Linehan, D.L. v Transport Workers Union of Australia

[1981] FCA 120

Re: DESMOND LAWRENCE LINEHAN
And: TRANSPORT WORKERS' UNION OF AUSTRALIA (1981) 76 FLR 328
V. No. 5 of 1981
Industrial Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
Northrop J.(1)

CATCHWORDS

Industrial law - Conciliation and Arbitration - Registered organization - purposes of registration - principles relating thereto - eligibility rule - special definition of "employee" - rules enrolling and retaining members not employees within special definition - validity of rules - methods available to challenge rules - declaration - effect of and powers of court in relation thereto.

Industrial Relations Bureau - nature, powers and procedure of investigation.

Conciliation and Arbitration Act 1904 ss. 132, 140.

Arbitration - Registered organisation - Purpose of registration - Rules - Eligibility rules - Definition of employee - Rules enrolling and retaining members not employees within definition of employee in Conciliation and Arbitration Act - Validity of rules - Methods available to challenge rules - Declaration - Conciliation and Arbitration Act 1904, ss 126A, 132, 140 (1), (3), (5), (5A), (5B), (5C), (5D), (5G), (6), (7) - Conciliation and Arbitration Regulations, reg 115.

HEADNOTE

The respondent was a registered organisation under the Conciliation and Arbitration Act 1904. The eligibility rule of the respondent after 16 January 1975 provided:

"The union shall consist of an unlimited number of persons -

(1) employed or seeking to be employed in or in connection with the industry or industries, and/or occupation, and/or calling, and/or vocations, and/or industrial pursuits of; and/or

(2) who, otherwise than as employees or employers, follow an occupation in or in connection with the industry or industries of; and/or

(3) who, otherwise than as employees or employers, are engaged in the industrial pursuit or pursuits of. . . ." In 1977 s. 132 of the Conciliation and Arbitration Act 1904 was amended to provide that eligibility for membership of an organisation was limited to employees and that term was defined to mean:
"any employee in any industry and includes -

(a) any person whose usual occupation is that of employee in any industry; and

(b) any person employed in an industry, or engaged in an industrial pursuit, in the State of New South Wales, Queensland, South Australia or Western Australia. . . ."

The applicant, the director of the Industrial Relations Bureau, commenced proceedings seeking orders under s. 140 (5D) of the Conciliation and Arbitration Act 1904 that pars. (2) and (3) of Rule 4 of the respondent's rules contravened s. 140 (1) of the Act in that they extended eligibility for membership to persons not falling within the classes of persons set out in s. 132(1)(b) and (c).

Held: (1) When a rule, or part of a rule, of a registered organisation contravenes s. 140(1) of the Conciliation and Arbitration Act 1904, the court may adopt the following courses:

(a) make a declaration under the first limb of s. 140(5D) and s. 140(5G) and the rule will then be deemed void from the date of the order; or

(b) adjourn the proceedings pursuant to s. 140(6) to give the organisation an opportunity to alter its rules; or

(c) pursuant to the second limb of s. 140(5D) declare the rules of the organisation contravene s. 140(1) in a specified respect; in which case if the rules have not been brought into conformity with s. 140(1) at the expiration of three months from the making of the declaration the Industrial Registrar is empowered pursuant to s. 140(7) to bring the rules into conformity with those requirements. However, a declaration under the second limb of s. 140(5D) did not make the relevant rules void.

(2) It was essential to remember the principles relating to the purposes of the registration of organisations, the nature of the legal proceedings in which the validity of rules of an organisation can be raised and the consequences which in law result where rules of an organisation are contrary to s. 140(1) of the Conciliation and Arbitration Act 1904 (Cth).

Wiseman v. Professional Radio & Electronics Institute of Australasia (1978) 35 FLR 24 at 38-39, referred to.

(3) Any order which had the effect of affecting adversely those persons who presently are validly eligible for membership of the organisation but who would cease to come within Rule 4 if pars. (2) and (3) became void, would offend the concept behind the purposes of the registration of organisations under the Conciliation and Arbitration Act and such a result should be avoided if possible.

(4) The organisation did not have the capacity to act as a party principal with respect to those persons who presumably come within Rule 4(2) and (3) but are not employees within s. 132(1)(b)(ii) and (c)(ii). Even if the declaration sought by the application were not made, this position would not be altered.

(5) It was undesirable to make a declaration in the form sought by the applicant. The court lacked power to make the order sought by the organisation.

(6) The applicant had made out a case that the rules of the respondent contravened s. 140(1) in a specified respect, namely, that they allow persons not being employees as defined in s. 132(4) to be eligible for membership of the respondent.

(7) Declaration accordingly.

HEARING

Melbourne, 1981, May 21; June 11; July 27. #DATE 27:7:1981

RULE NISI.

The applicant sought orders under s. 140(5D) of the Conciliation and Arbitration Act 1904 (Cth), that certain rules of the respondent organisation contravened s. 140(1).

M. E. J. Black Q.C. and C. N. Jessup, for the applicant.

D. M. Ryan Q.C. and D. Aronson, for the respondent.

Cur. adv. vult.

Solicitors for the applicant: B. J. O'Donovan, Commonwealth Crown Solicitor.

Solicitors for the respondent: Ryan, Carlisle, Needham & Thomas.

T.J.G.

ORDER

That the rules of the Transport Workers' Union of Australia, an organization of employees under the Conciliation and Arbitration Act 1904, contravene sub-section (1) of section 140 of that Act in a specified respect, namely that they allow persons not being employees as defined in sub-section (4) of section 132 of that Act to be eligible to become and to remain members of the Union.

JUDGE1

The applicant, Desmond Lawrence Linehan, is the director of the Industrial Relations Bureau, hereinafter called "the Bureau", established by s.126A Conciliation and Arbitration Act 1904 as amended (the Act). The applicant, in the exercise of powers conferred by s.126A(5) and s.140 of the Act is seeking orders under s.140(5D) declaring paragraphs (2) and (3) of Rule 4 of the Rules of the Transport Workers' Union of Australia, hereinafter called "the Union", an organization of employees under the Act, contravene sub-section 141(1) of the Act. If that declaration is made, those paragraphs are deemed to be void from the date that the order is made, s.140(5G).

The facts giving rise to these proceedings constitute but one of many illustrations of the confusion being caused to organizations thereby involving them in great expenditure by frequent amendments to the Act relating to the internal structures of organizations. In the present case the amendments to the Act had been designed to overcome difficulties highlighted in Moore v. Doyle (1969) 15 F.L.R. 59 but subsequent amendments give rise to the present proceedings.

At this stage, a summary of the facts will assist in an understanding of the problems arising in these proceedings. Prior to the Conciliation and Arbitration Act 1973 (Act No. 138 of 1973) coming into operation on 13 November 1973, under s.132 of the Act then in force, eligibility for membership of an organization of employees was limited to employees, see s.132(1)(b) and (c). At that time, for the purposes of s.132, "employee" was defined in s.4(1) as meaning:
"any employee in any industry and includes any person whose usual occupation is that of employee in any industry;"
Section 51 of Act No. 138 of 1973 amended those two paragraphs of s.132(1) which were amended further by s.4 of Act No. 89 of 1974 which came into operation on 29 October 1974. Following those amendments, under s.132 of the Act then in force, eligibility for membership of an organization of employees was widened to include persons who were not necessarily employees. Eligibility for membership was extended, for example, to include independent contractors such as owner drivers of trucks, provided those persons were not employers. Those persons were deemed to be employees under legislation in force in some States and many of them were members of State registered unions which coincided with a branch of an organization, cf. Moore v. Doyle, supra. The Union, pursuant to the amended s.132, altered its eligibility rule to make those persons eligible for membership of the Union. On 16 January 1975, pursuant to s.139 of the Act, the Industrial Registrar gave his consent to that alteration. The decision by which that consent was given is reported in 164 C.A.R. 1120 where the alterations made and the reasons for the alterations are set out in detail.

Section 132 was further amended by s.12 of Act No. 108 of 1977 which came into operation on 21 October 1977. Following those amendments, under s.132 of the Act, as then in force, eligibility for membership of an organization of employees was once again limited to employees, but under s.132(4) a special meaning was given to the word "employee" where appearing in s.132(1)(b)(ii) and s.132(1)(c)(ii) of the Act. Under that special meaning "employee" means any employee in any industry and includes:
"(a) any person whose usual occupation is that of employee in any industry; and

(b) any person employed in an industry, or engaged in an industrial pursuit, in the State of New South Wales, Queensland, South Australia or Western Australia . . ."
and in substance is an employee for the purposes of specified State legislation in those States. The provisions contained in the sub-section relate to those States which have legislation concerning State registered unions and which contain provisions in substance deeming persons to be employees.

Section 132(4)(b)(iv) was amended by s.13 of Act No. 71 of 1981 which came into operation on 17 June 1981 by inserting the name of the newly enacted relevant Western Australian statute.

From this summary, it will be seen that as a result of the amendments made in 1977, the eligibility rule of the Union is in a form wider than that permitted by s.132 of the Act and that it permits the Union to enrol and retain as members persons who are not employees within the meaning of the special definition contained in s.132. The rule of the Union has that effect, particularly in the States of Victoria and Tasmania and in the Territories being the Australian Capital Territory and the Northern Territory. It may have the same effect, albeit to a more limited extent, in the States of New South Wales, Queensland, South Australia and Western Australia.

The matter came on for hearing before the Court on 21 May 1981. The Union, although properly served with the rule nisi and supporting material and with notice of the time and place of hearing, did not appear. The applicant was represented by counsel and the hearing proceeded in the absence of the Union. Section 140(1)(a) of the Act provides:
"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;"
A detailed procedure is described by s.140(3), (4), (5), (5A), (5B) and (5C) of the Act under which the Bureau is authorized to investigate a complaint by a member of an organization that the rules of the organization contravene s.140(1) or the Bureau may act upon its own initiative if it has reason to believe that the rules of an organization contravene s.140(1). The Bureau is required to notify the organization of its intention to investigate the matter. If the Bureau, after investigation, considers the whole or a part of a rule of the organization contravenes s.140(1) or that the rules of the organization contravene s.140(1) in a particular respect, it must notify the organization accordingly and request the organization to make such changes to its rules as will bring them into conformity with the requirements of s.140(1). Under s.126A(5) the director of the Bureau, on behalf of the Bureau, is empowered to exercise the powers conferred upon the Bureau by s.140.

In the present case, the Bureau has been meticulous in its compliance with the requirements of the procedures set out in s.140 of the Act. It followed each of the requirements and at the hearing it proved compliance with each requirement. I find the Bureau has complied with the requirements of the section.

Rule 4 of the rules of the Union is headed "Conditions of Eligibility for Membership". Prior to 15 January 1975 the relevant provisions of Rule 4 were:
"The Union shall consist of an unlimited number of persons employed or seeking to be employed in or in connection with the industry or industries, and/or occupation, and/or calling, and/or avocation, and/or industrial pursuits of . . ."
There is then set out three paragraphs listing a wide range of industries, occupations, callings, vocations and/or industrial pursuits, but for present purposes these need not be set out.

Following the alterations to Rule 4 which were consented to by the Industrial Registrar on 16 January 1975, the relevant provisions of Rule 4 were:
"The Union shall consist of an unlimited number of persons -

(1) employed or seeking to be employed in or in connexion with the industry or industries, and/or occupation, and/or calling, and/or vocations, and/or industrial pursuits of: and/or

(2) who, otherwise than as employees or employers, follow an occupation in or in connexion with the industry or industries of: and/or

(3) who, otherwise than as employees or employers, are engaged in the industrial pursuit or pursuits of . . ."
There is then set out the same three paragraphs, with one minor alteration which is not relevant, in the form that they were in immediately prior to 16 January 1975.

It will be seen that paragraph 1, apart from the change of the word "avocations" to "vocations", corresponds to the rule as it existed immediately prior to 16 January 1975. Paragraphs (2) and (3) of Rule 4 were inserted thereby giving effect to the wider eligibility provisions as then authorized by s.132 of the Act as amended in 1973 and 1974.

Following the amendments to s.132 made in 1977 a member of the Union made a complaint to the Bureau with respect to those paragraphs (2) and (3). In addition, the Bureau had reason to believe that those two paragraphs contravene s.140(1) of the Act. The notification required to be given to the Union was contained in a letter to the Union dated 15 August 1980 and stated the matters to be investigated were the rules of the Union "insofar as they relate to entitlements of persons who are not employees to be admitted, and to remain as members of" the Union which it claimed contravened s.140 having regard to s.132 of the Act.

Following the investigation, the Bureau considered that part of Rule 4 contravened s.140(1) of the Act. By letter to the Union dated 5 January 1981, the Bureau notified the Union that it had:
". . . concluded its investigation and considers that those parts of Rule 4 (identified in the letter as the two paragraphs (2) and (3) set out above) of the rules of your organization . . . are contrary to the provisions of section 140(1) of the Conciliation and Arbitration Act 1904 in that they extend elibiligity for membership to persons not falling within the classes of persons set out in section 132(1)(b) and (c)."

The letter than contained a request that the Union make appropriate changes to Rule 4 so as to bring the rule into conformity with the requirements of s.140(1) of the Act.

The Union did not comply with that request. It has not altered its rules in the manner requested.

The Bureau is seeking an order under s.140(5D) declaring that paragraphs (2) and (3) of Rule 4 of the rules of the Union contravene s.140(1) of the Act. The substance of the claim is that under its existing rule the Union may enrol as members persons who are not employees and to that extent the rule contravenes the requirements of s.132(1)(b) and (c) as well as the requirements of Regulation 115(1)(a) of the Conciliation and Arbitration Regulations.

If a declaration is made in the form sought, those two paragraphs will be deemed to be void from the date of the order, s.140(5G). The Court has a discretion to refrain from making the declaration as sought and to adjourn the proceedings for the purpose of giving the Union an opportunity to alter its rules, s.140(6). A third course open in an appropriate case is for the court to declare that the rules of the Union contravene s.140(1) in a specified respect, s.140(5D). If a declaration in that form is made, s.140(7) has effect. Under that sub-section if, at the expiration of three months from the making of the declaration the Union has not amended its rules to bring them into conformity with the requirements of s.140(1) as regards the matters that gave rise to the declaration, the Industrial Registrar is empowered to bring the rules into conformity with those requirements as regards those matters. Often it is a nice question which course the court should take, generally see R. v. Australian Industrial Court, Ex parte Maynes (1978) 139 C.L.R. 482 per Mason J. at pp.488-490.

The relevant provisions of s.132(1) provide:
"132.(1) Any of the following associations or persons may, on compliance with the prescribed conditions, be registered in the manner prescribed as an organization:

. . .

(b) Any association the members of which include not less than one hundred employees in or in connexion with any industry and the other members, if any, of which are -

(i) officers of the association; or

(ii) persons who are employees who are qualified to be employed in or in connexion with that industry,

but does not include an association that has members referred to in sub-paragraph (ii) unless the association is effectively representative of the members who are employees in or in connexion with that industry; and

(c) Any association the members of which include not less than one hundred employees engaged in an industrial pursuit or pursuits and the other members, if any, of which are -

(i) officers of the association; or

(ii) persons who are employees who are qualified to be engaged as employees in that industrial pursuit or in one of these industrial pursuits,

but does not include an association which has members referred to in sub-paragraph (ii) unless the association is effectively representative of the members who are employees engaged in that industrial pursuit or those industrial pursuits."
Sub-sections (2) and (3) provide:
"(2) The conditions to be complied with by associations so applying for registration and by organizations shall be as prescribed.

(3) Upon registration, the association shall become and be an organization."
Sub-section (4) contains a special definition to be given to the word "employee" in s.132(1)(b)(ii) and (c)(ii), the substance of which has been set out earlier but at the same time the organization must be effectively representative of the members who are employees, in the normal sense, engaged in or in connexion with that industry or engaged in that industrial pursuit or those industrial pursuits.

For the purposes of s.132(2), conditions have been prescribed and are contained in Regulation 115 of the Conciliation and Arbitration Regulations. The effect of Regulation 115(1)(a) and (2) is that organizations must be of a kind referred to in s.132 of the Act. Insofar as Rule 4 of the rules of the Union permit persons other than officers who are not employees within the definition contained in s.132(4), the Union is not an organization of a kind referred to in s.132.

During the course of the hearing it become apparent to the Court that if a declaration was made in the form sought by the Bureau it would follow that in all probability there would be persons presently validly members of the Union and who would be entitled to be members having regard to the extended definition of "employee", but who would cease to have the full benefits of membership if paragraphs (2) and (3) became void. In the course of argument, the position was stated by the Court as follows:
"HIS HONOUR: Take New South Wales. At the moment there would be some persons who are not employees in the Conciliation and Arbitration Act narrow sense but are employees because of the effect of section 132(4) who may at the moment be members of the Transport Workers Union. The rule as it stands at the moment, would that allow them to be members?

MR. BLACK: The rule at the moment is just bad.

HIS HONOUR: Is it bad in whole or in part? Is it bad or that part which allowed it to be used to enrol persons who do not come within the extended provisions of section 132(4)? I think there could be an argument here.

MR. BLACK: Yes, there could.

HIS HONOUR: It is not clear-cut.

MR. BLACK: It is not. The fact that there is an argument which indicates, in our submission, a desirability of clearing this up once and for all now.

HIS HONOUR: If in fact there are such persons who are presently members, if a declaration is made under sub-section 5D they would cease to be members as from the date of the declaration, when it is possible that they could be validly members under the rule as it stands now. This is the difficulty that I see."

At the conclusion of the hearing the Court said, inter alia:
"The absence of the union has not made the task of the Industrial Relations Bureau any easier, but at the present time I would express the view that the court is indebted to the careful and thorough way in which the rule nisi has been prepared and argument presented to court and this has enabled me to form the view that at the present time and having regard to section 132 of the Act, the two parts of the rule under challenge do contravene or are contrary to s.140(1) of the Act.

The two rules in substance on their face allow persons who are not employees to become members of the union. The class of persons who were designed to come within those two parts initially, have been described as owner/drivers or persons of that kind being independent contractors who, not being employers, do work commonly done by employees, but are not employees.

The amendments made in 1977 preserved an extended meaning of the word 'employee' so far as section 132 was concerned and in particular, I refer to the act No. 108 of 1977, s.12(e). The effect of those amendments is that in certain States where under State legislation employees have an extended meaning persons who would otherwise not be employees under section 132 of the Commonwealth act, are deemed to be employees for the purposes of eligibility for membership of organizations of employees.

There is no evidence as to the number of persons who come within this category. It may be small, it may be large, the court does not know. The court is concerned that there may be people in those states, and in particular New South Wales, who at the present time may be members of the Transport Workers Union and who come within the two parts of rule four which are being challenged, but who would be eligible to be members under s.132 of the Act as amended in 1977."

. . .

"What I propose to do is adjourn the proceedings for a short period, the conditions being that when the matter comes on for hearing again I will expect the Transport Workers Union to be present to indicate whether it proposes to make application to have its rules amended to bring them into accord with s.132 and in particular with respect to the extended concept of employee referred to in s.132(4). I propose also that a direction be given that the applicant deliver a copy of these reasons and a copy of the transcript of the proceedings to the Transport Workers Union.

If on the adjourned hearing the Transport Workers Union does not appear or does not indicate its intention of making application to amend its rules in accordance with the law, the court at the present time proposes to make the necessary declaration under s.140(5D) with all the consequences that flow from such a declaration being made."

On the material before the Court, I was satisfied that those parts of paragraphs (2) and (3) of Rule 4 of the rules of the Union which permitted persons not being employees within the special meaning of the word as contained in s.132(4) were contrary to s.140(1) of the Act. I was concerned, however, that an order should not be made adversely affecting persons who currently being members and being eligible to be members under the existing paragraphs (2) and (3) and the meaning of the word "employee" as contained in s.132(4) would be disadvantaged and lose their legal entitlement to be and remain members. Accordingly, the hearing was adjourned to 11 June 1981.

On the resumed hearing, the Union appeared by counsel, but no evidence was led. Counsel submitted that any order made should be in a form adopting wording taken from s.132(4) of the Act. I have varied the form proposed by counsel to give effect to the amendment made to s.132(4) later in June 1981. The form suggested was:
"DECLARE that so much of paragraphs (2) and (3) of Rule 4 of the registered rules of the TRANSPORT WORKERS UNION OF AUSTRALIA contravenes Section 140(1)(a) of the Conciliation and Arbitration Act 1904 as makes eligible for membership of the said organization persons other than: -

(i) persons who are employed in an industry, or engaged in an industrial pursuit in the State of New South Wales and who are employees for the purposes of the Industrial Arbitration Act 1940 of that State or that Act as amended from time to time;

(ii) persons who are employed in an industry or engaged in an industrial pursuit in the State of Queensland and who are employees for the purposes of the Industrial Conciliation and Arbitration Act 1961-1976 of that State or that Act as amended from time to time;

(iii) persons who are employed in an industry or engaged in an industrial pursuit in the State of South Australia and who are employees for the purposes of the Industrial Conciliation and Arbitration Act 1972-1975 of that State or that Act as amended from time to time;

(iv) persons who are employed in an industry or engaged in an industrial pursuit in the State of Western Australia and who are employees for the purposes of the Industrial Arbitration Act 1979 of that State or that Act as amended from time to time;

who otherwise than as employees follow an occupation in or in connexion with the industry or industries specified in paragraph (b) of the said Rule 4 or who otherwise than as employees are engaged in the industrial pursuit or pursuits specified in paragraph (b) of the said Rule 4."
Counsel for the Union submitted that if Rule 4 did contravene s.140(1) of the Act, and he did not propose to contend to the contrary, it did so to the extent only that it gave eligibility for membership to persons who were not employees as defined under s.132(1)(b)(ii) and (c)(ii) of the Act. He contended that the form of order he proposed protected the interests of persons who otherwise would be eligible for membership under those provisions.

Counsel for the Bureau submitted that the Court should make the declaration sought in the rule nisi. He contended that paragraphs (2) and (3) of Rule 4 did contravene s.140(1) of the Act, that the Union had been given ample opportunity to amend its rules to make Rule 4 comply with s.140(1) in that respect but it had failed to do so and accordingly the declaration should be made even though the interests of persons who otherwise would be eligible for membership under s.132(1)(b)(ii) and (c)(ii) would thereby be adversely affected.

In considering this matter, it is essential to remember the principles relating to the purposes of the registration of organizations under the Act, the nature of the legal proceedings in which the validity of rules of an organization can be raised and, thirdly, the consequences which in law result where rules of an organization are contrary to s.140(1) of the Act.

In Wiseman v. Professional Radio & Electronics Institute of Australasia (1978) 35 F.L.R. 24 Evatt and Northrop JJ. said at pp. 38-9:
"The purposes of the registration of organizations under the Act, stated broadly, are to facilitate the creation and settlement of disputes arising from industrial relationships between groups or classes of persons ascertained by reference to the conditions of eligibility prescribed by the rules of organizations which, upon registration, become corporate bodies separate and distinct from their members: generally see Jumbunna Coal Mine, No Liability v. Victorian Coal Miners' Association ((1908) 6 C.L.R. 309); The Queen v. Dunlop Rubber Australia Ltd.; Ex parte Federated Miscellaneous Workers' Union of Australia ((1957) 97 C.L.R. 71); Williams v. Hursey ((1959) 103 C.L.R. 30); and The Queen v. Clarkson; Ex parte Victorian Employers' Federation ((1973) 131 C.L.R. 100)."
That principle was elaborated upon in those reasons for judgment, but for present purposes it is sufficient to stress the concept that the essential purposes of registration of an organization of employees is to permit the organization to act as a party principal in presenting and maintaining the industrial interests of industrial groups of employees identified by reference to the eligibility rule of the organization, in the present case Rule 4 of the Union. In the present case, any order which had the effect of affecting adversely those persons who presently are validly eligible for membership of the Union but who would cease to come within Rule 4 if paragraphs (2) and (3) became void, would offend the concept behind the purposes of the registration of organizations under the Act. If possible, such a result should be avoided.

The frequency in which proceedings in the Court are based upon applications brought under s.140 of the Act tends to cloud the fact that the validity of a rule of an organization can be challenged in many ways and in many different types of legal proceedings. This aspect is discussed at length in Egan v. Maher (No. 1) (1978) 35 F.L.R. 197 per Northrop J. at pp.242-251. For present purposes it is sufficient to say that a declaration in the form sought by the Bureau is not a condition precedent to enabling a person to challenge the validity of a rule of an organization in legal proceedings other than those commenced under s.140. This is illustrated by the example given in Egan v. Maher (No. 1), supra, at pp.247-8. Likewise, amendments to the Act from time to time may have the effect that a rule that was contrary to the Act may cease to contravene the Act following an amendment, with the result that the rule thereupon becomes effective, cf. R. v. Australian Industrial Court; Ex parte Maynes, supra, per Mason J. at p.488-9.

Apart from proceedings under s.140 and s.141 of the Act, the issue of the validity of a rule may arise in many varied ways. It may arise in proceedings brought under s.5 of the Act or under s.119 of the Act. It may arise in proceedings seeking to determine whether an award made by the Conciliation and Arbitration Commission is valid or whether the Commission can validly find that an industrial dispute exists. The relevant principles are discussed in Burgess v. John Connell-Mott, Hay & Anderson Pty. Ltd. (1979) 37 F.L.R. 387 and in the cases referred to in that decision.

By the application of these principles, it follows that the Union does not have the capacity to act as a party principal with respect to those persons who presently come within paragraphs (2) and (3) of Rule 4 of its rules, but are not employees under s.132(1)(b)(ii) and (c)(ii) of the Act. Those persons, hereinafter referred to as the disentitled members, do not in law form part of the industrial group identified by the eligibility rule of the Union. The Union cannot create industrial disputes affecting directly the industrial interests of the disentitled members. The Commission has no power to make awards affecting directly the industrial interests of its disentitled members. As far as the Act is concerned, the disentitled members are non-persons, they exist but are given no recognition in an industrial sense. It follows that the absence of a declaration as sought in either of the forms suggested will not alter the legal position of the disentitled person insofar as the Union is concerned in the performance of its functions for the purposes of its registration as an organization.

The third matter to be considered is the consequences which in law result where a rule or the rules of an organization are contrary to s.140(1) of the Act. A summary of the history of s.140 of the Act is given in Wiseman's case, supra, per Evatt and Northrop JJ. at pp. 32-4 and a consideration of the principles arising from that section appears at pp.38-42. See also Egan v. Maher (No. 1), supra, per Northrop J. at pp.242-9. For present purposes, while the general principles must be kept in mind, it is necessary to give detailed consideration to proceedings brought under s.140 of the Act. In doing this, it is to be remembered that s.141(8A) inserted into the Act by s.17 of Act No. 108 of 1977, empowers the Court to make orders in matters brought under s.141 which have an effect similar to orders made in matters brought under s.140 of the Act.

Proceedings under s.140 of the Act may be commenced in the Court by a member of an organization or by the Bureau, s.140(2) and (5B), and subject to giving the organization concerned an opportunity of being heard, the Court has jurisdiction to hear and determine the application in those proceedings. Sub-section (5D) is of crucial importance. It confers powers on the Court as follows:
"(5D) An order under this section may declare that the whole or a part of a rule of an organization contravenes sub-section (1) or that the rules of an organization contravene sub-section (1) in a specified respect."
The sub-section contains two limbs which are true alternatives. The words "in a specified respect" are limited in their application and apply only to the words "the rules of an organization contravene sub-section (1)". They form part of the second limb only. They do not refer to the words contained in the first limb of the sub-section.

The first limb makes provision for a declaration being made that the whole or a part of the rule contravenes s.140(1). Where such a declaration is made, sub-section (5G) operates of its own effect and as a result the rule or the part of the rule, as the case may be, is deemed void from the date of the order. The Act itself has the effect of making the rule void as against all persons whether those persons were parties to the proceedings in Court or not. One effect of this is that any declaration must be directed to particular words being all or part of the words in a rule. The Court cannot substitute new words nor, under the first limb of sub-section (5D), can it declare that a rule or a part of a rule contravenes sub-section (1) in a specified respect. The Act is specific and explicit. Upon a declaration being made under the first limb of s.140(5D), sub-section (5G) has the effect of making that rule void for all purposes. Even if subsequently the cause of the contravention is removed, for example by an amendment of the Act, the rule or part which has been deemed void remains void. It needs to be re-enacted by the organization before it can have any legal effect.

The second limb of s.140(5D) makes provision for a declaration being made that the rules of an organization contravene s.140(1) in a specified respect. Where such a declaration is made, sub-section (7) operates of its own effect. The organization has a period of three months from the date of the declaration in which to amend its rules to bring them into conformity with the requirements of s.140(1) as regards the matters that gave rise to the declaration. If the organization has not done that within that period, the Industrial Registrar has a duty imposed upon him to determine such alterations of the rules as will, in his opinion, bring them into conformity with those requirements as regards those matters.

It is to be noticed that under sub-section (7) none of the rules nor any part of them are deemed to be void. It is true that in other legal proceedings persons may not be able to rely upon those rules insofar as they are contrary to s.140(1) of the Act, but nevertheless, the rules are not void. In particular, in the present case, if a declaration is made under the second limb of s.140(5D), the disentitled members of the Union gain no rights or benefits additional to those they may have in the absence of any declaration being made.

The power to make a declaration under the first limb of s.140(5D) is based upon a case being made out that the whole or a part of a rule contravenes s.140(1). If such a finding is made, instead of making the declaration the Court may adjourn the proceedings under sub-section (6) for the purpose of giving the organization an opportunity of altering its rules. The effect of such an adjournment is similar in many respects to a declaration made under the second limb, but in the absence of the organization amending its rules, the Industrial Registrar has no power to amend the rules. This distinction may be of importance where the rules can be amended only by a body which under the existing rules is invalidly constituted. In those circumstances an alteration of the rules made by the Industrial Registrar could avoid many legal and practical difficulties.

Power to make a declaration under the second limb of s.140(5D) is based upon a case being made out that the rules of the organization contravene s.140(1) in a specified respect. As has been said in a number of cases, often it is a nice question to determine what case has been made out.

For reasons already given, the Court does not have power to make the declaration in the form sought by counsel for the Union. For reasons already given, it is undesirable that the Court makes a declaration in the form sought by counsel for the Bureau. In passing, it is noted that proceedings under s.140 are not penal in nature and it is not appropriate that the orders should be made as a form of punishment on an organization for not taking action to amend its rules, particularly when that punishment has the effect of affecting adversely persons not being parties to the proceedings in Court.

It becomes necessary, therefore, for the Court to determine the case made out in these proceedings.

On reflection, it is an over-simplification to say that paragraphs (2) and (3) of Rule 4 of the rules of the Union contravene s.140(1) of the Act. It is true that those two paragraphs contravene s.140(1) in a specified respect. This is illustrated by the form of order sought by counsel for the Union. I agree with the principles upon which that form of declaration is based, but in my opinion the Court has no power to make such a declaration. To make a declaration under the first limb of s.140(5D) would, in my opinion, be unfair and unjust to the disentitled members. This result suggests that the case made out is one under the second limb of that sub-section, not the first.

The present proceedings arise from the amendments made to s.132 of the Act and as a result of the operation of s.132(2) and Regulation 115. The rules of the Union in their present form fail to make a provision required by the Act, namely they fail to make a provision that eligibility for membership of the Union, being an organization of employees, is limited to persons who are employees within the definition of that word contained in s.132(4). In my opinion the Bureau has made out a case that the rules of the Union contravene s.140(1) in a specified respect, namely that they allow persons not being employees as defined in s.132(4) of the Act to be eligible for membership of the Union. Prior to the amendments to s.132 being made in 1977, the rules of the Union did not contravene s.140(1) in that respect. I propose to make the declaration accordingly.

In the result, pending an amendment of the rules by the Union being made either by the Union or the Industrial Registrar, no injustice will be caused to any person.