Johnson, L.P. v Frizziero, C

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NOT FOR DISTRIBUTION 1 .1
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JUDGMENT No. 33.3.. - /.?EL - I

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IN THE FEDERAL COURT OF AUSTRALIA ) -
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VICTORIA DISTRICT REGISTRY 1 No V1 8 of 1989
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INDUSTRIAL DIVISION -
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- BETWEEN: LESLIE PAUL JOHNSON
(Applicant)

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m: C. FRIZZIERO, G. GRUNDY, -

., ,

E. HILL, B. JUDGES, , . h
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J. MAVRODIS, C. MUSCAT, v .
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(Respondents) > .
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Judae Makina Order: Ryan.3
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Date of Order: 13 July 1990
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Where Made: Melbourne

MINUTES OF ORDER

b.,
8. ,

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The Court Orders: , ,

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1. That the ruie nisi herein as amended be discharged. -

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2. That the order of Keely J of 24 April 1989 that the :

respondents Frizziero, Grundy, Mavrodis, -Muscat, Russo, .

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Stevens and each of them refrain from incurring-any I :
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further liability or any further payment to Messrs. , ,
Gill Kane & Brophy, Solicitors on -behalf of the : I,
Confectionery Workers' Union of Australia or the

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Victorian Branch thereof in respect of the matters: - - : '

referred to in the Committee of Management's resolution .

of 7 February 1989, be dissolved. I :

NOTE: Settlement and entry of orders is dealt with in Order I s
36 of the Federal Court Rules. /
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16 JUL1990 i
AUSTRAUA

PRINCIPAL - ,

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VICTORIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
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BETWEEN: LESLIE PAUL JOHNSON
(Applicant)

AND:
IIGU. J. STEVENS
and S. WHIDBOURNE
(Respondents)

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Coram: Ryan J
Date: - 13 July 1990
Place: Melbourne
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REASONS FOR JUDGMENT -

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By a rule nisi granted on 29 March 1989 as amended .
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- pursuant to an order of Keely . J. made on 14 April 1989, the

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re~s~ondents were called up& to show cause why an order should - !
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not be made: -

-"That the abovenamed Respondents and each of them pe;form and I .
observe the rules of the Confectionery Workers' Union of

Australia ('the union') and of the Victorian Branch ('the - I

- - branch') thereof- . .
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(1) - by treating as null and void and of no force or effect the purported resolution of the Committee of Management

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.of the branch on 7 February, 1989, that - I-
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'This meeting endorses the action of the i '
Secretary to instruct Gill Kane & Brophy to advise I
and represent members of the Committee of f
Management for all proceedings before the Federal l
Court and the Australian Conciliation and I
Arbitration Commission in respect to litigation and I :
any other action against the Union and its members
by Les Johnson.' t ' :

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(hereinafter referred to as 'the resolution'); I
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(2)

by-treating as null and v o ~ d and of no force or effect any purported engagement by C. Frizziero, acting as' the
- branch Secretary, of Gill Kane & Brophy, solicitors, to . -
act on behalf of all or some of the members of the Committee of Management of the branch in respect of the proceedings referred to in the resolution;-

(3) by refraining from authorizing the payment of, or paying

(whether with or without prior authorization of the ?
Committee of Management of the branch) any account or -

accounts rendered by Gill Kane & Brophy for legal I..
services rendered to or for certain members of the

Committee of Management of the branch m respect of the !

proceedings referred to in the resolution, and including proceedings V1 No.2 and No.6 of 1989 issued in the Federal Court of Australia;

(4) by treating as unauthorised and improper the payment of $42,000.00 of branch funds made by C. Frizziero to Gill,

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Kane & Brophy on or about the 3rd Aprrl, 1989." -

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The applicant is thg Assistant Secretary of the branch. The respondents together comprise all the remaining members of

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the Committee of Management of the branch and the firstnamed

- respondent, Mr-Frizziero, is the Secretkiry of the branch. -

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The union is an organisation of employees registered registered;-rules include a body of rules known as "the Federal -

- under -tLe Industrial Relations Act 1988 ("the Actu). Its
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Rules" and a further body of rules ("the Vic'cozian Branch

Rules"); apparently made pursuant .to- Rule 32A of the Federal
Rules, which govern the Branch.

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On 20 January 1989 the applicant had earlier obtained a -

rule nisi in proceedings numbered V1 2 of 1989 under s.141 of the Conciliation and Arbitration Act 1904 seeking an order that the respondents-to those proceedings, who were all of the members of the Branch Committee of Management, perform and-
observe the Victorian Branch Rules:

" ( 1 ) by gavang e f f e c t t o and abiding by t h e resolutaon of t h e Comr t t ee .of Management of t h e Branch on 8 th November,

1988 t h a t t h e Applicant be appointed t o t h e posation of

Assi2tant Secre tary of t h e Branch pursuant t o Rule 1 2 ( e )
of t h e Branch; and

( 2 )

by t r e a t i n g a s n u l l and void t h e purported meeting of t h e Committee of Management of t h e Branch held on 25th November, 1989 and any r e s o l u t i o n passed a t t h a t meeting. "

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A first directions hearing in proceedings numbered V1 2

of 1989 occurred on 1 February 1989 when eight of the L.;
respondents opposing the application were represented by one t -
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firm of solici-tors, Messrs. Gill Kane & Brophy, and the .-
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remaining six respondents, -who supported the applicant, were - -- , .

represented by anothe; firm, Messrs. Maurice Blackburn & Co. , ,
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- By yet another rule nisi granted at the instance of the .

applicant on 6 Februar~y 1989, in proceedings numbered V1 6 of c ,
1989, the same respondents, being again all of the members of .;
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the Branch Committee -of Management,. were called- on to show.

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- cause why they siiould not perform alid observe the Victorian - :

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- Branch Rules "by treating as null and void the purported !

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appointment in or about June or July 1988 of the firstnamed

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respondent, R-. Beitseen, by the Committee of Management of the F -:
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Branch as '-a 'member of the committee - of Management of the - F- : >.-.
Branch".
M r Johnson ultimately conceded under cross-examination

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that he had -taken both proceedings against the named . I
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respondents because they were members of the Committee of L .
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Management. The pro-ceedings instituted by the two rules nisi I :
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numbered V1 2 and V1 6-of-1989 were heard together on 15, 16,

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17,- 22 and 23 February 1-989 and determined on 21 -March- 1989 -
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when Gray J. made an order that:
"the respondents and each of them perform and observe the rules
of the Confectionery Workers Unlon of Australia by:
1. treating the-applicant as having been appointed validly to the office of assistant secretary of the Victorian Branch of the Confectionery Workers Union of Australia by resolution of the committee of management of the Victorian Branch of the Confectionery Workers Union of Australia on the 8th November, 1988;
2. treatinq as null and void and of no effect the followina
resolut;ons, purportedly - passed by a meeting of ' the.
committee of management of the Victor~an Branch of the Confectionery workers Unlon of Australia on the 55th
November, 1988: - -

(a) "chat the secretary be -ins_tructed to contact the-

Industrial Registrar to arrange an election of -

members by the Australian Electoral Office for the position of Assistant Secretary upon the expiration of the period of notice of Eileen Jenkins';
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(b) 'that the Secretary have power to call a special meeting of the Committee of Management at tune and place to be determined by the Secretary'."

In those consolidated proceedings, eight of <he respondents, represented by Senior and Junior Counsel -

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instrccted by Messrs. Gill Kane & Brophy, resisted the rules -

to show cause. The remaining six respondents-; Hill, Jenkins, .
Judges, Sherry, Skidmore and- Spiteri, represented by Junior -

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- Counsel instructed by Messrs. Maurice Blackburn & Co., supported the applicant in contending that the rules to show cause should be made absolute. Throughout the proceedings the applicant retained his present solicitors, Messrs. J.N.

Zigouras & Co., who also instructed Junior Counsel. . -

While the proceedings numbered V1 2 and 6 of 1989 were .pending, the following motion-was proposed - at a meeting of the -
Branch Committee of Management on 7 February 1989:

"This meeting endorses t h e a c t i o n of t h e Secretary t o in s t ruc t

G i l l Kane & Brouhv t o a d v i s e and r e m e s e n t members o f t h e

committee of ~an$&ent f o r a l l proceeciings before t h e Federal
Court and t h e A u s t r a l ~ a n Conc i l i a t i on and Arbitrat ion Commission in respect t o litigation and any .other ac t i on aga ins t t h e Unlon and its members by Les Johnson."
That motion was framed by Mr Frizziero with some
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assistance from two other members of the Branch Committee of -
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Management, MS Beitseen and MS Halfpenny. Mr Johnson'took a - point of order contending that the motion was discriminatory. He said that he himsglf had applied for legal aid and that he

believed everybody else should do the same.rather than use the- -
members' money. The point of order was upheld by the chairman,
but, after some debate; a motion of dissent from her ruling -

was carried by seven votes to five. Aster further discussion, .

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the substantive motion was then put and carried by eight votes
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to five.
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As I have indicated,. M r Frizziero had retained Messrs. - -

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Gill Kane & Brophy to act on behalf of -respondent members of - the Victorian Branch Management Committee on the return of the rule nisi in proceedings numbered V1 2 of 1989 which was initially fixed for 1 February 1989. That retainer occurred on or shortly - after 20 January 1989 when ' the rule nisi was granted. The first directions - hearing in proceedings numbered v1 6 of 1989 was on 9 February 1989 and the ;etainer of Gill
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Kane & Brophy was apparently regar,de-d as extending to those

proceedings because Counsel then appeared before Gray J. for i ,,
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eight of the respondents instructed by those solicitors. L.
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After the hearing of the consolidated proceedings numbered V1 2 and V1 -6 of 1989 had concluded on 23 February

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1989, Messrs. Gill Kane & Brophy on 28 February 1989 wrote to L;
Mr Frizzier0 as "the Secretary, Confectionery Workers' Union ! -
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of Australia" a letter which, omitting -formal parts, was in I :

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the following terms: -

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"We refer to our recent telephone request +or- payment on
account of the expenses relatrng to the above matter.
We have not yet received final accounts for transcript, courier, and Mr.-Stephen Howells' fees. However we enclose our - computer - print-out of the varioug other accounts and expenditures lncurred to date.
After making an approprrate allowance for our own fees, we would estimate a total requrrement of $42,000.00. We would be glad if you could arrange to-let us have a cheque for this

. amount at your earllest convenience, and-in due course when all
accounts are received we wrll let you have a final account for
the whole and any necessary adlustrnent can then he made.

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Please let us know if you -are i s doubt about anythmg."
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The enclosed computer printout disclosed disbursements by -
way of Counsel's fees and expenses and transcript charges
After receiving that account, $fr Frizziero, on 3 March 1989, had filled up by the office secretary, a cheque payable to Gill Kane & Brophy for $42,000 which- he then signed. The cheque form was part of a stock of similar forms -which had earlier been signed in blank by 'two of the other three
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- signatories authorized under the Victorian Branch Rules. Mr
Frizzier0 then delivered the cheque -by hand -to Gill Kane & -
Brophy from whom he received a trust account receipt dated 6 March 1989, and a detailed bill of costs bearing the same date. hat bill of costs claimed disbursements amounting to $28,376.30 and profit costs of $13,750, making a total bill of $42,126.30. It also bore a handwritten notation "Accept $42,000 as payment in full" which was signed by Mrs Cooney, a
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! . The next meeting of the Branch ~anagement Committee after

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M r Esizziero had paid the account from Gill Kane & Brophy was

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on 7 March 1989. However, neither that nor any other account
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was endorsed or passed for payment at that meeting because the respondent Hill, as chairman, decl.ared the meeting closed for -
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lack oi a quorum before any substantive item of business was. -

reached. The next nieeting of the- ~raich Management committee was on 2 May 19'89 when it was resolved that accounts for each

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of the montlis- of February, March and April 1989 be read and

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recorded. An-omnibus motion that "the Branch total expenditure

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and income for the-months of ??ebr.uary/~arch and April 1989 be
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adopted" was then carried. Included in a "Summary of Accounts for March 1989" appended to a copy of the minutes of that meeting was an item recorded as "Legal & Court" for

- $47,240.30. An account book detailing cheques drawn on the

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Branch account, which was not put before any meeting of the

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I Branch Management Committee, reveals that the amount of
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$47,240.30 was made up of the cheque fo; $42,-000 drawn in I

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favour of Gill_ Kane & Brophy on 3 March 1989, and a further ' I~

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i cheque for $5,240.30 drawn in favour of another firm of i
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! solicitors, Messrs. Ryan Carlisle Needham Thomas, on 21 March r
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1989. The - minutes of the meeting of the Branch Management ..

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. Committee of 2- May 1989 were confirmed at the next meeting of 1 ~

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that body on 4 July 1989.

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There -was appended to the original rule nisi 'granted on 29 March 1989 a further order that:

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"pending t h e f i n a l determination of t h e s e proceedings, -or-

f u r t h e r Order. t h e Res~ondents and each of them r e f r a i n from

making o r f o w a r d i n g an? payment of branch funds t o G i l l Kane &

Brophy f o r t h e se rv ices r e fe r red t o i n paragraph (3) above, and

f u r t h e r , t h a t any cheque drawn f o r t h a t purpose be forthwith

cancel led , and if already sent , payment thereon - b e stopped

forthwith." -

- It appears that, after it was realized that payment by
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means -of the cheque for $42,000 to Gill Kane & Brophy had been -
completed early in March 1989, the applicant did not seek to

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maintain that interim order which was vacated by Keely J. on I

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, - 14 ~ ~ r i l 1989. By motion on notice returnable on that day the - - L
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applicant sought an alternative interlocutory order in these i

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terms : -
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" t h a t pending t h e f i n a l determination of t h e s e proceedings or

f u r t h e r Order, t h e Respondents and each of them r e f r a i n from / .
incur r ing any f u r t h e r l i a b i l i t y o r making any f u r t h e r payment t o G i l l Kane & Brophy, on behalf of t h e Confectionery Workers'

I .Union of A u s t r a l i a o r t h e V ~ c t o r i a n Branch the reof , i n respect
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of t h e mat ters r e f e r r e d t o i n t h e Committee of Management i

r e s o l u t i o n of 7 February, 1989 r e f e r r e d t o i n t h e Rule t o Show

Cause

herein."

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After hearing substantial argument on 21 and 24 April l

- 19_89! his Honour acceded to the applicant's- motion for interlocutory relief and made an-order that: 1

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"The Respondents FRIZZIERO, GRUNDY, MAVRODIS, MUSCAT,-RUSSO, STEVENS and WHIDBOURNE and each of them refrain-from incurring any further liability or any further payment to nessrs Gill

. . Kane & Brophy, Solicltors on behalf of the Confectionery
-Workers Union of Australia or the Victorian Branch thereof in
respect of the matters referred to in the Committee of
Management's resolution of Tuesday the 7th Day of February,
1989, referred to in the Rule to Show Cause herein."

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Although it is not so expressed in terms, -it is clear both from the applicant's notice of motion and-the reasons for

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judment which his Honour delivered when pronouncing that - 1 :
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order that it-was intended to have effect only until the final - - .
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hearing and determination of these proceedings or further - !:,
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order.

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Th-e Union is governed by Federal Rules which provide by

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r.10 for the formation of branches and sub-branches in each J

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State of the Commonwealth. As well, the existence of a . -

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- Victorian Branch and_ a Tasmanian- Branch is expressly

acknowledged by r .2. - The powers and duties of the Federal I -

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Council are stipulated in r.12 which, so-far as is relevant to -

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these proceedings, provides: . .

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"(a) The Federal Council shall act as, and be deemed to be, the Committee of Management of the Association, and shall ! .

transact all business of the Association in accordance 1 :
with these Rules, provided that the Council shall not I I

- vote funds except for ordinary expenses of the I .:

Association I ;

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- (t) To generally advance the objects of the Association and for these purposes devote and expend such monies as may

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- be necessary in the opinion of the Council."
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Rule 23 deals with the funds of the Union by providing: ! -.
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- "23 - FUNDS OF THE ASSOCIATION
The Association shall raise funds, which shall-be the absolute property of the Association, by contributions, levies and fines and apply the same, with any other money received, for the following purposes, that is to say, defraying the costs of management of the Association and Branches, subscribing to any organrsatron with which the Association may become affrliated, reimbursing members for loss of time and expenses incurred on behalf of the Association, paying for presentations made to persons for services rendered, defraying expenses incurred in any appeal to the Conciliation and Arbitration Commission, assisting members who are out of work through taking an active and judicious part in the affairs of the Association, for the general improvement of the trade and the Association, and for all purposes provided by-the rules of the Association.

The property of the Association shall be controlled by -
the Federal Council, -

All money received on behalf of the Association shall be banked to rts credit in the Commonwealth Bank of Australia. The funds of the Association shall be invested -on fixed deposit in any government bank or incorporated bank or upon current account m any government savings bank or in any other manner allowed by law as the Federal Council may determine.
All payments of accounts or any other form of =payment shall be made by cheque and every -cheque shall be signed

one of the Trustees. by the secretary/~reasurer and also by the President and ..
It shall be lawful for the Federal Council to vote or spend any sum of money from the funds of the Association for such expense? as are provided for by the rules, such expenses to be deemed ordinary expenses; but it shall not be lawful for-the Federal Council to vote or spend money

- from the funds of the Association, or for the signing officers to sign orders or cheques for the withdrawal of money from the said funds for extraordinary expenses (that is expenses not provided for in the rules), but if it is deemed desirable by the Federal Council to vote a sum of money for extraordinary expenses, a recommendation shall be sent on to the whole of the branches and if such recommendation is adopted by a majority of the Branches, at meetings called to consider the question, such branches representing at least two thirds of T h e members of the Association, the amount mentioned in the recommendation shall be paid over by the Council.

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(e) A loan, grant or donation of an amount exceeding .$1,000

shall not be made by the Association unless the Federal - -
Council :

(a) has satrsfied itself - -
(i) that the making of the loan, grant or donation would be in accordance with the other rules of the Association; and

(11) in relation to a loan - that, m the circumstances, the securrty proposed to be -
given for the repayment of the loan is adequate and the proposed arrangements for the repayment of the loan are eatisfactory; and

(b) has approved the making of the loan, grant or-

donation. " --
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A dichotomy between "ordinary expenditure" and "disbursements for extraordinary purposes" is recognised by
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r.25 which specifies the duties of federal officers including:
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"(f) Trustees' Dutles -
Two Trustees shall be elected by the Council and shall

hold offrce for a period of two years.- . .

(i) The funds of the A s s ~ ~ i a t l ~ n shall not be drawn

upon for ordinary expenditure without the sanction of the Council and disbursements for extraordinary .-
purposes shall not be made without the sanctron of

- a majority of Branches. -

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(ii) All orders for the withdrawal of money- from the

Bank shall be slgned by the President, -

~ecretary/~reasurer and at least one Trzstee;
unless otherwise decided-by the Council.

(iii)

The property of the Assoclation shall be held b; -

- the Trustees on behalf of the Assocration."

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The Federal Rules empower branches of the union to make their own rules and to conduct their own affairs by providing, again so far as is relevant to these proceedings,:
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"32A - BRANCH RULES-

Branches shall have power to make such rules and by-laws as is

deemed to be necessary by them for the proper .conduct of .
business. Provided that such rules or by-laws shall not be
inconsistent with the rules of the Aesociation.
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32B - BRANCHFS

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(a) The members of the Association residing in different -

States may group themselves rnto Branches of the - i

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Association subject to the approval of the Council, and

each branch may elect officers and organisers of the I'
Branch and may pay such officers and organisers such i -
amounts as remuneratron for their services as may be 'I
determrned by the members of the Branch in meetrng
assembled, -and each Branch may make Branch Rules for the I.
guidance of the members of the Branch, provided that such

Branch Rules are approved by the Federal Council and are .
not contrary to any of these Rules.

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(C) A Branch shall act as an agent for and on behalf of the Associatron for the recovery and collection of a11

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contributrons, levies, fines and all other monres now or I ,

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hersafter becoming due to the Assocration under these I .

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Rules and each Branch may appoint shop stewards or [,.~,
collectors to collect such contrrbutions, levies, fines

- etc. ancLmay pay to such shop stewards or collectors such amount of salary or commissron as the Branch may I~ ; '
determine. Each Branch may deduct or retain for its

working and management expenses the contributions of I :

- members of the Associatron~collected by such Branch less

an amount prescrrbed by Rule 24 to be payable to the . I.
Council by the 28th day of February in each year." I

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As contemplated by r.32A of the Federal Rules, Branch Rules have been made for the government of the Victorian

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Branch of the union. Rule 3 of -the Victorian Branch Rules I

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specifies "objects for which the Association is established" - ! ~ '

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in . terms which are identical to those of r,3 of the ~ederal

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I _ Rules. Rule - 8 of the Victorian Branch Rules deals with- the I
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I funds of that Branch by providing:

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"8 - FUNDS.

(a) The Funda of the Branch shall consist of:

(i)

Any real or personal property whrch the Branch by the Rules or by any established practice not inconsistent with the Rules has or in the absence of any limited term, lease, bailment or arrangement would have the rrght of the custody, control and management;

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(ii) The amount of entrance fees, subscriptions, fines, I
fees or levies received by the Branch less so much i
of these amounts as are payable by the Branch to F:

the Federal Council; 1 ' .
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(111) Any ihterest, rents or dividends' derived from the mvestment of the funds;

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.(rv) Any superannuation or long service leave fund- 1-
operated or controlled by the Branch for- the

benefit of its officers or employees; l I I
(v) Any sick pay fund, accldent pay fund, funeral fund or llke fund operated or controlled by the Branch for the benefit of rts members;
(vl) Any property acquired wholly or mainly by expendrture of the monles of the fund or derived- from the other assets of the fund;

(vri) The proceeds of any dlsposal of parts of the fund.

(b)

The Branch funds shall be dealt with by the Branch in accordance with this Rule.

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(c) The Branch Secretary shall forward to the Federal Secretary/Treasurer a sum equal to the amount required pursuant to Rile 24 of the Federal Rules of the-
Assoclation. Payments shall be made to the
Secretary/Treasurer in respect of income received, based

on membership as at the 30th- of September ln each fear -
not later than'the 28th day of February of the following year pursuant to Rule 24 of the Federal Rules of the

Association. - -
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(d) The Committee of _Management shall have power to pay all accounts in connection wlth the management expenses of the Branch and to disburse all funds for any lawful purpose in connection with the administration of the Branch.

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(e)

A loan, .grant or donation of an amount exceedrng $1,000 shall not be made by the branch unless the Committee of

Management of the branch:- -
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:- (a) has sstlsfied itself- -
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(1) that the maklng of the loan, grane or -
donation would be in accordance with the
other rules of the branch; and-

(11) In relatron to a loan - that, in the circumstances, the security proposed to be . -
given for the repayment of the Ioan is adequate and the proposed arrangements for the repayment of the loan are satisfactory; -and

(b)

has approved the maklng of the loan, grant or donation."

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Requirements o f a machi-nery kind f o r payment o f accounts are contained i n r r . 1 5

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and 17 o f t h e Victorian Branch Rules

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which include these provis ions:

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"15 - BRANCH SECRETARY

... He shall be the-investigating and organising officer of the
Branch. He shall prepare a statement for -endorsement at each ordinary meetrng of the Management Committee, setting out the amount-of cash received since-the previous meeting, and produce the bank receipts showrng the dates of such amounts being banked, and partrculars of all accounts being rendered for payment, and prepare the cheques for signatures for payment of same, and shall prepire a balance sheet and hand over all books, vouchers, etc., for audit when kequested by the Commrttee-or General Meeting. The Branch Secretary shall be under the supervision of the Management Commrttee and shall recerve such remuneratron and conditions of employment as may be fixed by the Management Committee from time to time and shall be a full contributrng member of the Branch.

17 - TRUSTEES

Two Trustees shall be elected biennially. As .Trustees of the

.- Branch they shall make such investments from time to time' as the Branch may determine. All orders for the Qrthdrawal of money- shall be signed by the Secretary and President and at least one of the Trustees, and bear the stamp of the Branch. Should one or more of the Truetees be removed from office or-
any vacancy occur from any cause whatsoever, one or more shall be elected to fill the vacancy within four weeks after such

- vacancy occurs. Any Trustee who may retire or be removed from -

office, and shall refuse or neglect to assign or transfer the

- funds, effects, or property of the Assocration in his
possession shall be proceeded against."

. -

-

It was argued on behalf of the applicant that when, on 7
-

Februafy 1989, the majority of the ranch Committee of Management, realizing .that the minority wished to advance -
competing cont&tions to this Court, authorized only the retainer of Counsel .to argue the case which the majority

espoused, that authorization was not- obtained- in good faith.
The principles to be applied in examining an alleged lack of good faith in this context were accepted on both sides to
have been authoritatively stated by Evatt and Northrop JJ in
-

Alien v Townsend (1977) 31 F.L.R. 431 where their Honours said, at 485:
"The relevant principle is stated- in Mills v. Mills (1938) 60 C.L.R. 150. In that case. a resolution passed by the drrectors of a company to increase the voting power of one of the directors but which was believed by the directors to be in the best interests of the company was challenged, unsuccessfully, on the basls that one of the directors thereby derived some benefit. Dixon J. said:
'Directors of a company are fiduciary agents, and a power conferred upon them cannot be exercised in order to obtain some prrvate advantage or for any purpose foreign to the power. It as only one application of the general doctrine expressed by Lord North~ngton in Alevn v. Belchier (1758) 1 Eden 132, at p.138; 28 E.R. 634, at p. 637: "No point is better established than that, a person having a power, must execute rt bona fide for the end designed, otherwise rt is corrupt and void."
Upon the facts of the present caseL or at all events upon
the expressions used by Lowe J. ln stating his findings,
rt may be thought that a question arises whether there
must be an entire exclusioK of all reasons, motives or
aims on the part of the director-S, and all of them, whlch
are not relevant to the purpose of a particular power.
When the law makes the oblect, view or purpose of a man,
or of a body. of men, the test of the va-lidity of their
acts, it necessarrly opens up the possibilrty of an
almost infinite analysis of the fears and desires,
proximate and remote, which, in truth, form the compound_
motives-usually animatrng human conduct. But logically
posSible as such an analysis may seem, it would be
impract~cable to adopt it as a means of determ~ning the
validity of the resolutions arrived at by a body of

directors, resolutions which otherwise are ostensibly -

wrthin their powers. The applicatron of the general equitable prrnciple to the acts of-directors managrng the affairs of a company cannot be as nice as it is in the
case of a trustee exercising a spegial power of - -

appointment. It must, as it seems to me, take the substantial object the-accomplishment of whlch formed the real ground of the board's action. If this is within the
scope of the power, then the power has been validly exercised. But- if, except for some ulterior and lllegitrmate object, the power would not have been

*exercised, that whrch has been attempted as an ostensible exercise of the power will be void, notwithstandrng that

- the directors may rncldentally bring about a result which-
is wlthin the purpose of the power and which _they

- consider desirable. [1938) 60 C.L.R., at pp.185-1861,
-
In the same case Latham C.J. said: 'Directors are required to act not only in matters which affect the relations of the company to persons who are not members of the company but also in relatron to matters which affect the rights of shareholders inter se. Where there are preference and ordlnary shares a particular decision may be of such a character that it must necessarily affect adversely the interests of one class of shareholders and benefit the interests-of another class. In such a case it is difficult to apply the test of acting in the interests of the company. The question which arises is sometimes not a question of the interests of the company at
all, but a question of what is faar as between different classes of shareholders' [(1938) 60 C.L.R., at p.1641 This statement, with necessary adaptations,-has application to the duty imposed upon- members of a committee of management to act fairly between dafferent groups of members of an organisation." -
In my view, the concluding words of that passage have to
-

be understood in the -context to which they were applied. The
resolution in that case impugned the legal existence of a sub-
branch under the rules of the organization and gave certain
consequential directions designed-to prevent the members of
--

the sub-branch from using its funds -or staff to assert its -

-- continuing right to function. There- fairness to the group -
-

constituting the members of the =&-branch requi-red that they
.-

continue to have access to resources built up over forty years of unchallenged existence to contest the validity of the

.
.

-
resolution impugning the legality of that existence.

. -

-
However, a duty to act fairly between - different-groups
does not entail that each group be treated equally. In Scott v Jess (1984) 3 - F . C . R . 26?, Evatt -and Northrop JJ, again in a -

- joint judgment, referred to what they had said in Allen v .

- Townsend (supra) and continued, at.269: - -

-

>
-
"In summary, the principles therein stated may be set out braefly. Officers of an organisation are under a duty to exercise powers conferred upon them by the rules of the organisation bona fide for the purposes for which the powers are conferred. That is a statement of principle having general application to officers of organisations. It is but one aspect of a general principle having application far wider than to officers of organizations. As recently as 1981, in Ascot

- Investments Ptv Ltd v. Haruer (1981) 148 C.L.R. 337 at 348-349, Gibbs J., as he then was, in speaking of directors of a company, said:

I -

I -
I

i -
,

- 17 - i -
I.
-
'The d;rectors are bound to exercise *heir drscretion

bona frde in what they consider to be in the interests of -
the cpmpany, and not for any collateral purpose, but
subject to that qualifrcation their discretion is
absolute and uncontrolled: In re Smith & Fawcett Ltd t
[l9421 Ch. 304, at 306-308; Charles Forte Investments Ltd I
I -

v. Amanda [l9641 Ch. 240, at 252-254, 260-261; Australran Metrouolltan Life Assurance Co. Ltd v. Ure (1923) 33
C.L.R. 199, at 205-206, 217-220, 223. This rule is an 1.

applicatron of the general principles governing the exercise by drrectors of therr powers; those prrnciples are drscussed in Nourli Ltd v. Mctann (1954) 90 C.L.R.

1; . ,

425, at 438-440. The cases crted establish that the onus of provrng that the directors in refusing registration drd not act in good farth in what they consrdered to be in the interests of the company lies on those who challenge their decision.'

See also Russell Kinsela Ptv Ltd (in li.) v. Kinsela [l9831 2 i -
N.S.W.L-.R. 452, and the many cases referred to in that

judgment. - i
.-

. t ,-

It follows,-therefore, that if the members of a committee of an -.
organisation, or if an offrcer of an organisation, resolved to
exercise a power conferred upon them by the rules of tJe
organlsation otherwrse than bona fide for the purpose for whrch

the power was conferred, a member of the organrsation would be F .
entitled to obtain an order under s.l41(1G) of the Act. The I

normal form of drrections grven by that order would be that the - 1 :
respondents to those proceedings perform and observe the rules , 11
I-

of the organrsation by treating the resolution so made as being -

vord and of no effect. If necessary, similar directions would be given with respect to any actions taken or to be taken pursuant to the void resolution."

!
L.
I:

- Their Ho-nours then went on to hold that, although the appellants, who were the respondents -at first instance, or -

-

I .

some of .them, had published, at the expense of the I .

- - I
l

organisation, material disparaging members of a "reform groupu - -

1.'

within the. organisation, the respondent had not made out a I-

- ! . ~

case for relief under s.141 of the Conciliation and 1. :. i
Arbitration Act 1904. It was observed, at 276, that:
1::

"The applicant (at first instance) did not attempt to establrsh 1 ,:
the absence of bona fides in the actrons of the respondents. He

- I
did not attempt to rely on the prrnciples enunciated in Allen v

Townsend." - !

- !
1;

- To siniilar effect, the same two Judges, as members of another I

--Full- Court in Tanner v Mavnes (1985) 7 F.~.~:-432, noted, at

-

443: !
t

: 8

"On the . assumption that the respondents. authorised the publication and distribution of the FCU pamphlet, there is I
I I.

nothing to suggest that they d ~ d not exercise the powers

conferred upon them bona f ~ d e for'the purpose of those powers.

It is true the contents of the FCU pamphlet are contentious and j

may seem to be favouring one group within the Union and disadvantaging a competrng group. That of itself is not proof that the publication was not made bona fide for the purpose of the power conferred upon the respondents. It was for them to
communication to members of the Union. It is-not for the court
determine what matters of interest should be-the sub~ect of j:
to act as a censor of publ~cations. In proceedihgs of thrs 1. -

kind, the court determ~nes the question of whether powers haye I I-

- been exercised bona frde for the purpose they wer? conferred.
.-

-In the present case, the applicant has failed to prove that the

responaents have not exercised the powers conferred upon them 11.:
-

bona fide for the purpose of those powers." -

!

- , .
-

In the present case, the evidence does-not establish that the majority of the Branch Committee of Management who voted

,

I -

i

. ,

- 8 <

in favour of the resolution of 7 February 1989 were concerned t - .

. - ::l

. to achieve some ulterior or extraneous purpose.- It is true t : ;

! - a

I that by carrying the resolution they ensured that the costs of - 5
! . .
I
, :

- legal representation to advance the contention which they I .

. -

j :.

espoused would be met from the union's resources, while the

- -

applicant and the other members of the Committee who supported I l .
!

his case were left to pay their own costs or take their-chance - :

-

with an application--for legal aid. However, it does not follow r
I ;

from that conclusion that the Court can be satisfied that the l ! r~
actions of the majority were not bona fide. I
I
!-

- !

l ,,

It was contended on behalf of the applicant that an inference of lack of bona fides should be arawn from the

il
! :
i
I.
circumstances surrounding the preparation and payment of the I
j ;
-

;.

-
-
cheque for $42,000 to Messrs. Gill Kane & Brophy. However,
there is 'no evidence to suggest that any of the respondents
other than Mr Frizziero were involved in the hasty payment
between 3 and 6 March of the interim account from the
-

solicitors dated 28 February 1989. Even if the circumstances of that payment allowed the Court to impute to Mr Frizziero a lack of good faith, that imputation on the evidence could not extend to the other members of the Committee of Management who voted in favour of the resolution of 7 February. In any event,

I do not consider that Mr Frizziero's actions-- signified -

anything more than a determination to a motion by Mr -
Johnsonls supporters to rescind the resolution of 7 ~ e b r u a r ~ or to refuse to pass the account for payment.
-

Counsel for the applicant also relied on the judgment of Spender J. in Ward v Williams (1985) 6 F.C.R. 384 where his

-

- -

~6nour concluded, at 397: --
-.-

given to the existence of self interest by some of the members "In the facts of the preaent case, proper regard has to be

of the Branch Committee of Management. Notwithstanding that -

consideration, the court should not lightly conclude that the resolutions were not made bona fide, in the aense explained earlierin these reasons. It is clear from the extracts of the

- minutes- previously set out that the question of authorisation by the Brisbane Committee of Management of the payment of legal costs of the respondents to the electoral inquiry preceded that inquiry and in no way depended upon, or was a conaequence of,
- the results of that inquiry. Nor, in my view, can it properly be concluded that there has been demonstrated an attitude to expend funds of the Union in a partisan way, favouring one group while at the same time denying another."
That passage makes clear that his Honour did not regard the- fact that a resolution conferred a financial benefit- on
those who voted for it as, by itself, justifying an inference
of lack of 5ona fides. Nor do I consider that his lionour
intended to convey by the last sentence in that passage that
such an inference must be drawn if the resolution expressly or
by necessary implication confers a financial benefit on one

>

group and withholds a -similar benefit from another group. If,
however, his Honour did intend to lay down a general- rule -
requiring an imputation of lack of good faith to the supporters of any discriminatory resolution of that kind, I respectfully decline to endorse it. I have-already--indicated
-

my view that fairness as between different grpups does not - -
necessarily entail- equality of treatment. In deciding to
.

expend funds of an ~Gganisation to defray the costs of one set -

of litigants in an action between competing groups of members, -
-

a judgment-might be made, without- lack of good faith, that the

8 -

favoured group was more representative of the organisation as 1.

. - , 2
, .

a whole, or the case which that group was seeking to adva&e . .

-

would better serve the interests of the organl'sation.

> .'

conv&sely, a similar decision -might be taken to- withhold !

financial assistance from a pgrty perceived Zo be pursuing or -

- I .

defending the litigation frivolbusly or vexatiously, or whose

- !

case was regarded as coinciding with that of another party for !
I
payment of whose costs satisfactory arrangements had already - 1
I

been made. c

Even if I - am wrong in the analysis which I 'have just -

attempted, I do not construe the resolution of 7 February 1989 . ,
-

as containing an implied refusal to pay the costs of the

- t , I
-

-

minority on the Committee of Management. The evidence does not- reveal that any request was made at that time for payment of-
-
those costs out of the funds of the organisation. Mr Johnsonls complaint about the motion, before it was carried, was not -

that it failed to provide for the costs of both sides. Rather, - ..
he urged that since he himself had applied for legal aid, both the majority and minority factions on the Committee should do the same and avoid any call on the funds of the Union. It is

. -

--

true that when the account of 22 March 1989 rendered to Mrs -

.

Jenkins by Messrs. Maurice Blackburn & Co., was presented for-.

- payment to Mr Frizziero by Mr ~ohnson, M r Frizziero by letter .

.

dated- 14 April 1989 refused to pay it. However, the evidence

i - does not suggest that Mr Frizziero, in writing - that letter, I ._

-

!

! was carrying out an' instruction of the majority of the

Committee of Management. Consistently with my evaluation of m I

- -

I Frizziero's conduct i_n paying the -account of Gill Kane and 8 ,

-

Brophy, I do not regard his subsequent refusal of the request I

, -

I for payment of tke account from Maurice Blackburn & Co. as the -

- !-

8 .

basis on -which lack of good faith can be imputed -to the l ,

- k ,'
1

majority members of the Committee when they voted in favour of - -

- 1 -,

the resolution on 7 February. 1989. It is not 'without :
significance that no attempt was made after 14 April 1989 by I :
Mrs Jenkins and her supporters to seek a resolution from the r
Committee of Management authorizing payment out of the Union's j ,:
funds of the account from.Naurice Blackburn & Co.
-

- l ~. I

The next attack-made by the applicant was not directly on the resolution of 7- February 1989 but was on the-payment of

! ! ,
! .

- I I :
i

$42,000 to defray the costs of those members of the Committee I 1 '

of Management represented by Gill Kane & Brophy. That attack was based on a distinction between ordinary and extraordinary expenditure. That distinction is drawn by- Federal Rule 23(d)
;1:
which provides that such expenses as are provided for by the I
l

rules are to be deemed ordinary expenses. It is a distinction -

- 1 ;

which is not expressly -reflected in the Victorian Branch - - 1,. -

I '

Rules. However, r.8jd) of those Rules empowers the Branch . - I ' - : ..

: .

Committee of Management to pay all accounts in connection with -

the management expenses of the Branch and to- disburse -all ;
I - .

funds for any purpose in connection with the administration of I

- ..

the Branch .- L
L'

Mr Borenstein on behalf of the applicant contended that the expenditure of $42,000 was extraordinary and not-within

I

-- l
,

- !
-

L

the gower of the Committee of Management of the Victorian - 1

- I.:

Branch. He sought to derive support from-a dekision of Gray J. - 1-

- f -:

in Lewis v Mavnes (unreported, 1 December 1988) in which -his - i- ;

. -

,

Honour was called upon to apply a rule of the- Australian 1 .~
i d

Workers' Union which contained an express dichotomy between - 1 .

! .,

disbursements for ordinary purposes on the one hand and I -
!
l
disbursements for extraordinary purposes which required j ;.
I
authorization by decision-of the National Council or National . i -
I .
Executive on the other. Construing that rule with the aid of i -

- ! ' .

I I . , -

what was said by a majority of a Full Court of the ~ustralian ~

i

-
Industrial Court-in McLure v Mitchell (1974) 24 F.L.R. 115, of a rule which deal^ with- the disbursement of -funds "for any purpose- (other. than ordinary expenditure)" his Honour concluded, at p.38:
>

"the question to be asked with respect to each dreburaement is whethel it as for a purpose normally carried .out by (an organization of the relevant srze and type) ... something which is not so normally carried out, although fallrng technically within the objects of the Union would be an extraordinary purpose" .
The applicant's argument proceeded that the resolution of
-

7 February 1989 was Jn such wide terms that it was
-

subsequently said to -authorize a payment .of $42,000. That payment, so- it was said, having regard to the small size of the Union was so exorbitant as to pennit the expenditure to be characterized as "extraordinary".
-

-

In my view, it is unhelpful to call in aid in construing -
.-

the rules of this union, decisions on the construcfion of rules of other organizations in which similar words have been

- used in different contexts which provide quite different - definitional guidance.- I prefer to ask whether expenditure on

- -

representation by solicitors and counsel- in an action brought -

-

against members of the Committee of Management of a Branch in
respect of alleged acts or omissions in their capacity as such
members, are incurred "in connection with the management
expenses of the Branch" or "for any lawful purpose in
-

connection with the administration of the Branch" as contemplated by r. 8 (d) of the. ~ictorian Branch Rules of the

union. - -

-

The financial structure erected by r.24 of the Federal Rules of the union makes the branches the primary collectors
..

of membership subscriptions, five -per cent of which the
branches are required to pay to the Secretary/Treasurer as
sustentation fees to the union. That suggests that wide powers
of disbursing or investing the residual ninety five per cent
-

are reposed in the branches. -

- -
-

"Administration" is itself a word of wide import in the context of r.8(d) of the Victorian Branch Rules and is, I -

-

consider, synonymous with the conduct of the affairs of the
branch. The range of expenditure permitted by that rule-is
further widened, if that- be possible, by the need for it only
-
-

to be "in connection with" the adniinistration of the Branch. --
-

The words "in connection with" were regarded by Gibbs J. (as

he then was) in The - Oiieen v Watson: ex Darte -Australian .

- Workers Union (1972) 128 C.L.R. 77 at 95 as "somewhat vaguen. However, it is clear from that case that they were construed -
. as words of extension; see especially per filenzies J. at 84. In
my view, expenditure on legal representation in proceedings
framed to uphold one action of the Committee of Management of
a branch, and to nullify a meeting-of the same Committee of
Management and an appointment to membership of - it, is clearly
"in connection with" the administration of that branch. I am confirmed in my view of the width of r.8(d) of the Victorian

-

. -
Branch Rules by the-presence in those rules of the immediately following paragraph (e) which assumes the power of the Branch Committee of Management to make payments by way of loan, grant or donation, but attaches conditions to its exercise in respect of amounts in excess of $1,000.

In support of paragraph 4 of the rule nisi, as amended, it was first contend=d on behalf bf the applicant that the payment to Gill Kane & - 'Brophy.-had been -effected by Mr

--

- Frizzier0 without compliance with r.15 of the -Victorian Branch
Rules.
-

-

That rule is reproduced in part at p. 14 of these reasons. It requires the- Branch Secretary, amongst other

.-

-

things, to produce (sc. at each - ordinary meeting of the
-

Management Committee) particulars of all accounts being -

reordered for payment and to "prepare the cheques for

- -

-signaturg - for-payment of same". The Branch Secretary is not

empowered himself to authorize - payments of accounts rendered

-

to the Branch. That power is exercisable by the Committee of Management pursuant to Branch Rule. 8(a) which is set out at p.12 above. I have already held that the account from Messrs. Gill Kane & Brophy was of a kind which the Branch Committee of Management was empowered by victorian Branch Rule 8(d) to pay. Iiowever, Miss Hickey for the respondents contended that there was nothing in Branch Rule 8(d) read in conjunction with
, .
' I/

Branch Rule 15 which precluded payment-on-the authority of the 8

I I
. .
I:;

Branch Secretazy alone of an account which had been rendered I '

i !,
by a creditor but which had not been approved for payment by

, >
the Branch Committee. In support of that contention reference
t
was made to the provisions of Branch Rule 11 which provides:

"11 - MEETING OF BRANCH MANAGEMENT COMMITTEE

Meetings of t h e Branch Management Committee s h a l l be on t h e
first Tuesday o f February, March, May, June, July, September,
October, and t h e second Tuesday i n November or when c a l l e d by

t h e Branch President and Branch Secretary ." -

Because- that rule contemplates that the Committee of -
-
Management may not meet in the months of January, April, -
August and December, it was submitted that an account might be
rendered requiring payment within 30 days which period would
-

expire before the account could be produced by the Secretary. Accordingly, so the argument went, Branch Rule 8(d) should not be construed as -requiring all accounts to be passed for - payment by the Branch Committee of Management before they can - be paid by the Branch Secretary. I reject that argument. What

each account rendered be approved for payment by the Committee I regard as the mandatory requirement of Branch Rule 8(d) that- -
of ~ana~ement before it- is actually paid, can be accommodated, in the months when the Committee does not meet, by obtaining an extension of time for payment, by having the account rendered earlier than it normally would be, or by the Branch President and Branch Secretary calling a speEial meeting of the Committee. Known recurring expenses like staff salaries
-

I :

- can be passed for payment by the Management Committee in I

t I
advance of the dates on which they have-to be-paid. ! .

-- I
l

-

' .
i ;

It was next argued on behalf of the respondents that the use of the present participles "being- banked" and "being rendered" in Branch Rule 15 recognized that- moneys would be banked and accounts would be rendered on a continuing basis

]-

I

between meetings of the Committee of Management. Accordingly,

i I I .

! . Miss - Hickey contended, there should be hputed to the Branch !
i

-- Secretary a- power to pay from time to time - accounts so I :
I
xendGred; without necessarily first obtaining the approval of-
-

the Committee of Management. I am- unable to accept that -
contention. The relevant activity of the Secretary specified

,.

i -

i

I -in Branch Rule 15 is not payment of accounts which have been

rendered, but preparation of cheques for signature for payment -

- , ..

of those accounts. When regard is had to the requirement of . !

- ,

-

Branch Rule- 17 that each cheque must -be signed by the - j .

=-

President and at least one Trustee, and the fact that each , ,

- permitted signatory is a member of. the Committee of , .
Management, it is an excessively strained interpretation of
!p.

- -

_ the rules to. regard them as authorizing the Secretary to pay . ,

- i.

an account after obtaining the other two requisite signatures I. '
l I - I
to a -cheque but without having the approval or endorsement of I I
;
the Management Committee. Consistently with the other parts of 1 -:
.Branch Rule 15, the Branch Secretary may from time to time
-

prepare cheques for signature for payment of accounts rendered

l',

and -that may occur both before and after the meeting of the / .'
!

~ani~ement Committee at which those accounts -are passed for payment. However, to af ford that facility '3alls f-ar short of permitting the Branch Secretary to pay accounts without first obtaining the approval or endorsement of the Management committee. That is not to say that each account must inaividually be passed for payment by the Management Committee. As I read Branch Rules 8(d) and 15 in conjunction it is sufficient for the Committee to pass a blanket resolution authorizing payment of all accounts of -which
-
particulars are produced by the Secretary at a given meeting.

-

It was also argued on behalf of the respondents that the Branch Management Committee had - discharged the financial
responsibility imposed on it by r.8(d)- by passing the
resolution of 7 February. That resolution, it was contended,
authorized the retainer of Messrs. Gill Kane .& Brophy, and, by
-

hplication, authori'zed the expenditure of branch funds for
-

that purpose. However, in my view;- while the resolution

debt to the solicitors, it did not purportedly or actually authorized the Secretary to incur, on behalf of the union, a
authorize the paFent of their fees, the amount of which could
-

not have been known, or even estimated, on 7 February. -I discern in the combined operation of r.8(d) and the relevant parts of r.15 a purpose of enabling the Management Committee to consider whether or not accounts rendered by creditors are for agreed or reasonable amounts and are otherwise properly payable in satisfaction of debts actually incurred by the
-
-

union through the branch. That purpose would be frustrated if
-

the Branch Secretary could arrogate to himself, withok
reference to the Management Commi'ttee, the function of-

approving and effecting payment of an account rendered. -

There was evidence that accounts, particularly for salaries, rent and electricity charges, had frequently been passed for payment at meetings of the Victorian Branch Management Cdmmittee after the accounts had in fact -been paid. The applicant himself participated in that practice.-In the

light of that evidence, - it was submitted that the construction -

which I have adopted of the Branch Rules-8(d) and 15 would -
cast doubt: on the validity of all of those payments. However, - if those payments have been made-in discharge of debts of the

Union properly incurred and have been subseq~ent~y ratified - by -

the Branch Management Committee, I do not see any basis on- -

which their validity can be impugned in any- practical sense. -

-

Moreover, a practice adopted for reasons of administrative -

-

-convenience on a misundefstanding of the rules of an -

organization, or in disregard of the rules, cannot or -
. -

require a construction of those rules which is contrary to the
ordinary meaning of the language in which-they are cast..

The question remains whether the Court should now make an order requirrng the respondents or any of them to perform and observe the rules of the- Union by treating as unauthorized and improper the payment of $42,000 to Gill Kane & Brophy. I have already indicated that the subsequent ratification by- the. '

; .

Branch Mancgement Committee of that payment renders largely -
academic any pronouncement about its propriety when made. Mr

- l .
, .
l .-

Borenstein of Counsel for the applicant has candidly ; ~ . I ,
:. ,
acknowledged -that "there is no intention, nor is there . , ,
!
l -

- anything to- indicate in the Orders sought, that recourse will be had or could be had to Gill Kane & Brophy in relation to 1..
I .
t .%
the payment that has been made".

I: l

- .--
l
t

I expect that the respondents and others having - .-

- t .-

responsibility for the administration of the affairs a& I

- 8 ,

finsnces of the ~ictorian Branch -of the Union will not revive .-

m .

the practice of paying accounts before endorsement by-the . I

- i-

Management Committee. Because of that expectation, and my i i

assumption that the respondents will hereafter give effect to . -

-
the Victorian Branch Rules 8(d) and 15 as explained in these

reasons, I- decline, -in the exercise of the discretion which I - , .
L ,
i
consider the Court has under s.209 of the Act to make now an L -
r .
-

order in terms of paragraph 4 of the rule nisi. Should my

.

expectation be disappointed, or my assumption be proved by

later- events not to'be justified, it will, of course, be open. - - I _

? , .
to the applicant or any other member of the union to obtain a

fresh rule nisi to compel performance and observance of the L
1 \
i
rules governing disbursement of union funds. However, in the I
t ,,

present-circumstances, for the reasons which I have indicated, . I
the rule nisi is discharged. It is also appropriate, in light
!
of the conclusion which I have reached about paragraphs 1, 2 l:.
and 3 of the r6le .nisi, to dissolve the order made by Keely 3.

-
. -

on 24 April 1989 -that certain named respondents refrain from

incurring any further liability or any. further payment to I
Messrs. Gill Kane & Brophy in respect of the matters referred I .

, !

to in the Victorian - Branch Committee of ~anagement's !

- 1 , '
.-

resolution of 7 February 1989.

I::

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I certify that this and the..
preceding thirty (30) pages are

I

a true copy of the Reasons for -

l,,

- Judgment of His Honour - Mr-

Justice Ryan. 1 2

8 .

-

r. -

-

I

/. .

Associate: :e+y -
-

Dated f ,3 z! L;; , .C, iL3

Counsel for ~pplicant: - M r H. Borenstein
-

Solicitors for Applicant: Messrs. J.N. Zigouras & CO
-

Counsel for Respondents:- Miss M.R. Hickey
Solicitors for Respondents: Messrs. Gill Kane & Brophy

Dates of Hearing: 14, 15 and 28 August 1989
1 November 1989
--

Date of Judgment: - 13 July 1990
-

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Citations

Johnson, L.P. v Frizziero, C [1990] FCA 333

Cases Citing This Decision

0

Cases Cited

2

Statutory Material Cited

0

Silbersher, Alexander v Gerkens, Maurice W [1984] FCA 289

Smith v Watson [1906] HCA 80

E. HILL, B. JUDGES,	, . h
L''
J. MAVRODIS, C. MUSCAT,	v .
' _

referred to in the Committee of Management's resolution	.
of 7 February 1989, be dissolved.	I :

NOTE:	Settlement and entry of orders is dealt with in Order	I s
36 of the Federal Court Rules.	/
i

'This meeting endorses the action of the	i '
Secretary to instruct Gill Kane & Brophy to advise	I
and represent members of the Committee of	f
Management for all proceedings before the Federal	l
Court and the Australian Conciliation and	I
Arbitration Commission in respect to litigation and	I :
any other action against the Union and its members
by Les Johnson.'	t ' :

(hereinafter referred to as 'the resolution');	I
i
I
(2)	by-treating as null and v o ~ d and of no force or effect any purported engagement by C. Frizziero, acting as' the

Rules" and a further body of rules ("the Vic'cozian Branch
Rules"); apparently made pursuant .to-	Rule 32A of the Federal
Rules, which govern the Branch.

of 1989 occurred on 1 February 1989 when eight of the	L.;
respondents opposing the application were represented by one	t -
! ' I
firm of solici-tors, Messrs. Gill Kane & Brophy, and the .-
!

applicant on 6 Februar~y 1989, in proceedings numbered V1 6 of	*c ,*
1989, the same respondents, being again all of the members of	.;

respondent, R-. Beitseen, by the Committee of Management of the	F -:
i : ..,

Branch as '-a	'member of the committee	-	of Management of the -	F- :	>.-.
Branch".

that he had -taken both proceedings against the named .	I
l :
respondents because they were members of the Committee of	L .
I .
I
Management. The pro-ceedings instituted by the two rules nisi	I :
I :

Industrial Registrar to arrange an election of	-
members by the Australian Electoral Office for the position of Assistant Secretary upon the expiration of the period of notice of Eileen Jenkins';

proceedings because Counsel then appeared before Gray J. for	i ,,
1

.	amount at your earllest convenience, and-in due course when all
accounts are received we wrll let you have a final account for the whole and any necessary adlustrnent can then he made.

-	signatories authorized under the Victorian Branch Rules. Mr
Frizzier0 then delivered the cheque -by hand -to Gill Kane & -
Brophy from whom he received a trust account receipt dated 6 March 1989, and a detailed bill of costs bearing the same date. hat bill of costs claimed disbursements amounting to $28,376.30 and profit costs of $13,750, making a total bill of $42,126.30. It also bore a handwritten notation "Accept $42,000 as payment in full" which was signed by Mrs Cooney, a

I	-
I	Branch Management Committee, reveals that the amount of
i	I

i	cheque for $5,240.30 drawn in favour of another firm of	i
:,
!	solicitors, Messrs. Ryan Carlisle Needham Thomas, on 21 March	r
-
, -
I '

, -	14 ~ ~ r i l	1989. By motion on notice returnable on that day the	-	- L
8 -

" t h a t	pending	t h e	f i n a l determination	of	t h e s e proceedings	or
f u r t h e r Order,	t h e Respondents	and	each of	them	r e f r a i n from	/ .

judment which his Honour delivered when pronouncing that -	1	:
, '
order that it-was intended to have effect only until the final -	- .
I_ 7
hearing and determination of these proceedings or further	-	!:,
I
order.

[1990] FCA 333

13 Jul 1990

r.10 for the formation of branches and sub-branches in each	J
-	; ..

Rule 23 deals with the funds of the Union by providing:	! -.
t
,_-i
-	"23 - FUNDS OF THE ASSOCIATION

upon for ordinary expenditure without the sanction	of the Council and disbursements for extraordinary .-
purposes shall not be made without the sanctron of

deemed to be necessary by them for the proper .conduct of	.
business. Provided that such rules or by-laws shall not be inconsistent with the rules of the Aesociation.

each branch may elect officers and organisers of the	I'
Branch and may pay such officers and organisers such	*i -*
amounts as remuneratron for their services as may be	'I
determrned by the members of the Branch in meetrng
assembled, -and each Branch may make Branch Rules for the	I.
guidance of the members of the Branch, provided that such
Branch Rules are approved by the Federal Council and are	.
not contrary to any of these Rules.

Rules and each Branch may appoint shop stewards or	[,.~,
collectors to collect such contrrbutions, levies, fines

I _	Rules. Rule - 8 of the Victorian Branch Rules deals with- the	I
I

(ii)	The amount of entrance fees, subscriptions, fines,	I
fees or levies received by the Branch less so much	i
of these amounts as are payable by the Branch to	F:

Requirements o f a machi-nery kind f o r payment o f accounts are contained i n r r . 1 5	.	I !
l.

.-	Branch they shall make such investments from time to time' as the Branch may determine. All orders for the Qrthdrawal of money- shall be signed by the Secretary and President and at least one of the Trustees, and bear the stamp of the Branch. Should one or more of the Truetees be removed from office or-
any vacancy occur from any cause whatsoever, one or more shall be elected to fill the vacancy within four weeks after such