Krantz, Harry David v Federated Clerks Union of Australia

[1984] FCA 461

Re: HARRY DAVID KRANTZ; FREDERICK EDWARD PRIEST and WILLIAM ALEX SMITH
And: FEDERATED CLERKS' UNION OF AUSTRALIA
SA No. 13 of 1984
Industrial Law(Cth)
58 ALR 189 / 5 FCR 416
9 IR 383

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIAN DISTRICT REGISTRY
INDUSTRIAL DIVISION
Gray J.(1)

CATCHWORDS

Industrial Law - registered organization - validity of rules - autonomy of branches - requirements as to federal and branch funds.

Conciliation and Arbitration Act 1904 s. 140(1)(a), s. 140(1)(d), s. 136A, s. 133A.

Industrial Conciliation and Arbitration Act 1972-1983 (S.A.)

Moore v. Doyle (1969) 15 F.L.R. 59

Williams v. Hursey (1959) 103 C.L.R. 30

Sherrif v. Townsend (1980) 48 F.L.R. 20

Allen v. Townsend (1977) 31 F.L.R. 431

Mapstone v. Maynes (1983) 4 I.R. 198

Morris v. Federated Liquor and Allied Industries Employees' Union of Australia (1978) 35 F.L.R. 60

Industrial Law (Cth) - Registered organisation - Rules relating to branch autonomy and branch funds - Whether ss 133A and 140(1)(d) of the Conciliation and Arbitration Act 1904 (Cth) applicable to the organisation - Whether rules complied with ss 133A and 140(1)(d) of that Act or contravened s 140(1)(a) of that Act - Conciliation and Arbitration Act 1904 (Cth), ss 133A, 136A, 139, 140(1)(a), 140(1)(d), 140(5D), 140(6), 143(1)(b) - Industrial Conciliation and Arbitration Act 1972 (SA).

HEADNOTE

The rules of an organisation of employees (the Union) under the Conciliation and Arbitration Act 1904 (Cth)(the Act) provided, inter alia:

(i) that the Union be divided into branches (one being in South Australia) with Supreme control vested in a "National Council" and management powers vested in a "National Executive";

(ii) that each branch fix the amounts of and collect entrance fees and contributions, other than those paid by a member not allocated to a branch;

(iii) that "unless otherwise directed by the National Council or the National Executive, branches may retain . . . all moneys received by them other than the sums hereinafter required to be forwarded to the National Executive" (r 15(1) so far as relevant);

(iv) that each branch pay to the National Secretary, sustentation fees calculated by reference to the total amount of contributions received by the branch;

(v) that subject to the rules and the approval of the National Executive, each branch shall have power to make rules from time to time for its own internal management (r 12(2)(a) so far as relevant);

(vi) that the right of a branch to send delegates is subject to obtaining the prior approval of the National Council or the National Executive (r 12(4) so far as relevant).

The South Australian branch rules made provision, inter alia, as to the powers and duties of its governing body, the care and composition of funds and property, the keeping and auditing of accounts, the fixing of wages, expenditure, collection of entrance fees, contributions, fines and levies and as to banking.

At a hearing, in which the validity of the rules of the Union were challenged, first on the basis of failing to comply with s 133A of the Act and thereby contravening s 140(1)(a) of the Act and secondly, on the basis of failing to comply with s 140(1)(d) of the Act.

Held: (1) The operation of s 133A and s 140(1)(d) is not expressed in the Act to be subject to the enactment of any complementary State legislation and that these two legislative provisions apply to all organisations divided into branches, whether or not those branches are able to participate in the relevant State's industrial system, although this will be a factor in determining the manner of application of those provisions.

(2) Sections 133A and 140(1)(d) cannot be applied in the same way to every branch of every organisation. What are the appropriate elements of any s 133A fund and what are matters affecting members of a branch only within the terms of s 140(1)(d) depend on the circumstances of the particular organisation and its branches in the light of the rules of both the organisation and its branches. The choice of matters which affect members of a branch only will essentially be that of the organisation and not that of the court.

(3) The requirement of s 133A that the rules of the organisation provide that a separate federal fund and a separate branch fund be established is satisfied if the rules of the organisation and the branch make a distinction between funds and property under the control of the federal governing body and those under the control of the branch governing bodies, as was the case here.

(4) Section 133A(2)(c) contemplates that the organisation's rules may enable it to require the branch to pay to it the whole or any part of any entrance fees, subscriptions, fines, fees or levies. It is for the organisation through its rules to choose how to allocate such items. However, a rule, such as the rule in par (iii) above, fails to make the provision required by s 133A and accordingly contravenes s 140(1)(a) when it does not restrict the organisation's calling up of moneys from the branch to such items, but also permits the organisation to direct the branch to pay over moneys generally, which could include moneys falling within pars (c) to (g) of subs (3) of s 133A which are required by s 133A to be part of branch funds.

(5) The proper course in this case was to adjourn the proceedings to enable the Union to alter its rules so as to comply with s 133A, rather than make a declaration under s 140(5D).

(6) The rule in par (iv) above was not contrary to s 140(1)(d) of the Act which required, inter alia, that such rules provide for the autonomy of branches in matters affecting branch members only. The organisation had a right to decide and had decided by making such a rule, that the form of branch rules is a matter affecting the organisation as a whole. Further, the Act does not require that the power to make branch rules be committed to the branches.

(7) The rule in par (v) above did not contravene s 140(1)(d). The Union was entitled to determine and had determined that the question of representation of any branch outside its area was not a matter which affected branch members only but one which affected the whole organisation.

(8) In any event, it was appropriate in this case, that with regard to such matters as the making of branch rules and the sending of delegates beyond branch areas, the organisation's wishes should prevail over those of the branch.

Moore v. Doyle (1969) 15 FLR 59; Williams v. Hursey (1959) 103 CLR 30; Sherrif v Townsend (1980) 48 FLR 20; Allen v. Townsend (1977) 31 FLR 431; Morris v. Federated Liquor and Allied Industries Employees' Union of Australia (1978) 35 FLR 60; Mapstone v. Maynes (1983) 4 IR 198; Nucifora v. Mapstone (unreported, 4 November 1983, Federal Court of Australia), referred to.

HEARING

Melbourne, 1984, November 10, 11, 12, 13, 14; December 21. #DATE 21:12:1984

RULE NISI

Rule nisi to show cause pursuant to s 140 of the Conciliation and Arbitration Act 1904.

P. A. Heywood-Smith, for the applicants.

C. N. Jessup, for the respondent.

Cur adv vult

Solicitors for the applicants: Johnston Withers McCusker & Co.

Solicitors for the respondent: Oakley Thompson & Co.

GFV

ORDER

1. The proceding is adjourned until Thursday 28th February 1985, at Adelaide, for the purpose of giving the Respondent an opportunity to alter its rules, so as to make the provisions required by section 133A of the Conciliation and Arbitration Act 1904.

2. The Rule to Show Cause is otherwise discharged.

Orders accordingly

JUDGE1

On 13th July 1984, the Applicants sought and were granted a Rule to Show Cause pursuant to s. 140 of the Conciliation and Arbitration Act 1904 ("the Act"). The Respondent, Federated Clerks' Union of Australia ("the Union") is an organization of employees registered pursuant to the Act. Each of the Applicants is a member of the Union.

1. By its rules, the Union is divided into branches. Rule 12(1) provides for eight branches in North Queensland, Central and Southern Queensland, New South Wales, Broken Hill (within the county of Yancowinna), Victoria, Tasmania, South Australia, and West Australia, and for one branch consisting of taxation officers. Subject to ballots of the members under rule 32, the supreme control of the Union is vested by rule 16 in a National Council, composed of four national officers and councillors elected by branches, roughly in proportion to branch membership. By rule 27, the committee of management of the Union is the National Executive, which consists of the four national officers and one vice president from each branch, elected by and from the National Council. There is also a National Executive Committee, which consists of the four national officers and the vice presidents from the Central and Southern Queensland, New South Wales and Victorian branches. This body is required to meet at least every two months, by virtue of rule 28.

2. At the hearing, Mr. Heywood-Smith appeared for the Applicants and Dr. Jessup for the Union. A substantial amount of oral evidence was received from Bernadette Anne Callaghan, the branch secretary of the Central and Southern Queensland branch, the first Applicant, who is the former secretary of the South Australian Branch, and Ralph Desmond Clark, the current secretary of the South Australian branch. Numerous documents were also tendered. For reasons which will appear, it is unnecessary to make detailed findings on all of the issues canvassed in the evidence. Some of those issues belong more properly in proceedings under s. 141 of the Act than in a proceeding of the present kind. So far as the facts need to be canvassed, I propose to deal with them in relation to the specific challenges to the rules. As presented at the hearing, these challenges fall into two categories. The first category is based upon s. 140(1)(a) and s. 133A of the Act. The second category depends upon s. 140(1)(d) of the Act. The relevant parts of s. 140 are as follows:
   
   

"140. (1) The rules of an organization -

(a) shall not be contrary to, or fail to make a provision required by, a provision of this Act, the regulations or an award or otherwise be contrary to a law;

...

(d) shall be such as to provide for the autonomy of a branch in matters affecting members of the branch only and matters concerning the participation of the branch in any State industrial conciliation and arbitration system."

It is appropriate to set out s. 133A in full:

133A. (1) In addition to the other conditions referred to in this Act, the conditions to be complied with by associations divided into branches applying for registration as organizations and by organizations divided into branches shall include a condition that the rules of the association or organization shall provide-

(a) that there shall be a fund (in this section referred to as the Federal Fund) which shall be managed and controlled in accordance with rules relating to the association or organization as a whole; and

(b) that each branch shall have a fund (in this section referred to as a Branch Fund) of the particular branch which shall be managed and controlled in accordance with rules of that branch,

and shall make provision in relation to those Funds in accordance with subsections (2) and (3), as if references in those sub-sections to an organization included references to an association applying for registration as an organization.

(2) The Federal Fund shall consist of-

(a) any real or personal property of which the committee of management of the organization, 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 right of custody, control or management;

(b) in the case of an organization the rules of which provide for the payment of capitation fees by a branch to the organization-fees so paid.

(c) in the case of an organization the rules of which provide for the payment of the whole or part of any entrance fees, subscriptions, fines, fees or levies by a branch to the organization-the amounts of such payments;

(d) any interest, rents, dividends or other income derived from the investment or use of the Fund;

(e) any superannuation or long service leave or other fund operated or controlled in accordance with rules relating to the organization as a whole for the benefit of its officers or employees;

(f) any sick pay fund, accident pay fund, funeral fund, tool benefit fund or like fund operated in accordance with rules relating to the organization as a whole for the benefit of its members;

(g) any property acquired wholly or mainly by expenditure of the moneys for the Fund or derived from other assets of the Fund; and

(h) the proceeds of any disposal of parts of the Fund.

(3) A Branch Fund shall consist of-

(a) any real or personal property of which the branch of the organization, 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 right of custody, control or management;

(b) the amounts of entrance fees, subscriptions, fines, fees or levies received by a branch, less so much of those amounts as is payable by the branch to the organization;

(c) any interest, rents or dividends derived from the investment of the Fund;

(d) any superannuation or long service leave fund operated or controlled by the branch for the benefit of its officers or employees;

(e) any sick pay fund, accident pay fund, funeral fund, tool benefit fund or like fund operated or controlled by the branch for the benefit of its members;

(f) any property acquired wholly or mainly by expenditure of the moneys of the Fund or derived from other assets of the Fund; and

(g) the proceeds of any disposal of parts of the Fund.

(4) Rules relating to a Branch Fund shall not be altered except with the consent of the branch concerned.

(5) The Registrar may grant to an association or organization exemption from this section or any provision of this section on the ground that its rules make adequate and reasonable provision for its funds, including branch funds, having regard to its functioning under this Act and its participation in any State system of industrial conciliation and arbitration."

1. An understanding of the provisions of s. 133A and s. 140(1)(d) requires an examination of their history. Each was first enacted by Act No. 89 of 1974, which also first enacted a number of other provisions now found in the Act. Act No. 89 of 1974 resulted from the recommendations of the Committee of Inquiry on Co-ordinated Industrial Organizations, which was constituted by the late Mr. Justice J.B. Sweeney. That committee had been appointed by the then government in an attempt to resolve problems which had become apparent as a result of the decision of the Commonwealth Industrial Court in Moore v. Doyle (1969) 15 FLR 59. In substance, these problems arose where organizations registered under the Act had branches in the States of Queensland, New South Wales, South Australia and Western Australia. The legislation of each of those States provided for registration of associations or unions, and gave to such associations or unions corporate status. It was assumed in the case of many organizations registered under the Act that they were capable of having, and did have, their branches in those States registered under the State legislation. As a result of the judgment in Moore v. Doyle, it became well known that an association or union registered under the legislation of those States was in law an entirely separate entity from the branch of an organization operating within that State. Such a branch could have no existence independent of the organization: see Williams v. Hursey (1959) 103 CLR 30, at pages 53-55, in the judgment of Fullagar J.

2. As a consequence of the attempt, which occurred in many cases, to operate a branch of an organization and a union or association registered under State law as if they were one and the same legal entity, it was thought to be the case that one such body, either the State union or association, or the branch of the organization, would cease to exist or to function effectively, after the lapse of some time. As a result of the decision in Moore v. Doyle, the view was taken that the Transport Workers' Union of Australia did not have a branch in New South Wales; the body which operated under the name "Transport Workers' Union of Australia, New South Wales Branch" was a trade union registered under State legislation, and not a branch of the organization registered under the Act.

3. The task of the Sweeney Committee was to find a solution to these problems, if such a solution could be found. The solution proposed was in substance that the Act should be amended to permit a branch of an organization to be registered under State law, where that State law did not operate to incorporate a body registered under it. For such a system of non-corporate registration to operate effectively, two things were necessary. One was to amend the Act so as to permit a branch of an organization to operate within a State industrial system, so as to ensure that local officers had sufficient authority and funds to participate effectively. The other was for the States to pass complementary legislation, permitting the registration of branches without incorporation. Act No. 89 of 1974 was designed to accomplish the first of these objects. The second has never been accomplished. The legislation of Queensland, New South Wales, South Australia and Western Australia still provides for the attribution of corporate or other legal personality to a registered association or union. In Victoria and Tasmania, no provision is made for registration, but recognition is given to an organization itself, as distinct from a branch.

4. Among the sections introduced into the Act by Act No. 89 of 1974 was s. 136A, which provides as follows:
   
   

"136A.(1)Where it is not contrary to the rules of an organization to do so, it may participate in the systems of conciliation and arbitration or of wages boards or like systems established under the law of a State, and for that purpose a branch of an organization may become registered under a law of a State so long as that registration does not involve the branch in becoming incorporated, or otherwise becoming a legal entity, under the law of a State.

(2) Where an organization so participates, its rules may provide that the Secretary of the branch of the organization in the State shall be the person to sue or to be sued under the law of the State in respect of any acts or omissions arising from that participation."

Part VIIIB of the Act was also enacted at the same time. This is intended to facilitate amalgamation between organizations and existing State registered unions and associations. Reference should also be made to s. 139(5), also first enacted by Act No. 89 of 1974. This provision is intended to make it easier for an organization to alter its rules relating to eligibility for membership so as to enable it to represent persons already represented by a State registered union or association where the two bodies have been conducted in conjunction. All of this legislation was passed either entirely or substantially in the form in which it was recommended by the Sweeney Committee.

1. It was clearly expected by the Sweeney Committee, and by the Parliament which enacted Act No. 89 of 1974, that State legislation would be passed which would complement the scheme introduced into the Act. That expectation is clearly revealed in the second reading speeches on the bill which became Act No. 89 of 1974, both in the House of Representatives and in the Senate. It is an expectation which has not been fulfilled in any State. As a consequence, the intention of the Sweeney Committee, and of the Parliament has been frustrated.

2. In the light of this history, Dr. Jessup submitted that neither s. 133A nor s. 140(1)(d) has any operation in relation to the rules of any organization. On this view, those provisions remain in the Act solely upon the footing that they will spring into effect when the necessary complementary legislation is enacted in any State. Support for this argument is found in the judgment of Northrop J. in Sherrif v. Townsend (1980) 48 FLR 20, at pages 56-57. In that case, the Full Court was called upon to deal with a number of issues arising from the rules of an organization. One such rule permitted a branch committee of management to submit any local question or dispute to a State industrial tribunal after obtaining approval for such submission from the branch in general meeting and from the federal executive committee of the organization. Northrop J. held that s. 140(1)(d) did not apply to branches not falling within s. 136A of the Act. At page 45, Evatt J. expressed his agreement with the conclusion of Northrop J., but limited his reasons to the second part of s. 140(1)(d), namely matters concerning the participation of the branch in any State industrial conciliation and arbitration system. At pages 34-35, the Presiding Judge, Smithers J., accepted the proposition that the rule concerned was a direct invasion of the autonomy of branches, and held that the rule offended s. 140(1)(d). It should be noted that, as is pointed out in the judgment of Northrop J. at page 56, full argument was not directed to the question whether s. 140(1)(d) was effective.

3. One of the issues to which the Full Court addressed itself in Sherrif v. Townsend was the question whether s. 140(1)(d) operated to compel the organization concerned to convert a sub-branch, set up under its rules, into a branch. Smithers J. held that it did not. His Honour did not discuss the question whether s. 140(1)(d) had effective operation. On this issue, the other two members of the Full Court contented themselves with agreeing with the conclusion and reasons of Smithers J. The provision was also considered briefly by Smithers J. in Allen v. Townsend (1977) 31 FLR 431, at pages 458-9, where his Honour expressed the view that a rule which entitled the Federal Secretary to be a member of all branch committees of management of an organization contravened the requirement of branch autonomy. The other two members of the Court, Evatt and Northrop JJ., did not express any view on this issue. Indeed, it does not appear that the Applicant in that case sought relief on the basis of s. 140(1)(d). In Morris v. Federated Liquor and Allied Industries Employees' Union of Australia (1978) 35 FLR 60, a Full Court consisting of Smithers, J.B. Sweeney and Evatt JJ. was called upon to consider whether the power of an organization to amend rules, including branch rules, was required to be expressed to be subject to a requirement that any amendments not trespass upon branch autonomy. This contention was rejected by the Full Court. There was no suggestion that s. 140(1)(d) was not an effective provision.

4. The view of Northrop J. in Sherrif v. Townsend was rejected by Fitzgerald J. in Mapstone v. Maynes (1983) 4 IR 198, at page 205. On appeal from the decision of Fitzgerald J., the Full Court did not find it necessary to consider the question. See Nucifora v. Mapstone (4th November 1983, unreported). The authorities, therefore, do not assist to any great degree in determining whether s. 140(1)(d) operates with respect to all or any branches. Section 133A has not been the subject of any pronouncement by this Court or its predecessor, the Australian Industrial Court.

5. Whilst the history of these provisions, and the information derived from the second reading speeches on the bill which became Act No. 89 of 1974, suggest strongly that the provisions were to operate with complementary State legislation, it is difficult to disregard the provisions altogether, even in the absence of such complementary legislation. It would have been easy for Parliament to make express provision that the new sections enacted by Act No. 89 of 1974 would not come into effect until certain legislation was passed by one or more States, or even to delay the proclamation of such sections until such legislation was passed. Neither of these courses was adopted. The Parliament must also be taken to have been aware that the problems to which the Sweeney Committee addressed itself existed only in four States. Despite this, ss. 133A and 140(1)(d) were enacted so as to be applicable to branches in all States. These factors suggest that the provisions were intended to have some effect in relation to branches which could not participate in State industrial systems. This view is supported by the absence of any reference to such participation in s. 133A (except indirectly in sub-s. (5)), and by the fact that s. 140(1)(d) is expressed so as to apply to two types of "matters", namely those affecting members of the branch only, and those concerning the participation of the branch in any State industrial conciliation and arbitration system. It may be that the reasons advanced by the Sweeney Committee, and accepted by the Parliament, do not justify the entirety of the legislation which resulted. It is, however, an entirely different thing to say that, by reference to those reasons, the legislation should be read as if it had not been passed. However inconvenient it may be, s. 133A and s. 140(1)(d) must be given some meaning in relation to all branches of organizations which have branches.

6. Just what meaning is to be given to them is also a difficult question. It is entirely unnecessary under the Act that an organization should have branches at all; whether branches exist or not is a matter of the choice of an organization, expressed through its rules. If branches do exist, they do not exist separately from the organization, but simply as aggregations of members within the organization. They are no more than convenient divisions of the members of a corporate body, created for administrative purposes. See the passage from Williams v. Hursey to which I have already referred. Many organizations have branches which coincide with the States and, in some cases, Territories. Much of the reasoning which seems to underlie the Sweeney Report is based on the expectation that organizations will have State branches. On the other hand, as the Act does not require an organization to have branches at all, so it does not require an organization which has branches to make them coincide with the States. Branches may be based on smaller or larger geographical areas, or may be based on entirely different aggregations of members. Examples are members employed in particular industries, or by particular employers. The Union itself contains one branch which is employer based, rather than being geographically based. I refer to the Taxation Officers Branch. Several well known examples can be found of organizations which have availed themselves of the opportunity to form branches which are aggregations of members otherwise than on a State basis. Both the Sweeney Committee, and the Parliament which passed Act No. 89 of 1974, must be taken to have been aware of the differences which could, and did, exist between branches, both within organizations, and among various organizations.

7. This reasoning suggests that s. 133A and s. 140(1)(d) cannot be applied in the same way to every branch of every organization. What are the appropriate elements of any fund, and what are matters affecting members of a branch only, must be determined by reference to the circumstances of the particular organization and, in some cases, the particular branch. The question of participation in any State industrial system will inevitably be one factor to be considered. The extent of coverage of members by awards made under the Act will be relevant, as will the question whether those awards are applicable within more than one branch. Of paramount importance will be the system of government which the organization has chosen, and which is expressed in its rules. Section 133A is flexible in its terms. Sub-sections (2) and (3) are not expressed to lay down hard and fast rules as to what the federal fund and the branch fund of an organization divided into branches should contain; in crucial respects, those sub-sections expressly defer to the rules of the organization. The financial requirements of a branch which has full-time officials will inevitably be different from those of one which does not. Similarly, the matters which can properly be considered to affect the members of a branch only will differ from organization to organization, and even from branch to branch within an organization. Whether a particular matter affects members of a branch only will usually have to be determined by looking at the express terms of the rules, or the implications which necessarily arise from them. Accordingly, the choice of matters which affect members of a branch only will be essentially that of the organization, and not that of the court.

8. With these conclusions in mind, I turn to deal with the specific objections made by the Applicants to the rules of the Union. In the first place, an attack was made on the rules of the Union as a whole, on the basis that they failed to make a provision required by s. 133A of the Act, and therefore contravened s. 140(1)(a). As an alternative to, or perhaps in conjunction with, this attack, it was specifically alleged that rule 15(1) of the Federal rules of the Union was contrary to s. 133A, and therefore to s. 140(1)(a). Some examination of the rules is necessary, for the purpose of determining whether they are in conformity with s. 133A.

9. I turn first to the Federal rules. Rule 7 deals with entrance fees and contributions. It permits branch rules to fix the amounts of entrance fees, and gives to a branch a discretion to waive payment of an entrance fee by an Applicant for membership. Rule 7(2) also leaves the fixing of the amounts of contributions to the branch rules. It provides for payment to the National Secretary of contributions by any member not allocated to a branch; the implication is that all other members should pay to the branches to which they are allocated. Rule 7(3) leaves to the branch rules the task of fixing the times and methods of payment of contributions, fees, fines and levies. It also deals with the categories of persons authorized to collect contributions, fees, fines and levies. Rule 8 permits the National Council or National Executive, or branches to levy members up to the maximum amounts laid down by the rule. Rule 15(1) provides as follows:
   
   

"(1) Unless otherwise directed by National Council or the National Executive, Branches may retain for the maintenance thereof all monies received by them other than the sums hereinafter required to be forwarded to the National Executive."

The remaining sub-rules of rule 15 deal with the fixing of what are called sustentation fees, which are fees payable by each branch to the National Secretary each year, and are calculated by reference to the total amount of contributions received by the branch concerned. Rule 27(3) deals with the powers of the National Executive. Its opening words are as follows:

"(3)The National Executive shall, subject to the review of its actions by the National Council, have the care, control, custody, superintendence, management and administration in all respects of the affairs, business, funds and property of the Union..."

The first three sub-rules of rule 37 are as follows:

"(1) All funds and property held by any Branch shall be vested in the Union.

(2) The Executive of a Branch shall not invest any funds for the time being in its possession in other than authorised trustee investments without the approval of the National Council or National Executive.

(3) The funds of the union may be disbursed for ordinary purposes by such officer or officers as may be authorised in that behalf and subject to such limitations as may be imposed. Funds may be disbursed for extraordinary purposes by decision of the National Council or National Executive."

1. The rules of the branches of the Union are plainly relevant to the question of compliance with s. 133A. The Applicants did not seek to tender in evidence the rules of any branch except the South Australian Branch. As a consequence, it is impossible for the Court to assess whether the Applicants would have made out a case of non-compliance with s. 133A in respect of the branch rules of any branch other than the South Australian Branch. The Union does not carry an onus to justify the rules of all its branches in a proceeding such as this, in which it is the Respondent.

2. I turn now to the rules of the South Australian Branch of the Union. Rule 16 relates to the powers and duties of the branch council, which is the governing body of the branch. Under sub-rule (b), the branch council has the care, control and custody of the funds and property of the branch. Under sub-rule (p), it has the power to fix and alter the salaries and allowances of officers, to engage and dismiss office staff, and to pay such salaries and allowances as it may deem proper. Rule 18 deals with the powers and duties of the branch executive. The executive has power to authorize expenditure and to pass all accounts for payment, but not to incur an extraordinary expense exceeding $40.00 without the prior approval of the branch council. Under rule 24(d), the branch secretary is made responsible for the proper carrying on of the branch and is required to act as general supervisor for and on behalf of the branch. Under rule 24(h), the branch secretary is required to receive and bank all monies collected by and on behalf of the branch. Rule 27(i) obliges him to keep a correct account of all receipts and expenditure and submit a monthly statement to the branch executive. Rule 24(j) requires him to submit to the branch council half yearly and yearly audited income and expenditure accounts of the branch. Rule 28 provides for office representatives. Under sub-rule (c)(2) and (4), an office representative is required to collect all monies due to the branch and to pay the same within fourteen days, or on demand, to the secretary, or to other authorized persons at the office of the branch, and the office representative is responsible for any deficiencies in monies collected by him, and shall be authorized to give receipts for all monies collected by him. Rule 36 relates to funds and disbursements; it is in the following terms:
   
   

"(a) The funds of the Union shall consist of all entrance fees, contributions, levies, fines payable to the Union and other revenue acquired. It shall be used only in furthering the objects of the Union as laid down in Rule 3.

(b) All accounts not exceeding, L20 in connection with the ordinary managements expenses of the Union shall be authorised by the Executive. All other accounts of Expenditure shall be authorised by the Council.

(c) The funds of the Union may be invested in such investments as shall be decided upon by the Council and the control of such investments be vested in the Council.

(d) All cheques for the withdrawal of moneys from the bank shall be signed by either the President, Deputy President or Vice-President and countersigned by either the Secretary or Assistant Secretary and shall bear the seal of the Union.

(e) The Branch Council may where it deems necessary authorise Section banking and shall arrange for the opening of Section bank accounts and shall give and may withdraw or change the authority for persons, not being less than two, to operate such accounts. All funds to the credit of such accounts plus interest shall be the property of the Union as provided by this rule and shall only be expended for purposes authorised by the Rules. The authority for Section Banking given by Branch Council in accordance with this rule may be included in the rules of the Section."

Rule 37 deals with the imposition of levies.

1. Dr. Jessup relied upon the rules to which I have referred, together with rules providing for the audit of federal and branch accounts, as the rules which satisfy the requirements of s. 133A of the Act. He pointed to the flexibility of the terms used in that section, particularly as to the elements which are required to make up the federal fund and the branch fund respectively. It is correct, as Dr. Jessup pointed out, that the rules of an organization are not required to echo the precise words of sub-sections (2) and (3) of s. 133A. If some of the subjects of those sub-sections do not exist in an organization or a branch, it would plainly be absurd for the rules to make provision for such subjects to be part of a fund. An obvious example of such absurdity would be the making of a provision in the rules of the Union for a tool benefit fund, such as is referred to in s. 133A(2)(f) and (3)(e).

2. The rules of the Union and of its South Australian branch do make the distinction between funds and property under the control of the federal governing bodies, and those under the control of the branch governing bodies. In this sense, they do establish a federal fund and a branch fund, as contemplated by s. 133A. At the heart of the objection taken by the Applicants to these rules was the proposition that rule 15(1) permits the National Council or the National Executive of the Union to take from a branch all of the monies of the branch. This follows, so Mr. Heywood-Smith argued, from the opening words of the rule. So far as entrance fees, subscriptions, fines, fees or levies are concerned, there is no limit expressed in s. 133A upon the amount of those monies which the rules of an organization can provide should be paid by branches to the federal governing body. Indeed, s. 133A(2)(c) expressly contemplates that the rules of an organization might provide for the payment "of the whole or part of any entrance fees, subscriptions, fines, fees or levies by a branch to the organization". Nothing about the section as a whole suggests that the amount or percentage payable by a branch of these monies should be expressed with precision in the rules, or should be ascertainable in advance. It is permissible that the rules of an organization provide for the ability of a federal governing body to call up the whole or any part of those monies at any time. It is for the organization to choose what system it wishes for the allocation of particular sums of entrance fees, subscriptions, fines, fees or levies to the federal fund or to the branch fund.

3. Rule 15(1), however, goes further than is contemplated by s. 133A(2)(c) and (3)(b). On its face, it would permit the National Council or National Executive of the Union to require a branch to pay over monies which fell within paragraphs (c) to (g) of sub-section (3). The rule would permit the National Council or National Executive, for instance, to call upon monies which included interest derived from investment of monies by a branch, or the proceeds of disposal of branch assets. These monies could be called upon specifically, by reference to the fact that they constituted such interest or proceeds, or generally, by a demand for so large a sum of money as would require the branch to pay over interest or proceeds of disposal, in order to satisfy the demand. In this respect, it appears to me that the rules fail to make the provision required by s. 133A. That section does require that there be distinct funds, and that they be controlled under separate rules. Where it is contemplated that a branch shall be required to pay monies to the Federal fund, this is specifically provided for in s. 133A(3)(b), which relates only to entrance fees, subscriptions, fines, fees or levies. The remaining paragraphs of sub-section (3) do not contain such an expression. If the power in rule 15(1) for the National Council or National Executive to call up monies from the branches were restricted to monies coming to the branches by way of entrance fees, subscriptions, fines, fees or levies, the rules would be in conformity with the provisions of the Act. As they stand, they fail to make the provision required by s. 133A and, accordingly, contravene s. 140(1)(a).

1. In the Rule to Show Cause, specific attention was directed to the power of the National Executive over the funds and property of the Union, given by rule 27(3), and to the provision in rule 37(3), which I have set out earlier. As the case was put at the trial, Mr. Heywood-Smith relied upon these provisions to support the attack on the rules as a whole as failing to comply with s. 133A. It is sufficient to say that the provisions of those rules do not cause the rules as a whole to fail to comply with s. 133A.

2. In support of the Applicants' case, Mr. Heywood-Smith also relied upon evidence of specific instances of funds from branches being called up by the National Council or National Executive. At its meeting in November 1984, after the proceeding had been commenced, the National Council passed a number of resolutions calling up monies from branches. One resolution involved the raising of an additional $250,000.00 as sustentation fees from branches for the year ended 30th June 1984, in proportion to sustentation fees already paid by branches in respect of that financial year. Another resolution required the Central and Southern Queensland branch to pay $40,000.00, which approximated the amount claimed by the national officers as sustentation fees from that branch, there being a dispute between the branch and the national officers as to the correct interpretation of the sustentation fees provisions in rule 15. A further resolution called upon the Central and Southern Queensland and South Australian branches to pay the costs of litigation which had arisen in those branches and had involved the joinder of the Union itself or its national councillors as Respondents. In each case, the resolution fixed a date by which the amount concerned was payable. Reliance was also placed upon the fact that the National Executive had called upon the Central and Southern Queensland branch of the Union to pay the salaries of former employees of the Union within that branch, who had been dismissed by the branch council, and re-employed by the National Executive in the area of the branch concerned. Lastly, reliance was place upon a resolution directing all branches to make payments to an overseas fund, the purpose of which is to finance the sending of representatives of the Union to conferences and like functions outside Australia. Some of these resolutions may raise issues which it would be appropriate for the Court to examine in proceedings under s. 141 of the Act. It is, however, unnecessary for me to make specific findings of fact about the resolutions, or to indicate whether orders would be likely to be made under s. 141. Even if the allegations made by the Applicants are true, they do not indicate the existence in the rules of the Union of powers of the National Council or National Executive which would render the rules in disconformity with s. 133A of the Act.

3. The second complaint of the Applicants was that rule 12(2)(a) of the rules of the Union was in contravention of s. 140(1)(d) of the Act. That rule is in the following terms:
   

(2)(a) Subject to these Rules and to the approval of the National Executive, a Branch shall have power to make Rules from time to time for its own internal management.

All Branch rules made pursuant to this sub-rule shall form part of and shall not be inconsistent with these rules. Such Branch rules shall be subject to these rules. The power given to the Branches by this sub-rule to make rules for their own internal management shall not be taken as a delegation of power to the Branches to make rules precluding the exercise by the National Executive of any of its powers under Rule 27 hereof.

Mr. Heywood-Smith argued that the requirement that the National Executive approve the rules of the branch involved an invasion of the autonomy of the branch in matters affecting members of the branch only.

1. On the view which I have taken of the proper construction of s. 140(1)(d), the very existence in the rules of the Union of the requirement that branch rules be subject to the approval of the National Executive is sufficient to indicate that such rules are not a matter affecting members of the branch only. The Union has chosen to make such rules matters which affect it as a whole. Even if my approach to s. 140(1)(d) is incorrect, I am still of the view that the making and alteration of branch rules are not subjects which fall within s. 140(1)(d). There is nothing in the Act, either express or by implication, to suggest that the power to make branch rules need be committed to branches at all. So far as it is possible to draw inferences from the provisions of the Act, s. 133A(4) suggests strongly that rules relating to a branch fund may be altered by somebody other than the governing body or the members of a branch. If this is so, it is difficult to see how the decision to commit part of the process of making branch rules to a branch, i.e. to commit the initial decision as to the form of such rules to a branch, can be said to make a failure to commit the whole of the process to the branch objectionable. The general reasoning of the Full Court in Morris v. Federated Liquor and Allied Industries Employees' Union of Australia, referred to above, supports this conclusion.

2. Even if it were possible to discern from the provisions of s. 140(1)(d) the existence of some objectively determined class of matters which the Parliament intended could be classed as matters affecting members of a branch only, it is hard to see how the making of branch rules could be said to fall within that class. It is not unreasonable that an organization should require that the rules of all its branches be consistent with its federal rules. If this view is taken, there is obviously a necessity to have some body able to make a decision whether such consistency exists, even if such a decision is afterwards overturned by the court. It is proper that the body chosen to exercise this discretion should be the committee of management at the federal level. More importantly, it is the organization itself which has ultimate responsibility for its rules. To be valid, and to be accepted by the Industrial Registrar for certification under s. 139 of the Act, all rules, including branch rules must comply with s. 140(1) of the Act. If its rules do not so comply, but are nevertheless certified by the Industrial Registrar, the organization may face litigation by one of its members under s. 140(2), or possible de-registration upon the ground referred to in s. 143(1)(b). The form of the rules of a branch is, therefore, a matter which affects the organization as a whole, and upon which it is appropriate that the committee of management of the organization at the federal level should have a say.

3. An attempt was made by evidence to demonstrate that the National Executive of the Union has frustrated and delayed attempts by the South Australian branch and the Central and Southern Queensland branch to alter their branch rules, since the coming into operation of s. 140(1)(d). Again, it is unnecessary for me to make specific findings of fact about these matters. It is also unnecessary for me to consider whether the evidence discloses breaches of the rules by members of the National Executive, which might provide grounds for an application under s. 141 of the Act. On any view which could be taken of the rule amendments the subject of the evidence, they were matters upon which it was proper for the National Executive of the Union to have the final say. The challenge to the validity of rule 12(2)(a) fails.

4. The final attack by the Applicants was made on rule 12(4) of the rules of the Union, which is in the following terms:
   
   

"(4) No Branch shall send delegates to, be represented in any other manner, on or affiliate with any National or International Organisation, Body or Meeting without first receiving permission from National Council or the full National Executive."

It was contended that this rule involves an interference with matters affecting members of branches only, and accordingly that the rule is in contravention of s. 140(1)(d). Some evidence was given of actual attendances by officers of the South Australian Branch, including the first Applicant, at conferences outside South Australia, and of affiliation with bodies which might be described as "National". The evidence was, however, inconclusive as to whether these attendances and affiliations were in breach of the rules of the Union, or whether they involved action by or on behalf of the Federated Clerks Union of Australia, South Australian branch, an association registered under the Industrial Concilation and Arbitration Act 1972-1983 (South Australia), which would be beyond the reach of the rules of the Union. Whatever be the true position, so far as the rules of the Union are concerned, it has been determined by the Union that the question of representation of the kinds referred to in rule 12(4) is not a matter affecting the members of any branch only, but is a matter affecting the organization itself. In my view, this is sufficient to dispose of the challenge to rule 12(4). Even if this approach is incorrect, the question of representation of any branch outside its area is one on which it is appropriate that the National Executive of the Union should be entitled to express a view which prevails against that of any branch. It is inevitable that delegates or representatives of a branch will be seen as delegates or representatives of an organization, if attending conferences or being involved in activities outside the area of the branch concerned. It is appropriate that the committee of management of an organization at the national level should have the final say as to who represents the organization in this fashion. The challenge to rule 12(4) is rejected.

1. Although, in form, the Rule to Show Cause may have permitted the Applicants to pursue a challenge to the rules of the Union as a whole, based upon s. 140(1)(d), the challenges which were in fact pursued were limited to those relating to the specific rules 12(2)(a) and 12(4).

2. In the result, the Applicants have failed, to make out a case for the invalidity of the rules of the Union, accept in so far as those rules fail adequately to make the provision required by s. 133A. In the event that the Court took the view that any contravention of s. 140 of the Act existed, Dr. Jessup submitted that it was appropriate that the Court should not make any declaration of a kind contemplated by s. 140(5D), but that the Court should exercise the power given by s. 140(6) to adjourn proceedings for the purpose of giving the organization an opportunity to alter its rules. Mr. Heywood-Smith did not dispute that this course would be appropriate. In my view, it is appropriate to grant an adjournment. To make any declaration under sub-section (5D) might have the effect of leaving the Union powerless in some respect in the management of its funds and property, until such time as amended rules could be made and certified pursuant to s. 139(4) of the Act. This would be an undesirable situation. Accordingly, the Court will order that the proceeding be adjourned until Thursday, 28th February 1985, for the purpose of giving the Respondent an opportunity to alter its rules, so as to make the provisions required by s. 133A of the Act. If, upon the matter being mentioned on that date, further time is necessary to enable alterations to be finalised or certified, consideration can then be given to a further adjournment. Otherwise, the Rule to Show Cause will be discharged.