Mellor v Horn

[1988] FCA 323

Re: SHIRLEY MELLOR
And: NOEL HORN; DOUG ANDERSON; BRIAN ELTON; COLIN HARDIE; JIM MOORE; RUSSELL
DUMMETT; STEVE KING; SANDY BALDWIN; KATHY NEWCOMBE and TONY SHELDON
No. Q1 of 1988
Industrial Law
25 IR 157

COURT

IN THE FEDERAL COURT

QUEENSLAND DISTRICT REGISTRY
INDUSTRIAL DIVISION
Gray J(1).

CATCHWORDS

Industrial law - registered organization - rules - performance and observance - casual vacancies on branch committee - whether implied resignation from one office by election to another - incompatibility of offices - whether filling of vacancy can be delayed until less than twelve months of term remains - whether order should be refused on discretionary grounds - proximity of next regular elections - expense and difficulty of preparing roll of voters - form of order.

Conciliation and Arbitration Act 1904 s 133AB, s 140(1)(a), s 141, s 165(3)(d), s 170.

HEARING

MELBOURNE

#DATE 24:6:1988

Counsel for applicant: Mr. K. Watson

Solicitors for applicant: Cooper Grace & Ward

Counsel for respondent: Mr. Jerrard

Solicitors for respondent: Carberry & Co.

Solicitors for Federated Liquor and Allied Employees Union of Australia: Hawthorn Cubpaidge and Badgery

ORDER

THE COURT ORDERS THAT the respondents perform and observe the rules of the Federated Liquor and Allied Industries Employees Union of Australia by taking all reasonable steps to cause to be conducted elections to fill all vacancies currently existing in the offices of trustee and members of the committee in the Queensland branch of the Federated Liquor and Allied Industries Employees Union of Australia.

(NOTE: Settlement and entry of orders is dealt with by O.36

of the Federal Court Rules.)

JUDGE1

By rule to show cause granted on 10th May 1988, the applicant seeks an order pursuant to s.141 of the Conciliation and Arbitration Act 1904 ("the Act"). The applicant is a member of the Federated Liquor and Allied Industries Employees Union of Australia ("the Union"), an organization of employees registered pursuant to the Act. She seeks an order for the performance and observance of the rules of the union by the holding of elections to fill casual vacancies in the committee of management of the Queensland branch of the Union.

1. The rules of the Union contain branch rules, which appear to apply to all of its branches. Rule 3 of those branch rules provides as follows:
   
   

"3 - OFFICERS AND MANAGEMENT COMMITTEE OF THE BRANCHES OF THE UNION

The Officers of each Branch shall consist of a President, Vice-President, Secretary, Treasurer, Guardian, two Trustees and eight members of the Committee and such officers shall constitute the Committee of Management of the Branch.

The members may determine at a general meeting that the Secretary fulfil the dual position of Secretary-Treasurer.

In addition to the foregoing at a general meeting, a Branch may determine to hold an election for an Assistant Secretary and as such shall be an Officer of the Branch and be a member of the Committee of Management of the Branch."

It is common ground that the Queensland branch of the Union has determined that its Secretary be a Secretary-Treasurer. It is also common ground that the branch has determined that there shall be an Assistant Secretary.

1. By virtue of rule 5(2)(a), elections for the offices of branch Secretary-Treasurer and Assistant Secretary are required to be held every four years. Similarly, by virtue of rule 5(3)(a), elections for the remaining positions referred to in rule 3 are required to be held every four years. The effect of rule 5(1)(b) and (c) is to require that all elections be by secret postal ballot of the financial members of the branch.

2. The last regular elections for all of the offices other than Secretary-Treasurer and Assistant Secretary were held in 1985, in accordance with the timetable laid down in rule 5(3)(b). The respondent Horn was elected as President, the respondent Anderson as Vice President, the respondent Moore as Guardian, the respondent Dummett as one of the two trustees and the respondents Baldwin, Newcombe (whose name is correctly spelt Neucom), King and Sheldon as members of the committee. Also elected as a trustee was one William Livingstone. The respondents Elton and Hardie, as well as Gilbert Neville Shepherd and Owen O'Sullivan were elected to the remaining positions of members of the committee. At the time, the offices of Secretary-Treasurer and Assistant Secretary were held by persons who are not parties to the proceeding.

3. In late 1985 or early 1986, Gilbert Neville Shepherd resigned from his office. In May 1986, vacancies occurred in the offices of Secretary-Treasurer and Assistant Secretary. The respondents Elton and Hardie were appointed to act in those offices respectively. Subsequently, in 1986, elections were held for the offices of Secretary-Treasurer and Assistant Secretary. Those elections were contested. Messrs. Elton and Hardie were candidates in those elections. On 26th November 1986, the Court declared the ballots in those elections void, by reason of certain irregularities which were admitted to have taken place, and ordered the conduct of new ballots. Those ballots were completed in or about August 1987. Mr. Elton was declared elected as Secretary-Treasurer and Mr. Hardie as Assistant Secretary. In or about October 1987, William Livingstone died.

4. Rule 34 of the Union's branch rules provides, so far as is relevant, as follows:
   
   

"34 - CASUAL AND TEMPORARY VACANCIES

Where a casual vacancy occurs in any office or position for which an election is held under Rule 5 the following provisions shall apply:-

(a) Where the vacancy is in the office of a member of the Committee of Management and less than twelve months of the ordinary term of such office remains unexpired the Committee of Management may appoint a member of the Branch to fill such vacancy.

(b) In other cases vacancies in the office of member of the Committee of Management shall be filled by election in accordance with Rule 5, provided that if not less than four-fifths of the members of the Committee of Management remain in office the vacancy shall not be filled unless the Committee of Management so directs, and pending an election the Committee of Management may appoint one of its members to act in any vacant position of President, Vice-President, Secretary, Treasurer, Assistant Secretary, Guardian or Trustee or Committee member.

Provided further that as soon as vacancies on the Committee of Management exceed one-fifth of the Membership thereof an election shall be held to fill all such vacancies concurrently. Any election held under this sub-rule shall be held amongst members who were financial members at the end of the quarter which immediately precedes the date on which the ballot is to open. The ballot shall be open for a period of at least fifteen (15) days and the opening and closing dates shall be as decided by the Committee of Management. A successful candidate shall take office upon the declaration of the result of the election and subject to the rules shall hold office until his successor takes office following the next ordinary elections.

(c) Where pending the filling of a vacancy in any office in a Branch, or while a regular office-holder is absent or incapacitated, it is necessary for the proper conduct of business that some person perform the duties of such office, the Committee of Management may appoint an acting officer."

The applicant contends that vacancies on the Queensland branch committee of management exceed one fifth, and have done so since William Livingstone's death in October 1987. No elections having been held, she seeks an order that the respondents comply with rule 34 of the branch rules. Mr. Watson of counsel appeared for the applicant. Mr. Jerrard of counsel appeared for all of the respondents except Tony Sheldon, who did not appear at all. Mr. Allingham, solicitor, appeared for the Union, to make submissions on the proper construction of its rules. It is worth mentioning that the evidence does not account for Owen O'Sullivan, who was elected to the committee of management in 1985. A list of members of the committee of management published in the branch journal "On Tap" for November 1987 shows only ten persons, they being the respondents.

1. The first question which arises is whether the number of vacancies exceeds one fifth of the membership of the committee of management. Mr. Jerrard conceded that two vacancies have occurred, being those caused by the resignation of Mr. Shepherd and the death of Mr. Livingstone. As I have said, nothing was said about the fate of Mr. O'Sullivan. The point at issue is whether Mr. Elton and Mr. Hardie impliedly resigned their offices as members of the committee upon their election to the offices of Secretary-Treasurer and Assistant Secretary. They did not expressly resign their earlier offices at any time. Indeed, arrangements have been made for a special meeting of the committee of management at 10.00 a.m. on 3rd July 1988. At that meeting, the respondents Elton and Hardie intend to tender their resignations as members of the committee. The respondents Baldwin and Neucom intend to move the appointment of four persons as members of the committee. Each of those four persons is a financial member of the union, and is willing to accept appointment. All of the respondents other than Mr. Sheldon intend to vote to accept the resignations of Messrs. Elton and Hardie, and to vote in favour of the appointment of the four persons proposed. Indeed, if the respondents Baldwin and Neucom do not move the motions, all of the respondents other than Mr. Sheldon are prepared to move them. There is no evidence of any current proposal to fill the position of trustee vacated by the death of William Livingstone.

2. The question whether the respondents Elton and Hardie impliedly resigned their earlier offices depends upon whether the earlier and later offices are incompatible, in the sense that one person cannot hold both simultaneously. In Egan v. Maher (No.2) (1978) 35 FLR 252, it was held by a majority of the Full Court that the purported but invalid election of the National Assistant Secretary of a registered organization to the office of National Secretary-Treasurer operated as a resignation from the office of National Assistant Secretary. See the judgment of Northrop J. at pp. 262-264. At p. 260, Evatt J. expressed his agreement with the judgment of Northrop J. Smithers J. dissented on the basis that the election to the position of National Secretary-Treasurer was invalid; if it had been valid, an implied resignation would have occurred. See especially p.258. In that case, an express rule of the organization concerned prohibited any person from holding more than one office. The incompatibility of the offices concerned therefore arose directly from the express terms of the rules. Reference was made in that case to Iron Ship Coating Co. v. Blunt (1868) 3 LRC.P 484, a case concerning incompatible offices within a company. In that case, the articles of association of the company provided that a director who should accept or hold any other office under the company, other than that of manager, should thereupon cease to be a director. The person who held the office of secretary became a director. It was held that he had impliedly resigned the office of secretary, the two offices being incompatible, notwithstanding that no express provision of the articles of association created a resignation. In the course of the judgment, Willis J. cited certain examples of incompatible offices, where the incompatibility plainly arose from the nature of the two offices, rather than from any express provision. One of these instances was that of the chief justice of a court and the prothonotary or clerk of papers in the same court.

3. In the present case, the rules of the Union provide for a committee of management upon which there are to be fourteen, fifteen or sixteen offices, depending upon whether the branch concerned exercises the rights given by rule 3 to combine the positions of Secretary and Treasurer and to create a position of Assistant Secretary. No provision is made for the votes to be exercised by the holders of the offices. The normal principle is that each office holder has one vote. The idea that a person may hold more than one of the offices at the same time seems inconsistent with the scheme of the rules; taken to its logical conclusion, it would mean that one person could hold all fourteen, fifteen or sixteen offices, and be the committee of management. Mr. Jerrard contended that, in the absence of a specific provision in the rules, one person could hold more than one of the offices at the same time, at least so long as there were seven persons, that being the number of the quorum required for the committee of management by rule 16. Such a contention could lead to a situation in which one person held seven, eight or nine offices, and six other persons each held one of the remaining offices. The seven persons would constitute a quorum, but one could always outvote the other six. This is not the intention of the rules, in my view.

4. Mr. Jerrard also drew attention to the provisions of rule 34(b), under which, pending an election, the committee of management is entitled to appoint "one of its members" to act in any vacant position. It is true that, as rule 34(b) reads, it would be possible for the committee of management, pending an election to fill a vacancy, to appoint one of its members to act in the vacant position of another of its members, as well as the vacant position of one of its named offices. It is unclear from that rule that such a person would be entitled to exercise an additional vote for the additional position held. In the absence of a specific rule, I consider this to be an unlikely conclusion. Even if it be the case that a person can acquire two votes under that provision, rule 34(b) would constitute an express provision giving one person two votes in limited circumstances, thereby supporting the proposition that one person could not have two votes under ordinary circumstances.

5. The most important factor in construing the rules on the question of incompatible offices is the express provision in rule 3 for the creation of a dual position of Secretary-Treasurer. By implication, this express provision carries the suggestion that no other dual position can be created, except under rule 34(b), in the limited circumstances therein referred to. It follows that the holding by one person of one of the offices on the committee of management would be incompatible with the holding by the same person of another of those offices in ordinary circumstances. The plain intention is that, except as otherwise provided by the rules, each office should be held by a different person.

6. The only proper conclusion, therefore, is that Mr. Elton impliedly resigned his position as a member of the committee of management upon his election to the office of Secretary-Treasurer, and Mr. Hardie impliedly resigned his position as a member of the committee upon his election to the office of Assistant State Secretary. In the present case, it is unnecessary to determine whether those implied resignations took effect on the closing of the ballots in 1986, which ballots were later declared void, or on their subsequent declaration as elected in 1987. Each event occurred prior to the death of Mr. Livingstone. On the evidence before me, it was at that point when the vacancies on the committee of management exceeded one fifth of its membership.

7. The respondents who appeared were not prepared to submit to an order of the kind sought by the applicant in the event that the major issue was decided against them. They relied instead on a construction of rule 34 which would avoid the consequence that elections need to be held, and on an appeal to the Court to exercise its discretion against the applicant in the peculiar circumstances of the Queensland branch of the Union.

8. The argument based on construction of rule 34 was not altogether easy to follow. It drew attention to the fact that sub-rule (a) seems to preclude the possibility of the committee of management taking steps to conduct an election for any position for which less than twelve months of the ordinary term of office remains. The ordinary term of office of each of the persons originally elected to the committee of management will expire on 2nd July 1989. Because of the proximity of that date, the respondents who appeared seemed to be contending that the Court could stay its hand until that date, when the committee of management could comply with the rules by appointing persons to fill the vacancies which exist.

9. Such a construction is at odds with the text of the rule itself. It is to be noted that, under rule 34(a), the committee of management "may" appoint a member of the branch to fill a vacancy if less than twelve months of the ordinary term of office remains. By contrast, rule 34(b) requires that "as soon as" vacancies exceed one fifth of the membership of the committee of management, an election "shall" be held to fill all such vacancies. The contrast in the use of language between "may" in rule 34(a) and "shall" in rule 34(b) suggests strongly that the holding of elections as soon as the vacancies exceed one fifth of the membership is mandatory. The word "shall" is also used in the opening words of rule 34(b), indicating a further requirement for vacancies to be filled by election. The power under rule 34(b) to appoint one of its members to act in a vacant position is only a power so to appoint pending an election, which must be held, and only involves an appointment of a person to "act". It does not involve a filling of the position. Accordingly, there is no warrant in the rules for delay until such time as less than twelve months remains in the ordinary term of office of a person who has vacated a position on the committee of management. It is worth noting that the power in rule 34(c) to appoint an acting officer is not in any way a power to fill a position, and does not cure a vacancy in such position.

10. If the rules, on their proper construction, did permit the committee of management simply to delay filling a vacancy until it was able to do so by appointment, they would be in clear contravention of the provisions of s.133AB of the Act, and therefore in contravention of s.140(1)(a). Section 133AB provides, so far as is relevant as follows:
    
    

"(2) The rules of an organization may provide for the filling of a casual vacancy in an office by an ordinary election or, subject to this section, in any other manner provided in the rules.

(3) Rules making provision as described in sub-section (2) shall not permit a casual vacancy, or further casual vacancies, occurring within the term of an office to be filled, otherwise than by an ordinary election, for so much of the unexpired part of the term as exceeds -

(a) 12 months, or

(b) three-quarters of the term of the office,

whichever is the greater."

Rules which permitted a delay between the occurrence of the vacancy which required to be filled and the filling of that vacancy, so as to permit appointment instead of election, would contravene the requirements of those provisions. For these reasons, I hold that the respondents are and have been since October 1987 obliged by rule 34 of the branch rules of the Union to conduct elections to fill the vacancies in the Queensland branch committee of management.

1. The respondents who appeared contended that, in the exercise of the discretion which the Court has not to make an order pursuant to s.141 of the Act, the Court should refrain from ordering the respondents to conduct elections. The existence of a residual discretion not to make an order under s.141, when a proper case for such an order has been made out, was recognised by the Full Court in Cook v. Crawford (1982) 62 FLR 34. It was also made clear in that case that the discretion will only be exercised against making an order in the most exceptional cases, and on considerations relevant to the objects of the Act, rather than general equitable grounds. See generally pp. 66-69 in the judgment of Smithers J., p. 82 in the judgment of Keely J. and pp.116-124 in the judgment of Sheppard J.

2. In the present case, a substantial part of Mr. Jerrard's argument on the issue of discretion was based on the proximity of the next regular elections for the committee of management. If the respondents are ordered to take steps for the conduct of elections, they are first obliged by rule 6 of the branch rules to request the Industrial Registrar to hold such elections under s.170 of the Act. That rule requires that such a request be made not later than six weeks prior to the date for the closing of nominations. Under rule 5(1)(g), nominations can only be called during the period on or between the first and fourteenth days of the months of January, April, July and October. The calling of nominations in the first two weeks in July would not be possible unless these provisions of the rules could be disregarded. The Court has no power under s.141, comparable with that under s.165(3)(d) of the Act, to enable it to modify the operation of the rules. Accordingly, nominations could not be called until the first fortnight in October. Should a ballot be required, it will be necessary to prepare a roll of voters. By a happy coincidence, the respondent Horn gave evidence that difficulties which will attend the preparation of a list of members' names and addresses to form the basis for a roll of voters will be able to be overcome, to the extent that a roll will be available by October. The conduct of an election will therefore be possible. The next regular elections will commence with the calling of nominations during the second week in April 1989, by virtue of rule 5(3)(b). Even if ballots are necessary then, the results will be declared early in July pursuant to that rule. If the Court is now to order that elections be held, and any ballot is necessary, the persons elected are likely to hold office for less than eight months.

3. Evidence was also given of particular circumstances attending the operations of the branch at the present time, which will lead to expense and difficulty in the preparation of a list of members for a roll of voters. For some time, the branch has been attempting to change the programme used in storing its membership data on computer. The new programme was originally to be introduced in December 1986. It was delayed as a result of the order of the Court for new ballots for the positions of Secretary-Treasurer and Assistant Secretary. That order was made on 26th November 1986, and the resulting ballots were held in April and May 1987. They necessitated the preparation of a new roll of voters, and there was heavy concentration on ascertaining the home addresses of members, so that fewer ballot papers would be sent to them at their employers' addresses.

4. The preparation of that membership list led to a considerable backlog in the entering of membership data into the computer, because resources were diverted to the preparation of the new list. This fact, together with the unavailability for some time of computer consultants used by the branch, caused some delay in the recommencement of the introduction of the new programme. The new programme is not yet in operation. It is not yet possible to derive from the computer-stored information what are called "reports", which include membership lists. For that to become possible, the computer consultants will have to finalise the changeover and conduct some testing. Membership lists from the computer will not be available until the middle of August 1988. This is despite the fact that casual clerical staff have been employed since 5th April 1988 to process membership information.

5. In the meantime, preparation of a list of members would involve manual work, necessitating the diversion of personnel from the programme changeover to that preparation. Personnel diverted will not be available for the ordinary work of the Union in Queensland. Mr. Elton has given evidence that the preparation of the list of members for the roll of voters in the last ballots involved an expense greater than $30,000 for the branch. The branch has suffered a recent diminution in income, because employers of members of the Union in large residential hotels in Queensland have refused to participate in schemes for the deduction of Union dues from the pay of their employees. This has caused financial strain on the branch, and led to a reduction in the number of persons employed in the branch.

6. There are difficulties in obtaining home addresses for members. In part, these difficulties are caused by the reduction in personnel consequent upon the diminution in income. In part, they arise from the unwillingness of employers to provide home addresses for members. Hotel proprietors in Queensland have been made aware by a circular from the Queensland Hotels Association that employers are under no legal obligation to provide home addresses of their employees to the Union. The ascertainment of those addresses is therefore difficult and will involve the diversion of personnel from the normal work of the branch.

7. Mr. Jerrard contended that the difficulty and expense of preparing a list of members for a roll of voters, coupled with the proximity of the next regular elections, should lead to the conclusion that the Court should not order elections at the present time. In my view, the relative shortness of time for which persons might hold office is not a weighty factor in the exercise of discretion, at least when the time is as long as it will be. A similar view was taken by Keely J. in Re Application by Brophy for an Inquiry into an Election in the Federated Clerks Union of Australia (30th October 1987, unreported). In that case, the time likely to elapse between an election ordered by the Court and the next regular elections was approximately eight months. In that case, at pp. 3 and 4, Keely J. said:
   
   

"In my opinion the period of office likely to be held is not so short as to constitute a factor of significant weight in this case. If that period had been only a few weeks it could have been a matter of considerable weight - although it would have been necessary to consider the reasons for the time which elapsed before the court commenced the hearing which led to the finding that an irregularity had occurred."

In the present, case, the shortness of the period for which persons elected are likely to hold office is the result of the fact that the respondents have taken an incorrect view of the rules with respect to their obligations to fill vacancies.

1. In the ordinary case, the cost to a registered organization of the conduct of elections to fill casual vacancies would not be a weighty consideration. The clear policy of Parliament, as expressed in s.133AB of the Act is that casual vacancies be filled by election, when they occur more than twelve months before the end of the ordinary term of office of the position vacated. Parliament must have intended that organizations should be required to cope with the expense of such elections. Further, the Union itself has adopted rules requiring the filling of casual vacancies as soon as they exceed one fifth of the members of a branch committee of management. It must therefore be presumed to have intended to bear the expense of conducting such elections. The real question is whether the particular circumstances of the branch, with its changeover of computer programmes, and the current difficulties in obtaining members' home addresses, should outweigh all of the considerations which favour the conduct of elections. In my view, those factors do not outweigh the need to ensure that the members have an opportunity to vote for the persons who will fill casual vacancies on a branch committee of management.

2. Some attempt was made to argue that the discretion should be exercised against the applicant because she did not raise the question of elections until her solicitors wrote to the Secretary-Treasurer by letter dated 15th April 1988. It is unnecessary in the strict sense for an applicant under s.141 of the Act to demand compliance with the rules before commencing proceedings. The letter of 15th April 1988 was no more than a desirable courtesy to the respondents. It did not receive the courtesy of a reply. The respondents cannot be heard to say that the applicant should have acted earlier when they were aware of the existence of vacancies and did not themselves act earlier. In these circumstances, the discretion of the Court should be exercised in favour of making an order.

3. Mr. Jerrard did make reference to the form in which the rule to show cause was granted. It orders the respondents to appear before the Court to show cause why they should not be ordered to comply with rule 34 of the branch rules. It is clear that the Court is not obliged by s.141 of the Act to make orders simply that persons perform or observe the rules of organizations. See R. v. Commonwealth Court of Conciliation and Arbitration; Ex Parte Barrett (1945) 70 CLR 141, especially at pp 156-157, 160 and 170. Nor does the Court, as a matter of practice, make orders in such general terms. Section 141(1G) gives the Court power to "give directions" for the performance or observance of rules. It is desirable that an applicant, in seeking a rule to show cause, should formulate with precision the order sought. A rule having been granted in general terms, it is open to the Court to make an appropriate order. In the circumstances of the present case, an appropriate order is that the respondents perform and observe the rules of the Union by taking all reasonable steps to cause to be conducted elections to fill all such vacancies as presently exist in the offices of trustee and members of the committee in the Queensland branch of the Union.