Motor Traders' Association of New South Wales

[2023] FWCD 24

[2023] FWCD 24

FAIR WORK COMMISSION

DECISION

Fair Work (Registered Organisations) Act 2009

s.159—Alteration of other rules of organisation

Motor Traders' Association of New South Wales

(R2023/55)

PATRICK COYLE MELBOURNE, 28 SEPTEMBER 2023

Alteration of other rules of organisation.

1. On 16 June 2023 the Motor Traders' Association of New South Wales (the Association) provided the Fair Work Commission (the Commission) a notice and declaration setting out alterations to its rules. Particulars supporting the application were lodged on 30 June 2023. Further particulars in support of the alterations were provided on 15 September 2023.

1. The Association seeks certification of the alterations under section 159 of the Fair Work (Registered Organisations) Act 2009 (the Act).

1. On the information contained in the notice and declaration, and further material lodged on 15 September 2023, I am satisfied the alterations have been made under the rules of the organisation.

1. The particulars set out alterations to all the rules, except for rule 1 – Name of Association. Some alterations make minor changes to the rules, whereas others are substantial.

1. The minor changes to the rules include revising rules for improved readability, updates to the disciplinary process of officers and members, and the amalgamation of new car dealer divisions.

1. The substantive changes to the rules involve the restructure of the organisation from the Governing Council and Executive Board to the Executive Board as the supreme governing body, and the creation of an advisory council. The changes to the admission of members and the Code of Ethics also require discussion.

1. Alterations have also been made to the eligibility rule, which will need to be the subject of a separate application.

Minor changes to the rules

Improve readability

1. Alterations have been made to improve the readability of the rulebook. These include updates to the interpretation rule, the insertion of headings, subheadings, capitalisation and removal of capitalisation of particular words, further numbering of subrules and internal cross-referencing.

Disciplinary actions against members and officers

1. The procedures regarding disciplinary actions against members remain largely the same. The alterations group provisions regarding the Board of Enquiry together under its own rule[1] and provide that the Board of Enquiry will now be able to be utilised in disciplinary actions against officers.[2] The rule regarding dismissal from office of officers is expanded, adopting features in the procedure for disciplinary actions against members.[3]

Amalgamation of all new car dealer Divisions

1. The alterations provide for the amalgamation of all new car dealer Divisions into one called the “Australian Automobile Dealers Association”. The amalgamating Divisions are the Australian Automobile Dealers Association Metropolitan Division, the Australian Automobile Dealers Association North and North West Division, and the Australian Automobile Dealers Association South and South West Division. The rest of the Divisions remain unchanged. The alterations also provide that the Executive Board can determine changes to Divisions without the need to amend the rules.[4]

Alterations to the eligibility rules

1. The eligibility rule is contained in rules 4 and 7. The alterations make changes to both rules. The alterations are minor and do not change the substance of the rules. However, alterations to eligibility rules cannot be certified under section 159 of the Act. A separate application would need to be made to the Tribunal under section 158 for consent to the alteration of eligibility rules.

1. I am satisfied that the proposed alterations to the eligibility rule contained in rules 4 and 7 are severable from the other alterations in light of the principles set out by the majority in the Food Preservers case.[5] In particular, I am satisfied that the remaining alterations operate independently to the proposed alterations to rules 4 and 7, and severance will not impact the meaning or effect of the remaining alterations. Therefore, the proposed alterations to rules 4 and 7 are severed from the remaining alterations.

1. I am unable to certify the proposed alterations in rules 4 and 7. Staff of the Commission are willing to provide advice and assistance to the Association if required in relation to the making of an application under section 158 for alteration of the eligibility rules.

Changes to the admission of new members

1. Section 166 of the Act provides for an entitlement to membership. Subsection 166(4) states that an employer who is eligible to become a member of an organisation of employers is entitled, subject to payment of any amount payable, to be admitted as a member and to remain a member so long as the employer complies with the rules of the organisation.

1. The proposed alterations specify at sub-rule 13(5) the process for applications for membership to be dealt with by the Executive Board or its delegate.[6] Proposed sub-rule 13(5)(b)(c) provides that, where an application is accepted by a delegate on behalf of the Executive Board, such acceptance requires ratification by the Executive Board within 60 days, failing which the acceptance will be deemed void and have no effect from the beginning. This is contrary to section 166(4) of the Act because it could result in an employer who is otherwise eligible for membership not being admitted as a member, including through a failure of process, delay or inability by the Executive Board to meet the timeframe set out in the rule.

1. I am satisfied that proposed sub-rule 13(5) is severable from the other alterations in light of the principles set out by the majority in the Food Preservers case.[7] In particular, I am satisfied that the remaining alterations operate independently to the proposed alterations to sub-rule 13(5) and severance will not impact the meaning or effect of the remaining alterations. Therefore, the proposed alterations to sub-rule 13(5) is severed from the remaining alterations.

1. Furthermore, the general powers and responsibilities of the Executive Board, as stipulated in subrule 32(9), encompass the admission of new members to the Association.

1. I refuse to certify the proposed alterations in sub-rule 13(5). Staff of the Commission are willing to provide advice and assistance to the Association if required to help them to perfect alterations that give effect to its intent if it wishes to pursue the matter.

Restructure

The Executive Board as the supreme governing body

1. The alterations redesign the Association’s internal governance structure. The alterations make the Executive Board the governing body responsible for the overall management and control of the Association. The Executive Board’s power is subject to control of the members in general meeting.[8] The Executive Board comprises of 10 members.[9] Members of the Executive Board will be elected by members, regardless of which Division they belong to.[10] The term of office is 4 years,[11] with a limitation to 3 consecutive terms.[12]

1. There will be one President and one Vice President.[13] They have the same term of office and limitation on term of office as those for the Executive Board. The Executive Board will elect the President and Vice President.[14]

The Advisory and Nominations Council

1. The alterations rename the current Governing Council to the “Advisory and Nominations Council”. This reflects the change in the role of the Council. The Council will no longer have a governance function, rather the role of the Council will be a forum of the Association to facilitate communications between the Executive Board and members, inform decision-making by the Board and facilitate implementation and enforcement of decisions of the Executive Board.[15] Members will be referred to as Councillors, however they will not be officers. The functions and responsibilities of the Councillors include serving as representatives of the respective Divisions and affiliates which elected them to the Council, and nominate, and run as, candidates in elections for members of the Executive Board.[16]

Removal of the Chief Executive Officer

1. The alterations remove the position of Chief Executive Officer within the rulebook, and the relevant functions have been allocated to the Executive Board. This position is not an office, however the alterations do remove offices that exist under the current rules.

Removal of offices

1. Under the proposed alterations, the offices of Secretary and Honorary Treasurer are abolished. The powers and responsibilities of the Secretary and Honorary Treasurer are reallocated to the President and the Executive Board respectively.[17]

1. As a result of the change in function of the Council under the restructure, the remaining office bearers under the current rules, including the 4 Metropolitan Vice-Presidents, 4 Country Vice Presidents, councillors and alternate councillors are also abolished.

1. The last scheduled election for all the above offices were held in 2020, and in the ordinary course of events under the current rules, the next election is due by the end of this year.

1. The alterations provide for a transitional rule. Sub rule 44(1) states that the term of office of the councillors appointed to hold office on 18 June 2021 shall cease on the close of the annual general meeting held in 2024.

1. Sub rule 44(4) provides for the Caretaking Council and Executive Board. It states that those currently holding the office of Councillor or Member of the Executive Board will be deemed to have been elected as Councillors or Members of the Executive Board, respectively, under the new rules.

2. While this transitional rule will allow for the current office holders to retain their title of Councillor, under the new structure none of these positions will continue to be offices. The rule alteration has made their offices into advisory positions, effectively abolishing all of the offices on certification.

1. I will now turn to the principles relevant to a restructure that involves the abolition of an office.

1. The following principles are relevant to the restructure of organisations:[18]

·   an organisation has the right to restructure itself as it sees fit;[19]

·   an organisation is entitled to abolish offices at any time as long as it is effected in accordance with its rules and must be bona fide;[20]

·   in addition, any abolition of office must not have an oppressive, unreasonable or unjust effect on members or applicants for membership having regard to the objects of the legislation.[21]

1. These principles indicate that the alterations should be certified unless they are found to be not bona fide or that they have an oppressive, unreasonable or unjust effect on members. Consequently, I must now consider whether the abolition of the offices is bona fide.

1. Along with the notification, the Association lodged various documents including the particulars of the alterations, which contained an explanatory memorandum. The abovementioned abolishment of offices is a result of the restructure. In the explanatory memorandum, the Association explained that the restructure has been implemented to “keep governance agile and responsive to better meet the challenges associated with the Association’s size and its multitude of objects.”[22]

1. I have nothing before me to suggest that the alterations are not bona fide. I must now consider whether the abolition of the offices has an oppressive, unreasonable or unjust effect on members or applicants for membership having regard to the objects of the Act.

1. Subsection 142(1) of the Act outlines the general requirements for rules. Subsection 142(1)(c) provides that the rules of an organisation must not impose on applicants for membership, or members, of the organisation, conditions, obligations or restrictions that, having regard to Parliament’s intention in enacting this Act (see section 5) and the objects of this Act and the Fair Work Act 2009 (the FW Act), are oppressive, unreasonable or unjust.

1. Parliament’s intention in enacting the Act is set out in section 5. The section provides for certain standards which include:

·   ensure that employer and employee organisations are representative of and accountable to their members, and are able to operate effectively;

·   encourage the efficient management of organisations and high standards of accountability of organisations to their members; and

·   provide for the democratic functioning and control of organisations.

1. Having regard to the above, the Association’s restructure has been implemented to encourage the efficient management of the organisation and to ensure the organisation is able to operate efficiently. As noted above, the alterations provide for the democratic functioning and control of the organisation by ensuring all members can participate in elections of the Executive Board and are represented at the Executive Board level. In each of these respects, the alterations reflect Parliament’s intention in enacting the Act. I have not found anything to otherwise suggest that the alterations will have an oppressive, unreasonable or unjust effect on members of the organisation under section 142(1)(c).

Code of Ethics

1. Rules must provide for the times when and the terms on which persons cease to be members (other than by resignation).[23] When considering alterations to rules which provide for the terms on which persons cease to be members, regard must be had to subsection 142(1)(c), that is the alterations must not be oppressive, unreasonable or unjust within the meaning of the Act.

1. The alterations remove the text of the Code of Ethics from the rulebook and incorporates the obligation on the Association to cause particulars of all alterations and additions to the Code to be made available to members as soon as practicable after the general meeting is held at which such changes occur and any new Code is adopted.[24] This is an important obligation as a contravention of the Code is grounds for disciplinary action.[25]

1. It is well-held doctrine that members are deemed to know the rules of their organisation, and rules that provide for removal for contravention of rules are not oppressive, unreasonable or unjust, within the meaning of the Act.[26] The part of proposed sub-rule 20(2)(c) that provides a contravention of the Code of Ethics may cause rise to a disciplinary event is not contrary to the Act.

1. However, although referred to in the rules, the Code of Ethics does not form part of the rules. In determining whether it is oppressive, unreasonable or unjust to remove members for non-observance of a code which sits outside the rules, regard must be had to members’ access of the code.  As stated in Thornton at p.591:  

…the power to punish for not complying with the decisions of Conference or the National Council or not carrying out the policy in the Union cannot be conceded unless coupled with provisions for the promulgation of details of the decisions and the policy in such a way that a member may reasonably ascertain what he is obliged to do or refrain from doing… [27]

1. To this end, I am satisfied that sub-rule 5(3) requires the Code of Ethics to be made available and that all members would be able to avail themselves of the Code and act in accordance with it.

1. With the exception of the proposed alterations to rules 4, 7 and sub-rule 13(5), in my opinion the alterations comply with and are not contrary to the Act, the FW Act, modern awards and enterprise agreements, are not otherwise contrary to law and were made under the rules of the organisation. I certify accordingly under subsection 159(1) of the Act.

DELEGATE OF THE GENERAL MANAGER

[1] Rule 21

[2] Rule 21(1)

[3] Rule 35

[4] Rule 11(6)

[5] Re Food Preservers’ Union of Australia (1988) 79 ALR 138 at 145

[6] Rule 13

[7] Re Food Preservers’ Union of Australia (1988) 79 ALR 138 at 145

[8] Rule 33(9)(c)

[9] Rule 32(1)

[10] Schedule item 12.1.2

[11] Rule 32(3)

[12] Rule 32(3)(b)

[13] Rule 34

[14] Schedule item 2.1.4

[15] Rule 30(2)

[16] Rule 30(3)

[17] Rule 34(1)(b)(iii) and 32(9)

[18] See Independent Education Union of Australia [2015] FWCD 8168 at [4]

[19] Imlach v Daley (1985) 7 FCR 457 at 462

[20] Saint v Australian Postal and Telecommunications Union & Ors (1976) 13 ALR 649

[21] Roughan v Australasian Meat Industry Employees’ Union (1992) 36 FCR 536

[22] Attachment B of the particulars lodged 16 June 2023

[23]Subsection 141(1)(b)(ii) requires that rules:

…

(b)must provide for:

…

(vii)the times when, and the terms on which, persons become or cease (otherwise than by resignation) to be members

[24] Rule 5(3)

[25] Rule 20(2)(c)

[26]  Hardiman v TWU (1954) 80 CAR 232 at 236; Cassidy v Amalgamated Postal Workers’ Union of Australian (1967) 11 FLR 124 at 127;

[27] Thornton & Ors v MacKay & Ors (1945) 56 CAR 561 at 591

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