Jess v Scott

Re: MICHAEL PATRICK JESS
And: R.T. SCOTT; J.G. KIDD; L. CARMICHAEL; G. CAMPBELL; R.A. BRUGGY; W.
MARTIN; E. LIPSCOMBE; F. MAURICE; D.A. BEER; W.R. ARSCOTT; F. McGOWAN; R.B.
HAWKES; G. HARRISON; R.M. ADAMSON; H. MALCOLM; P. JOHNSON; J.F. HALFPENNY; J.
O'NEILL; R. POINTER; M. TUMBERS; F. BASTOW; A.J. MARKS; B.R. BURNS; J.A.
VAUGHAN; M.K. HILL; J. WOODS AMALGAMATED METALS FOUNDRY & SHIPWRIGHTS' UNION
Nos. 1 and 9 of 1984
Industrial Law
14 IR 341

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
INDUSTRIAL DIVISION
Wilcox J.

CATCHWORDS

Industrial Law - Union elections - Publication of documents during election period - Whether publication contravened rules of union - Whether individual officers are personally liable to bear expenditure incurred.

Conciliation and Arbitration Act 1904 ss.2, 141, 171C, 197A.

Evidence Act 1905 ss.7A(1), 7B.

Scott v Jess (1984) 3 FCR 263, Brophy v Mapstone (1984) 56 ALR 135, Tanner v Maynes (1985) 63 ALR 197, Allen v Townsend (1977) 31 FLR 431, Mills v Mills (1938) 60 CLR 150, Howard Smith Limited v Ampol Petroleum Limited (1974) AC 821, Thompson v Randwick Municipal Council (1950) 81 CLR 87 referred to.

HEARING

SYDNEY

#DATE 23:7:1986

In matter No. NSW 1 of 1984

Counsel for the Applicant: Mr J A McCarthy and Mr G W Watson

Solicitors for the Applicant: Messrs T V Martin & Co

Counsel for the Respondents: Mr D M Ryan QC with Mr J W Shaw and Mr J McGrath

Solicitors for the Respondents: Messrs Turner Freeman

In matter No. NSW 9 of 1984

Counsel for Applicant: Mr D M J Bennett QC with Mr J A McCarthy

Solicitors for the Applicant: Messrs T V Martin & Co

Counsel for the Respondents: Mr D M Ryan QC with Mr J W Shaw

Solicitors for the Respondents: Messrs Turner Freeman

ORDER

The Application be dismissed.

The applicant pay to the respondents their costs of the proceedings.

Note: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

JUDGE1

During recent years elections for offices in the Amalgamated Metals Foundry and Shipwrights' Union -- now the Amalgamated Metal Workers' Union -- have been notable both for the vigour with which they have been fought and for the extent of the litigation which they have engendered. These cases require consideration, yet again, of matters related to elections held in late 1983 and early 1984 in respect of positions within the Tasmanian and Queensland branches of the union and for the federal position of National Organiser. The total election period, in connection with those positions, extended from 15 August 1983, when nominations opened for positions in the two branches, to 17 February 1984 when the last ballots closed. The union is, of course, an organization registered under the Conciliation and Arbitration Act 1904.

The present judgment relates to two separate proceedings: what remains of matter NSW 1 of 1984 and the whole of matter NSW 9 of 1984. Matter NSW 1 of 1984 depends upon s.141 of the Conciliation and Arbitration Act; matter NSW 9 of 1984 upon s.171C of that Act.

The course of the proceedings
Matter NSW 1 of 1984 was commenced on 1 February 1984 when Beaumont J granted an order nisi addressed to the respondents, the 22 members of the National Council and the four National Trustees of the organization, calling upon them to show cause why orders should not be made requiring them to perform and observe the rules of the organization by refraining from using or permitting any other person to use the property, funds and resources of the organization to support or to promote a candidate or a group of candidates or to defeat a candidate or a group of candidates in ballots for certain offices then being contested. The order nisi referred to two documents, each described as a "National Newsletter", each purporting to be authorized by the first respondent, Mr R T Scott, the National President of the organization, and dated respectively 24 January 1984 and 25 January 1985. The order nisi sought a declaration that the decisions, directions and resolutions of such of the respondents as authorized the publication and distribution of these newsletters were in breach of the rules of the organization and an order that Mr Scott and such other of the respondents who authorized the publication and distribution of the newsletters repay to the organization the printing and distribution costs incurred by it.
At the time of granting the order nisi Beaumont J made an ex parte injunction restraining the publication or distribution out of the property, funds or resources of the organization of any publication supporting or opposing a particular candidate or group of candidates.
Upon the return of the matter on the following day the respondents consented to the continuation of that order until further order and the hearing of the matter was adjourned until 23 February 1984. On that day Beaumont J granted the applicant leave to amend the rule nisi to include claims for orders for the repayment to the organization of moneys expended in relation to the publication and distribution of a "National Newsletter" dated 5 December 1983 and in respect of the printing of an issue of "The Metalworker" dated 1 February 1984 which, because of the injunction, was either not distributed at all or not fully distributed.
Beaumont J heard argument upon the jurisdiction of the Court to entertain the Application. On 2 March 1984 his Honour held that there was jurisdiction. On 30 March 1984, after a further hearing, for reasons which he gave, Beaumont J made permanent injunctions. His Honour did not at that time deal with the applications for repayment of expenditure.
An appeal against the orders made by Beaumont J on 2 and 30 March 1986 was allowed: see Scott v Jess (1984) 3 FCR 263. The Full Court held that, whatever the justification for the injunctions during an election period, the orders should not have been made at a time when no elections were current.
The decision of the Full Court was announced on 5 October 1984. Thereafter the matter was mentioned before Beaumont J. Although, in a technical sense, it may have been correct to regard the case as being part heard by his Honour, it was more convenient for the matters remaining in issue to be heard by another judge. With the concurrence of Beaumont J the case was fixed for hearing before me on 27 and 28 March 1985. However, on 5 February 1985 and upon the joint application of the parties, those dates were vacated and the matter was fixed for hearing on 24, 25 and 26 June 1985. By consent directions were made for interlocutory steps -- including the discovery of documents and the administration of interrogatories -- by particular dates.
However, shortly before the projected hearing date, on 13 June 1985, the respondents had the matter listed for mention. They revealed that they had been waiting since March for a reply to a request for further particulars of the applicant's points of claim. On the applicant's side nothing had been done to prepare the matter for trial and, without particulars, the respondents could not be ready. Consequently, I was forced once again to vacate the hearing dates. I made new directions and the hearing eventually proceeded on 18 and 19 November 1985, 13 months after the Full Court decision.
During final addresses on 19 November 1985 I learned for the first time of the existence of matter NSW 9 of 1984. That proceeding had been commenced on 5 March 1984, the parties being identical to those in matter NSW 1 of 1984 save that the organization itself is an additional respondent. The Application in this matter sought, amongst other relief, orders for the repayment by the individual respondents to the organization of two sums, totalling $70,884.87, said to have been paid or incurred by the organization in respect of printing and distribution costs. The Application further sought orders that the matter be consolidated with matter NSW 1 of 1984, evidence in that matter being evidence in matter NSW 9 of 1984.
Shortly after it had been commenced matter NSW 9 of 1984 had been mentioned upon a couple of occasions. But it was then lost sight of. On 8 August 1985 an officer within the District Registry drew the matter to the attention of the applicant's solicitors. He was informed that the continuation of the matter would depend upon the outcome of matter NSW 1 of 1984. Despite the reference to consolidation in the Application itself, no action was taken to arrange for the listing of matter NSW 9 of 1984 concurrently with matter NSW 1 of 1984 or even to draw it to my attention. But for a casual reference to the matter by counsel I would have proceeded to determine matter NSW 1 of 1984 in ignorance of the existence of the other claim.
When I learned the position I indicated my view that it was highly undesirable that there be two separate trials, leading to two separate judgments, of what was, in substance, a single claim; although a single claim founded, alternatively, upon different provisions in the Act. I indicated that I would not give judgment in matter NSW 1 of 1984 until after the hearing of matter NSW 9 of 1984 and I caused matter NSW 9 of 1984 to be listed for mention. There was a question whether the Court should permit the applicant to administer interrogatories in that case, no advantage having been taken of the opportunity to interrogate in the earlier proceedings. In the event, and upon certain terms, I granted leave and at the final hearing, which took place on 23 June 1986, certain answers to interrogatories were tendered in matter NSW 9 of 1984.
At the final hearing of matter NSW 9 of 1984, by consent, I admitted into evidence in that matter the whole of the evidence in matter NSW 1 of 1984. I also acceded to an application made on behalf of the applicant to re-open his case in matter NSW 1 of 1984 so as to tender the particular answers to interrogatories provided in matter NSW 9 of 1984 which had been tendered in that case. In the result, the evidence finally before me in respect of each matter is identical.
Little evidence was in fact adduced. All of it was tendered on behalf of the applicant. The respondents adopted the course of putting the applicant to proof of the facts upon which he relies and of arguing the legal effect of that material. The major evidence consists of 25 exhibits, 6 of which are extracts from answers to interrogatories. No oral evidence was given. Only one affidavit was read, the affidavit of the applicant dated 2 February 1984 and filed with the initial order nisi. Yet, despite every co-operation by the Court, there was a delay of over 20 months between the delivery of judgment in the Full Court and the conclusion of the last hearing before me.
The problem is not only one of delay. During that 20 month period there have been numerous applications to the Court, whether of a formal or informal nature. Most of these applications have been made on behalf of the applicant. Many have been necessitated by the failure of the applicant to comply with previous directions or to take advantage of leave previously granted. This must have resulted in considerable wasted expense. Wasted expense is of particular concern in litigation governed by legislation which restricts the Court's ability to make costs orders appropriate to protect an unoffending party against expenditure caused by the conduct or default of the other side: see s.197A of the Conciliation and Arbitration Act and Brophy v Mapstone (1984) 56 ALR 135. It should not be necessary to remind the legal advisers of a party having the burden of proof of a case of their obligation, at an early stage of the proceedings, to address themselves both to the nature of the case which they need to make and to the manner in which they hope to do so.

Section 141
Section 141 of the Conciliation and Arbitration Act relevantly provides:

"141(1) A member of an organization may apply to the Court for an order under this section in respect of the organization.

(1G) An order under this section may give directions for the performance or observance of any of the rules of an organization by any person who is under an obligation to perform or observe those rules.

(1H) The Court has jurisdiction to hear and determine an application under sub-section (1) but, before making an order under this section, the Court shall give any person against whom the order is sought an opportunity to be heard.

(2) ...

(3) ...

(4) A person shall not fail to comply with a direction or order of the Court under this section.

Penalty: $400.

..."

The applicant contends that, in authorizing the publication of the four documents referred to in the amended order nisi the respondents, or some of them, contravened the rules of the union. The legal principles governing such a submission, and a claim for orders under s.141(1G) for the rectification of a contravention by the recoupment of expenditure improperly incurred, were considered in the Full Court appeal in this case, Scott v Jess, and, more recently and more briefly, in Tanner v Maynes (1985) 63 ALR 197. I can deal with them shortly.
Rule 6 of the rules of the organization confers upon the National Council, subject to the powers and decisions of the National Conference and the rules themselves, "the care, control, superintendence, and management in all respects of the affairs, business, funds and property of the Union". The rule goes on to refer to certain specific powers including the power to "expend such moneys as may in the opinion of the Council be necessary" and to "control and supervise the work of the National Officers of the Union".
The rules confer no specific power to communicate with members upon union affairs, or to expend moneys for that purpose, but communication with members is clearly a necessary part of the management of the affairs and business of the union. Subject to two qualifications, it is for the National Council, and the National Officers of the union who carry out their duties subject to the control and supervision of the National Council, to judge the manner and frequency of communications with members and the extent to which union funds should be expended for this purpose. In making judgments upon those matters they are accountable to the members of the union through the ballot box.
The two qualifications to which I have referred are, first, that, in exercising their discretion, the officers and members of the National Council must act bona fide in what they consider to be the best interests of the union, and not for any collateral purpose: see Allen v Townsend (1977) 31 FLR 431 at pp.483-488 and Scott v Jess at pp.269,287, noting the connection drawn in those references between the principle underlying this qualification and that governing the actions of company directors.
The second qualification is really but a particular application of the first: that it will not normally be proper for funds of an organization to be expended upon the support of, or upon opposition to, a candidate for office within the organisation. As Gray J pointed out in Scott v Jess at p.288, the qualification cannot properly be stated in absolute terms. There may be cases in which it is permissible to expend union funds to advance the interests of a candidate. Gray J cited as an example a campaign within a particular branch to secure the election of a candidate from that branch to a federal office. But, generally, the expenditure of union funds in a campaign to support or to oppose a particular candidate or group of candidates is improper: see Scott v Jess pp.270-272, 287-288, Tanner v Maynes at pp.205-206. It can be described as the pursuit of a collateral purpose. In the particular context of organizations registered under the Conciliation and Arbitration Act it can also be seen as breaching the requirement of "fair play" implied by s.2 of that Act: see per Evatt and Northrop JJ in Scott v Jess at p.272.
It is not suggested, in the present case, that the printing or distribution of the subject material was carried out otherwise than bona fides, in the general sense of that term. As was pointed out by Gray J in the Full Court, at p.289, there was no evidence at that stage of the case "to show lack of good faith or the existence of some ulterior or extraneous purpose" in respect of any decision to publish the material. No such evidence has since been adduced. This qualification upon the exercise by the National Council, and by the officers, of their powers of communication may be ignored.
The application of the second qualification depends upon the purpose for which expenditure was incurred. There is no evidence of subjective purpose but it is said on behalf of the applicant that a purpose to assist some candidates and to oppose others is to be inferred from the terms of the documents themselves. If, in relation to any particular document and upon a fair reading thereof, it appears that the substantial purpose for which it was printed and distributed was either to advance or to reduce the prospects in the then elections of any candidate or candidates, the second qualification applies. The printing and distribution of that document would be outside the powers conferred by the rules upon the National Council and the officers and the Court would be empowered to make an order under s.141(1G) for the rectification of the breach.
I take the phrase "substantial purpose" from Scott v Jess at p.277, the adjective accepting that there may be more than a single purpose underlying a decision to incur particular expenditure and that it is not enough if the invalid purpose is merely incidental to a valid dominant purpose. The test of "substantial purpose" has been used in two cognate fields: in relation to the exercise of powers by company directors -- see Mills v Mills (1938) 60 CLR 150 per Dixon J at pp.185-186 and Howard Smith Limited v Ampol Petroleum Limited (1974) AC 821 at pp.834-836 -- and in respect of the exercise of administrative powers conferred by statute -- see Thompson v Randwick Municipal Council (1950) 81 CLR 87 at p.106 and the discussion in de Smith's "Judicial Review of Administrative Action" (4th ed) at pp.329-332. The test avoids the two, equally unacceptable, extremes: a test which would free officers from liability for expenditure which would not have been incurred in the absence of an invalid dominant purpose, merely because they also had a subsidiary legitimate purpose; or a test which would fix with liability officers who incurred expense in pursuit of a proper purpose which happened to provide some incidental benefit to themselves.

Section 171C
Section 171C of the Conciliation and Arbitration Act reads as follows:

"171C(1) An organization, a member of an organization or any person having a sufficient interest in respect of an organization may apply to the Court for a determination of the question whether an invalidity has occurred in the management or administration of the organization or of a branch of the organization or in an election or appointment in, or the making or alteration of the rules of, the organization or a branch of the organization and the Court has jurisdiction to hear and determine the application and to make such declaration as it thinks proper.

171C(2) Where, in proceedings under sub-section

(1), the Court finds that an invalidity of the kind referred to in that sub-section has occurred, the Court--

(a) may make such order as it thinks fit to rectify or cause to be rectified the invalidity, or to negative, modify or cause to be modified the consequences in law of the invalidity, or to validate any act, matter or thing rendered invalid by or as a result of the invalidity;

(b) shall, before making such order, satisfy itself that such an order would not do substantial injustice to the organization or to any member or creditor of the organization or to any person having dealings with the organization;

(c) where any such order is made, may give such ancillary or consequential directions as it thinks fit; and

(d) may determine what notice, summons or rule to show cause is to be given to other persons of the intention to make such an order, and whether and how it should be given or served and whether it should be advertised in any newspaper.

171C(3) This section applies--

(a) to an invalidity whenever occurring, including an invalidity occurring before the date of commencement of this section; and

(b) in relation to an organization which is an association -- to an invalidity occurring in or in connection with the association before the date on which it was registered as an organization."

The addition to the Act of this section was a recommendation contained in the Report of the Committee of Inquiry on Co-ordinated Industrial Organisations delivered to the then Government in 1974. That Inquiry was conducted by Sweeney J of the Australian Industrial Court. The subject of the Inquiry -- stemming originally from the decision in Moore v Doyle (1969) 15 FLR 59 -- was the desirability of establishing a system of organizations and/or registration of industrial organizations which would enable the one body to represent members in both the Commonwealth and State arbitration systems. The report contained a series of recommendations designed to enable unincorporated branches of federal organizations to be registered under State law. It went on to deal with the problem of curing invalidities. The thinking behind the recommendations in this area -- now enacted as Part 1XA (ss.171A-171G) of the Act -- appears from this extract from the Summary of the Report:

"The Committee then turns to the question of curing invalidities.

It records 'the melancholy fact' that reported cases disclose that any investigation of the affairs of an organisation seems to reveal nullities and irregularities in the conduct of the organisation. This applies to both employer and employee organisations, to State registered and federally registered unions alike.

It refers to the fact that the validity of any given act may depend on all that has gone before and that the validity of acts done up to forty years ago have had to be examined.

An organisation is likened to a house of cards -- if a bottom card is withdrawn, as in invalidity, the whole structure may collapse.

Organisations particularly of employees are conducted by men and women who may be expected to have little expertise in corporation law.

Special provisions have been made in Uniform Companies Acts to cure invalidities.

In the case of other corporations the law has evolved a doctrine of the validity of acts of de facto officers which do not apply to organisations under State Acts or the Australian Act.

A series of amendments to the Australian Act is then proposed which are designed essentially:

(a) to validate acts of persons being or purporting to be officers and committees, where the acts are done in good faith.

(b) to allow the Court to make orders validating and correcting irregularities.

(c) to provide that actions done more than four years ago are to be deemed to have been done validly.

The provisions contain safeguards enabling the Court to except from validating provisions a particular action if validating it would cause substantial injustice."

In the body of the report, at p.41, the proposed s.171C is described as giving to the Australian Industrial Court "power to rectify or cause to be rectified an invalidity".

Having regard to the history of the section, counsel for the respondents contend that it ought not to be interpreted in such a manner as to enable the Court to make orders against individuals, even officers of an organization, requiring them to make good expenditure which has been improperly incurred, that the purpose of the section is to wipe clean the slate and to allow organizations to proceed in future free of technical invalidities which have accrued in the past and which could not otherwise easily be cured. To that end, it is said, the Court was given the widest possible powers, including the power to direct individuals to take any steps considered to be appropriate.
The words of s.171C(2)(a) are sufficiently wide to encompass any order designed to rectify an invalidity, of whatever nature and however caused. But, having regard to the history of the section, there is force in the submission of the respondents that Parliament did not envisage that the section would be used as a mechanism, additional to s.141, for enforcing rules and that s.171C(2)(a) was intended merely to allow latitude in designing the orders necessary to cure any invalidity or to negative its consequences.
However, it is not necessary to decide in this case whether s.171C is capable of sustaining the orders sought by the present applicant. As I have pointed out, the evidence in the two Applications is now identical. If that evidence demonstrates a breach of the rules of the union, occasioned by identifiable individuals and causing loss to the union, s141(1G) confers upon the Court ample discretionary power to make an appropriate rectification order. If that case is not made out, no order could be made under s.171C. If the facts are proved but it is held undesirable, upon discretionary grounds, to make an order under s.141(1G), the same result would apply under s.171C(2). That also is a discretionary power.

National Newsletter 5 December 1983
I turn now to the facts relating to each of the four publications complained of.
According to his answers to interrogatories -- which answers, of course, furnish evidence only against himself -- Mr R T Scott, the first respondent and the National President of the union, gave oral instructions on or about 4 December 1983 to the union's Publicity Officer, Mr Chris Ray, to prepare and to have distributed a national newsletter emphasising the part played by national officials of the union in negotiating the economic accord between the trade union movement and the Australian Labor Party, and to the relationship between the union and the Hawke government since the 1983 federal election. A draft was prepared and, as Mr Carmichael also admits, was discussed with Mr Lawrence Carmichael, then Assistant National Secretary of the union and the third respondent herein. The discussion apparently took place on 5 December 1983. Both Mr Scott and Mr Carmichael admit that they approved the draft.
The Newsletter read as follows:

"Workers must have Unions they can rely on

LIES AND SLANDER

ARE NOT LEADERSHIP

A campaign is being waged to denigrate the role of the AMFSU in the working out of the economic Accord between the Labor Government and the Unions.

Since Labor's victory in the March Election the focus of the Union's work has shifted from the purely industrial area to the political stage.

We are seeking to obtain by working with the Labor Government what, under the Fraser Government, we could achieve only by stopping work and walking out the gate.

AMFSU Officials played a big part in drawing up the Accord with leading ALP figures before the last Federal Election.

HAWKE PRAISES UNION

As Bob Hawke told our Union's National Council last February--

'I applaud the remarkably constructive way in which this Union has operated.'

The Prime Minister said the AMFSU should be congratulated for giving a lead to the rest of the Trade Union movement in negotiations with the ALP concerning the Accord.

'If this Union had not adopted such an approach on a prices and incomes policy it is very unlikely the ALP would be going into an election with the confidence we have', Bob Hawke said.

Since the Federal Election this Union has continued to play the leading role, acknowledged by Bob Hawke, in implementing the terms of the Accord on which the Government's whole economic strategy is based.

WAGE INCREASE

We gave strong support to establishing a centralised system of wage fixing. This resulted in last month's 4.3 percent pay increase for all workers, with Government support for full and automatic costs of living adjustments.

The AMFSU is working with the Labor Government on plans for industry development and job creation.

We are about to launch a campaign for tax reform, which follows our Social Wage campaign last year

Tax reform is an important part of the Accord - vital to the maintenance of metal workers living standards.

DESTRUCTIVE ELEMENTS

One would think that all members genuinely interested in getting the most from our Union's work would aim for the maximum possible unity in action. However it seems that a few are hell bent on trying to destroy our unity.

They spend all their time throwing muck at the Union's leadership.

Recent events have provided clues as to why they should do this.

As revealed in the June 1983 Metal Worker, a leading light in the Queensland Liberal Party has been touting for signatures on a petition against the Union leadership. This Liberal Leader - not a member of the AMFSU - said it was necessary to change our Union leadership in order to help the Hawke Government.

The former secretary of the right wing National Civic Council, Gerald Mercer, admitted the NCC spent $140,000 on AMFSU National Elections last year.

Mercer, speaking on ABC Radio on May 26th, said the money was spent in support of so-called 'reform group@ candidates - candidates who didn't win even with this massive financial backing.

THE UNANSWERED QUESTION

Metal workers must ask why such enormous funds are available to forces trying to get rid of the Union's current dedicated and expert leadership."

Mr Scott admits that he gave instructions for the printing of the document. There is no evidence that any respondent gave express instructions for its distribution, but this should be inferred against Mr Scott from the terms of his admission as to his initial conversation with Mr Ray. Certainly the document was distributed. According to an invoice of R L Polk & Co (Australia) Pty Limited dated 21 December 1983 and addressed to the organization, 40,000 copies of the National Newsletter of 5 December 1983 were printed. Copies were distributed in bulk to various State and regional offices of the organization. Printing and bulk distribution costs of $1,858.70 were claimed by the invoice. That amount was included upon the December statement sent by Polk to the organization and paid by cheque dated 25 January 1984. In addition some copies of the Newsletter were mailed, at a cost of $1,606.26. Two invoices to this total amount were included in the December postage statement of Polk, which was also paid on 25 January 1984. Thus the total cost incurred by the organization in respect of the Newsletter was $3,464.96.
The cheques to pay the Polk statements were each signed by two of the trustees of the union, Messrs D A Beer and R B Hawkes, the 9th and 12th respondents respectively in each of these proceedings. There is no evidence as to what information, if any, these respondents had relating to the content of the publications in respect of which the accounts were submitted. There is nothing to indicate that they gave any consideration to the propriety of the expenditure of union funds upon the publication and distribution of the Newsletter of 5 December. Given that there had not yet been any complaint of impropriety, so far as the evidence shows, it may be that this question never occurred to them.
The payments to Polk were included in a lengthy list of January 1984 accounts placed before a meeting of the National Administrative Committee on 13 February 1984. The first seven respondents attended that meeting. The meeting resolved: "Accounts passed for payment". But by then the cheques to Polk had already been banked and debited to the union's account.
In summary, then, the evidence shows that Mr Scott initiated the document and authorized its distribution. He must have expected that printing and distribution costs would be incurred. The costs actually incurred do not appear to be disproportionate to what might have been expected so that it should be found that Mr Scott was responsible for the union incurring the expenses which it subsequently bore. There is no case against any other respondent. Mr Carmichael was consulted about the draft but there is nothing to indicate that he was concerned in the decision to print and to distribute the document. The two trustees were responsible for payment of the moneys due to Polk but, by that time, the liability had been incurred. They did not cause the expenditure to be incurred.
The question whether Mr Scott may be ordered to repay to the union the cost of the National Newsletter of 5 December 1983 depends upon whether, upon analysis of its contents, it may be said that the substantial purpose for which it was printed and distributed was either to support or to oppose any particular candidate or group of candidates in the then pending elections.
By 5 December 1983 nominations had closed for the election of a national organizer and for the Queensland offices, but the ballots had not yet opened. The ballots were open for the Tasmanian offices. It appears from the two election pamphlets which constitute ex.P that in both the elections for national organizer and for the Queensland positions there were candidates campaigning under the slogan "break the stranglehold", their platform being one of opposition to those said then to control the union. From a reference in the Queensland pamphlet to the recent successes in Tasmania of what was called "the reform team" it may be inferred that there were also candidates of like mind in Tasmania. The National Newsletter of 5 December 1983 must therefore be read against the background that, in the then current elections, there were candidates whose campaign involved an attack upon the current administration of the union. However, the National Newsletter of 5 December makes no express reference to the then elections or to any candidates in those elections.
The applicant contends that certain passages in the document make indirect reference to these subjects. He refers to the sentence which immediately follows the second heading: "A campaign is being waged to denigrate the role of the AMSFU in the working out of the economic Accord between the Labor Government and the Unions", to the references, under the heading "Destructive Elements" to "a few" members being "hell bent on trying to destroy our unity", and to members spending all their time "throwing muck at the Union's leadership".
It is possible that recipients of this Newsletter would have been aware of facts sufficient to cause them to deduce that the "members" referred to in this Newsletter were the candidates, or some of them, running in the then elections in opposition to the current union administration. But, if so, this has not been proved. It cannot be assumed, from a mere reference to "a campaign" and "muck raking", that reference was being made to the emanations of any current candidates. This is particularly so because of the references in the document to revelations made in May and June 1983 and to the elections in 1982.
In the absence of proof of extrinsic facts the Court is limited to what appears in the document itself. Looking at the Newsletter it is, in my opinion, impossible to say that this pamphlet is referring to any candidates in the then elections. Still less can it be interpreted as urging any particular course of action by members in relation to voting for or against particular candidates. The claim in respect of the National Newsletter of 5 December must fail.

National Newsletter 24 January 1984
The Newsletter of 24 January 1984 was a single page document in the form of a handbill. By an inscription at the foot it claimed to be authorised by Mr Scott as National President. The document read:

"Bob Hawke is misused

ELECTION PHOTO DECEPTION

A secret 'reform group' is claiming that Prime Minister Bob Hawke is opposed to the Union's policies and is involved in AMFSU elections. This gross deception is a matter of official Union concern.

The 'reform group' has spent thousands of dollars printing leaflets which pretend that Bob Hawke is supporting their candidates in AMFSU elections.

This secret group has manipulated photographs taken with the Prime Minister at public functions.

HAWKE EXPOSES DECEPTION

The Prime Minister has exposed this mischevious and deceptive attempt to pretend that he supports candidates in trade union elections.

A statement provided to the AMFSU by the Prime Minister on Tuesday 24th January 1984 says:

'The Prime Minister has a firm policy of non-interference in the internal affairs of trade unions.

As he understands it, the photographs in question were taken in a political context and were not posed for trade union purposes.'

A.L.P. POLICY

This policy of politicians and political parties not interfering in elections and internal affairs of trade unions has been the long standing national policy of the Australian Labor Party.

The NSW ALP does not support interference in trade union elections. In a letter to Merv Malcolm, AMFSU NSW State Secretary, the NSW ALP General Secretary, G. F. Richardson, states:

'The NSW branch of the Australian Labor Party does not endorse candidates to contest trade union ballots and this has been practised for many years.'

PRAISE - NOT INTERFERENCE

Rather than trying to interfere in AMFSU elections and internal affairs, Bob Hawke has applauded publicly the Union's support for the Labor Government.

On the eve of the Federal Elections, Bob Hawke said:

'I applaud the remarkably constructive way in which this Union (AMFSU) has operated.

If this Union had not adopted such an approach on the Prices and Incomes Policy, it is very unlikely that the ALP would be going into an election with the confidence it has.'

UNION POLICY - CLEAN AND HONEST

Regardless of which officials hold office at any particular time, the AMFSU has never engaged in deceiving members. The Union's policies and actions have always been clean and honest. No one has ever questioned that.

Any member who complies with the Rules can participate in union elections - but all members are entitled to expect that every candidate treats them fairly and honestly.

Any member who uses deception to win an election will keep on deceiving members to keep that position.

AMFSU elections are for AMFSU members only - keep them that way."

There is very little evidence about the printing and distribution of this document. By his own admissions, Mr Scott, on about 23 January 1984, gave oral instructions to Mr Ray for the printing of this Newsletter but Mr Scott said in his answers to interrogatories that he gave no express instructions for distribution. There is no evidence of any such instructions being given by Mr Scott or by anybody else. Nor is there any evidence, admissible against any of the individual respondents, either of the fact of distribution or of its cost. There is in evidence an answer to interrogatory 7(M), filed on behalf of the organization itself, in which Mr Kidd, as National Secretary on behalf of the organization, states that, as far as he is able to ascertain, specified numbers of this Newsletter were distributed in various ways. But that is not evidence against any individual respondent.
There is in evidence a postage statement in the name of Polk dated 25 January 1984 and claiming the sum of $40,463.52 in respect of a job identified as "National Membership Newsletter - 24/1/84" together with some receipts by Australia Post in favour of Polk and a Polk job specification. There is also an invoice from Polk, bearing the same job description and dated 31 January 1984, for $17,627.58, covering the supply of 141,962 envelopes and labels and the cost of labelling, folding, inserting and preparing for postage of 141,962 copies. I am satisfied by the annexure to this invoice that it relates to the 24 January 1984 Newsletter; and, as the name of the job is the same, a similar conclusion may be made about the postage statement. However, there is no evidence of any payment by the union in respect of either of these claims. There is no evidence, despite the time which has since elapsed, that Polk has pressed for payment. There is nothing, from an officer of Polk or otherwise, to verify the claims made in the postage statement or in the invoice. The unverified assertions of Polk as to what was done, and at what cost, which are contained in these documents do not constitute evidence against any of the individual respondents. It does not appear who was the author of either of these documents, so that it is not shown that the author of either was a "qualified person" within the definition in s.7A(1) of the Evidence Act 1905. Consequently neither of the documents can be admitted as proof of the matters alleged therein pursuant to s.7B of that Act.
In his affidavit of 2 February 1984 the applicant said that, on 26 January 1984, he received through the mail at his home address a document headed "National Newsletter" and which was identified as that of 24 January 1984. The affidavit contains no information as to the person by whom, or the place from which, the Newsletter was sent. It would be unsafe to draw from this bald statement a conclusion that copies of the Newsletter were dispatched by Polk to all members of the organization. Even less is it possible to attribute to any particular official of the organization the responsibility for authorizing a mass distribution or the incurring of the expenditure referred to in the Polk accounts.
Under those circumstances it is not strictly necessary to reach any conclusion upon the question whether the substantial purpose of the National Newsletter of 24 January 1983 was to advance or to retard the prospect in the then elections of any particular candidates. However, in case the matter should go further I express my view that it was not. By the date of the publication of this Newsletter the Tasmanian ballot had closed but the national organizer and Queensland ballots were open. The Newsletter of 24 January 1984 refers to a "secret 'reform group'" said to be claiming that Mr Hawke is opposed to the union's policies and is involved in AMFSU elections. This group is said to have printed leaflets "which pretend that Bob Hawke is supporting their candidates in AMFSU elections". I take this as a clear reference to pamphlets such as those in ex.P to which I have referred. Accordingly, although the adjective "secret" is puzzling, the reference to "reform group" must be read as a reference to those candidates running as a team in organized opposition to the current administrators of the union. Members of that group had in fact published documents containing photographs of themselves with Mr Hawke.
In my opinion the substantial purpose of the National Newsletter of 24 January 1984 was to inform members of Mr Hawke's true position in relation to elections: one of neutrality. Mr Hawke's position having been raised, this was information which members were entitled to have. It is true that the authors of the document used the occasion to criticize those who had stated that the Prime Minister's position was other than neutral. To the extent that those people would be understood to include reform group candidates, or some of them, the effect of the Newsletter was to criticize those candidates. But a communication between the officers of a union and the members of that union, even in an election period, does not contravene the rules of the union simply because it will have the effect of improving or damaging the chances of a candidate or group of candidates; not even if that is an intended, although subsidiary, purpose. The critical question is the substantial purpose of those who made the communication. In the case of this document that purpose was the entirely proper purpose of making clear to members that an important public figure, the Prime Minister, neither supported nor opposed any candidates and that they should exercise their franchise without reference to any suggestion to the contrary.

National Newsletter 25 January 1984
The document referred to as the National Newsletter of 25 January 1984 is also in handbill form. Like its immediate predecessor it claims to have been authorized by Mr Scott as National President. This document reads:

"ACTU EXPOSES ELECTION DECEPTION

The deceptive attempt to involve Prime Minister Bob Hawke in AMFSU elections for National Organiser, Queensland State President, and other positions, has been exposed once again. This time by the Australian Council of Trade Unions.

Concern about deceptive attempts to involve the Prime Minister in internal Union affairs led ACTU Secretary, Bill Kelty, to contact Bob Hawke and to release the following statement:

'Attention Mr R. Scott, President, AMFSU.

RE: LEAFLET IN ELECTION CAMPAIGN

I have now seen the election leaflet and have spoken to the Prime Minister regarding the matter.

The Prime Minister has made it absolutely clear that:

1. The photographs taken were in a political context and not in an industrial context. They were not taken for the purpose of promoting the particular candidate in a Union election.

2. He does not get involved in the internal affairs of unions.

3. He does not endorse the particular candidate in the Union election.

ACTU CONCERN

The ACTU has expressed its concern that the photographs are being used out of context.

The ACTU also does not get involved in Union elections.

Although I am compelled to say for the sake of accuracy and honesty, the AMFSU has worked very closely with the ACTU and the ALP Government in establishing and maintaining the Accord - and hence the established Labor Government.

In fact, it is not unreasonable to say that without that support the foundation for the Accord would be absent.

It is therefore patently wrong to portray the AMFSU as opponents of the current Government.

Bill Kelty, Secretary, ACTU.

25th January, 1984'

Those who masquerade as 'reformers' are really deceivers."

The evidence as to the printing and distribution of this Newsletter is even more scanty. In answers to interrogatories made on behalf of the union Mr Kidd set out some information on distribution but this is not evidence against any individual respondent. Mr Scott, by his answers, admitted that he orally instructed Mr Ray, on about 24 January 1984, to print the document but he said that he gave no express instructions about distribution. There is no evidence who, if anybody, did give instructions or what distribution took place. There is a statement in the affidavit of Mr Jess, based upon information and belief but which was not the subject of any objection, to the effect that the document was distributed to members of the union employed at Clyde Engineering Pty Limited in Adelaide on Friday 27 January 1984; but that is all. Once again there are accounts from Polk: a postage invoice dated 26 January 1984 claiming $1,717.68 and an invoice dated 31 January 1984 covering the cost of 18,000 copies of the document. But there is no evidence that either of these accounts has been paid, or that Polk has pressed for payment, and there is no verification of the claims made in the accounts. There is no material which would enable the Court to make any order against any individual, if it came to the conclusion that the publication of this Newsletter contravened the rules of the union.
However, once again, I am of the opinion that there was no contravention. The purpose of this Newsletter was to inform members of the content of a press release issued by the Australian Council of Trade Unions stating Mr Hawke's position regarding union elections. It is true that, once again, the opportunity was taken to criticize those who had suggested that Mr Hawke did have a partisan position but this was plainly incidental.
Some may question the necessity to put out this Newsletter, in the light of the information contained in the publication of the previous day, but that is not a matter going to validity. It was for the officers of the union to determine what communications were necessary. Provided that the substantial purpose underlying any particular communication was proper, they are not vulnerable under s.141(1G) simply because others may differ from them regarding necessity.

February "Metal Worker"
There is in evidence a copy of a newspaper, said to be "an AMFSU publication", called "The Metal Worker". It is identified as volume 5, no 1 dated February 1984. Upon the front cover it contains a large heading "Hawke Photo Fraud Exposed". An arrow directs attention to p.3 for what are described as "PM, ACTU statements". At p.3, under the heading "Uproar Follows Election Photo Trick" and a sub-heading "Hawke exposes deception" is a piece which reads as follows:

"A deceptive attempt to involve the Prime Minister in AMFSU elections has caused an uproar in the labour movement.

Photographs of Bob Hawke appear in election leaflets issued by a so-called 'reform group' in ballots for national organiser, Queensland president and nine Queensland delegates to National Conference.

The leaflets falsely suggest PM Hawke is opposed to the union's policies and is involved in AMFSU elections.

AMFSU National President Dick Scott said: 'This gross deception is a matter for official union concern.

'Candidates in union elections have manipulated photographs taken with the Prime Minister at public functions.'

Bob Hawke quickly exposed this attempt to pretend that he supports candidates in trade union elections.

In a statement provided to the AMFSU he said:

'The Prime Minister has a firm policy of non-interference in the internal affairs of trade unions.

'As he understands it, the photographs in question were taken in a political context and were not posed for trade union purposes.'

Rather than trying to interfere in AMFSU elections and internal affairs, Bob Hawke has applauded publicly the union's support for the Labor government.

On the eve of the federal elections at which Labor won office, Bob Hawke said:

'I applaud the remarkably constructive way in which this union (AMFSU) has operated.

'If this union had not adopted such an approach on the prices and incomes policy, it is very unlikely that the ALP would be going into an election with the confidence it has.'"

Beside this article is a photograph of Mr Hawke, brandishing what could be a cheque, in company with Mr Scott. Underneath the article, under the heading "ACTU Voices Concern", reference is made to a press release issued by Mr Bill Kelty, Secretary of the ACTU, relating to the circumstances under which certain photographs were taken. Beside the main article is a small piece attributing to the State secretaries of the Australian Labor Party various statements relating to the non involvement of the party in union elections.
In his answers to interrogatories on behalf of the union Mr Kidd stated that he believed that Mr Scott orally instructed Mr Ray to include "in the next issue of the 'Metal Worker'" -- presumably that of February -- "the quotations therein attributed to the Prime Minister, Mr Kelty and six ALP State Secretaries". This is all that is said by Mr Kidd, in the answers tendered in evidence. The "Metal Worker" is not referred to in any of the other answers to interrogatories which are in evidence.
The evidence does include two accounts relating to the February issue of the "Metal Worker". The first is an invoice dated 21 February 1984 from Ramsay Ware Stockland Pty Limited to Polk. This invoice claims $5,463.20, particulars of which are as follows:

"Metalworker Volume 5. No 1. February 1984.

64,400 Copies of Aborted run. $4,551.20 Machine Down Time 965.00 Additional Camera work for amended artwork. 115.00 --------- $5631.20

Less: Allowance for 3 colour plates @ $56.00 168.00 --------- $5,463.20" ---------

The second invoice is from Polk to the union. It claims $6,065.00, particulars being as follows:

"FEBRUARY ISSUE - THE METALWORKER

Quantity Amount

Production of Metalworker produced between 23/1/84 and 3/2/84 consisting of scanning of transparancies

(sic) supplied for colour separations as specified and printing four colour process in 8 page format to suit mechanical inserting requirements for inclusion of mailing with quarterly account card 64,400 6,065.00"

It may be inferred from the invoice of Ramsay Ware Stockland that all or part of the printing run of the February "Metal Worker" was prematurely terminated -- "aborted". There is no doubt that, because of the orders made on 2 February 1984, the initial version of this issue was not fully distributed. But there is no evidence whether any copies of that version were distributed and, if so, how many. Neither is there evidence as to whether an amended February issue was ever published and, if so, what part of the expenditure which had previously been incurred was wasted. Nor is there any evidence admissible against any individual to connect any particular official of the union with the decision to include in the "Metal Worker" the material to which I have referred -- and which is relied upon in these proceedings -- or any part of it. The only material of any kind is Mr Kidd's reference to Mr Scott's instruction to Mr Ray to carry the statements attributed to the Prime Minister, Mr Kelty and the State Secretaries; matter in respect of which no complaint is presently made.
No case has been made against any individual respondent in relation to expenditure in connection with the "Metal Worker". In any event, as it seems to me, the substantial purpose behind the publication of the relevant parts of the newspaper was a valid one: to inform the members of Mr Hawke's position.
The applicant has failed to demonstrate any contravention by the respondents, or any of them, of the rules of the union. Each of the Applications should be dismissed.
Section 197A of the Conciliation and Arbitration Act provides that a party to proceedings before the Australian Industrial Court "shall not be ordered to pay any costs incurred by any other party to that proceeding except where the party against whom the order is made instituted the proceeding vexatiously or without reasonable cause". This provision was interpreted in Brophy v Mapstone as being applicable to proceedings in this Court.
It cannot be said that matter NSW 1 of 1984 was instituted vexatiously or without reasonable cause. Leaving aside the consideration that interlocutory injunctions were granted in that matter, the application for orders for payment of moneys by individual respondents was fairly arguable. However, it seems to me that matter NSW 9 of 1984 was instituted without reasonable cause. Even supposing, which is doubtful, that reference to s.171C could have provided a basis for relief not available under s.141 of the Act, that section could have been relied upon in matter NSW 1 of 1984; any necessary amendment of the pleadings being obtained. There was no reason whatever to burden the respondents or the Court with a second Application by the same applicant claiming against the same individual respondents the same relief. The exception referred to in s.197A being satisfied, it is appropriate to order that the applicant pay the costs of the respondents incurred in matter NSW 9 of 1984.

[1986] FCA 287

23 JULY 1986