May, T.D. v Cox, P

[1989] FCA 369

Re: DAVID THOMAS MAY
And: P. COX; J. BROWN; J. DANN; G. HARRIS; E. McARA; I. MILLER;
M. NICHOLAIDES; J. SPEARS and D. DZUR
No. NI 10 of 1989
FED No. 369
Industrial Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
INDUSTRIAL DIVISION
Wilcox J.(1)

CATCHWORDS

Industrial Law - Application to enforce Rules of registered organization - Calls for national plebiscite of members - Whether calls made by properly constituted Special General Meetings of Branches - Special General Meetings called by meetings of Branch Councils at which there was no sufficient quorum - Deficiencies in notice to members - Whether strict compliance with Rules necessary for valid Special General Meetings.

Industrial Relations Act 1988 ss.194, 209.

HEARING

SYDNEY

#DATE 21:7:1989

Counsel for the Applicant: Mr J W Nolan

Solicitors for the Applicant: Carroll & O'Dea

Counsel for the Respondents
Messrs J Brown, J Dann,
P Drosd, G Harris, E McAra,
M Nicholaides and D Dzur: Mr S R Marshall

Solicitors for the Respondents: Maurice Blackburn & Co

Appearance for Respondents
Messrs P Cox, I Miller and
J Spears: Mr C G Staff (Solicitor)

Solicitors for Respondents
Messrs P Cox, I Miller and
J Spears: Jones, Staff & Co

ORDER

The Application be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

Application has been made to the Court, pursuant to s.209 of the Industrial Relations Act 1988, for an order compelling the members of the Federal Executive of the Association of Draughting, Supervisory and Technical Employees ("ADSTE") to perform the rules of that organization. The applicant is a member of ADSTE, an organization registered under the Industrial Relations Act, and a supporter of a move for a plebiscite of the members of the organization upon the question whether ADSTE should amalgamate with the Amalgamated Metal Workers' Union ("AMWU"). Three of the respondents, Messrs P Cox, I Miller and J Spears, appeared by their solicitor to submit to the order of the Court. The remaining seven respondents, whom I shall refer to simply as "the respondents", appeared by counsel to contest the claim of the applicant that there was default in the Federal Executive's performance of the rules. Their counsel concedes that the Federal Executive has declined to take a plebiscite of members; but he argues the request for it to do so was not valid. There is evidence to suggest that the Federal Executive is unwilling to incur the expense of a plebiscite at this stage, having in mind that there must, in any case, be an approving vote of members before any amalgamation may be consummated: see Div.7 of Part IX of the Industrial Relations Act. Of course, the Court is not concerned with the merits of holding a plebiscite at this stage; and still less with the arguments for and against any amalgamation. The only question for the Court is whether the Rules of the organization entitle the Federal Executive to take the position it does.

The meetings

1. During the course of a two-day meeting on 24 and 25 November, the Federal Executive passed the following resolution:
   

"That in accordance with the 1988 Federal Conference decision the AMWU, the ETU, the MOA and the ACOA were invited to respond to ADSTE's proposal for amalgamation as outlined in the Charter.

Federal Executive determines that in view of the discussions and information obtained over the last several months of 1988 from those unions; the Association at this stage pursue further discussions with the AMWU, the objective being a mutually acceptable scheme of amalgamation consistent with the amalgamation Charter."

1. This resolution caused concern among some members of the organization. They wished the resolution to be the subject of a plebiscite of members. This course is possible under the Rules of the organization, Rule 42 of which is as follows:
   

"(a) Notwithstanding anything contained in these Rules, a Plebiscite of all members of the Association--

(i) may be held for any purpose at the discretion of the Federal Conference or the Federal Executive, and,

(ii) shall be held if requested by resolution of special General Meetings of three Branches or if requested by a requisition in writing and signed by not less than 5 per cent of the financial members of the Association.

Provided that no decision of the Federal Conference, the Federal Executive or the Federal Executive Committee shall be reviewed or referred to a Plebiscite of members pursuant to paragraph (ii) of this clause unless the appropriate request has been delivered to the Federal President or Federal Secretary within three months of the said decision.

(b) Any such Plebiscite shall be conducted by secret postal ballot and shall be under the absolute control and direction of a Returning Officer appointed by the Federal Executive for that purpose who shall--

...

(c) A simple majority decision of the members voting shall be final and shall prevail over any contrary decision of the Federal Conference, Federal Executive or Federal Executive Committee."

1. With para.(a)(ii) in mind, steps were taken in three Branches to secure resolutions of Special General Meetings requesting a plebiscite. Those Branches were those of the Australian Capital Territory, Tasmania and Western Australia. In fact meetings, each purporting to be a Special General Meeting, were held in each of those territories, all within three months of the date of the Federal Executive resolution, at which the following identical resolutions were passed:
   

"This special general meeting calls upon the Federal Secretary to conduct a federal plebiscite of members, in accordance with Rule 42, in reference to the Federal Executive resolution re amalgamation passed by the Federal Executive meeting of 24 November 1988. The plebiscite shall contain the following questions only:

Question 1

That the Association of Draughting Supervisory and Technical Employees shall not amalgamate with the Amalgamated Metal Workers Union and that all discussions with the Amalgamated Metal Workers Union in respect of amalgamation shall cease immediately.

Question 2

That the Association of Draughting Supervisory and Technical Employees shall pursue the formation of a National Technical Supervisory and Professional Union, via discussion and if appropriate amalgamation with other unions which have traditionally and actively represented the interests of technical supervisory and professional employees in the public and/or private sector. Motion 2

This special general meeting calls upon the Federal Executive to appoint the Australian Electoral Commission as the returning officer for the purposes of conducting the plebiscite."

For ease of reference, I will refer to these resolutions as "the identical resolutions".

1. It is accepted on behalf of the respondents that, if those meetings were properly convened, the Federal Executive is bound to proceed with a plebiscite upon the matters set out in the identical resolutions. But it is said that none of the meetings was properly convened.
   The procedural defects

2. In relation to the Tasmanian and Western Australian Branches only one matter is raised. Rule 60(b) enables the calling of a Special General Meeting of a Branch "by resolution of the Branch Council". In both Tasmania and Western Australia, meetings which purported to be Branch Council meetings were held and a resolution appropriate to the calling of a Special General Meeting of the respective Branch was passed. But in neither case was a quorum available at that Branch Council meeting. So, in the contention of the respondents, neither Special General Meeting was validly called. It follows, according to the respondents, that neither of the meetings was in law a Special General Meeting, with the further consequence that neither of the resolutions passed at those meetings was capable of constituting a request by a resolution of a Special General Meeting of the Branch within the meaning of Rule 42(a).

3. In the case of the Australian Capital Territory there were several procedural defects. A meeting of the Branch Council was called but, at the appointed time, no quorum was available. Nonetheless, a meeting was held involving six persons of whom five were members of the Branch Executive. By virtue of Rule 48(b) the Branch Executive has power, subject to any direction of the Branch Council, to conduct and manage the affairs of the Branch. According to minutes prepared by Mr Desmond Heaney, the Branch Secretary, the meeting of the six people resolved:
   

"That a special general meeting be held on the 21 (sic) December, 1988 at which the following motions will be addressed ..."

The resolution then set out the whole of the identical resolutions, except Motion 2 thereof referring to the Australian Electoral Commission. However, Mr Heaney said this was in fact agreed to, but omitted from the minutes when written up. This omission was not rectified when the minutes were later confirmed.

1. It will be noted that the resolution did not specify a time or a place for the Special General Meeting. Rule 60(d) provides:
   

"(d) The place, date and time of such meetings shall be decided by the Branch Council or Branch Executive.

1. The evidence of Mr Heaney is that the meeting discussed the venue and favoured the Canberra Labor Club at Belconnen; but, as it was uncertain whether accommodation would be available, the time and place were left to be fixed by him in conjunction with the Branch President. In that manner it was decided that the meeting should be held at 6 pm on 21 December 1988 in the Barcaldine Room at that club.

2. The status of the six persons who decided that there ought to be a Special General Meeting of the ACT Branch is something of a mystery. The minute prepared by Mr Heaney, and confirmed without alteration at a subsequent Branch Council meeting, is headed "Minutes of ACT Branch Council Meeting ..."; yet the first item is a reference to the Branch President having "declared the Special Executive meeting open at 7.36 pm". The first resolution passed was one "That Branch Council appoints ..." two named people to be "Branch Councillors". Under the heading "Reports", and after referring to reports from other sources, reference is made to report 53/88, described as being from the Branch Executive. The minutes then record this resolution:
   

"Motion 7/12/88 May/Satrapa Resolved: 'That recommendation E 1/12/88 be endorsed'."

There followed the resolution previously set out.

1. As I understand this minute, those present passed the resolution by adopting a Branch Executive recommendation. This procedure seems curious, if indeed those voting on the resolution were then acting as the Branch Executive. Furthermore, the minutes show that the sixth person previously mentioned, Mr C Smitz, who was not a member of the Branch Executive, but who was a member of the Branch Council, was allowed to participate in the meeting even to the point of moving and seconding various motions.

2. At the time, the Branch Executive consisted of a total of six members, only five of whom were present at the meeting. Mr Heaney conceded in evidence that no notification was given to the sixth member that there was to be an Executive meeting that evening.

3. In response to an inquiry from the Federal Secretary of the organization regarding the procedure which was followed in connection with the ACT Special General Meeting, Mr Heaney wrote a letter, dated 8 March 1989, in which he said:
   

"The procedure followed was as detailed below: 1) Branch Council on the 6th December 1988 resolved that a Special General Meeting be called for the 21st December 1988. -Copy of minutes attached -It was agreed that once the venue was confirmed the meeting notice would go out stating the Canberra Labor Club at 6.pm. 2) The Agenda was signed by an authorised officer stating time date, place and nature of motion. Distribution was done in the following matter (sic). 1) two copies to each delegate. One for the workplace notice board, one for the delegates file that is circulated to each member in the area.

2) where there is one member, a notice was sent direct to their workplace. 3) a Public Notice was placed in the Canberra Times, stating time, date etc.

-Copy attached. 3) The Special General Meeting was held on the 21st December 1988. -Business was conducted as per agenda. -Minutes and roll attached. 4) Special General Meeting resolution sent to Federal President and Federal Secretary on 22/12/88. Copy attached."

It will be noted that Mr Heaney described the meeting of 6 December as being that of the Branch Council, not the Branch Executive. Furthermore, he made no reference to the omission of Motion 2 from the resolution as recorded in the minutes of that meeting.

1. In the earlier of his two affidavits filed in this proceeding Mr Heaney said:
   

"(i) On 6 December 1988 a meeting of the branch council of the ACT branch was held and resolved to call a special general meeting on the topic of a proposed plebiscite. A copy of the minutes of the branch council meeting is attached and marked 'A'.

(ii) The branch council agree that the special general meeting would be held on 21 December 1988 at the Canberra Labour

(sic) Club subject to the venue being confirmed by me."

Once again the meeting is described as being that of the Branch Council, not of the Branch Executive.

1. In his second affidavit in this proceeding, Mr Heaney said: "I next refer to the meeting of the Branch Council which became a meeting of the Branch Executive on December 6, 1988". In his oral evidence Mr Heaney said that it was realised at the time that there were insufficient people present to constitute a Branch Council quorum, so that it was decided to hold a Branch Executive meeting instead. Perhaps because counsel thought it unnecessary to do so, this statement was not challenged. Consequently, I should accept it as correct. But in doing so, I must say that the confusion and mis-statements to which I have referred reflect little credit upon the officers of the ACT Branch.

2. If the meeting of 6 December was a meeting of the ACT Branch Executive, there is no problem about a quorum. According to Mr Heaney the voting on the subject resolution was unanimous, so that Mr Smitz's participation may be disregarded. A question remains whether a Branch Executive may validly summon a Special General Meeting. Counsel for the respondents contends not. He says that, accepting the power of a Branch Executive generally to manage the affairs of a Branch, a specific procedure is required by Rule 60(b) for the calling of a Special General Meeting of a Branch. That procedure is a resolution of the Branch Council. Counsel says that the intention of the draftsman of Rule 60(b), to give only the Branch Council such power, is further indicated by the reference in Rule 60(d) to alternative decisions of the Branch Council and the Branch Executive. The calling of a Special General Meeting is a matter of substance, counsel argues. By Rule 60(k):
   

"Any decision by a majority of the members present and voting at an Annual or Special General Meeting shall be binding on the Branch Council and the members of the Branch and any general meeting of members shall have the power to disallow or approve any decisions made by Branch Council or Branch Executive."

1. It seems to me that there is substance in this submission. The Branch Council is required to meet at least once every month except January. It may meet at such other times as may be necessary: see Rule 47(a). It is not difficult to understand a view that, before the members are put to the trouble of being summoned to a Special General Meeting and the Branch exposed to the consequences of a resolution at such a meeting, the subject matter should be considered at a Branch Council meeting. The contrast between paras.(b) and (d) of Rule 60 is telling, suggesting that the decision to call the meeting must be made at Branch Council level, although the mechanics of place, date and time may be decided by the Branch Executive. In the present case, of course, the President and Secretary made those decisions.

2. In the result, even if one accepts that the meeting of 6 December was a meeting of the ACT Branch Executive, it is clear that the Special General Meeting of 21 December was not validly called.

3. However, the ACT irregularities do not stop there. Rule 60(d) and (f) provide:
   

"(e) The Branch Secretary or such other officer of the Branch as may be authorised to call such meeting shall give each member of the Branch 14 days written notice of the place, date and time of such meeting.

(f) A copy of the agenda of the business to be transacted at such meeting shall be forwarded to each financial member of the Branch with the notice convening such meeting."

1. As Mr Heaney indicated in his letter to the Federal Secretary, quoted above, the method adopted by him for the notification of members was to supply two copies of the notice to each job delegate. The delegate was supposed to put one notice on the job notice board and the other in a manilla folder containing various papers which was handed around amongst members in the particular workplace. This general procedure was subject to the qualification that, where there was only one member at a particular workplace, a copy of the notice was sent to that member, as an individual, either at the workplace or at the member's home.

2. The evidence does not establish when copies of the notices of meeting were sent to the job delegates, of whom there are some 300 in the Australian Capital Territory. But, having regard to the fact that the decision to call the meeting was made during the evening of 6 December, it is highly improbable that any significant proportion of the approximately 21,000 members of the organization in the Territory received 14 days notice of the meeting. Indeed, it is likely that some members received no notice at all. It is difficult to feel confident that a system which depended upon members checking the notice board or reading the manilla folder would effectively inform all of those members who were at work during the period which elapsed between the distribution of the notices and 21 December. And it is certain that some members would be absent from work during that period, due either to illness or leave (especially bearing in mind the time of the year and the fact that schools were then on holiday). It is true that a notice of the meeting was published in the "Canberra Times" of 21 December, but it is unlikely that this would have been seen by all members; anyway, many members might then have found it too late to arrange attendance.

1. There is a further aspect of notice. Rule 60(f) speaks of a copy of the agenda being "forwarded" to each member. The word "forwarded" suggests an intention that each member have a copy of the agenda for his or her own use; an understandable intention, given the importance of a Special General Meeting and the possibility that members might wish to study the proposed resolutions and to discuss them with others. Merely to read draft resolutions on a notice board, or in a folder which has to be passed on to others, would often be an unsatisfactory substitute for permanent possession of a copy of them.
   The need for strict compliance

2. Counsel for the applicant did not dispute the proposition that there were irregularities in connection with the calling of each of the Special General Meetings. But he submitted that the requirements of the Rules in that regard were merely directory and that there was substantial compliance with the Rules. In the submission of counsel, the focus of attention ought to be upon the Special General Meetings, at which the will of the members of each of the Branches was expressed, rather than upon the procedure by which those meetings were constituted. As counsel said, no complaint is made of the conduct of the Special General Meetings themselves or as to the form of the resolutions there passed.

3. I do not think that the procedural deficiencies noted above can be brushed aside so easily. It is true that the Industrial Relations Act does contemplate the possibility that a rule of a registered organization may be directory rather than mandatory: see s.194(2) of the Act. In this respect it continues the dichotomy between mandatory and directory rules which was envisaged in the Conciliation and Arbitration Act 1904: see s.132A. In referring to this dichotomy, in Lawrence v Porter (Full Court, 5 May 1988), Northrop J commented:
   

"A rule which is mandatory requires strict compliance. A rule which is directory is complied with where there has been substantial compliance with that rule."

1. However, as Dawson J pointed out in Hunter Resources Limited v Melville (1988) 164 CLR 234, and speaking in the context of statutory requirements, there are cases in which requirements with which there cannot be substantial compliance -- either the requirements are complied with, or they are not -- have been regarded as directory only. Even though there has been no compliance whatever, in such cases the argument of invalidity has sometimes been rejected. The approach preferred by Dawson J, with whom Wilson J expressly agreed on this point, was to search for the legislative intention upon the question whether failure to comply strictly -- or at all -- with the requirement would render invalid the resulting act.

2. The difficulty, of course, is that the draftsman of a statute rarely makes provision for an indication of such intendment. As Bennion said in Statutory Interpretation pp 21-22:
   

"Where a duty arises under a statute, the court, charged with the task of enforcing the statute, needs to decide what consequence Parliament intended should follow from breach of the duty.

This is an area where legislative drafting has been markedly deficient. Draftsmen find it easy to use the language of command. They say that a thing 'shall' be done. Too often they fail to consider the consequence when it is not done. What is not thought of by the draftsman is not expressed in the statute. Yet the courts are forced to reach a decision."

1. The courts must do the best they can, having regard to the scope and object of the statute. In Hunter Resources at pp 251-252, Dawson J said:
   

"It is a question of what consequences, if any, were intended to flow from the failure to comply with the statutory requirement and even if the difference between the performance of a public duty and the acquisition or exercise of a private right is not conclusive, that distinction does at least provide some guidance in distinguishing those provisions with which strict compliance was intended from those with which it was not. That point was made in Clayton v Heffron (1960) 105 CLR at p 247: 'But in them all (the decided cases) the performance of a public duty or the fulfilment of a public function by a body of persons to whom the task is confided is regarded as something to be contrasted with the acquisition or exercise of private rights or privileges and the fact that to treat a deviation in the former case from the conditions or directions laid down as meaning complete invalidity would work inconvenience or worse on a section of the public is treated as a powerful consideration against doing so.'"

1. In Formosa v Secretary, Department of Social Security (1988) 81 ALR 687 at p 692, Davies and Gummow JJ said:
   

"... there is much force in the view (advocated by Mr Evans in his article 'Mandatory and Directory Rules' (1981) 1 Legal Studies 227 at 230-1) that (a) directory rules are not to be defined as rules which require merely substantial compliance with a specified procedure, and that (b) the distinction between directory and mandatory requirements has its meaning and utility primarily upon consideration of the consequences of breach. Thus, if a rule, on its correct meaning, is satisfied by substantial compliance, then the rule may still be properly described as mandatory in character. This is because the rule, properly construed, must still be observed, and non-compliance will be fatal. But, if the consequence of non-compliance with what is stipulated by the rule (properly construed) is not to render ineffective the acts in question, then the stipulation may truly be said to have been directory and not mandatory in character."

1. This same approach has been taken to the application of the rules of a registered organization, attention being directed to the scope and purpose of the relevant rule and the consequences of its breach. In Wilson v Devereux (1980) 45 FLR 223 at p 227, a case concerned with union rules, Sheppard J said that, in order to determine the intent of the draftsman as to the effect of breach "one is entitled to take into account the surrounding circumstances, the subject matter to which the rule is addressing itself, the context in which the words in question appear and the words themselves". The surrounding circumstances obviously include the effect of non-compliance.

2. The significant elements of non-compliance in the present case may be divided into two categories: the failure to secure a valid decision of a majority of the Branch Councils in favour of a Special General Meeting in any Branch and the failure in the Australian Capital Territory properly to notify Branch members. I think that the failure of the Australian Capital Territory meeting itself to nominate a time and place for the Special General Meeting and its delegation of this task to the Branch President and Branch Secretary may be disregarded; it is hardly likely that the draftsman of the Rules would have intended this omission to invalidate a meeting otherwise properly called.

3. From one point of view the failure to obtain a valid decision of the Branch Council in favour of a Special General Meeting may seem a matter of minor importance. There is force in the argument of counsel that the most important question is the decision which the members themselves made at the Special General Meeting. But the holding of a Special General Meeting is a matter of some consequence, creating, as it does, the possibility of a decision of the Branch Council being over-ruled. In the present case the meeting was concerned only with the question of a plebiscite. No decision was under immediate threat. But the question whether compliance with a particular provision is mandatory must not be determined by reference to the facts of the particular case. The inquiry is as to the likely legislative intention. That involves consideration of all possible fact situations.

4. Despite the argument that the most important aspect of the matter is the ability of the members to express their wishes at a Special General Meeting, the Rules ought to be interpreted as requiring strict adherence with their provisions in relation to the decision whether or not to hold that meeting. The calling of a Special General Meeting is an important event in the life of a Branch, with the potential to override a decision validly arrived at by the Branch Council or to make a particular policy, which would be binding upon the Branch and upon all of its members. A member is absent from a Special General Meeting at his or her own risk, in the sense that in the member's absence a decision may be taken which is unpalatable to, but binding upon, that member. In my view, members are entitled not to be put in that position except by a decision properly arrived at by the Branch Council. It is appropriate to bear in mind the matters mentioned by the Full Court in Lyons v Deegan (1978) 35 FLR 430 at p 444:
   

"It is fundamental to the existence of a democratically controlled organization that it should have its own rules. These are laws made by the organization dealing with the rights and obligations of members and their controlling bodies. They are in almost all respects laws which the body is entitled to make as it wishes. Having made them, it seems to us imperative that there be, except in rare cases, adherence to them. There cannot be a democratically controlled organization in which members may properly participate if the laws made for its government can be set aside or flouted at will and this is as true of unions as of other bodies. There are ready methods available to alter the rules if a proper case arises but members are placed in an impossible position when seeking to participate in the affairs of the organization if they do not know whether controlling bodies will observe the rules or not."

1. When one turns to the Rules concerning the notification to members of the calling of a Special General Meeting, the argument in favour of strict compliance becomes overwhelming. This is a matter which goes directly to the democratic control of the organization. A situation in which members may become bound by the decision of a meeting of which they have not been notified in the manner required by the Rules is patently unacceptable; it could never have been regarded as otherwise by those who framed the Rules. As counsel submitted, these requirements have a basis in the memberhsip itself; all members and all Branches having an interest in the maintenance of the integrity of the democratic process. Disregarding the problems associated with the decision to call the ACT meeting, the failure of the Branch Secretary to comply with the notice requirements leads inevitably to the conclusion that the ACT Special General Meeting was invalid. Rule 42(a) compels the holding of a plebiscite, upon the demand of Branches, only where there is a request from three Branches. Consequently, even if I am wrong in my view about the necessity for strict compliance with the Rules in connection with the Branch Council meetings, the failure properly to notify ACT members means that there has been no valid request for a plebiscite by resolution of Special General Meetings of three Branches. It follows that the Federal Executive is not bound to hold a plebiscite upon the matters referred to in the identical resolutions. The respondents have not failed to perform the Rules of the organization.

2. The application must be dismissed.