these costs the Federal Council

decided to introduce a $4.00 Rehabilltation Lex~.

l	This has been endorsed by all states at thelr
general monthly meeting;, and zpplies to all
members of the Federatlon. The levy will lasi; for two terms".
If at the time of sending the letter the Gc-ner?:

Secretary had knowledge of the Queensland notice of motlo~~

then such an open letter would appear to have been misleading

but there is no evidence on this aspect - another illus:.ration

of the unfortunate dearth of evidence. Two persons know vhat

conversations (if any) the Queensland State Secretary haci

with the General Secretary on the subject of whether the .'.wy

had been mdorsed by a General Mceting of the Queensland liranch.

They are the Queensland State Secretary and the General

Secretary and no oral evidence o r affidavit from either was

placed before the Court. Further material as to the mlsleading of the

members is that the Branches to wnom the General Secretary's

open letter was sent apparently included the A.C.T. Brancii In

which, at a General Meeting on 25 February 1975, there was

I an unsuccessful attempt to have the matter of the levy

circulated to the members. A motion was moved and seconc?ed

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that "the question of a $4.00 subscription rehabilitation l evy

be circulated to all B.L. In A.C.T. and discussed on a next

General Meeting". That motion was lost. It is atleast

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l possible that the members of the A.C.T. Branch at that meetlng

: !	were misled by the General Secretary's open letter lnto
I '	accepting his misstatement that "This has been endorsed by all

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states at their general monthly meetings, and applies to all

members of the Federation. The levy wlll last for two terms11.

Any such belief might well have dlscouraged members from votlng

in favour of the motion that Ifthe question of a $4.00 subscT1ptlol:

rehabilitation levy be circulated TO all B.L. in A.C.T. and

discussed on a next general rneetingll.

The open letter to members from the General Secretmy,

dated 4 February 1975, to whick 1 have referred was quite wrong

in asserting that the levy "has been endorsed by all states at

the general monthly meetings, and applies to all members af

the Federation. The levy will last for two terns". Further,

there is EO evidence at all before the Court that at that tune -

or at any other time - the General. Secretary belleved thzt

statement to be true. This was not an error in an unlmpo-cant

matter. It went directly to the i'inanclal obligations of

members a d that in turn affected the rlghts of members ur.&:r

i1 the rules including the right to stand for office. The

i	importance of the matter is illustrated by the €act that iil
!	the S. 159 proceedings it was submitted on behalf of the
Federation "that the nomination of B. V. Rix was lnvalid because
Rix and his two nominators were not financial members of the under consideration.

The requirements of the rules as to the proper

way in which a levy may be imposed are of vcry considcrable

importance. They a r e p l a i n l y c o n s i s t e n t with the gene ra l

po l icy o f the ru les o f ves t ing the supreme cont ro l o f the

Federation - b o t h i n g e n e r a l and p a r t i c u l a r l y i n money

matters - i n t h e members. I adopt what was s a i d by

J. B. Sweeney J. i n his r easons fo r judgment i n t h e S. 159

proceedings (at pp. 4 - 5 of the typed copy) :-

"Under t h e rules, t h e suprcme control of t!le ul?lon

is v e s t e d i n t h e members of the union. SubJPCt

t h e r e t o , t h a t supreme cont ro l i s t o be e x e r c l s e l

on behalf of the mec.bers by t h e Fer5era.l C o u n c ~ l ,

which has very mporta:?t general powers in add l ' l on

t o t h e s p e c i f i c power t 3 m p o s e l e v i e s i n S u l e E ( n ) . .

. . . . Agenda papers are t o be prepared ar.d sLbnut te t

t o the Council . Each branch of the Federnt-)or

is t o r e c e i v e a copy of the agecda paper. Th&

r u l e s t h e n p r o v l d e t h a t d c l e g a t e s t o t h e Fedpra:

Council must vote In amordance wlth the 1nntr3.:ctions

of t he l r b ranch on a l l m a t t e r s c o n t a i n e d I n he

agenda paper.

It i s common ground t h a t t h e questlor, of a l e v y

d id not appear on t h e agenda paper and hence a

r e so lu t ion o f t he Fede ra l Comci l i t s e l f would

n o t b e s u f f i c i e n t t o lmuose the l evy . Rehence

is placed on Rule 8 ( 4 ) whlch reads 'Federal Co:rcll,

when assembled, may a r r l v e a t a dec is ion whlch

no t on the agenda, SUC? d e c i s i o n t o be endorsed by

the major i ty of the branches ' .

There must then be a d.clsion, imposing a levy,

reached by the Federal Councll when assembled

and such decision must be endorsed by t h e ~ ~ a j o ~ ~ t y

of branches f o r It t o $e e f f e c t l v e and operete ' .

The provisions of Rule 8 a re r e ln fo rced , as f a r 2s

the expendi ture of money i s concerned, by Rule 16 which a s f a r

as mater ia l provides as fol lows :-

"16. Property and funds of the Federation.

. 1. ...

2. Before any money 1s passed by t h e F e d c r d

Council or Management Conmlttee f o r s p e c l a l

purposes the proposal to cxpcrid such sum sl1.:11

be plnccd before the different Branches of 3 ~ .

Federat lon by sending a n o t l c e i n w r l t l n g t o cach

branch secre ta ry , s ta t ing the na ture and r e x o n

f o r such expenditure.

The respec t ive Branch Secre ta r ies sha l l

thereupon convene meetings of t h e w r e s p e c t l v e

"Branches for the purpose o f re jec t ing o r

endorsing the sald proposal.

I Such meeting i s t o be convened wl th in

four teen (14) days of rece lp t o f the sa id no t lce .

The dec is ion of t he ma jo r i ty o f the Bracches

s h a l l be the d i r ec t ion t o t he Fede ra l Counc l l o r

Management C o r n i t t e e a s t o t h e manner i n whlch t o

act i n respec t o f such proposal.

3. This r u l e shal l no t app ly t o t he d l sbu r swan t

I 1 of the ordinary expenses cornected with o r l r c l t i x t a l

I

' l t o t he conduc t , managenent, a d n n i s t r a t l o n o f t;-,?

o r d i n a r y a f f a i r s o f the Federat ion o r of the

respective Branches thereof1!.

In addi t ion Federal Rule 25, so fa r as mater ia l , p rovides

I ! as fol lows :-

I ' "25. Control of Federal Councll and Wanagemcnt

Committee by members.

l In a d d i t i o n t o any other. method of control of t:e

Federal Council and t h e Manageoent Comut tee by

members the fol lowing provis ions shal l be obser?sd :

1. Federal Councll and the Management Corrmltt-.e

sha l l r e p o r t t h e i r e c t i v i t i e s and proceedings

members by -

( a ) . . .

(b) . . .

( c ) r epor t ing t c branch meeting follovin:

Federal Councll.

The Gcnernl Secretary shall take sucn

s t e p s as a re necessa ry t o s ee t ha t T L S

is done''.

The d u t i e s of the Genera l Secre ta ry a l so inc lude the fo l lcwirg

(Federal Xule 11 ( c ) ) : -

" ( c ) He shal l conduct and f i l e a l l correspondecce,

.make minutes of a l l resolutions passed and other

bus iness t ransac ted a t any nleetlngll.

Mr. Einfe ld was asked a t t h e c a r l i c r h e a r i n g t o

examine " t h e r u l e s i n g e n e r a l " i n p u t t i n g 111s c a s e t o t h c Court

and h i s a t t e n t i o n was drawn t o Rule 25 i n p a r t i c u l a r , b u t he

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16.

failed to do so on the resumed hearing. Looking at the rules

i without the benefit of any argument it apprars that there was

a duty on the General Secretary to ensure that the Branch

members in the General Meetings of the Branchcs were given the

opportunity to consider the Federal Council resolutlcn as to

the levy with a view to that matter being decided in accordance

with the views of a majority of th? Branches. The later

affldavi h exhlbits %orrespondence ( l l I W ~ t l l ) between the General

Secretaq and the Branch secretaries of the Federation relating

to the le-lyll. On my examination of that corrcspondcnce t i lpre

is nothing to suggest that the General Secretary took any steps

to ensure that the members in General Meetings of the Erallches

were give2 that opportunity to ccnfirm or reject the lev,.

1

Some of the deficiencies in the evidence t o v:hLch

I have referred may be summarized as follows :-

l. The statement in paragraph 13 of the later affLdldavlt

is admissible evidence of the lnfornation upon vnlch

Norman Alexander Wailace based his belief. 15 is not admissible evidence that the General Secretary in facT

!Ispoke to all State Sec-etaries after their

respective Branch meetings following the impositlon

of the Levy".

2. Nor in it admissible evidence that "each of the State

Secretaries lnformed Mr. Gallaghcr that the levy hzd

been endorsed by his branch!!.

3. There is no other evidence before the Court that I'e2Ch

of the State Secretaries informed the General

Secretary that the levy had been endorsed by his branch".

.

17.

4. It would not have been correct for the State

Secretaries of any of five Branches (i.e. the

Branches other than Victoria and Queensland) to have informed the General Secretary that the levy

had been endorsed at a General Meetlng	of hls
Branch.

! *	5.	There is no evidence	of "a bellef formed by thE
I '

State Secretaries that the Branch had endorsed

!

the resolution and the levy". On the evidencc at present before the Court it appears unlikely that the five Branch Secretaries would all have

held a belief that a General Meetlng of the

Branch had endorsed the levy.

6.         There is no evldence that the General Secretary

believed that the levy 'lad been endorsed by a

majority of the Branches.

7.         There is no evidence bzfore the Court that the

General Secretary or any other member of the

Federal Council ever took proper steps to ensure
that the resolution of Federal Council	relating to

the levy was considered by a General Meeting of

each Brnnch with a view to deciding whether to endorse

or refuse to endorse thc levy (as required by the

. .rules).

On the material before the Court at this stagc would not be prepared to make any order I

of validation as sou::ct.

.i	i
I ! 18.

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I n any event I do not consider t ha t any s u f f i c j e n t

i reason has been advanced as t o t h e need for an o rder under

S. 171 C, a matter with whlch Mr. Ein fe ld s a id on t h e e a r h e r

hear ing tha t he would dea l . It is t r u e that It was formally

submitted by Mr. Ein fe ld " tha t i f t h i s Court does not make a

val idat ing order the Federat ion could be successful ly sued for

t h e amouxts". However tha t submjssion was not zdvancec! as

p a r t of %he case put by the appl icant and was only made i:l

answer t s a spec i f i c ques t ion from t h e bench a t t h e end 01'

Mr. Einfe ld ' s address on the resmed hear ing . It was not

e labora ted upon i n any way. . It is unsupported by any

evidence tha t any member or former member i s s u n g o r h a s

threa te r led to sue the Federa t ion f o r t he r e tu rn o f any of

the amour~ts of money i n payment of t he i nva l id l evy . On the

c o n t r a r y t h e l a t e r a f f i d a v i t contcAned the following para1;xph:-

'l31. I have made enqui r ies among e l e c t e d o f f 1 , : u l s I

of the Federat ion In each State and t o the b e s b 0-

my knowledge t h e r e have been no l ega l F roccedugs

brought agalnst the Felerat lon o r any of i t s

o f f i c i a l s , by any rnexbdr of the Federat lon for

I refunding of the levy!!.

I n h i s a s d r e s s M r . Einfeld submitted that l lpcople have pc.

t he l evy appa ren t ly no t unde r p ro t e s t i n any meaningful sense.

They have not sought	t o g e t It bazk	o r sought t o have	it c r t
aside".

Fur ther , it does not appear to me t h a t any

..

d i f f i c u l t y will a r i s e by reason of the Federat ion sulng t o

recover contr ibut ions and bclng met w i t h an a t tenpted spt off

of the l evy payment aga ins t o ther amounts due. I base tha t .<-le-.;

upon the evidence of M r . Wallace, the Federal Treasurer of t h e

appl icant Federa t ion tha t :-

“No person has ever been prosecuked f o r arred1-z.

It is not	our	pol icy	. . . It i s our pol icy n o c
t o sue” .

. .

Accordingly i n my vic;r t he mn te r ln l f a J l s t o e::tL-bli:

any su f f i c i en t r ea son as t o v l l y an order should be msde z r d ,

as I have alrcady sald, In thc ebscnce of arguwnt on t h e

mat te r , I am d i sposed t o t he view That an app11czr:t under

S. l71 C has t o s a t i s f y t h e C c u r t n o t mzrely thal; an mv: i?.d:t:r

has occuryed and that an order v m d d not do s u b n t a n t l a l

i n j u s t i c e w i t h i n t h e meaning of ihe s c c t i o n bct ::l~o thl

t h e r e is some good reason why an order should be m d e .

I n my view t h e a p p l l c n t i o n should be zdjourned 0::

the grountl t h a t t h e a p p l i c a n t h a s f n i l c d t o make o u t a C C L C

bu t l eav ing it open t o t h e applicant t o have the ma t t e r : ‘c-

l i s t e d f o r f u r t h e r h e a r i n g	i f	i t	d e s i r e s	t o p lace	further>
mater ia l before the Cour t .

In t he c i r cums tances do not express any o p u ? - : ~

as t o whether orders in the form sought a r c wl th in t h e C c x t ’ s

I

power and, i f s o , whether they a m approprmte

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