Lewis, B.L. & Ors v Maynes, J.P. & Ors Lannigan, G.J. v Lewis, B.L

[1988] FCA 695

JUDGMENT No. ... 6% ........ ..... 7 . .._.. 8g.

C

r CATCHWORDS

Industrial law - registered organization - rules performance and observance - whether expenditure incurred in relocating

branch office is expenditure for "an extraordinary purpose or

extraordinary purposes" - whether rule applies to

disbursements of funds controlled by a branch - whether funds

held by branch are funds of the union - whether the words

"ordinary and "extraordinary" are toa uncertain to .have

meaning - meaning of "ordinary" and "extraoqdinary"	- whether
rule contravenes Act	- oppressive, unreasonable and unjust -

whether rule attempted to permit union expenditure beyond

objects of organization.

Conciliation and Arbitration Act 1904

Conciliation and Arbitration Regulations reg. 115(l)(d)

Federal Court Rules

BARBAFA LEE LEWIS, SYLVIA PEARL BROOKS, MICHAEL DAVID

GIDDINGS, RUSSELL WILLIAM COLE, LINDSAY JAMES TANNER,

EMMANUEL LAMBROU and JANET RUTH WHEATLEY V. J.P. MAYNES, J.D. SMITH, T.W. SULLIVAN, R.J. WASSON, M. BOURKE, V. HIGGINS, R.D. CLARKE, M. STRANGWOOD, J.D. SWORDS, H.J.

DARROCH, D.J. FRY and L.T. HAUFF

GERALD JAMES LANIGAN V. BARBARA LEE LEWIS, LINDSAY JAMES

TANNER, SYLVIA DAVID GIDDINGS, RUSSELL WILLIAM COLE, DAWN PAMELA PERRY,
JANET RUTH WHEATLEY, DEREK BARNARD, PETER BUTCHER, NOEL
FRANKS, DAVID LEYDON, MABEL MCCANDLES, SAFET MUJOVIC, JOAN PEARL BROOKS, EMMANUEL LAMBROU, MICHAEL

PRICE, PETER TAYLOR, PAUL WELSHE, LINDA WHITE, BARBARA WOODALL, KATRINA	PRIOk, K.H. SCHULLER, C.J. SCOTT,	LORRAINE
WOODLAND, SYLVIA AINLEY,	M. COX, R. HEARN, JAMES HEWATT,	J.M.
PEDRANA, IRMA STEINKUHLER,	J.	VAN DER PLUYM, BRUCE SCOTT,

JULIA McCARTHY, MARGARET HUXTABLE,	R. TALBOT, JOHN NICHOLLS,
P. VIVEKENANTHAN, MAURICE WIGGETT, CAROLYN	JANE WELSH, DAVID

LINDSAY, K. BRYCE, DONALD PACKHAM, KEITH WILSON

r

VI No. 47 bf 1988

VI NO. 48 Of 1988

GRAY J.

MELBOURNE

1ST DECEMBER 1988

IN THE FEDERAL COURT	OF AUSTRALIA	) ,
)

VICTORIA	D STRICT	REGISTRY	)	No. VI 47 of 1988
1

INDUSTRIAL DIVISION	1
BETWEEN:

BARBARA LEE LEWIS, SYLVIA PEARL BROOKS,

MICHAEL DAVID GIDDINGS, RUSSELL

WILLIAM COLE, LINDSAY JAMES TANNER,

ENMANUEL LAMBROU and JANET RUTH WHEATLEY

Applicants

-and-

J.P. MAYNES, J.D. SMITH, T.W. SULLIVAN,
R.J. WASSON, M. BOURKE, V. HIGGINS,
R.D, CLARKE, M. STRANGWOOD, J.D. SWORDS,

H.J. DARROCH, D.J. FRY and L.T. HAUFF

Respondents

MINUTES OF ORDER

! THE COURT ORDERS THAT:

1.    The preliminary question is answered as follows:

Question:  Whether expenditure pursuant the to

resolution of the State Council of the

Victorian Branch of the Federated Clerks

Union of Australia declared carried on

20th September 1988 is or was or would be

expenditure for an extraordinary purpose or extraordinary purposes within, the meanlng of rule 3 7 ( 3 ) of the rules of the

Federated Clerks Union of Australia.

Answer :	Expenditure pursuant to the resolution of the State Council of the Victorian Branch
of  the F derated Clerks Union f
Australia  declared carried on 20th
September 1988 is not, was not and would
not be expenditure  f o r an extraordinary
purpose or extraordinary purposes within
the meaning of rule 3 7 ( 3 ) of the rules of
the Federated Clerks Union of Australia.

2.	The further hearing of the proceeding	is adjourned to a
date to be fixed.

(NOTE:	- Settlement and entry of orders	is dealt with in	0.36
of the Federal Court Rules.)

I

I	IN	THE	F DERAL	COURT	OF AUSTRALIA	)
1

VICTORIA	D STRICT	REGISTRY	1	No. VI 48 of 1988
)

DIV SION INDUSTRIAL )

i BETWEEN:

GERALD JAMES LANIGAN

ADplicant

I - -

-and-

Indents

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.    The preliminary ques ition is answered as follows:

Question:  Whether expenditure pursuant the to

resolution of the State Council of the

Victorian Branch 0 5 the Federated Clerks

Union of Australia declared carried on 20th

I

September 1988 is or was or would be

expenditure for an extraordinary purpose	or
extraordinary purposes within the meaning	of

rule 37( 3) of the rules of the Federated

Clerks Union of Australia.

Answer:  Expenditure pursuant to the resolution of

the State Council of the Victorian Branch of

the Federated Clerks Union of Australia

declared carried on 20th September 1988 is

.not, was not and would not be expenditure

extra dinary an for purpose or

extraordinary purposes within the meaning of rule 37(3) of the rules of the Federated

*r-

Clerks Union of Australia.

2.    The rule to show cause is discharged.

(NOTE: Settlement and entry of orders is dealt with in 0.36 of the Federal Court Rules.)

!

b

IN THE FEDERAL COURT OF AUSTRALIA )

1      Nos. VI 47 of 1988

VICTORIAN DISTRICT REGISTRY	1	and VI 48 of 1988
1

DIV SION	INDUSTRIAL	j
BETWEEN:

BARBARA LEE LEWIS, SYLVIA PEARL BROOKS,
MICHAEL DAVID GIDDINGS, RUSSELL
WILLIAM COLE, LINDSAY JAMES TANNER,

EMMANUEL LAMBROU and JANET RUTH WHEATLEY

Applicants

-and-

AND BETWEEN:

GERALD	JAMES	LANIGAN	pplicant
-and-

,

Respondents

I

REASONS FOR JUDGMENT

JUDGE: Gray	3.
PLACE:	Nelbourne
-
-	DATE: 1st December 1988

The Federated Clerks Union of Australia ("the

Union") is an organization of employees, registered pursuant to the Conciliation and Arbitration Act 1904 ("the Act"). By rule 12(1) of its rules, it has various branches, including a

branch in Victoria. That branch has rules applicable solely

to it. It is convenient to refer to the rules of the Union

as the federal rules, and to the rules	of	the Victorian
Branch as the branch rules.

'?-

At the national level, the Union has a two tier

system of government. Under rule	16 of the federal rules,
the National Council has supreme control	of the Union. Under

rule 27, the	National	Executive	is the	committee	of
management	of	the	Union.	It consists of the	National

President, the National Deputy President, the National

Secretary, the Assistant National Secretary and one National

Vice-President from each branch.

At the branch level, there is a three tiered system

of government. Under branch rule	13, there is	an annual
State Conference. under branch rule	19, there	is a State

Council, which consists of seven state officers and a number

of councillors. Branch rule 21 sets up the State Executive,

as the committee of management of the branch. The State

Executive consists of the seven state officers.

The Victorian branch currently occupies office

premises in a building situated at 53 Queen Street,

Melbourne, and known as Fedsda House. That building is owned

by Fedsda Pty. Ltd., a trustee company owned jointly by the

Union and Distributive & another registered organization, the Shop

Allied Industries Employees Union of

Australia. The .Union's national office, and the office of

its Taxation Officers Branch, are also located in that

building.

*

At a meeting of the State Executive, held on 29th August 1988, the State Secretary reported on a proposed move

of the office of the Victorian Branch to 1st floor, 500

Swanston Street, Carlton, in a building owned by the Building
Workers' Industrial Union of Australia. The State Executive
resolved to recommend the move to the State Council, and

resolved that this recommendation be conveyed to the State

Council meeting on 30th August 1988, and that a decision on

the recommendation be made by postal ballot of the State

Council one week thereafter.

On 30th August 1988, the State Secretary presented

to the State Council a detailed report on the proposed move.

i b

,l

- 4 .

This report approximately 6,230 indicated that it was proposed to lease

square feet on the 1st floor of 500

I

swanston Street, compared with approximately 5,000 square

feet currently occupied in Fedsda House. The proposed rental

was $19.00 per square foot per year, compared with the Fedsda

House figure of $10.00 per square foot per year. A three

year lease, with	an option for a further three years, was
proposed. The lease was to contain a right	to terminate with

three months' notice on either side. The branch would also become liable for a proportional part of council and Melbourne and Metropolitan Board of Works rates and lift

maintenance costs, and would be required to make its own
arrangements with respect to cleaning and security. It was
reported that car parking would be leased at the rate of
$100.00 per month per car space, the proposal being to lease
nine car spaces.

In the report, the State Secretary estimated that

the new premises would involve additional rental cost to the
branch of approximately $50,000 to $60,000 per year, compared

with likely future rental costs at Fedsda House. He drew

attention to the likely need	to purchase or lease a main
frame computer. The purchase cost was estimated	at no more
than $30,000,	which would be offset against the cost of
current computer arrangements. Partitioning and purchase	of
new furnishings were an estimated	$30,000, less the posslble
sale of	existing furnishings and partitioning in Fedsda

House. The report drew attention to costs associated with
furniture removal and publicity to members and the general
public. It also drew attention to the need to negotiate the
completlon of the branch's current lease with Fedsda Pty.
Ltd. The report claimed a number of advantages for the move,

including cost savings in some respects.

By letter dated 6th September 1988, the State

Secretary conducted a postal ballot of State Councillors	on
the following motion:

"That the premises and registered office of

the Federated Clerks Union of Australia

(Victorian Branch) be moved to the 1st floor,

500 Swanston Street, Carlton, in accordance

with the proposal submitted to the State

Council by the State Executive."

A majority of members of the State Council voted in favour of

this motion, which therefore became	a resolution of the State
Council. The result was declared at	a meeting of the State
Executive on 20th September 1988.

On 21st September 1988, the National Secretary of

the Union forwarded to all members of the National Executive

a postal ballot upon the following motions:

"(l) That the expenditure that would be

involved in a y relocation the f

Victorian branch office would involve and
is hereby deemed to involve disbursement

of funds for an extraordinary purpose and

must not be entered into except by

decision of the National Executive.

i

( 2 ) That the members and officers of the

Victorian branch and in particular of the

members of the State Executive of the
Victorian branch are hereby directed not

to incur any expenditure or take any

steps whatsoever relocate to the

Victorian branch office or any of the

furnishings thereof or any branch records

or the place of work of any paid

officials	or	of the	clerical	nd
administrative	staff	from	the	present

branch office situated at 53 Queen

Street, Melbourne.

( 3 ) That the members and officers of the

Victorian branch and in particular the

members of the State Executive of the

Victorian branch are hereby directed not

to purport to nor take any steps

whatsoever to enter into any lease in

respect of any premises proposed as

premises	for	a branch	office	in
substitution	for	the	branch	office

presently situated at 53 Queen Street,

Melbourne nor to enter into any agreement

for nor to expend any Union funds for the t

refurbishment or furnishing of any

premises proposed as an alternative	to
the present branch office situated	at 53
Queen Street, Melbourne."

i

A majority of the members of the National Executive voted for

those motions, which thereby became resolutions of the

National Executive. The result was declared on 27th

! September 1988.

In the meantime, correspondence was exchanged

between an agent for the proposed lessor of 500 Swanston

Street and the branch secretary.	A letter from the agent to
the branch secretary, dated 23rd September	1988, set out the
terms of the proposed lease.	In some minor respects, these

I

.I

1 .

terms differed slightly from those contained in the branch

secretary‘s report. The letter contained a term that the

lessee should be entitled to give three months notice to

vacate “should there be a substantial change in Union

leadership”, and a term reserving to the lessor the right to

give one month’s notice to vacate “in the event	of a change
in Union leadership”. By letter of the same date,	the State
Secretary accepted the terms proposed. Accompanying this
letter was a nominal deposit of	$100.00.

By letter dated 28th September 1988, the National

Secretary advised the State Secretary of the resolutions adopted by the National Executive by postal ballot.

’ .5

On 13th October 1988, two separate rules to show

cause were granted. In matter No. VI 47 of 1988, the

applicants are the members	of	the State Executive and the
respondents are the members	of	the National Executive. The

I

respondents are called upon to show cause why an order should

not be made that they perform and observe the rules of the

Union by treating as null and void and of no effect the

resolutions declared carried on 27th September 1988, after

the postal ballot of members of the National Executlve.	In
matter No. V I 4 8	of 1988, the applicant is a member of the

Victorian branch of the Union and the respondents are the members of the State Council of that branch. In that matter, the respondents are called upon to show cause why an order

!

should not be made directing them to perform and observe the

rules of disbursing any funds of the Union, the Union by desisting and refraining from

or entering into any

agreement to disburse any funds of the Union, for the purpose

of or as a consequence of moving the premises of the

Victorian branch of the Union from its present situation at 53 Queen Street, I-felbourne. In each case, interim orders are sought in terms similar to the final relief claimed.

. .

The matters both came before the Court on 2nd and

3rd November 1988, for the hearing of applications for

interim orders. After hearing evidence and argument, I took

the view that the resolution of the matters would be assisted

by the trial of the preliminary question, pursuant to 0.29 of

the Federal Court Rules. Accordingly, the Court ordered that
the question whether expenditure pursuant to the resolution
of the State Council of the Victorian branch of the Union,
declared carried on 20th September 1988, is or was or would
be expenditure for an extraordinary purpose or extraordinary
purposes within the meaning of rule 37(3) of the rules of the

Union be decided separately from any other question in the

proceedings, and that that question be heard on 21st November

1988.   Undertakings were given and orders made, designed to

protect the positions of both sides in the meantime.

It is convenient to set out in full the provisions

of rule 37 of the Federal rules.

I c

9 .

“37 - FUNDS AND PROPERTY - DISBURSEMENT OF SAI3E

(1) All funds and property held by any Branch

shall be vested in the Union.

(2) The invest any funds for the time being Executive of a Branch shall not

in

its possession in other than authorised

trustee investments without the approval

of the National Council or National

Executive.

(2A) (a)	A Branch shall not establish any
superannuation, long service leave, sick pay, accident, funeral or other specific purpose fund without the approval of the National Executive. In the case of any such fund which
is, the as date t of he
commencement of the operation of
this sub-rule, already established,
no alteration shall be made in the
rules governing such fund without the approval of’the National Executive.

(b) No payment of moneys retained by a

Branch under Rule 1 5 ( 1 A ) shall be

made into any superannuation, long

service leave, sick pay, accident,

funeral or other specific purpose

fund, now or hereafter to be

established, without the approval of
the National Executive. In the case
of funds existing as at the date of
the commencement of this sub-rule,

it shall be deemed that the National

Executive has approved the

continuation, under existing rules
relating to those funds, of payments
into such funds, unless the National Executive determines otherwise not
later than 31st December, 1985.
(c) On any question	of approval under

this sub-rule the National Executive

shall have regard to the practices

and standards prevailing in all

Branches, and may alter the future
conditions to apply to any such fund
as an alternative to disapproving
the fund.

( 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 National or
Executive.
( 4 )	No loan, grant or donation of an amount
exceeding $1,000 shall be made by the
Union unless the National Executive:
(a) has satisfied itself:-

(i) that the making of such loan, grant or donation would be in accordance with these Rules; and

. (ii)in relation to a loan, that in

the circumstances the security

proposed to be given for the

repayment the of loan is

adequate and he proposed

arrangements for the repayment

are satisfactory; and

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

Provided that this sub-rule shall not

apply in relation to payments made by the

union by way of provision or for,

reinbursement of out-of-pocket expenses

incurred by persons for the benefit of

the Union. ''

On the one hand, it is contended that all items of

expenditure connected with the relocation	of the Victorian
branch office from 53 Queen Street to 500 Swanston Street

are, or would be, disbursements for extraordinary purposes,
within the meaning of rule 3 7 ( 3 ) . The contrary contention is
that no such item of expenditure falls within that rule.

Ms. Hickey of counsel appeared for the members of the State Executive in matter no. VI 47 of 1988, and for some

of the members of the State Council in matter No. VI 48 of

1988. Mr. Dalton P.C. and Mr. Philbrick of counsel appeared for most of the members of the Natlonal Executive in matter

no. VI 47 of	1988.	Mr. Tracey of counsel appeared for the
applicant in matter no.	VI 48 of 1988.	Because questions
arose of the possible contravention of	s.140	of the Act by

rule 3 7 ( 3 ) , the Union itself sought and was granted leave to

intervene in the proceedings. Mr. Dalton Q.C. and Mr.

Philbrick also appeared for the Union, and indicated that the

submissions which they put were put on behalf	of the Union,
as well as	the majority of members of the National Executive.

.-

Ms. Hickey’s first submission was that rule 3 7 ( 3 )

has no application at all to disbursement of funds by or on

behalf of a branch of the Union. This submission had a

number	of	aspects,	based	on	the	history,	validity	and
construction	of	the	rule.	The	second	major	issue	was

whether, if it applied to branch expenditure, rule 3 7 ( 3 )

operated to prevent the particular expenditure the subject of

the proceedings, without a decision of the National Council

or National Executive. At the conclusion of argument, on

22nd November 1988, I announced that I.did not have a

concluded view on.the issue whether rule 3 7 ( 3 ) applies to

branch expenditure, but did have a flrm view that the

particular expenditure under consideration could not be

characterised as for an extraordinary purpose in the event

that the rule did apply. Accordingly, I announced that it was my intention to answer the preliminary question in the negative, but to publish my reasons for judgment at a later

time, to enable consideration of the first issue, and to
assist in dealing' with the arguments which had been put

according to their merits. Apart from certain questions of

interim orders, which were then dealt with, it was agreed

that the making of formal orders in the two proceedings

should await the.publication of my reasons for judgment.

In Bailey V. Krantz (1985) 13 I.R. 339,

I

especially at p. 389, it was assumed that rule 37(3) of the

federal rules was applicable to expenditure out of funds held
by a branch of the Union. No specific argument was directed

in that case to the question whether rule 37(3) did have this

effect. In the present case, such specific argument has been

l

put. Ms.

Hickey argued that, on the proper construction of rule 37(3), in the context of the rest of rule 3 1 , and the rules as a whole, rule 37(3) only applied to what might be

called federal funds, i.e. those funds which, under the

federal rules, come within the control of the National

Council and National Executive. On this basis, the first

sentence of rule 37(3) is properly to be regarded as giving

limited authority to national officers to spend federal funds

for ordinary purposes, subject to limitations expressed

I

1 3 .

elsewhere in the federal rules. The second sentence reserves
to the National Council and National Executive the right to
decide whether to expend funds for extraordinary purposes.
Limitations on the powers of the national officers to spend

moneys do appear elsewhere in the rules. For instance, rule

24(3)(p) provides for the division of what are called

"National Funds" into two bank acounts, one described as the
National General Fund Account and the other as the National
Advance Account. No more than $2,000 can be banked at any
one time in the latter account, and cheques drawn on that

latter account msy be signed by the National Secretary alone.

Cheques drawn on the General Fund Account are required to be

signed by the National Secretary and either the National
President, or when not practical by one of the National Vice

Presidents.

The derives some support from the form construction contended for by Ms. Hickey

of rule 37. Sub-rules

(l), (2) and ( 3 ) were first adopted in 1956, and were in

their present form, subject to inconsequential amendments

made subsequently. They were without sub-rules (2A) and	( 4 ) .
Ms. Hickey drew attention to the specific references to funds
held by any branch in sub-rule	(l), funds in the possession

of the executive of a branch in sub-?xle ( 2 ) and moneys

retained by a branch in sub-rule (2A)(b), and contrasted

those expressions with the words "funds of the Union" in

sub-rule ( 3 ) . This was put as an indication that the framer

i

of the rules intended to distinguish between funds of a

branch and funds held at the national level. On this basis,

makes it clear that, notwithstanding that a branch may hold funds, they are funds which are owned by the

sub-rule (1)

Union. Comments probable purpose, were made in Bailey v. Krantz (1985) on the meaning of this rule, and its

13

I.R. 339, at pp. 387-388. Sub-rule (2) contains restrictions

on the powers provision, sub-rule of a branch to invest funds. The later

(2A) contains specific restrictions on

the right of a branch to pay moneys into certain funds for

specific purposes. Sub-rule (3) then deals with the manner

in which federal funds may be disbursed.

The wording of sub-rule (4) may lso be

significant. This sub-rule was inserted after the coming

into operation in 1983 of s.1338 of the Act. That section

requires a rule of this nature to be inserted into the rules

of each registered organization, and of any branch of each

registered organization. The section makes it clear that

there is to be a rule applicable to loans, grants o r

donations made by the organization itself, and a rule

applicable to loans, grants or donations made by any branch.

A rule complying with s.133B has been inserted in the branch
rules, as rule 46. It is extremely unlikely that the framer

of rule 37(4) of the federal rules intended that provision to

apply to loans, grants or donations made by branches. So to

do would have been to go further than the requirements of s.l33B, and to impose a dual requirement on the making of

loans, grants requirement of approval at both branch and national levels.
It may be taken, therefore, that the reference to the making or donations by branches, namely the

of any loan, grant	or donation by "the Union"	in sub-rule (4)
is intended to	be a	reference to the making of such loan,

grant or donation out of federal funds, and not out of branch

I	funds. It would be surprising if the framer of sub-rule (4) had chosen the same phrase as appears in sub-rule (3), whilst
intending to give it a different meaning.

Ms. Hickey's argument also draws considerable

support from the definition of "officer" in rule 45(k) of the

federal rules. That definition is a's follows:

"(k) "Officer" in these rules means the

National	President,	National
Deputy-President, National Secretary and Assistant National Secretary.
In respect to branches "Officer" shall
mean those positions which are defined as
such in the rules of the branch
concerned, failing such definition or, shall mean the members of the Branch
Executive or of the Branch Committee of
Management by whatever name called."

There are instances to be found in the rules where the word

"officers" is used, in circumstances which show that it must

mean those national officers listed in rule 45(k). In

i

particular, reference is made to rule 19(2), under which the

order of business at meetings of the National Council

includes the provides for removal from office of any officer election of officers, and rule 33, which

or member of

the National Council or of the National Executive, among

other means, by ballot of the membershlp. On the other hand,

where the framers of the rules have desired to make reference

to officers-of a branch they have often made specific and

clear reference. Examples are found in rule 14(d), requiring

branch returns including a list of officers of the branch,

rule 27(3)(b), under which officers of a branch may be

removed by the Nqtional Executive, and rule 31(l)(i) in which

an offence is created of knowingly giving misleading

information relating to Union business or matters to any

officer of the Union. Rule 31(7). also contains specific

' b

refer'ence to an officer in the Union or a branch. Rule 49(6)

has a specific definition of "officer", for the purposes of

that rule. It includes certain officers of branches.

In some rules, reference is made to the holder of

any office, as distinct from to "officer". Such rules

include rule 27(3)(a) and rule 31(l)(g) and (1). All these

are disciplinary provisions. In the case of rule 31,

specific reference is made to branches. In rule 27(3)(a) the reference is to "the holder of any office in the Union". Mr

Dalton argued that rule 27(3)(a) obviously gave to the

National Executive the right to deal with the holders of

offices in branches. I doubt that this is so, especlally ln

I

t h e l i g h t o f p r o v i s i o n s s u c h a s r u l e 2 7 ( 3 ) ( f ) a n d (h) , a n d

the p re sence b ranch o f f i ce r s o f d i sc ip l ina ry p rov i s ions w i th r e spec t t o

I

i n branch rule 20(e ' 1 .

What does emerge from an examination of the rules

is t h a t s p e c i f i c r e f e r e n c e s a r e made t o b r a n c h o f f i c e r s where

t h e s e a r e i n ru l e 45(k) is appl ied d e s i r e d . I n t h i s way, t he de f in i t i on o f "o f f i ce r "

in accordance with i t s terms. Where

t h e r e i s no t h e n a t i o n a l o f f i c e r s s p e c i f i e d re ference to a branch, the word " o f f i c e r " means

i n t h e f i r s t s e n t e n c e of the

d e f i n i t i o n . Where t h e r e is a r e f e r e n c e t o a branch, the word

" o f f i c e r " means a11 of those who f a l l w i t h i n b o t h s e n t e n c e s

of	the	def in i t ion .	Apply ing	the	def in i t ion	i n t h i s way	t o
t h e f i r s t suppor t	e n t e n c e	of	r u l e	3 7 ( 3 ) ,	t h e r e	i s	considerable
T

fo r t he v i ew tha t t ha t s en tence app l i e s on ly t o

n a t i o n a l o f f i c e r s ,	and	the re fo re	on	ly	t o	funds	con t ro l l ed	a	t
t h e n a t i o n a l l e v e l .

The contrary argument was t h a t r u l e 3 7 ( 1 ) makes i t

c l e a r t h a t funds held by any branch are funds of t h e Union,

and t h a t r u l e 3 7 ( 3 ) p r e s c r i b e s t h e manner of disbursement of

such funds. Further , there would be an anomaly i n t h e r u l e s

of the Union i f o n l y n a t i o n a l o f f i c e r s were t o be s u b j e c t t o

rule 37(3) , were t o have no control and the Nat ional Counci l and National Executive

over the xpenditure of funds by

branches.

I

!

I	18.
i
i	This argument would have carried more weight if
I	rule 37(1) described funds held by a branch as "funds of the
i
I	i
Union". It does not use that terminology. As has already
I	been said, its purpose is to make it clear that the Union, as
a body corporate, is the owner of all funds (and property)
!
held by any branch. It does not necessarily operate to bring
i
I	all funds held by any branch within the expression "funds of
j
I
I	the Union".
I
1	The branch rules, which are the only rules of any branch of the Union in evidence in the present proceeding, do contain significant provisions concerning the expenditure of
funds. Rule 33 provides as follows:

.5

"33 - APPLICATION OF FUNDS

Subject to National Rule 15 all moneys

received on account of entrance fees,

contributions, fines, levies, donations

or on interest on capital shall be

disbursed only in furthering the objects

as laid down in Rule	3 .
All orders for the withdrawal of	moneys
from the bank shall be signed by the

President or Deputy Vice-President or

Senior Vice-President Jun or or

Vice-President together with the state

Secretary or First Assistant S ate

Secretary.

No funds in possession of the Branch

shall invested be other in than

authorised trustee investments without

the approval of the National Council or

National Executive."

l

I

It is wortH noting that the objects in rule 3 include that in

I	rule 3(k), namely "to purchase, sell, mortgage, lease or
i
I	otherwise
deal all moneys collected by and on behalf of the branch. By rule 22(a)6, the State Executive "shall be responsible for all with any land or other eal estate." By rule
!
I	25(c), the State Secretary is required to receive and bank
expenditure of expenditure for the proper upkeep and the furtherance of the [branch], and may incur all necessary
i	I
1	objects of the [branch] and it may pay all sums so incurred."
The requirements for signature of orders for withdrawal of
l	moneys from the bank, found in rule 33(b), are found in the
same terms in rule 23(d). In addition, by rule 25(g), the
State Secretary is required to countersign all money orders, vouchers and cheques for and on behalf of the branch, and is
prohibited from making any payment exceeding $ 4 0 except by
cheque.

It may be seen from these provisions of the branch

rules that the State Executive, an elected committee, is

responsible for all items of expenditure within the Victorian

branch of the Union. No one or more officers, as officers,

has or have power to expend the funds of the branch for any

purpose. The committing responsibility for their expenditure to an elected branch rules thus safeguard the funds by

!	committee. It is the State Executive which must make	the
decision to disburse each item of expenditure. Rule 37(3)

can be viewed as imposing a different regime officers authority to disburse money for ordinary purposes, at the national

level. In the first place, it commits to an officer or

without any decision of the National Council or National

Executive. Such a decision is only required when the purpose
of a disbursement If extraordinary. This view is consistent
with the role of the National Executive under rule 27(3),

whereby it is provided that:

"The National Executive shall, subject to the

review of its actions by the National Council,

have control, care, custody, the

superintendence, management and administration

in all. respects of the affairs, business,

funds and property of the

It is also consistent with the specific power of the National
Executive to expend or authorise the expenditure of any
moneys in furtherance of the objects of the Union, found in
rule 27(3)(n) of the federal rules.

Union..."

Viewed in this way, rule 37(3) of the federal rules

has no necessary application to Victorian branch expenditure.
No officer of the Victorian branch is authorised by the rules

to disburse any of the funds of the branch. Each such

disbursement must be effected by decision of the State

Executive, which is an elected body. The purpose of rule

37(3) is to provide for a system at the national level

whereby an officer is authorised to disburse funds for

ordinary purposes, but dlsbursements for extraordinary

purposes can only be made on the authority of the National

i
!

c

i

!

21.

Council or National Executive. This view removes the

I

appearance of any anomaly in confining rule 3 7 ( 3 ) to national

I

officers.

Mr. Dalton argued that the purpose of rule 3 7 ( 3 )

is to give ultimate authority over any expenditure within the union, and
that the rule would be ineffective if it were not construed the National Council and National Executive

so as to do this. There is a certain artificiality about

assuming a purpose f o r a rule, and then construing it so as

to accord with that purpose. Upon the analysis which I have

undertaken above, it cannot be assumed necessarily that the
National Council and National Executive are to have ultimate
control over any aspect of branch ,expenditure. The branch
rules commit the responsibility for branch expenditure to a

State Executive elected by members of the branch. Under rule

15(1) of the federal rules, the National Executive has

substantial power to affect the funds of branches, by calling
up all or any part of the entrance fees, contributions, fines
and levies received by the Union within a branch. The

National Executive also has substantial power to prescribe

which branches may pay moneys collected, under federal rule	banks, credit societies or other financial institutions into	7 ( 7 ) , and to withhold its authorization in respect of branch
investments in other than authorised trustee investments,
pursuant to rule 3 7 ( 2 ) . There 1 s no reason to suppose that
it was
intended disbursements by branches to exercise a supervisory role over

f o r some purposes.

Mr. Dalton had some difficulty in explaining the

nature of the control that the National Council or National

Executive would exercise over branch expenditure. In

particular, he found it difficult to decide whether to base his submission on the proposition that the National Council

and National Executive were set up as guardians of

I

expenditure, or as guardians of the purposes of expenditure.

The distinction lay in the question whether the role of the

National Council o r National Executive was to rule that

expenditure for a given purpose chosen by a branch would be excessive to achieve that purpose, or whether it could rule that no money at all should be spent in furtherance of the

purpose, on the ground that the National Council or National

.-

Executive did not	approve of the purpose. In the end,	Mr.
Dalton opted for the latter role.	On	this view, branches

might be free to pursue purposes which the National Council

or National Executive did not like, as long as such pursuit

did not involve spending money, but the National Council or

National Executive could disapprove a purpose and forbid the

expenditure of distinction might be of importance because, in the present any branch funds on that purpose. The

cases, the resolution of the National Executive purports to

prevent the expenditure of any moneys on any move of the

Victorian branch office from 53 Queen Street, Melbourne. The

I

course taken position contended for by by argument on this point shows that the

Mr. Dalton would not be entirely

free of anomalies itself.

I

Having given serious consideration to the arguments

put on both sides, I am of the view that rule 37(3) of the

federal rules does not apply to any disbursement of funds

under the control of	a branch of the Union. In my view, that
rule does nothing more than to make,	at the national level, a

distinction which 'is unnecessary at the Victorian branch

level. This is a distinction between those payments which

may be made by an officer, without the express authority of

an elected committee or council, and those payments which may

only be made by.such authority. This view is supported by

the provisions of rule 37 itself, the definition of "officer"

in rule 45(k) of the federal rules, and the provisions of the
branch rules with respect to expenditure of moneys. It is
not inconsistent with any other provision of the federal

rules, or with any authority.

That conclusion makes it unnecessary to examine in detail the other arguments relied upon by P E . Hickey to

support the view that rule 37(3) is inapplicable to the

expenditure the subject of these proceedings. In deference

to those arguments, however, I should state briefly my

conclusions in relation to them. I do not accept that the

words "ordinary" and "extraordinary" in rule 37(3) are	so
uncertain as to be incapable	of having meanings attributed to

them. The words were used, in ]uxtapositlon slmilar to that

appearing in particular, for many years, the prescribed conditions to be
complied with by associations seeking registration under the rule 37(3), in earlier Legislation. In

L

24.

Act, and by registered organizations, included a condition

I

that their rules provide for the manner in which their funds

could be expended for ordinary and extraordinary purposes.

See s.12 of Act no. 7 of 1910, which repealed the earlier

Schedule B, and shbstituted another Schedule B. See also

S.R. no. 102 of 1909, reg. 5I(j), and S.R. no. 331 of 1913,

reg. 5I(j). This has now been replaced by a requirement that the rules provide for the conditions under which funds may be

disbursed. See regulation 115(l)(d)(xi) of the Conciliation

and Arbitration Regulations. The fact that the two words

crucial to this case were used in legislation for many years

is a strong indication that they are capable of ascertainable

meaning.

I also reject the argument that rule 37(3) is in

contravention of s.l40(l)(c) of the Act, by imposing on

persons charged with the responsibility for disbursing branch

funds conditions, obligations or restrictions which, having

regard to the objects of the Act and the purposes of the

registration of organizations under the Act, are oppressive,

unreasonable and unjust. To some extent, this argument was

bound up uncertain a provision, the more likely with that relating to uncertainty. The more

it is that it wlll be

held to impose unreasonable condltlons. As will appear later

in these reasons for ~udgment, it is my view that the

L

2 5 .

provision may be construed with sufficient certainty to avoid

i

I	this	consequence.	In part,	the	submission	based	on
i	I

s.l40(l)(c) depended upon the proposition that rule 3 7 ( 3 )

i

could be operated capriciously. In a sense, any rule giving

power to make decisions may be operated capriciously, but the

possibility does not bring such a rule into contravention of

the Act. Finally, the argument was based in part on the

proposition that rule 3 7 ( 3 ) in some way constituted an interference with the proper functions of branches of the

!

Union. There are no ob~ectively ascertainable functions

which could be described as proper functions of a branch.

The functions of any branch of any registered organization
are ascertainable only from the rules of that organization.
The organization is allowed by the Act freedom of choice of
its structure. It is not necessary for an organization to be
divided into branches at all. If it is so divided, branches

may be given whatever functions the organization considers

appropriate. To the extent to which rule 3 7 ( 3 ) , if it

applied to branches, might deprive branches of functions, it

would only be part of the totality of rules of the union

which need to be looked at to ascertain what are the

functions of the Union's branches.

One further argument should be mentioned briefly.

Ms. Hickey argued that rule 3 7 ( 3 ) should be construed as an

attempt to permit the National Council or National Executlve

to expend the funds of the Union for purposes going beyond

.)

2 6 .

its objects. The argument involved detailed reference to the

amendments made from time to time to the prescribed

conditions to be complied with by associations seeking

registration as organizations, and subsequently by

organizations. It also involved etailed reference to

earlier rules of the Union, both federal rules and branch rules of the Victorian branch. It is true that some earlier

I	provisions of those rules were capable of being construed as
labelling as for ordinary purposes expenditure in pursuit of
the objects of the Union, and as f o r extraordinary purposes
all other expenditure. It does not follow that the words
"ordinary" and meanings from the rules when rule "extraordinary" retained their historic

3 7 ( 3 ) was adopted in

something like liELlihood is that the dropping of earlier definitions was its present form ,in 1956. Indeed, the

intended to bring about changes in meaning. It is clear that

a registered organization lacks capacity to apply its funds

for purposes which lie outside its objects. If authority is

needed for this proposition, then ample is to be found in the

I

various judgments in Williams

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

3 0 . I reject the argument that rule 3 7 ( 3 ) could be construed as an attempt to oust this principle.

Because

these proceedings, it is also strictly unnecessary for me to
attempt to construe the meaning of "ordinary" and the meanlng

I have reached the conclusion that rule

3 7 ( 3 ) is

inapplicable to the expenditure contemplated in

I	L
I	27.
i

of "extraordinary" in that rule. Nevertheless, I should make

such an attempt, not only in deference to the arguments which

I

\	were put on that issue, but also in case it should turn out
!	that my conclusion as to the application of the rule is
incorrect. What follows is therefore based on the assumption that rule 37(3) is applicable to disbursement of funds under
the control of a branch.

In construing the rule, it must be borne in mind

that every disbursement of funds must be placed in one or

other category, .namely as a disbursement for an ordinary

purpose, or a disbursement for an extraordinary purpose. The

consequence of an officer or officers making a disbursement

for an extraordinary purpose, without	a decision of the
National Council or National Executive, would	be that the

disbursement would be made without any authority under the

rules of the Union. Such	a disbursement would amount to a
misappropriation of the funds of the Union or	a branch,
within the proviso to rule	27(3), and may render the officer

concerned liable to dismissal from office.	I	reject the
submission which Mr. Dalton attempted to make, that	a	bona

fide error as to whether a particular disbursement was for an

ordinary or extraordinary purpose would exonerate an officer

from a charge of misappropriation; the view might well be
taken that the officer concerned should have realised the
true situation. These considerations point to the need for
the distinction between ordinary and extraordinary purposes

to be as clear as possible, and not to depend upon

considerations as to which different views might be taken too
easily. The need for certainty is not decreased materially
by the presence of rule 17(2), under which the National

Council may determine any question arising under the federal

rules. Mr. Tracey relied upon this provision to support an

argument that, if an officer is in doubt as to whether to

disburse money or not, the safest course is to seek a ruling

of the National Council, or to ask for the authority of the

National Executive in any event. There may be many

situations in which expenditure needs to be made quickly, if
at all, and doubts may not be resolved. Further, the views

of the National Council or National Executive as to whether a

purpose is extraordinary are not final. A court may later

reach the conclusion that an officer has disbursed moneys

without authority, even though the National Council has taken

the view that considerations reinforce the need for certainty. no such authority was needed. These

Both Mr. Tracey and according to which the distinction between ordinary and Mr. Dalton propounded a test

extraordinary purposes could be drawn. The test involved an

examination all disbursement, and a balancing of the factors tending towards f the circumstances attending any

ordinariness of purpose against hose tending towards

extraordinariness of purpose. In each case, the question

was aid

one amount of money involved, the income of degree. Various factors were

be or infrequency of transactions

to

suggested, but it was clear that no list of factors could
ever be complete. The list of factors included the frequency

!

!

2 9 .

of the type contemplated, the

f the branch concerned

or the Union, the effect on finances, in terms of capacity

to perform other functions, the possible impact on	members,
the magnitude of the proposal	in non-financial terms, the

departure from established means or practices of achieving

the objects of the Union or branch, the treatment of the same

or similar purposes as extraordinary	or ordinary in the past,
the length of time for which	a commitment was being made

(especially as to whether it would bind a future executive),

the state of the finances of the Union or branch

(particularly whether it had a surplus or deficit in the

.C.-

previous financial year) and the "scale" of expenditure

usually incurred.

Mr. DaltOn stated his test in various ways. One

such way was to ask whether the subject of the proposed

expenditure, in incidents, is extraordinary. Another was to ask whether the the manner proposed, and with all its

proposed expenditure would involve either another item being

added to the accounts, or the swelling of an existing item to

a scale not experienced previously.

Whatever test is adopted for distinguishlng between

i

ordinary and characterization of the purpose extraordinary purposes, it will involve

of a particular disbursement.

Given that the purpose of every disbursement must be within

the confines of the objects of the Union, such a process of

characterization can never be particularly easy. A more

difficult process than the one put forward by Mr. Tracey and

Mr. Dalton can inevitable, in a process of weighing of unspecified factors, hardly be imagined, however. It is

that opinions will differ. Some factors will strike one

person as having more weight than others. Sometimes	a factor
will be added to the	list in a particular case by one person,

which would not.even be perceived as relevant by another

person. In some circumstances, the same factor or similar

factors may be seen as pointing in opposite directions. Mr.

Tracey put forward the length of time for which a commitment

c

was required as a factor tending to extraordinariness,

particularly if an arrangement were being entered into which

would bind another executive after an election. It would

follow that the three year term of the proposed lease in the

!	present
case Dalton complained that the notice provisions would tend towards extraordinariness. Mr.

of the proposed

lease tended towards extraordinariness, because they did not

give the branch sufficient security of tenure. If a long

lease, not terminable by notice, could be regarded as an

extraordinary purpose, and yet a short lease, or one

terminable on short notice, could be regarded as an

extraordinary purpose, the test proposed would be	a	very
difficult one to apply.

characterizing the expenditure the subject of

these proceedings, Mr. Dalton and Mr. Tracey concentrated on
changes that were being made. Attention was drawn to what

In

was said to be a 136 per cent increase in rent which the

branch would partitioning and furnishing the proposed new office, the pay, the one-off nature of the cost of

estimated cost of that (which rose from $30,000 in the State

Secretary’s report to State Council to $70,000 in his evidence to the Court on an interlocutory hearing) and the fact that the move was away from premises in which the branch

had had its office, along with the office of the Union itself and another branch, pursuant to the arrangement under which

Fedsda House was acquired. On the. other hand, it could be

’*

argued that payment for items such as’ office rent, car

parking, partitions and furnishings, and computer services

were normal subjects of branch expenditure, without which t

could not ordinarily survive. If change is to be the

which extraordinary, it may be necessary distinguishes ordinary from

essential e ement

to inquire into the nature

and reasons for the change.	A	change of office from one
building to another may arise	for many reasons. A lease may

expire and not be renewed, a landlord may demand rent which
is regarded as excessive, more space might be needed, better

accomodation might become available, new premises might be

more conveniently situated, old premises may be damaged or

destroyed, or there may be many other reasons dictating

I

change. Clearly, opinions may differ as to whether such

i	-	causes
would Similarly, if size make change a an extraordinary purpose.

of expenditure is to be a factor, opinions

i

will vary. The size of any expenditure must often be

I

relative to necessarily depend upon whether a branch achieved a surplus
or a deficit in the preceding financial period. Substantial income and resources. Resources will not

reserves may experiencing a better year than it has had before. have been built up. The branch may be

In almost

every case, it will be possible to take	a different view	in
relation to each factor put forward.

At one stage, Mr. Dalton attempted to argue that the degree of prudence or imprudence of a particular item of

expenditure factor was the in ordinariness or

extraordinariness of the purpose of that expenditure.

Prudence is pre-eminently	a matter on which opinions may
differ very markedly. It involves an assessment of a	number

of factors. The arguments which apparently prevailed with a

majority of members of the State Council in favour of moving
the Victorian branch office do not seem to have been aired

before the National Executive before it passed its

resolutions by postal ballot. The arguments which were

forwarded by the National Secretary together with the postal

ballot may not have been aired before the State Council. The
consideration of prudence is made all the more difficult by
the fact that, in the last resort, it is the Court which must
determine on which side of the imaginary line a particular

purpose falls. A court is least equipped to judge the

prudence of a particular purpose in the context of the

affairs of a registered organization.

of these considerations tend to suggest that

some distinction between ordinary and extraordinary purposes
must be found which does not depend on the application f a
number of unspecified factors, and an assessment of matters
of degree. To subject any officer of a registered

All

organization to the possible consequences of making an

unauthorized distribution of the funds of that organization if he or she should take a wrong view of the application of such a test might be to run the risk that rule 37(3) would

contravene s.l40(l)(c) 'of the Act. A more ascertainable

meaning would be likely to save the validity	of the rule,
and should therefore be adopted if possible.

Little assistance can be gained from authority. In

McLure v. Mitchell (1974) 2 4 F.L.R. 115, some consideration was given to a rule requiring prior notice to financial

members, before vote a was passed authorizing the

disbursement of funds "for any purpose (other than ordinary

expenditure)". The Items of expenditure dealt with by the

Court are set out at pp. 141-143, in the ~udgment of Joske

J., who dissented. H I S Honour took the view that each of the

items concesned was not ordinary expenditure. In their joint

l

Y

34 .

judgment, Spicet C.J. and Dunphy J. did not discuss the items

in detail, but said, at p. 118:

"What is a disbursement of the funds other

than ordinary expenditure? It has to be

defined having regard to the wide powers over

"all matters concerning finance" conferred on
the finance committee under r. 3 0 . In this
context we find it difficult to conclude that

the salary and emoluments of the secretary and

assistant secretary o dinary not are

expenditure, at least in	an organization o€
this type and size."

An examination of the items of expenditure dealt with shows clearly that the majority did not apply a test based on a balancing of various factors, in determining whether each

item constituted ordinary expenditure. Nor did Joske J. expressly apply such a test. The majority certainly did not

take into account factors such as the size of the payments or

Rather, emoluments of the secretary and assistant secretary) and to
have considered their relationship, not with the particular
organization or branch, but with an organization of its type
and size. their Honours appear to have

their imprudence.

looked at the nature of the payments (the salary and

In Valentine v. Butcher (1981) 51 F.L.R. 127, at

p. 136,	it is recorded that an argument was put that	a
particular use of the property and funds of	a	registered

organization was for a purpose which was not the ordinary

purpose of the organization but was for an extraordinary

!

purpose, and that the extraordinary purpose was impliedly

the objects of the organization concerned, and one which fell
outside them, and was therefore invalid. Whatever might have
been intended by counsel who put the argument in that case, rules. The distinction which was

prohibited by apparently drawn was between

a purpose which fell within the

the Court did not discuss the issues in terms of ordinary	o
extraordinary purposes.

Both sides sought to gain support from authorities

dealing with phrases such as "the ordinary course of

business" in legislation dealing with bankruptcy and

companies. A fertile field for such authorities are the

provisions applied by courts in. determining whether a

.-

particuiar payment made by a debtor constituted a preference,

or was in the ordinary course	of business. Reference was
therefore made to the views expressed	In Downs Distributing

Co. Pty. Ltd. v. Associated Blue Star Stores Pty. Ltd. (In

Liquidation) (1948) 76 C.L.R.	463, at pp. 414-475 in the
judgment of Latham C.J.	pp. 476-477 in the judgment of Rich
J. and pp. 479-480 in the judgment of Williams	J., Taylor v.

White (1964) 110 C.L.R.	129, at pp.	136 in the judgment of
Dixon C.J., p.	140 in the judgment of Kitto J., pp.	150-154

in the judgment of Taylor J. and pp. 157-159 in the judgment

of Menzies J., and Re Cummins; Ex parte Harris (1985) 70

A.L.R. 773, at pp. 778-780, where the authorities are discussed. These authorities tend to indicate that, for the purposes of bankruptcy legislation, what is in the ordinary course of business should be determined without reference to

the particular business of the debtor concerned. It is to

the business (in the sense of business in general)

characteristics of a transaction to which the phrase is
directed. This is in contrast with the provision relating to

companies, dealt with in Re Bradford Roofing Industries Pty.

Ltd. (In Liquidation) [l9661 1 N.S.W.R. 674, at p. 679 and

(on appeal) in (1967) 70 S.R. (N.S.W.) 13, at p. 2 8 , in the

judgment of Wallace P.	That provision directed attention to
the question whether an assignment	was made "in the ordinary
course of the company's business".	In that case, attention

must be paid to the nature of the particular business of the

particular company, to see whether.something is ordinary to

it.

Mr. Dalton phrases "ordinary purposes" and "extraordinary purposes" had relied on the proposition that the

been adopted from previous legislation, as an argument for

their having certainty of meaning.	In my view, it is	likely
that they were	so	adopted, and that they should therefore

bear the meaning which they bore in the legislation. It must
be remembered that the phrases appeared in	a prescription of

conditions with registered organizations were bound to comply. They were which associations eeking to become

therefore past of a condition which was regarded as

applicable to all such associations, be they of employers or

I

I

employees. To determine whether the condition was satisfied,

it would have been necessary to look at the rules of an

association or organization, to decide whether they

distinguished properly between ordinary and extraordinary

purposes, with respect to funds. The distinction could not

have been concerned. The purposes contemplated could peculiar to the association or organization

not have been

restricted to any particular association or organization,	o r
any particular kind	of association or organization, much less

particular organization. branch of such an association or

to any

.The original prescribed conditions, in

Schedule E to the Act as it was in 1904, contained a

requicement that the rules of an association applying for

registration provide for, "The conditions, as to notice and

' .- other matters, to be complied with before the funds of an

association may be disbursed except f o r its ordinary expenses

as defined in the rules". This was repealed and replaced by
a condition that the rules provide for, "The conditions under

which funds may be disbursed for ordinary and extraordinary

purposes."	In construing the phrases as they appear in rule
37(3)	of the rules of the Union, their previous general
application must be borne in mind. Attention should be

directed, not to whether the purpose of a particular

disbursement is ordinary or extraordinary f o r a branch, or

even for the Union itself, but rather to whether it would be

ordinary or extraordinary for an organlzatlon of an

industrial kind. Deference to the view of the majority in

I ; .

McClure v. Mitchell might require the words to be construed

I	-
i

by reference to employee organizations, and perhaps to

employee organizations of a similar size. The result is that

the question to be asked with respect to each disbursement is

whether it is for a industrial organizations of employees. Something which is	purpose normally carried out by large
not so	normally carried out, although falling technically

within the objects of the Union, would be	an	extraordinary
purpose.

Applying this construction, it is clear that the

occupation of leasehold office premises, and the partition

and furnishing of such premises, are perfectly normal and

usual purposes for which organizations of the Union’s type

*

would spend money. Further, a change of office premises,

from one leasehold to another, for whatever reason, and an

expenditure of moneys to equip the new office premises, would

i

not be regarded as anything other than usual and normal in

such an organization.

.

Even if it were necessary for me to apply the sorts

of tests advocated by Mr. Tracey and Mr. Dalton, I should

still be of the view that the expenditure the subject of

these proceedings is or was or would be for ordinary

purposes. There	is nothing so large, race or reckless about
this type of expenditure as to bring	t within the concept of

extraordinary purposes which was put forward. Some attempt

I

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F

i

39.

! ; '

was made to rely on the history of office moves within the

I	branch. Particular attention was directed to the purchase of
I	the freehold of a building in 1971, for which the National
Executive gave its approval, and to the scheme whereby Fedsda House was purchased in 1976, for which the National Executive also gave its approval. In each case, what was involved was not the undertaking of a lease. Further, there is some evidence that the 1971 purchase involved the title to the
building purchased being in a name other than that of the
Union, a factor which was held to make expenditure on the purchase of real estate a disbursement for an extraordinary
purpose in Bailey v. Krantz (1985) 13 I.R. 339, at p.389.
The 1976 scheme for the acquisition of Fedsda House had a
number of highly unusual aspects, including the progressive provision of share capital in a company which was jointly
owned by the Union and another registered organization. It
is much easier to
see regarded as extraordinary purposes than it is to characterize how these transactions could be
the undertaking of a move to new leasehold premises as
extraordinary. It is interesting to note that no evidence
was led as to whether the National Executive had been called
upon to approve expenditure on any change of office premises
by any other branch of the Union.
i	No suggestion was made that the State Council did

not have the power to decide upon the sltuatlon of the

Victorian branch office. Express power with respect to the

registered office is given by rule 4 of the branch rules.

Mr. Dalton did make the point that the registered office need

not be in the same place as the office occupied by branch

officials and staff. Nevertheless, the powers of the State

Council in	the branch rules clearly encompass determining
where the office shall be. If such	a power is to be cut down

by the application of a test requiring a balancing of

factors, and an assessment of matters of degree, a court

should not be too ready to hold that the power has been

exercised improperly.

It follows from these reasons that I would answer

the preliminary question in the negative. Mr. Tracey

conceded that that would have the effect of disposing finally

of the rule to show cause in matter no.	VI 48 of 1988.
Accordingly, that rule to show cause will be discharged.	Mr.

Dalton indicated his intention of arguing that the resolution

G	of the National Executive, taken by postal ballot, can be
supported by other provisions of the federal rules. That question will therefore have to be determined at a later
time, so the proceeding in matter no. VI 47 of 1988 will
continue. Appropriate interim orders in that proceeding have
already been made.

I

1.

l 41.

Appearances

Ms. Hickey for the applicants in VI 47 of 1988 and for some

of the respondents in VI 48 of 1988

Instructing solicitors: Holding Redlich

Mr. Dalton Q.C. and Mr. Philbrick for most of the respondents

in VI 47 of 1988 and the Federated

Clerks Union of Australia

Instructing solicitors: Minter Ellison

Mr. Tracey for the applicant in VI 48 of 1988

Instructing solicitors: Oakley Thompson & Co.

Hearing date: 21st - 22nd November 1988.

I certify that this and the

preceding forty (40) pages are

a true copy of the Reasons for

Judgment of he Honourable

Justice Gray.

i Associate h&&