Nilsen v Loyal Orange Trust
[1997] IRCA 32
•20 February 1997
DECISION NO:32/97
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - Claim of UNLAWFUL TERMINATION - Applicant employed by the Loyal Orange Trust for over 25 years - Responsible for running the Institution’s bookshop - Trust operating in deficit - Trust resolved to reduce staff of three by one and close bookshop - Applicant selected for termination after consideration of Trust’s needs and relative skills of other employees - Whether VALID REASON connected with operational requirements - Applicant alleged that real reason for termination was her association with members who had challenged the propriety of the Trust’s administration - Applicant and these members expelled from the Institution six months before termination of employment - Whether events surrounding the expulsion related to her termination - Whether selection process a sham or unfair - Whether NOTICE sufficient - Whether CONSULTATION adequate
Workplace Relations Act 1996 (formerly Industrial Relations Act 1988) ss 170DE(1), 170EA
NILSEN v LOYAL ORANGE TRUST (ACN 004 245 694)
VI 4875R of 1994
Before: NORTH J
Place: MELBOURNE
Date: 20 FEBRUARY 1997
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 2875R of 1994
B E T W E E N :
MARGARET NILSEN
Applicant
AND
LOYAL ORANGE TRUST (ACN 004 425 694)
Respondent
MINUTES OF ORDERS
BEFORE: North J
PLACE: Melbourne
DATE: 20 February 1997
THE COURT ORDERS THAT:
The application is dismissed.
The question of costs is adjourned to a date to be fixed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 2875R of 1994
B E T W E E N :
MARGARET NILSEN
Applicant
AND
LOYAL ORANGE TRUST (ACN 004 425 694)
Respondent
BEFORE: North J
PLACE: Melbourne
DATE: 20 February 1997
REASONS FOR JUDGMENT
The applicant, Miss Margaret Nilsen, had her employment terminated by the respondent, the Loyal Orange Trust (the Trust), as a result of a resolution of a Trust meeting on 25 November 1994. She last attended work on 22 December 1994. On 29 December 1994, the applicant filed an application under s 170EA of the Industrial Relations Act 1988 (now the Workplace Relations Act 1996) (the Act) alleging that her employment was unlawfully terminated.
The application was heard by a Judicial Registrar and was dismissed on 23 August 1995. On 13 September 1995, Miss Nilsen applied under s 377 of the Act to review the exercise of the power by the Judicial Registrar.
THE ISSUES ON THE REVIEW
Section 170DE(1) of the Act reads:
“An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service.”
The central issue in this review is whether there was a valid reason, based on the operational requirements of the Trust, for the termination of the employment of Miss Nilsen. The Trust argued that it was operating in deficit and needed to cut expenses. One way to reduce expenses was to reduce staff costs and reduce the operations of the Trust. The Trust employed three people. It determined that it would have to function with two people and that it would close the bookshop which it operated. The Trust contended that the reason for the termination of Miss Nilsen’s employment was based on the financial requirement of the Trust to reduce costs, and the selection of Miss Nilsen was based on an assessment of the relative suitability of the employees for the remaining needs of the Trust. In particular, Miss Nilsen’s main function of running the bookshop no longer existed. In response, Miss Nilsen contended that the members of the Trust were not in a position to determine that the financial position of the Trust required a reduction in staff because they had not been given adequate information. Further, she argued that, quite apart from whether the financial position of the Trust justified the termination or not, the real reason for the termination was to protect the personal interests of a small group of members of the Trust. This group of members wished to rid the Trust and the Institution of Miss Nilsen because she was associated with some members who had questioned the competence and propriety of the administration of the Trust and, thereby, threatened the interests of that group.
Miss Nilsen was expelled from the Institution on 1 June 1994. She argued that her dismissal in December 1994 by the Trust was part of the one process, which commenced with her expulsion from the Institution. Much of the applicant’s case involved reference to the circumstances of the expulsion. In part, this reference was intended to demonstrate that the reason for the dismissal was related to the events of the expulsion. In part, the reference was intended to demonstrate that the circumstances of the expulsion were unfair and unjust. From this base, the applicant argued that the unfairness and injustice of the expulsion caused the dismissal to be unlawful.
In addition, the applicant argued that the termination was unlawful because:
· the Trust had an excessive concern for confidentiality in relation to its affairs and dismissed the applicant, partly because it regarded her as unable to maintain adequate confidentiality;
· the applicant was not given adequate notice of termination;
· the applicant was not adequately consulted in relation to her termination;
· the process by which the applicant was selected for termination ahead of other employees of the Trust was invalid.
I will examine these contentions further later in these reasons. It is desirable, by way of background, to examine the structure and operation of the Trust and the Institution, and then to say something about each of the three employees of the Trust.
THE STRUCTURE AND OPERATION
OF THE TRUST AND THE INSTITUTION
The Trust is a company limited by guarantee and was incorporated in 1946. Its objects are adequately described, for the purpose of this case, by reference to the first three objects set out in the Memorandum of Association, as follows:
“3. The objects for which the Trust is established are to:
(a) Propagate and defend the Protestant Faith, proclaiming the Lord Jesus Christ as the Saviour of men, and to attain this object to conduct religious services, activities and Sunday Schools and to encourage the reading and study of The Holy Bible.
(b) Establish, maintain, conduct, and regulate in foreign countries missionary activities to extend the Protestant Faith.
(c) To apply the property and assets of the Trust to:
1.establish, maintain, conduct and regulate a charitable institution or institutions for the care, relief and maintenance or [sic] destitute orphaned or neglected children.
2.establish, maintain, conduct and regulate a charitable institution or institutions for the care, relief and maintenance of aged destitute or infirm persons.
3.establish, maintain, conduct and regulate a hospital or hospitals for the care of sick persons.
4.loan money either bearing interest or free of interest or charge of any kind for the relief assistance and help of persons of poor and moderate means or to make gifts of money from its funds to help sick persons to procure medical surgical and/or hospital attention and/or to have a period of convalescence or to make gifts or donations to such institutions established for religious charitable or educational purposes as the Trust may deem fit.
5.conduct and carry out research into the history of the Protestant Faith.
6.establish print publish maintain distribute and regulate any newspapers periodicals books publications leaflets pamphlets and tracts that the Trust may think desirable for the promotion of its objects.
7.undertake activities establish conduct and regulate clubs associations and such other organizations as will assist in promoting the satisfactory development physically spiritually mentally and socially of children and young people.”
The Trust is managed by a group of people described in the Articles of Association as members. The Trust has 14 members, comprising the Grand Master, Grand Secretary and Grand Treasurer of the Institution, nine persons appointed by the annual meeting of the Institution, three of whom retire annually, and two persons appointed by the annual meeting of the associate members of the Trust, one of whom retires annually. There is thus a close link between the Trust and the Institution. The link is further seen in the provision that the Grand Secretary and Grand Treasurer of the Institution are to be the Secretary and Treasurer of the Trust respectively, and the property and assets of the Trust may not be given to or used for any body or organisation not associated with the Institution without the consent of the Grand Executive of the Institution. Clause 17 of the Constitution and Laws of the Institution describes the role of the Trust in relation to the Institution as follows:
“All the real estate, property and effects of the Grand Lodge, and that of any Primary Lodge, Chapter or Auxiliary passing a resolution to that effect, or becoming defunct, shall vest in LOYAL ORANGE TRUST, which shall be the Trustee, and the said TRUST is hereby empowered to sue for, and recover, and to hold and apply the use of such property in accordance with its Memorandum and Articles of Association.”
The Articles of Association of the Trust require the Trust to keep proper books of account and to allow access by members to the books. The accounts of the Trust must be audited at least annually. The Trust must hold an annual meeting of members in October every year. The accounts and balance sheet of the Trust made up to 31 August preceding the date of the meeting must be laid before the annual meeting in October. Clause 17 of the Articles of Association provides:
“A copy of all accounts laid before the Annual Meeting of members accompanied by a report thereon the officers of the Trust [sic] shall be sent to the Grand Lodge of the Loyal Orange Institution in Victoria in time for its Annual Meeting.”
The annual meeting of the Institution must be held in November every year.
The Institution is an unincorporated association formed in 1843. The governing body is the Grand Orange Lodge of Victoria. The objects of the Trust referred to earlier are, in essence, a mirror of the objects of the Institution. The Grand Orange Lodge of Victoria is made up of various officers, including past and present Grand Masters/Mistresses, and numerous other officers together with one delegate for every twenty members of the Primary Lodges. The Grand Lodge meets at least twice every year, namely, at an annual meeting in November and at a half-yearly meeting in May. Thirty members form a quorum. The officers of the Grand Lodge constitute the Grand Executive, which has the power of management of the Institution between meetings of the Grand Lodge. The Grand Lodge or Grand Executive may form districts. The Primary Lodges within each district elect District Masters or Mistresses. Primary Lodges may be formed under the authority of the Grand Lodge by the grant of a warrant. There are about 17 primary Lodges. Each Lodge holds annual elections for various offices including that of a Worshipful Master/Mistress, Secretary, Treasurer and a committee of five members.
The parties agreed that, in 1993, the Institution had approximately 250 full and honorary members and, in 1996, had approximately 185 full and honorary members.
In 1994, the Trust operated a number of homes for the aged. It also owned a number of halls in the suburbs of Melbourne and country Victoria, used for Lodge meetings. It held investments which produced income. The Trust also owned Loyal Orange House at 524-530 Elizabeth Street, Melbourne, and the adjoining building at 520-522 Elizabeth Street, which was previously an ANZ bank. Loyal Orange House contained a meeting hall which was used for Lodge meetings and activities. The Trust operated a bookshop for the sale of Protestant literature which was also located in Loyal Orange House. The administrative offices of the Trust were located in Loyal Orange House before June 1993. They were then relocated to the adjoining old ANZ bank premises until June 1994, after which they were relocated back to Loyal Orange House, until they were shifted to Box Hill in February 1996.
After the filing of the unlawful termination application against the Trust, Miss Nilsen applied to have the Institution joined as a respondent. Judicial Registrar Murphy dismissed this application. A further application was made to Judicial Registrar Chancellor and this was also dismissed. On the hearing of the review, Mr Bourke, who appeared as counsel for the Trust, said that he had instructions from the Institution to consent to an order that it be joined as a respondent. That order was made by consent on 26 June 1996, the first day of the hearing of the review. At various times during the first three days of the hearing, Mr Flower, who appeared as counsel for Miss Nilsen, cross-examined the respondent’s witnesses in an attempt to establish that the Institution was the employer of Miss Nilsen. On 25 November 1996, which was the fourth day of the hearing of the review, Mr Ray Nilsen announced his appearance on behalf of Miss Nilsen, in place of Mr Flower. Mr Nilsen is a solicitor, and the brother of Miss Nilsen. I will deal with his involvement in the events concerning this case later in these reasons. Mr Nilsen also sought to cross-examine the respondent’s witnesses as to the identity of the employer of Miss Nilsen. The original estimate of the time the hearing of the case was three days. The manner in which the issue of the identity of the employer was being pursued indicated that the issue would take a considerable time to explore. It was clear that the other contentious issues would take a considerable time to hear. Mr Bourke indicated that both the Trust and the Institution would stand behind any judgment of the Court. In the light of the close legal connection between the Trust and the Institution, and the willingness of both the Trust and the Institution to be bound by the judgment of the Court, there seemed no practical reason for this matter to be pursued. Mr Nilsen was unable to provide any practical reason for Miss Nilsen to pursue the matter. After some consideration, she conceded, for the purpose of this case, that the Trust was the employer. The Trust admitted that fact and, by consent, I gave leave to Miss Nilsen to discontinue the application against the Institution.
THE EMPLOYEES OF THE TRUST
As at November 1994, the Trust had three employees: Miss Nilsen, Mr Jeff Davis, assistant to the Secretary of the Trust, and Mr Robert Curran, the Grand Secretary of the Institution and Secretary of the Trust. Miss Nilsen had started working for the Trust in mid August 1969. She was then 37 years old. She worked for the Trust for 25 years. In her unlawful termination application, she described her work as “typist, receptionist, bookshop attendant, clerk”. Prior to 1988, Miss Nilsen assisted voluntary helpers to run the bookshop. After the voluntary assistance ceased, she managed the bookshop. From 28 January 1986 until her dismissal, Miss Nilsen handled all but 166 of the 2,193 transactions in the bookshop. Mr Davis gave evidence that, from 1988, Miss Nilsen spent 75 per cent of her time in the bookshop. I accept this evidence. Miss Nilsen attempted to downplay the extent of her involvement in the bookshop. Her answers on this issue were clearly designed to assist her contention that the closure of the bookshop was not a reason for her dismissal. Her answers were evasive and I prefer the evidence of Mr Davis on this subject. In evidence, she said that some particular duties were to act as hostess for visitors, including interstate and overseas visitors, to research the old records of the Institution for people interested in the history of the Institution, to help the old people who lived in the homes if they came to Loyal Orange House, to help young people with information for assignments, to counsel people with problems who visited Loyal Orange House and, on instructions from other employees, to advise Lodge secretaries of the death of Lodge officers, to arrange for memorial notices drawn up by other employees of the Trust to be published, and to do the banking.
Miss Nilsen joined the Institution at the time she started work with it. She was a very active member of Loyal Orange Lodge 111 (LOL 111). Adherence to the Protestant faith and loyal service to it was a very important part of Miss Nilsen’s social and working life. She formed many long-lasting friendships with other members of the Institution. Members of her close family were involved in the Protestant cause. Her brother, Mr Ray Nilsen, her sister, Mrs Sylvia Child, Mrs Child’s husband, Mr Robert Child, and her nephew, Mr Neil Hawthorn, were all members of the Institution. Mr Nilsen was an active leader of other Protestant organisations.
Mr Davis started work with the Trust on 25 August 1969. He was assistant to the then Secretary, Mr Morris. In 1976, he was appointed Acting Grand Secretary of the Lodge and Secretary of the Trust, when Mr Morris was unwell. In 1977, Mr Davis was elected Grand Secretary of the Lodge, and hence became Secretary of the Trust. He remained Grand Secretary of the Institution and Secretary of the Trust until November 1992, when Mr Curran was elected Grand Secretary of the Institution. Then Mr Davis became assistant to the Secretary of the Trust. His main work was to administer the Trust properties other than the aged persons’ homes. Mr Ian Black was the administrator of the homes. Mr Davis also assisted the Secretary by dealing with correspondence which Mr Curran gave him, helping Mr Curran with the administration of the Trust generally, and taking over the functions of Secretary when Mr Curran was absent. In January 1996, Mr Davis was appointed to the new position of Property Manager of the Trust, which involves the administration of all the Trust properties, including the homes. Mr Davis did most of his own typing.
Mr Curran became a member of the Institution in 1967. He lived in Mooroopna. He was an elder of the Presbyterian Church, a lay preacher, and a Session Clerk for 11 years. In November 1992, he was elected Grand Secretary of the Institution for a six-year term. Consequently, he also became Secretary of the Trust. As a result he shifted to Melbourne and worked at Loyal Orange House with Mr Davis and Miss Nilsen. He was responsible for the administration of the Trust, which involved dealing with correspondence, attending to the banking, carrying out the decisions of the Trust and investing moneys as directed by the Trust. He did most of his own typing, including the minutes of Trust meetings and sometimes minutes of meetings of the Institution.
CONSIDERATION BY THE TRUST OF ITS FINANCIAL POSITION PRIOR TO THE TERMINATION OF EMPLOYMENT
I now turn to the facts relevant to the question of whether the Trust had a valid reason for the termination of the employment of Miss Nilsen. I will first consider the attention given by the Trust to its financial position before the termination, then examine the circumstances of the meeting of the Trust on 25 November 1994, at which the Trust decided to terminate the employment of Miss Nilsen, and then deal with the events following that meeting relevant to the termination.
The annual accounts for the Trust for the year ended 30 June 1991 showed an operating surplus of $198,020. For the year ended 30 June 1992, the accounts showed an operating deficit of $10,864.05, and for the year ended 30 June 1993, they showed an operating deficit of $64,127.39.
The Trust met in most months during 1994. At each meeting, the Treasurer, Mr Arthur Homan, presented written financial reports to the Trust and explained them to the meeting. Each month, his reports were adopted.
Immediately after the Treasurer’s report was adopted at the Trust meeting held on 25 February 1994, a resolution concerning staffing levels of the Trust was carried as follows:
“That prior to the next meeting of the Trust that the staffing levels be discussed and that the Secretary and Mr Davis be excluded from this discussion both being payed [sic] officials of the trust”.
Although the financial statements presented by the Treasurer were not tendered in evidence, it is clear that this resolution was passed as part of an effort to deal with the ongoing deficit.
The situation was of such concern that the Treasurer prepared a handwritten discussion paper outlining options to deal with the deficit. The paper was presented at the Trust meeting held on 8 April 1994. The Treasurer said in the paper that the deficit in the general fund of the Trust at the end of February stood at $55,000. He estimated the deficit for the full year to be approximately $65,000 at best. He set out four options in his paper, as follows:
OPTIONS
1 2 3 4 Lease 520 Elizabeth St City
Est income $30,000Sell Croydon cottage & land
Est income $10,000Accept retirement of homes administrator
Est savings $10,000Sell 520/524 Elizabeth St and
move offices to Box HillPossible yield on sale $1,500,000
Est deficit
$15,000One office employee to be
part time
Est savings $10,000Est deficit
$5,000Make up gap of $15,000 by drawing more money from home accounts. If reserves for maintenance are to be keep [sic] at present levels rents would have to rise on average $4/wk This would give an income of $75,000/year
Three of the options involved leasing the building at 520 Elizabeth Street, Melbourne. In April 1994, it was occupied as the offices of the Trust. The Trust resolved, on 8 April 1994, to lease 520 Elizabeth Street, as suggested by the Treasurer.
At the half-yearly meeting of the Institution at Euroa on 7 May 1994, the Treasurer reported that the deficit in the general fund of the Trust at the end of March was $56,000. He reported that the Trust was to lease 520 Elizabeth Street to increase revenue. He also recommended a number of cost-cutting measures, including the reduction of the number of phone lines for the Trust, a review of the use of photocopiers by outsiders, the reduction in size of a publication of the Institution called “The Sentinel”, and an increase in hall hire fees to all users. The half-yearly meeting adopted the Treasurer’s report and adopted the cost-cutting recommendations.
At the next meeting of the Trust on 27 May 1994, the Treasurer recommended that the bookshop be open only in the afternoon between 1-5 pm. Presumably the intended result of a reduction in the hours of the bookshop was a reduction in the wages of Miss Nilsen, who operated the bookshop. One member of the Trust raised the possible consequences of a change in the working hours of Miss Nilsen. As a result, the meeting resolved to defer the matter until the July meeting and obtain legal advice from Hunt & Hunt, solicitors, in the meantime.
In June, the Trust vacated 520 Elizabeth Street and shifted its offices into Loyal Orange House next door. The next meeting of the Trust was on 22 July 1994. The Treasurer presented the financial statements for May and June, which were adopted. He again addressed the issue of the deficit. The Secretary reported that Hunt & Hunt advised the Trust to approach the Department of Labour & Industry in relation to the employment of Miss Nilsen. The meeting resolved to reduce the number of issues of “The Sentinel” to be produced in the next year from four to three.
By letter dated 15 August 1994, Mr Black, in his capacity as Honorary Secretary/Treasurer of LOL 40, wrote to the Secretary of the Institution concerning the bookshop, as follows:
“I advise that the future of the above has been discussed at length by members of this lodge over a period of 3 to 4 months.
Contributions have also been made by visiting brethren.
Further discussion took place at our meeting of August 13th (1994) with the result that the following notice of motion is submittedResolved
‘That the Institutions Bookshop cease operations at a date to be fixed by the Grand Lodge of Victoria; and that no further purchases of stock be undertaken.”
The Secretary reported to the meeting of the Trust held on 26 August 1994 that the Department of Labour & Industry could not assist with the question relating to Miss Nilsen’s employment.
In a letter dated 2 September 1994, Mrs Roma Hardy, the Honorary Secretary of LOL 182/49 in Ballarat, wrote to the Secretary of the Institution, in part as follows:
“The Lodge also heard a report from the Half-Yearly Meeting about the deficit in funds to run the Institution. Our Members are worried that it may effect [sic] Ballarat Lodge Money with the Orange Trust.
Can’t the Institution help overcome this problem by cutting the number of Workers at Grand Lodge Office?”
At the September Trust meeting, adjourned to 25 October 1994, the Secretary advised that the proposal to close the bookshop and reduce the staff at Loyal Orange House would be discussed at the annual meeting of the Institution to be held in November. The meeting then resolved to send a notice to staff advising them of the possibility of the bookshop closure and staff restructure. Mr Curran and Mr Davis, who were both members of the Trust, abstained from voting on this motion. On 27 October 1994, a notice in the following terms was given to each staff member:
“NOTICE TO ALL STAFF
27th of October 1994
By direction of the Trust, we bring to your attention proposals that will be considered at the forthcoming Annual Meeting of the Grand Lodge of the Loyal Orange Institution of Victoria. The proposals have been suggested as a possible means of reducing the Trust’s operating deficit.
The proposals are that staffing levels be reduced and for the bookshop at Loyal Orange House Melbourne to be closed.
If the proposals as suggested are adopted by the Grand Lodge meeting, and ratified by the Loyal Orange Trust, it will effect [sic] the present staff levels and work conditions.
Of course, the future is unknown in this matter as no decisions have been made
We are simply informing you what may occur.
Yours sincerely
I.J. Black A.N. Homan
Chairman Treasurer”
The 127th annual meeting of the Institution took place on 5 November 1994. There were over 50 members present. The Treasurer of the Trust recommended that, in order to address the continuing deficit, the Trust should reduce staff by one, contact an estate agent to explore the possibility of leasing part of Loyal Orange House, and explore means of raising hall hire fees. The report was adopted. The meeting then dealt with a number of motions from different Lodges, including the motion from LOL 40. The meeting adopted the motion from LOL 40, which was:
“That the Institutions Bookshop cease operation at a date to be fixed by the Grand Lodge of Victoria, and no further purchases of stock be undertaken”.
Later in the meeting, it was resolved:
“That the Institutions Bookshop be closed on 23 December 1994”.
Mr George Brown spoke in favour of the motion to close the bookshop. He produced figures which showed that, from 1988 until 1994, the excess of proceeds of sale plus donations over the cost of books sold was $3,766. This figure took no account of the cost of staffing the bookshop. In the first nine months of 1994, the proceeds of sale were $7,079, donations were $1,372 and the cost of stock was $6,554. Thus, the excess of the proceeds of sale over the cost of books sold was $525.
Following the annual meeting of the Institution, a notice was sent to each member of staff in the following terms:
“NOTICE TO ALL STAFF
8th November, 1994
We refer to our previous letter to all staff dated 27th October, 1994, when we brought to your attention proposals that would be considered at the Annual meeting, on 5th November, of the Grand Orange Lodge of Victoria concerning staff levels and the future of the bookshop.
These matters were debated at that meeting, and it was resolved:
(1) That the staffing levels at Loyal Orange House, Melbourne, be reduced by one.
(2) That the bookshop be closed on the 23rd December next.
Accordingly, you will be notified in due course as to actions taken on these resolutions and how they may effect [sic] you.
Yours sincerely,
I.J. Black A.N. Homan,
Chairman Treasurer”
THE MEETING OF THE TRUST ON 25 NOVEMBER 1994
Thirteen members of the Trust were present at the meeting held on 25 November 1994. Under the heading “Resolutions from Grand Orange Lodge of Victoria” the minutes record the passing of the resolution as follows:
“It was resolved J.Brown/ G.B.Brown, ‘That because of the continuing deficit, the Loyal Orange Trust ratify recommendations adopted by the Grand Lodge of Victoria at its recent Annual meeting to the effect that:
(1)‘Staffing levels at Loyal Orange House, Melbourne be reduced by one.’
(2)‘That the Bookshop at Loyal Orange House, Melbourne be closed on the 23rd of December, 1994.’
After the resolution was carried, Mr Curran and Mr Davis, who were both members of the Trust and staff members, left the meeting. The minutes then record as follows:
“In reaching a decision the chairman asked members to consider several criteria, Viz:
* What are the Trust’s staffing needs for administration and management of properties, Protestant Information Centre, etc.
* What talents has the Trust available from staff presently employed.
* From the staff available who will best meet the Trust’s requirement.
* The termination package presently required for reducing staff.
MOTION:
It was resolved T.G.Meaklim/ G.B.Brown. ‘That in consultation with solicitors, a termination package prepared for Miss Margaret Nilsen [sic] and be referred to a meeting of members for approval.’”
Evidence concerning the meeting was given by three members of the Trust who were present throughout the meeting, namely, Mr George Brown and Mr Jeff Hardy, who were called by the Trust, and by Mr William Simpson, who was called by Miss Nilsen. In all significant respects, the evidence of the events which occurred at the meeting was consistent. This is noteworthy, because Mr Simpson disclosed a strong hostility to the Trust and to its cause in these proceedings in his evidence concerning other matters.
Once the decision to reduce staff by one had been taken, the selection of the particular staff member took about one hour. The criteria referred to in the minutes summarised some guidelines for the meeting which Mr Curran had obtained from Hunt & Hunt. Just before he left the meeting, Mr Curran distributed a document setting out the guidelines. It read:
“WHAT ARE OUR NEEDS
WHAT ARE OUR TALENTS
WHO WILL BEST MEET THOSE NEEDS FROM THE STAFF AVAILABLE
THE MATTER OF LAYING-OFF STAFF, WITHOUT TOO MUCH DIFFICULTY, IS ABOUT ‘DAMAGE CONTAINMENT.’
AN INDEPENDENT PERSON ON THE TRUST COULD INTERVIEW STAFF SO AS TO GET AN OPINION/MAKE UP OUR MINDS.
THE INTERVIEW PROCESS IS THE CONCEPT OF ‘BEING HEARD’
SUBSTANTIVE & PROCEDURE
Substantive need - do we need to reduce staff ?
Procedural fairness - how did the employer choose who would be sacked ?
In procedures there is usually a check list/table -
Bookshop
Clerical
Travel (vehicle licence) for administration
Office bookwork
The type of letter sent to staff in this situation is as follows:
‘Having made a decision to restructure the organisation, we wish to undertake the task to assess our needs and the skills and functions of staff need to be assessed. Therefore, we want to meet with you to discuss the matter.’
(If a person other than the staff member tries to interfere they are told it is an internal matter between staff and the Trust; that it is therefore assumed the staff member does not wish to discuss the matter).
PAYOUT FOR A STAFF MEMBER WITH 25 YEAR’S SERVICE WOULD BE ABOUT EQUIV. TO 52 WEEKS SALARY:
8 weeks for the first 5 years of service
1 week for every year after that
5-6 weeks notice (or pay in lieu thereof)
Holidays due
(The Trust has never allowed for accrued sick leave pay)
Long Service entitlement
Solicitors would assist calculating tax payable.”
Mr Curran told the meeting that the guidelines were for its assistance, but did not have to be used. He and Mr Davis then left the meeting. The remaining members of the Trust discussed whether Mr Curran should be considered for termination. Mr Brown said that Mr Curran should not be considered because he was appointed for a six-year term and there would be legal problems if he was dismissed before the term concluded. Mr Brown told the meeting that he had recently seen a television programme about unlawful termination of employment, and that it was critical to a valid termination that the members of the Trust consider the needs of the Trust and the abilities of the candidates to fulfil those needs. It was suggested that, as Miss Nilsen had lost her membership of the Institution, she could not fulfil the necessary functions required by the Trust because she could not be permitted to have access to confidential records of the Institution. After discussion, the members of the Trust reached a consensus that membership of the Institution was not relevant to Miss Nilsen’s future employment by the Trust. Mr Simpson then suggested that the selection should be on the basis of last on first off. He said that Mr Davis had started employment with the Trust after Miss Nilsen and should therefore be dismissed. This argument depended on the suggestion that Mr Davis broke his continuity of service by resigning as Secretary of the Trust in 1992. Other members pointed out that Mr Davis had immediately taken the position as Assistant Secretary so that there was no break in continuity of employment. In the face of quite animated discussion, Mr Black, the chairman, suggested that both Miss Nilsen and Mr Davis be dismissed. Mr Brown then urged the meeting to return to the guidelines to consider the abilities of each candidate and the needs of the Trust. The discussion finally led to a consensus. The members considered that Mr Davis had skills in property administration and a close familiarity with all aspects of the administration of the Trust and Institution which he had gained from 15 years as Secretary of the Trust and Grand Secretary of the Institution. They considered that Miss Nilsen was a very valued employee whose main function had been to operate the bookshop. As the bookshop was to close, and as Miss Nilsen did not have the other skills which Mr Davis had and which were needed by the Trust, the meeting determined that her employment would be terminated. Mr Brown raised the issue of whether the Trust should consult Mr Davis and Miss Nilsen in relation to the reduction in staff. Again, a consensus was reached. The meeting decided against further consultation because most of the members had known both Miss Nilsen and Mr Davis for nearly 25 years and were keenly aware of the duties of each and the skills they possessed. The meeting concluded that consultation would serve no purpose.
EVENTS FOLLOWING THE MEETING OF 25 NOVEMBER 1994
Hunt & Hunt were then consulted by the Trust to advise on an appropriate termination package for Miss Nilsen. On 12 December 1994, the Trust met and resolved to terminate the employment of Miss Nilsen on 22 December 1994, and to pay her a termination payment in accordance with the advice from Hunt & Hunt. It was further resolved that a delegation comprising Mr Black, Mr Curran, Mr Homan, Mr Davis and Mr John Brown (Mr George Brown’s father and the Grand Master of the Institution) meet with Miss Nilsen to discuss “the staff requirements and the necessity for the reduction in staff, and present to her the letter containing the termination package”.
On 15 December 1994, these five men tried to speak with Miss Nilsen. She refused to do so without her brother, Mr Ray Nilsen, present. The meeting with these five Trust members did not take place and, instead, a letter of termination was sent to Miss Nilsen by courier on 16 December 1994. It read:
“As you are aware, the Trust has in recent months had to assess its financial position and the manner in which it is organised.
This assessment of its finances and its organisation has resulted in changes which will, hopefully, enable the Trust to remain economically viable.
Consistent with this assessment, the Members of Loyal Orange Trust, in general meeting, have ratified the decision made at the annual Meeting of the Grand Lodge of the Loyal Orange Institution of Victoria to close the bookshop effective from 23 December, 1994.
Yesterday, the officers of the Trust, together with the Grand Master of the Loyal Orange Institution of Victoria, attempted to meet with you to discuss staff requirements and the necessity for any changes in staff, having regard to their decision to close the bookshop.
You refused to speak with them.
Your refusal to speak with the Trust Members about this matter has made the process of assessment and the manner in which any changes might be achieved difficult.
After careful consideration of the needs and objectives of the Trust and the available skills of all the current staff members, the Trust has decided to give you notice that your employment with it will terminate on 22 December, 1994.
Therefore, you will be provided with the following termination package:
COMPONENT PERIOD PAYMENT TAX
Payment in lieu of notice 5 weeks 2125.00 NIL
Annual Leave 5 weeks 2125.00 667.25
Long Service Leave 22 weeks 9350.00 1945.55
Redundancy Payment 8 weeks -
(say) 12 weeks 5100.00 NIL
$18700.00 $ 2612.80Today we received a facsimile from your solicitor informing us of your need in the coming week to undergo medical treatment and, as a consequence, to take sick leave. Having regard to your requirement to take sick leave and the impending holiday season during which Loyal Orange House will be closed for approximately three weeks, it will be unnecessary for you to return to your duties after the holiday season is ended. Accordingly, we will arrange for a cheque for the nett amount of $16087.20 to be posted to you.”
VALID REASON - THE FINANCIAL POSITION OF THE TRUST
In the light of the facts just outlined, the question arises of whether there was a valid reason based on the financial position of the Trust to reduce the staff of the Trust by one, which also raises the issue of whether the Trust was justified in forming the view that it was operating in deficit.
The initial decision to reduce the staff of the Trust by one was made by the more than 50 delegates to the 127th annual meeting of the Institution on 5 November 1994. The decision was based on the report of the Treasurer of the Trust, who recommended the action in order to reduce the overall deficit of the Trust. The members of the Trust ratified the recommendations adopted by the Institution “because of the continuing deficit”.
The applicant contended that neither the annual meeting of the Institution nor the meeting of the Trust was justified in accepting that the Trust was operating a deficit, because there was insufficient information available to make a valid assessment of the income or expenditure of the Trust.
In my view, this argument is without any foundation. The consolidated profit and loss account for the year ended 30 June 1993 showed an operating deficit of $64,127. The consolidated profit and loss account for the year ended 30 June 1994 showed an operating deficit of $61,956.78. The largest item of expenditure recorded in the profit and loss accounts was “rates, insurance, maintenance”. For instance, in 1993, the item amounted to $312,898.36. Although the argument was not put with particularity in final submissions, I gather from the overall conduct of the case that the applicant suggests that the Trust could not be properly satisfied of the expenditure of the Trust and, hence, the deficit of the Trust, without a breakdown and explanation of the components of this large item.
The Institution and Trust members were entitled to take the accounts at face value. The Articles of Association of the Trust required the books to contain a full, true and complete account of the affairs and transactions of the Trust. The Articles required that the accounts be audited. There was no reason for the members to disbelieve the accounts. But, in addition, the Treasurer produced monthly financial reports to the Trust. The reports dealt separately with the aged homes account and what was called the general account. An example is the account of expenditure for the aged homes for June 1994, which reads:
“ADMINISTRATION: (To General Acc.)
Box Hill 2035.00
Croydon 405.00
Newborough 530.00
Werribee 530.00 3500.00
RATES & TAXES: 26.00
REPAIRS & MAINTENANCE:Box Hill 10765.85
Croydon -.-
Newborough 133.00
Werribee 1030.01 11948.86
INSURANCE: 272.85
TRAVEL: 250.00
L/POWER (W): 212.90
SUNDRIES: 694.85
CASH M’MENT ACC. 2061.66Cash at Bank 30-6-94 11413.90
________$ 30381.02”
Thus, repairs and maintenance are recorded separately from other expenditure. The item is further divided between the separate aged home sites. This gives a reasonable degree of particularity. In addition, Mr George Brown, who did most of the maintenance and repairs as the Trust contractor, was a Trust member and attended Trust meetings. He was available to answer questions. Indeed, at the half-yearly meeting of the Institution on 7 May 1994, he was asked about his arrangement with the Trust, and explained that he charged $25 per hour and provided his own tools and transport. This explanation was given during discussion of a motion of no confidence against officers of the Trust moved by Dr Ely, to whose involvement I will later refer. Her allegation, which is mirrored in the applicant’s submission, was that she had not received sufficient financial information to discharge her duty as a member of the Trust. After hearing responses from the Grand Treasurer, Mr Homan, the Homes Administrator, Mr Black, and the Assistant to the Grand Secretary, Mr Davis, the members of the Institution resolved that they had full confidence in the Trust officers. In effect, the members of the Institution answered the complaint upon which this submission is based. They determined that they had sufficient material on which to find that the Trust had a deficit. The applicant has produced no material to suggest that the members of the Institution or the Trust were wrong in this conclusion. In particular, Dr Ely expressly disclaimed any implication that the auditors had failed in their duty to verify the accounts.
As I mentioned earlier, the Trust accounts included, among others, an account of income and expenditure of the aged homes, and another called the general account, which was an account of the income and expenditure of the head office, hall properties and investments. A consolidated profit and loss account covering all Trust income and expenditure was also produced. The administration expenses were apportioned between the aged homes’ account and the general account. Thus, for instance, in the year ended 30 June 1994, the consolidated profit and loss account showed a deficit of $61,956.78. The general account showed a deficit of $72,713.34. The homes’ account showed a surplus of $3,930.88. The applicant submitted that the apportionment of administration expenses unduly favoured the homes’ account. If more of the administration costs had been debited to the homes’ account, the deficit on the general account would have been less. The applicant produced calculations based on an apportionment of administration expenses for which the applicant contended. Of course, on these calculations, the consolidated deficit remained the same. But on these calculations, the deficit on the general account in 1994 was reduced from $72,713.34 to $19,155.03. The surplus on the general account was converted to a deficit of about $50,000. The calculation was produced on the last day of evidence, which was the eleventh day of hearing. The calculation had not been put to any of the witnesses called by the Trust. This would be reason enough to reject the submission. But, in my view, the exercise was wholly misguided. The existence of an overall deficit, which was not disputed, made it legitimate for the Trust to take steps to reduce the costs of the Trust. The fact that, on the applicant’s view, the overall deficit should have been apportioned over the two accounts differently makes no difference to the validity of the decision to reduce staff by one. Thus, the Trust had good reason to determine that it was operating in deficit.
The next question is whether the decision to terminate the employment of Miss Nilsen was made to address that problem. Miss Nilsen contended that the decision to close the bookshop and terminate her services was not made for financial reasons, but was made to protect the personal interests of Mr Davis, Mr Curran, Mr Homan and Mr George Brown. She contended that the Institution and the Trust wanted to get rid of her because she was associated with persons who had questioned the competence and propriety of the administration of the Institution and the Trust, and thereby threatened the interests of that group. To understand this argument, it is necessary to outline how Miss Nilsen lost her membership of the Institution and to examine a series of events alleged to be related to her dismissal.
EVENTS RELATING TO MISS NILSEN’S LOSS OF MEMBERSHIP OF THE INSTITUTION
In early 1994, some tension arose in the Trust when a member, Dr Ely, produced a document which argued that the assets of the Trust should be used to propagate the Protestant faith and not used to run homes for the aged if those homes did not return a commercial income. In support, she expressed the legal opinion that the objects of the Trust did not allow for the provision of aged homes except as an investment and that, if the homes were not profitable, the Trust members were acting in breach of trust to continue the operation. At the Trust meeting on 25 February 1994, Mr Davis spoke against that argument. The minutes of the meeting record that, after a 25 minute debate, nothing was achieved. The debate was a taste of the trouble to come.
Mr Davis had been a member of the Loyal Orange movement since he was a young boy. He had been a member of the Institution since 1969 and the Grand Secretary for 15 years. He had been involved with and committed to the provision of homes for the aged by the Institution. Dr Ely joined the Institution in 1989. She was legally qualified, and it was clear from her evidence and her demeanour in the witness box that she was opinionated and disposed to use her legal qualification in an overbearing manner to attempt to persuade members of the Institution and Trust to her views. Her view that the provision of homes for the aged amounted to a breach of trust was fanciful. The plain words of clause 3(c)(2) of the Memorandum of Association of the Trust permitted it to operate homes for the aged. After she failed to win the debate, she wrote to the Secretary of the Trust. The letter, dated 25 March 1994, purported to be a request for the correction of the minutes of the meeting of 25 February 1994. In truth, it was an attempt to carry on the debate. She concluded:
“No Trustee can afford to dismiss the above with a wave of a hand. Not only do we have a deep moral obligation to the Institution. We no longer enjoy full indemnity for breach of our duty under Trust and Corporations law.
The development of the common law (Eise case in particular) and Corporations law overrides any indemnity offered Trustees by the Trust deed. This means that each Trustee’s assets (real and personal property) are under threat if we do not conform with Legal requirements.”
To suggest in the circumstances that the members of the Trust might be exposing themselves to personal liability by continuing to operate the homes for the aged was bound to cause a hostile reaction, and it did so. The letter was read out at the half-yearly meeting of the Institution on 7 May 1994. I will return to this matter shortly.
At around the same time, a controversy developed in the affairs of LOL 111 over the attempted admission of Miss Nilsen’s twin sister, Mrs Child, and her husband as dual members of the Lodge. Mr Child was already a member of LOL 135, and Mrs Child a member of Ladies LOL 8 (LLOL 8). At the meeting of LOL 111 on 28 February 1994, Mr and Mrs Child asked to become dual members of LOL 111. At that time LOL 111 had 12 members. Miss Nilsen said that Mr and Mrs Child sought to join LOL 111 to build up the numbers of the Lodge to support their nephew, Mr Neil Hawthorn, who was the Worshipful Master at the time. Mr Davis, however, regarded the applications by Mr and Mrs Child as an attempt to stack the Lodge in favour of persons supportive of Mr Nilsen and Dr Ely, who were members of LOL 111. The meeting resolved that the Acting Secretary, Miss Nilsen, write to LOL 135 and LLOL 8, to advise of the requests of Mr and Mrs Child respectively. This resolution reflected the usual procedure that dual membership would be granted to a member only after the mother Lodge of that member had been asked for and provided written financial clearance of the member.
On 4 March 1994, Miss Nilsen wrote to Mr Homan, the Honorary Secretary of LOL 135, in respect of Mr Child’s application for dual membership of LOL 111 and, on 16 March 1994, she wrote to Mrs Cox, the Honorary Secretary of LLOL 8, in respect of Mrs Child’s application for dual membership of LOL 111. In each letter, Miss Nilsen concluded with the words “The members of LOL 111 await your reply”.
The next meeting of LOL 111 was held on 28 March 1994. The members knew that the delegate of LOL 111 to the half-yearly meeting of the Institution was to be elected that evening. In the course of the meeting, Mr Nilsen stood for election as delegate and he was opposed by Mrs Rhodes, an elderly pensioner who had been the delegate for many years. She was supported by Mr Davis and several other members (the Davis camp). Mr Nilsen was supported by Miss Nilsen, Mr Neil Homan and Dr Ely (the Nilsen camp). Mr and Mrs Child were not yet members of LOL 111. Without their votes, the Nilsen camp could not elect their preferred candidate.
It was usual for some officers of the Grand Lodge to attend some Lodge meetings. A number were present at this meeting, including Mr Homan, the Grand Treasurer. Before the election of the delegate of LOL 111 to the half-yearly meeting, the meeting dealt with the question of the admission of Mr and Mrs Child to dual membership. A written reply had been received in respect of Mrs Child, but not Mr Child. There was then a debate as to whether the meeting could vote on Mr Child’s admission. Mr Nilsen addressed the meeting and argued that it was within the constitution and laws of the Institution to deal with Mr Child’s application. Mr Davis spoke against. He said that the meeting could not deal with the application unless LOL 111 had received a letter from Mr Child’s Lodge concerning his financial status. The Honorary Treasurer of that Lodge, Mr Homan, was present and would certainly have known, or been able to ascertain, the financial status of Mr Child. The Worshipful Master, Mr Hawthorn, ruled that the meeting could deal with the applications of both Mr and Mrs Child. A vote was taken, and was in favour of the admission of both. Then the vote for the position of delegate was taken. Mr Nilsen was elected.
On 5 April 1994, Mr Davis and three of his supporters who attended the March meeting of LOL 111 - Mrs Rhodes, Mrs Beattie and Miss Dingwall - wrote a letter of complaint to the Grand Secretary concerning the admission of Mr Child to dual membership of LOL 111. In part, the letter said:
“Our enquiry is not in any way against the new applicants for dual membership. It is against the way in which this matter was dealt with. We believe the Master’s ruling to be incorrect and in breach of rule 33 and the established procedures whereby that rule is put into effect. The whole matter was rushed.
The established procedure for a member seeking dual or affiliated membership is to first apply in the Lodge they choose to join. The Lodge in question then must write to the applicant’s Lodge and await advice as to whether or not the applicant is a financial member of his/her ‘mother’ Lodge. Upon receipt of this information, by return letter, only then should a ballot be taken.
We believe the Master’s ruling to be out of order as is the applicants’ participation in any business of the meeting.”
Mr Davis gave evidence about his objection. It was put to him that the objection was excessively technical, especially given the presence of Mr Homan, who would have been able to give the meeting the information about the financiality of Mr Child. I accept from the way he gave his answers, and the content of those answers, that Mr Davis had a genuine objection to the procedure, that is to say, not an objection solely tailored to his own interests in having Mrs Rhodes elected as delegate. The failure to follow procedure was an affront to his rather rigid sense of propriety.
In response to the objection, the Grand Executive determined that LOL 111 had followed the wrong procedure. The fact that LOL 111 had written to LOL 135 and LLOL 8 showed that it was aware of the proper procedure. Consequently, the Grand Executive ruled that all business conducted after the admission of Mr and Mrs Child was void. LOL 111 was notified of this decision on 14 April 1994.
On 21 April 1994, LOL 111 met and held a ballot for the admission of Mrs Child alone. This time, her application was rejected. Nominations were then called for the election of the delegate to the half-yearly meeting. Mr Nilsen and Mrs Rhodes were both nominated. Mr Nilsen spoke in support of his candidature, after a point of order had been taken that speeches in support of such candidature were not permitted. Mrs Rhodes won the election. Mr Homan was present at the April meeting of LOL 111, in his capacity as Grand Treasurer of the Institution. On 28 April 1994, he wrote to the Grand Secretary of the Institution complaining about the conduct of members of LOL 111 at the meeting on 21 April 1994. He wrote on behalf of the members of LOL 135 that:
“This meeting was deplorable and the worst witnessed by members of Kings Own at any meeting of an Orange Lodge. Disgraceful accusations were made on the night during the meeting, such as and I quote ‘the Grand Lodge Office had fixed appointments of substitute delegates to Grand Lodge meetings; and the LOIV Constitution was being used by the strong against little people.’”
The complaints were particularly directed against the Nilsen camp. The letter further recommended that all members of LOL 111 present on 21 April 1994 be re-ballotted under rule 38 of the Constitution and Laws of the Institution. Rule 38 provides:
“In order to safeguard the Institution against the possibility of improper persons continuing members thereof, Grand Executive may, upon the application of a Primary Lodge, order a re-ballot for any member or members thereof. Such application must be accompanied by a written statement under seal, stating definitely the reason for such request. Should it be deemed expedient that all, or any members of a Lodge should undergo a new ballot, a re-ballot shall be taken in such manner as Grand Executive shall decide.”
As a consequence of this complaint, the Warrant of LOL 111 was withdrawn, and the memberships of members of LOL 111 present on 21 April 1994 were suspended pending the re-ballot. However, after Mr Nilsen submitted to the Grand Executive that a re-ballot under rule 38 could only occur on the application of the Lodge subject to the re-ballot, the Grand Executive accepted this view, the Warrant was restored, and the suspensions lifted.
The letter dated 25 March 1994, from Dr Ely, referring to possible personal liability of members of the Trust for breach of trust was read in full to the half-yearly meeting of the Institution on 7 May 1994 in Euroa, and Dr Ely was given an opportunity to speak to its contents. After that, the Grand Secretary read an opinion obtained from Hunt & Hunt that the members of the Trust had little cause for concern that they had acted beyond their powers. The members of the Institution then passed a vote of confidence in the Grand Secretary, the Grand Treasurer, the Administrator of the Loyal Orange Homes, and the Assistant to the Grand Secretary.
On 8 May 1994, Mr Homan, as Honorary Secretary of LOL 135, wrote to LOL 111 approving the application of Mr Child for dual membership of LOL 135 and LOL 111.
On 12 May 1994, notice of meeting of the Grand Executive, to be held on 1 June 1994, was given in the following terms:
“You are advised that a meeting of Grand Executive has been called for WEDNESDAY, 1 JUNE, 1994, at Loyal Orange House, Melbourne, at 8 pm.
The meeting will consider general business and matters referred to it from the recent Half-yearly Grand Lodge meeting.”
On 19 May 1994, LOL 111 held its next monthly meeting. Some Grand Lodge officers were present. As financial clearance in writing had now been received for Mr Child from LOL 135, a ballot was conducted for his admission as a dual member. This application was rejected. Mr Davis and his supporters had the numbers. Later in the meeting, Mr Davis gave a report on the half-yearly meeting which had been held on 7 May 1994. He attacked Dr Ely for her 25 March 1994 letter and said that it contained misinformation and implied threats. He questioned her legal competence in relation to the interpretation of the objects of the Trust. He reported on the vote of confidence by the members of the Institution and, in obvious anger, he described Dr Ely and Mr Nilsen as being like guests who had overstayed their welcome. They were, he said, a festering sore. Then there was a break in the meeting prior to the installation of newly elected officers. When the meeting resumed, the installations were conducted and the meeting moved to general business. The first item was a motion moved by Miss Dingwall and seconded by Mrs Davis, Mr Davis’ mother, that the Grand Lodge/Executive re-ballot all members of LOL 111. Miss Dingwall told the meeting that she moved the motion because the bickering between members was “like a bar room brawl”. Mr Nilsen spoke against the motion. He said that a re-ballot could only occur if the members were improper persons and bickering did not make a person improper. He suggested that the motion was directed at him and only he should be subject to re-ballot. Some members and Grand Lodge officers spoke on the motion, including Mr John Brown, Mr Homan, Mrs Davis, Dr Ely and Miss Nilsen. The minutes record that Mr John Brown expressed the view that there was a cyst which needed to be cut out. Mr Homan alleged that Mr Nilsen did not believe in the Trinity, a necessary qualification for membership of the Institution. A motion moved by Mr Nilsen that he alone be subject to re-ballot was put and lost. Then, the original motion for the re-ballot of all members of LOL 111 was put and carried, with seven votes in favour, three against, being Mr Nilsen, Miss Nilsen and Dr Ely, and one abstention, being Mr Hawthorn. The minutes then record that Mr J. Castles, a member of the Grand Executive and the Trust, spoke against the dissenting minority.
At the meeting of the Grand Executive held on 1 June 1994, the request for a re-ballot of all members of LOL 111 was considered. The minutes record that there was a discussion of the matter, during which Mrs Lewington, Mr Singleton and Mr Hawthorn spoke. Mrs Lewington and Mr Singleton were strong supporters of Mr Nilsen and Miss Nilsen. They were both called as witnesses by Miss Nilsen in these proceedings. At the meeting of the Grand Executive they moved a motion that the re-ballot not proceed but that the matter be resolved by discussion. The motion was lost. Then the issue was raised of whether the re-ballot would determine not only membership of LOL 111 but also membership of the Institution. The Grand Master determined that the vote would determine membership of the Institution as well. The Grand Master was Mr John Brown, who was also a member of LOL 111, and therefore subject to the re-ballot himself. At this point, Mr Brown and the other members of the Grand Executive who were also members of LOL 111, and hence also subject to re-ballot, left the meeting. The meeting determined that the members would be ballotted individually and that honorary members would not be subject to re-ballot. Such a re-ballot had not occurred within the memory or knowledge of any of the witnesses, some of whose memory or knowledge went back to at least 1930. A re-ballot by the Grand Executive involved a blackball process, whereby each member of the Grand Executive was given a black and a white ball when the vote was to be taken. The marshals then brought around a bag. Each member dropped a ball into the bag. A black ball signified a vote against the person being ballotted. If one in seven of the members voted against that person, the ballot was declared against the person. Thus, at the Grand Executive meeting of about 30 members, a person would lose membership if only five members voted against that person. As a result of the re-ballot, Mr Nilsen, Miss Nilsen, Miss Dingwall, Dr Ely and Mr Hawthorn lost their membership of the Institution. Mr and Mrs John Brown, Mr Davis, Mrs Davis, Mrs Rhodes, Mrs Beattie and Mr Schafter retained their membership. The re-ballot was the last item of business and the meeting closed after midnight.
There were a number of attempts to reverse the blackballing after 1 June 1994. Mrs Cox wrote to the Grand Secretary on behalf of the members of LLOL 8, seeking the reinstatement of Mr Nilsen, Miss Nilsen and Mr Hawthorn. The Grand Executive resolved, in July 1994, to take no action on this request.
On 30 August 1994, Mr Nilsen, Miss Nilsen, Dr Ely and Mr Hawthorn gave notice that they intended to appeal to the annual meeting of the Grand Lodge on 5 November 1994 against the Grand Executive decision to expel them. They argued that the decision was void and said that they intended to make written and oral submissions to the annual meeting. In a separate letter, they asserted that they were still members and thus they forwarded their membership dues. On 22 September 1994, the Grand Secretary replied to Miss Nilsen that the Grand Executive had unanimously determined that there was no right of appeal under rule 38 and, consequently, her membership ceased on 1 June 1994. Her membership dues were returned. The letter concluded:
“If you are desirous of again becoming a member of the Institution you must apply to a Lodge for readmission in the usual way”.
By a letter dated 4 October 1994, addressed to the Grand Secretary, Grand Master and to the members of the Grand Executive, Mr Nilsen, Miss Nilsen, Dr Ely and Mr Hawthorn requested the Grand Executive to place their claims to membership on the agenda of the annual meeting. They argued that their appeal should be dealt with as part of the function of the Grand Lodge to validate the credentials of delegates. Then the following appeared:
“2. INDIVIDUAL EXECUTIVE MEMBERS TO BE HELD RESPONSIBLE FOR ANY LEGALS [sic] COSTS AWARDED AGAINST THE DEFENDANTS IF THIS DISPUTE GOES TO COURT.
......
If the Grand Executive or the Grand Lodge do not reverse the decision of June 1 that we are ‘improper persons’ at the November 1994 Annual Meeting of the L.0.I.V. then the only recourse is to the law. There is strong case law precedent in favour of the applicants.
......
If wiser counsel does not prevail at least discover:
1. What the true legal position is and
2. the costs which could be incurred by individual members of the Executive
3. the effects of adverse publicity on the Loyal Orange Institution of Victoria.
......
Members of the Grand Executive should be very concerned. From now and until this matter is settled Grand Executive and Grand Lodge members must, if they do not agree with a motion have their names recorded. ....
......
We stress that if members want to avoid their involvement in a legal challenge they should dissent from decisions which will lead to a successful challenge.”
The letter concluded by asserting that readmission to the Institution under rule 36, as suggested by the letter dated 22 September 1994 from the Grand Secretary, did not apply because there was no valid exclusion.
The Institution replied through its solicitors, Hunt & Hunt, who wrote to Mr Nilsen, Miss Nilsen, Dr Ely and Mr Hawthorn on 11 October 1994, in part as follows:
“As you have been advised previously there is no power to appeal from a reballot made pursuant to Rule 38 of the Constitution and Laws of the Association. As such neither the Grand Secretary, the Grand Master nor the Members of the Grand Executive can accede to the request stated in point 1 of your letter.
With reference to point 2 of your letter we would be interested in the ‘strong case law precedent’ which you claim exists in favour of the applicants. Please let us have details of the cases to which you refer.
In contrast with your opinion on Rule 36 of the Constitution and Laws of the Association, it is our opinion that you are entitled to seek re-admission to membership pursuant to that rule.”
By a letter dated 5 November 1994, Miss Nilsen, Dr Ely and Mr Hawthorn replied as follows:
“RE APPEAL TO GRAND LODGE OF VICTORIA
We note from your correspondence and that of your solicitor that we have been refused the right of Appeal to the Grand Lodge of Victoria.
We note also that we consider that we are still members of the L.O.I.V. and have not been removed either constitutionally nor legally.
We herewith hand in our Grand Lodge Collars however, to avoid dispute in this matter.
Our Appeal was against the finding of the Grand Executive that we were ‘improper persons’.
We accept the fact that on November 5 we will not be given the right to appeal and will have to take other measure [sic] if we are to gain justice in this matter.
Please note that Ray Nilsen is attending the meeting to lodge his appeal.”
The annual meeting of the Institution was held on 5 November 1994. Before roll call or the reading of minutes of the previous meeting, Mr M. Castles and Mr Singleton moved a motion:
“That a special meeting of Grand Lodge be called for the purposes of discussing the exclusion of Dr J. Ely, N. Hawthorn, M. Nilsen, and R. Nilsen from membership of LOIV.”
After debate, the motion was lost - 15 delegates voted in favour and 37 against.
THE REAL REASON FOR THE TERMINATION
OF MISS NILSEN
The applicant submitted that the process used to terminate the employment of Miss Nilsen was a sham. The meeting of the Trust on 25 November 1994 did not involve a real consideration of the needs of the Trust and the abilities of the candidates, but rather went through the motions to put in place an outcome which had been pre-arranged. The outcome was the termination of employment of Miss Nilsen. The real reason was that she was associated with Mr Nilsen and Dr Ely, who had challenged the propriety of the administration of the Trust. The outcome was arranged, it was said, by Mr Davis, Mr Curran, Mr George Brown and Mr Homan, who were concerned to protect their own interests. Mr Davis and Mr Curran were concerned to protect their employment by the Trust, and Mr Brown was concerned to preserve his position as the building and maintenance contractor to the Trust. The interest of Mr Homan was not identified.
The Trust argued that the real reason for the termination of the employment of Miss Nilsen was that her skills were less useful to it than the skills of Mr Davis. It contended that the meeting held on 25 November 1994 considered the requirements of the Trust, and the skills and abilities of the staff, in a genuine, and not in a pre-determined, way. The Trust bears the onus of proof on these matters: Kenefick v Australian Submarine Corporation Pty Ltd (No 2) 65 IR 366. The evidence satisfies me, on the balance of probabilities, that the real reason for the termination of Miss Nilsen was that her skills and abilities were less useful to the Trust than the skills and abilities of Mr Davis.
The discussion at the Trust meeting on 25 November 1994 in relation to the motion to terminate the employment of Miss Nilsen was not consistent with a prearranged outcome. The discussion went for about an hour. It considered a variety of methods for determining the issue, including a choice based on last on first off, or termination of both staff members. Thus, not all of the methods suggested would have resulted in the termination of Miss Nilsen’s employment. The debate was heated at times.
Mr Hardy and Mr Brown both impressed me as witnesses of truth. They both gave evidence in a frank and open manner. Their evidence gave me the impression that the discussion at the meeting on 25 November 1994 was a genuine consideration of the suitability of the candidates in which contending views were expressed and a consensus reached. While the impression was gained from the whole of the evidence of each of them, the following exchange with Mr Brown illustrates the type of response which contributed to the impression:
“[HIS HONOUR:] Can you tell me who the people were who at this stage of the meeting generally supported Ms Nilsen? --- Probably Mr Simpson, and not too many others really. There was no real - there wasn’t such a thing as major support to one person or the other at that meeting, it was more just a discussion; people just battering ideas backwards and forwards. There was no real basis of support for either of them. They were trying to make a decision but they were giving ideas of who could do what and what was happening. There was no real push for Ms Nilsen nor was there any real push for Mr Davis, it was just people asking questions and being in that position.”
He also gave the following evidence:
“[MR BOURKE:] Now, did you have any idea what the result, outcome of that meeting was going to be at the start of the meeting? --- No, I did not. I went into that meeting, I had no idea what the outcome was going to be.
It has been suggested that you were part of some cliche [sic] with Mr Davis and Mr Curran, possibly others, to attempt to get rid of Margaret Nilsen. What do you say about that? --- No, that’s absolutely untrue.”
Mr Hardy and Mr Brown gave evidence that they and other members of the Trust found the decision to terminate Miss Nilsen’s employment a very difficult decision to make. The following exchange occurred in the examination in chief of Mr Hardy:
“In relation to you was it an easy decision to make in relation to choosing Ms Nilsen? --- No. Personally it was one of the hardest decisions I’ve ever had to make.
Why was that? --- Because I’ve always had a really good relationship with Margaret. I’ve known her for the last 25 years and it was very difficult.”
And the following exchange occurred in the examination in chief of Mr Brown:
“Now, how did you find making this type of decision, Mr Brown? --- I found it very difficult, it was a difficult decision to make, and the consensus of the whole room with all the members was a very difficult decision to make, we found that when we came to the end and we had decided that Margaret would be the one who would go, it was an end of an era, it was 25 years that had gone past, and each individual member, nearly everyone, except for two, knew Margaret formerly [sic] that length of time, so it wasn’t an easy decision, and we decided that we should form a delegation to go and see Margaret and explain to her the position and try and ease the blow and to say ‘Thank you for your years of service but, sorry, this is what has come about.’”
The fact that they found the decision difficult to make, and the reasons they found it difficult to make, support the conclusion that their decision was not the result of a pre-determined plan to protect a small group of members of the Trust.
Mr Simpson was called as a witness by the applicant. He was a member of the Trust and attended the meeting on 25 November 1994. He resigned from the Institution on 29 July 1995. At that time, he was Secretary of LOL 173 in Dandenong. At the time of his resignation, the Institution had convened a special meeting of Grand Lodge for 9 September 1995 to consider allegations that LOL 173 had breached the Constitution and Laws by serving alcohol after Lodge meetings, and arranging a Lodge function on 12 July 1995, the date of commemoration of the Battle of the Boyne. Thereafter, he started a rival Lodge in Dandenong, which had been regularly attended by Mr Nilsen, Dr Ely, Mr Child, Mrs Lewington, Mr Singleton and, occasionally, by Miss Nilsen. In giving evidence, Mr Simpson demonstrated a great hostility towards the Institution. In my view, he departed from the truth in attempting to discredit the Institution. I am not able to rely on his evidence where it conflicts with the evidence of Mr Brown and Mr Hardy in relation to the events of the Trust meeting on 25 November 1994. In the main, however, Mr Simpson’s account did not differ from the accounts given by Mr Hardy and Mr Brown. As I have previously discussed, their accounts are witness to the genuineness of the consideration given to the issues discussed at the meeting. The only issue involving a direct conflict of evidence about an event was whether Mr Simpson voted in favour of the termination of employment of Miss Nilsen. Mr Hardy and Mr Brown both said he did. Mr Simpson gave several different responses but eventually said that he abstained from voting. By this, he said that he meant he did not vote in favour, but registered no other position to the meeting. I have formed a clear view that he voted in favour of the motion to terminate the employment of Miss Nilsen. I also find that he did so after putting vigorous argument to the meeting against the termination of Miss Nilsen. These facts are strongly supportive of the conclusion that the meeting involved a general consideration of the question, because it shows that the flow of the discussion at the meeting persuaded a person away from his initial opposition. In my view, Mr Simpson was not prepared to admit to his vote in favour of the termination of Miss Nilsen for fear of alienating the present supporters of his rival Dandenong Lodge. Mr Simpson also gave evidence that he felt that the outcome of the meeting was predetermined. This evidence was entirely general and unconvincing.
A further consideration which leads me to the view that the meeting was not the result of a plan by a few members to suit their own interests is that the meeting formed part of a continuum of events which involved a series of decisions made by a large number of people. The decisions were to submit a motion to the annual meeting of the Institution to consider closing the bookshop, the decision to ask the Institution to consider reducing staff at head office, the decision to refer this request to the annual meeting of the Institution, and the decisions of the Institution to close the bookshop and reduce staff by one. The first decision was made by the members of LOL 40, the second by the members of LOL 182/49 Ballarat, the third by the Grand Secretary, and the fourth by more than 50 delegates to the annual meeting of the Institution. These decisions gave rise to the occasion for the Trust to consider the termination of employment of staff. Such a background to the dismissal is a most unlikely background for a conspiracy of four persons to achieve the dismissal of Miss Nilsen. Moreover, the idea of reducing staff to deal with the financial problems of the Trust was suggested before the dissension developed between Mr Nilsen and his supporters and Mr Davis and his supporters. The idea was suggested at the meeting of the Trust on 25 February 1994 and was part of one of the options suggested by Mr Homan at the meeting of the Trust on 8 April 1994. At this time, Mr Davis had just made complaint about the meeting of LOL 111 held on 28 March 1994. But his complaint was about procedure. His letter of complaint expressly disclaimed any complaint against the parties. The real antagonism between Mr Nilsen and his supporters and Mr Davis and his supporters did not become significant until the time of the meeting of LOL 111 held on 19 May 1994. The argument that the whole process resulting in the termination was concocted to give the impression of genuineness when it was pre-determined does not sit comfortably with the fact that the suggested reason for engaging in the sham arose in May 1994 and the decision to terminate was not made until 25 November 1994.
Finally, the decision to terminate Miss Nilsen’s employment rather than that of Mr Davis is quite clearly founded on objective good sense and supports the conclusion that the real reason for the termination of Miss Nilsen was the greater benefit to the Trust of the employment of Mr Davis. As Grand Secretary for 15 years, Mr Davis had much more extensive experience in the administration of the affairs of the Trust. Miss Nilsen was largely concerned with the bookshop, which was to close. In the administrative functions she performed she had, in effect, answered to Mr Davis. I recognise that the way Mr Davis and Miss Nilsen gave their evidence is of limited use in assessing their suitability for employment by the Trust and, hence, the validity of the decision of the members of the Trust to choose Mr Davis. However, to the extent that it is of use, the way they gave evidence confirmed the view that Mr Davis was the more appropriate of the two candidates.
I will now deal with a number of incidents which, the applicant argued, show that the decision to terminate the employment of Miss Nilsen had been made before the meeting of the Trust on 25 November 1994. I will then deal with the allegation that some members of the Trust voted for the dismissal of Miss Nilsen on the basis of self interest, rather than on the basis of a proper consideration of the relative merits of each candidate.
Termination of employment of Miss Nilsen discussed in July 1994
The applicant argued that her termination had been decided by July 1994. The argument rested on a resolution, carried at the meeting of the Trust on 22 July 1994:
“That the department of Labour and Industry be consulted regards the employment of Miss M. Nilsen, and a report given to the next Trust meeting.”
In examination in chief, Mr Simpson said that the resolution was concerned with advice about a termination package for Miss Nilsen. In cross-examination, he was taken to the minutes of the May meeting of the Trust, which showed that the Trust resolved to obtain advice from Hunt & Hunt about a reduction in the hours of work of Miss Nilsen in the bookshop and to deal with the matter in July. He was then taken to the minutes of the July meeting, which recorded a report of a meeting with Hunt & Hunt and advice given that the Trust should consult the Department of Labour and Industry. He was further taken to the minutes of the Trust meeting held in August, which recorded a report that the Department of Labour and Industry had not been able to assist with the question and that the Trust would purchase a copy of the Clerks Award. When all these minutes were put to him, he accepted that the July meeting had been concerned with the reduction of Miss Nilsen’s working hours and not her termination.
In Mr Davis’ cross-examination, which proceeded upon the basis that Mr Simpson would say that the termination of Miss Nilsen was discussed at the August meeting of the Trust, Mr Davis denied that either he or the Trust had determined in July that the employment of Miss Nilsen was to be terminated and he denied that the advice sought related to termination of employment. He said that the advice was about the reduction in hours of work in the bookshop. Mr Brown also denied that there was any discussion at the July meeting about a termination payment for Miss Nilsen or making Miss Nilsen redundant. To the extent that there is any conflict between the evidence of Mr Simpson on the one hand, and Mr Brown and Mr Davis on the other, I would prefer the evidence of Mr Davis and Mr Brown. The initial evidence in chief of Mr Simpson is another example of his propensity to give incorrect evidence harmful to the Trust.
The closure of the bookshop discussed in July 1994
Mr Simpson also gave evidence that a proposal from LOL 40 to close the bookshop in December was discussed at the July Trust meeting. Mr Davis and Mr Curran said that the proposal from LOL 40 was not discussed in July. The minutes support this view. Mr Simpson was clearly mistaken in this evidence. He was cross-examined as to his evidence that the proposal from LOL 40 involved a fixed closing date in December. In fact, the date for closing was fixed by the annual meeting of the Institution held on 5 November 1994. It was suggested to Mr Simpson that the proposal from LOL 40 required the Grand Lodge to fix the date of closing. The following exchange occurred:
“It is to be fixed by the Grand Lodge, do you see that? --- According to the letter read out by Ian Black it was already put from Lodge 40 that it be closed in December.”
The only letter in evidence recording the proposal from LOL 40 is dated 15 August 1994. It is from Mr Black to the Institution. It could not, therefore, have been read out in July. The minutes of the annual meeting of the Institution held on 5 November 1994 show that the proposal from LOL 40 was that the Grand Lodge fix the date for closing, and the Grand Lodge did so fix the date for closing. The minutes make Mr Simpson’s version of events highly unlikely. In any event, I would rely on the evidence of Mr Davis and Mr Curran in preference to the evidence of Mr Simpson on this matter, for reasons previously stated.
New stationery
Prior to the Trust meeting held on 25 October 1994, Mr Curran and Mr Davis ordered some new stationery. It was delivered on about 3 November 1994 by Mr Gowans, the Grand Master from New South Wales, a printer by occupation, who came to Melbourne for the annual meeting. The letterhead was in the following format:
LOYAL ORANGE CENTRE
· LOYAL ORANGE INSTITUTION OF VICTORIA · LOYAL ORANGE TRUST A.C.N. 004 245 694
· LOYAL ORANGE AGED PEOPLE’S HOMES · LOYAL ORANGE SCHOLARSHIP FUND
· THE SENTINEL · PROTESTANT INFORMATION CENTRE
The applicant pointed to the absence of reference to the bookshop in the letterhead, and contended that this demonstrated that the decision to close the bookshop had been made both before the Trust meeting held on 25 October 1994 and, hence, before the annual meeting of the Institution held on 5 November 1994. Both Mr Davis and Mr Curran denied that the order was placed in anticipation of a decision to close the bookshop. They said that the bookshop had been using paper with the heading “Protestant Information Centre and Bookshop”, and there was an ample supply remaining. Therefore, it was decided that the bookshop would continue to use that letterhead. Mr Curran was then asked why the words “Protestant Information Centre” appeared on the new letterhead and why the old paper could not be used instead. Mr Curran explained that the Protestant Information Centre was administered by the Grand Secretary and it was convenient for him to have his own supply of paper separate from the bookshop supply. This does not fully explain the appearance of the words “Protestant Information Centre” on the new letterhead. The change of name from “Protestant Information Centre and Bookshop” to “Protestant Information Centre” was only approved by the Trust at the meeting held on 25 November 1994. However, this matter was not put to either Mr Davis or Mr Curran. I found Mr Curran to be a witness of truth and Mr Davis to be a witness of truth on most issues. In the light of their overall credibility, I would not make findings against them on the question of the early appearance of the name “Protestant Information Centre” on the new letterhead without the matter having been put to them. This is particularly so because, even if the early appearance of the name demonstrated that Mr Davis and Mr Curran expected the Trust to close the bookshop, it does not establish that the matter had been predetermined by the Trust so that its later consideration was a sham.
The computer course and name change
The minutes of the meeting of the Trust held on 25 November 1994, record that the following two resolutions were passed:
“MOTION:
It was resolved G.B.Brown/N.Homan, ‘That R.Curran and J.S.Davis arrange a computer course sometime in the next year.’ CARRIED.R.Curran and J.S.Davis abstained from voting on this motion.”
“MOTION:
It was resolved J.Whitten/J.Brown, ‘That the business name, Protestant Information Centre and Bookshop, be changed to ‘Protestant Information Centre.’
CARRIED.”
Both resolutions were passed before the decision to close the bookshop and terminate the services of Miss Nilsen. She argued that the passing of the two resolutions demonstrated that the decisions to close the bookshop and terminate her employment had already been made and that the later purported consideration of the termination of employment was a charade. This is not a necessary, nor even an obvious, conclusion from the timing of the passing of the two resolutions. Mr Curran, Mr Davis, Mr Hardy and Mr George Brown were at the meeting when the two resolutions were passed. Each was a witness called by the respondent. The applicant did not put the suggested significance of the timing of the two resolutions to any of these witnesses. This would be sufficient to conclude that no weight should be given to the submission. But, in addition, I find that the evidence given by Mr Hardy and Mr Brown as to the reality of the consideration of the termination of the one member of staff was truthful and impressive. In these circumstances, it would be wrong to draw any conclusion adverse to the respondent from the timing of the two resolutions.
Pecuniary interest
Mr George Brown is a builder, who earns all or most of his income from building and maintenance work for the Trust. It was contended by the applicant that he had a pecuniary interest in the decision to terminate the employment of Miss Nilsen because, if she was dismissed, there would be more funds to use for the building works and, hence, for Mr Brown. It was not said that his participation rendered the termination void and of no effect. If it did so, there could be no valid application under s 170EA. The argument therefore must go to the existence of a valid reason. The applicant did not formulate the argument on this issue, apart from saying that the decision to terminate was “tainted with bias”. I take this to be an argument that Mr Brown voted for the closure of the bookshop, the reduction of staff by one and the termination of employment of Miss Nilsen out of self interest, so that his reason was not a valid reason. Presumably, it is then said that the votes of one biased person tainted the decisions of the Trust, and the Court must regard the decision of the Trust to terminate the employment of Miss Nilsen as having been made for a reason which was not valid. This argument fails at the very outset. As I have already explained, I am satisfied from hearing the evidence of Mr Brown that he decided in favour of the termination of Miss Nilsen’s employment after a proper consideration of the needs of the Trust, and her abilities compared to the abilities of Mr Davis. Further, the allegation makes no sense in the context of a decision to select one person or another for termination. There was no financial benefit to Mr Brown in the choice of one person rather than the other. There is no evidence that Mr Brown voted for the termination of the employment of Miss Nilsen for his financial benefit. Similarly, there is no evidence that Mr Brown voted for the closure of the bookshop and the reduction of staff by one for his financial benefit. Neither were such allegations put to him. Although there are a number of reasons, just set out, which make this argument fanciful, the failure of the applicant to put the allegation to Mr Brown would alone persuade me against finding that he had acted out of personal interest.
Mr J. Castles, Mr John Brown and Mr Whitten were residents of the homes operated by the Trust. They were also members of the Trust who were present at the meeting held on 25 November 1994. The evidence is that these men voted in favour of closing the bookshop and terminating the employment of Miss Nilsen. The applicant contended that they voted in favour of closing the bookshop and terminating the employment of Miss Nilsen because those decisions would protect them from an increase in the licence fees payable for their residences. Again, it was not suggested that their participation rendered the decisions void. Although the applicant’s argument on this issue was not clearly formulated, it seems to be suggested that Mr Castles, Mr Brown and Mr Whitten voted in favour of closing the bookshop, reducing the staff by one, and terminating the employment of Miss Nilsen to protect their financial interests and, in so doing, they each personally did not have a valid reason to terminate the employment of Miss Nilsen. Consequently, I assume it is argued that their participation tainted the validity of the decision of the Trust. This argument is untenable. There is no evidence to suggest that the votes of Mr Castles, Mr Brown and Mr Whitten were influenced by a desire to avoid an increase in their licence fees. Even if this motive had existed, it would not have led to the termination of Miss Nilsen rather than Mr Davis. The evidence of the meeting of the Trust on 25 November 1994, from witnesses called by both the applicant and the respondent, made no reference to any such reason. Neither was it suggested to any of those witnesses for the respondent that there was any event or discussion pointing to such reason.
Thus, I am satisfied, on the balance of probabilities, that the real reason for the termination of employment of Miss Nilsen was a financial reason, and I am satisfied that she was selected after a genuine consideration of her relative merits. One may speculate that some members of the Trust may have been pleased that the decision was to dismiss Miss Nilsen rather than Mr Davis. Such speculation would be based on the fact that some members of the Trust were involved in the expulsion proceedings in June 1994. However, the evidence discloses that the Trust had not dismissed an employee before and it took particular care to comply with the law. Legal advice was obtained and the need to adhere to the law was stressed throughout the meeting. In essence, the applicant’s case asked the Court to infer that the background of dissension between the Nilsen and Davis camps must have governed the decision to dismiss Miss Nilsen. In my view, the evidence is to the contrary. The background of dissension made it important that the process leading to the dismissal of either Miss Nilsen or Mr Davis was beyond reproach.
I now consider the remaining arguments that the termination of employment of Miss Nilsen was unlawful.
CONFIDENTIALITY
The applicant sought to show that the Trust and Institution were concerned with keeping their affairs confidential. She argued that this concern was so excessive that it led to her dismissal. The excessive concern over confidentiality meant that, once she had lost her membership of the Institution, the Trust regarded her as unsuitable for employment. Again, the applicant did not formulate an argument which related the question of confidentiality to the issues relevant to an application under s 170EA. I assume that the point of the evidence was to demonstrate that the reason for the dismissal was an excessive and unreasonable concern with confidentiality, and that such a reason was not valid for the purposes of s 170DE(1).
The following evidence was led in support of this issue. In about September 1994, Mr Curran believed that Miss Nilsen had used the mailing list of the Institution members for purposes other than the business of the Institution. He wrote a letter to her reminding her that confidential matters pertaining to the business of the Trust and the Institution should not be disclosed to the public. Then, in October 1994, Miss Nilsen came to work on her day off and opened the mail for Mr Curran. He wrote to her that he preferred to open his own mail. In the past, she had not opened mail addressed to him, except for rate notices. His letter concluded:
“I do not doubt your sincerity when you told me you were trying to help, especially when there were so many letters to open.”
In November 1994, Mr Davis overheard a conversation at Loyal Orange House between Miss Nilsen and Mr Wolfenden, a sales representative who was delivering cleaning products to the Trust. Miss Nilsen was complaining about her blackballing and denigrating the Lodge and Mr Davis. Mr Curran consequently wrote to Miss Nilsen that the internal affairs of the Loyal Orange Order and the personal affairs of other staff were not the business of Mr Wolfenden.
Miss Nilsen also gave evidence of the events which occurred on about 12 July 1994. That was the date of commemoration of the Battle of the Boyne. Mr Curran and Mr Davis left for Sydney to attend the celebrations there. This would have left Miss Nilsen alone in Loyal Orange House. Instead, Mr Curran and Mr Davis arranged for the Grand Master, Mr John Brown, and his wife to spend the day at Loyal Orange House. Miss Nilsen felt that they were there to spy on her. Mr Davis explained in evidence that it was not desirable for Miss Nilsen to be alone in Loyal Orange House on that day because, in the past, there had been incidents of violence directed to Loyal Orange House at the time of the commemoration of the Battle of the Boyne. Further, in September 1994, when Mr Curran and Mr Davis were again absent, an elderly Trust member, Mrs Bugslach, came to Loyal Orange House. Miss Nilsen said she thought Mrs Bugslach was possibly asked to come to intercept important calls from Hunt & Hunt so that she would not receive them. Mr Davis said that he thought Mr Curran and himself had had to attend a funeral on that day and, again, they had thought it was better for her security that Miss Nilsen was not left alone in Loyal Orange House.
The letters sent to Miss Nilsen show a concern by Mr Curran about confidentiality. But this evidence does not demonstrate that, at the meeting on 25 November 1994, the Trust considered these events or determined to dismiss Miss Nilsen because of them. On the contrary, the evidence of Mr George Brown and Mr Hardy was that the meeting determined that the loss of membership of the Institution by Miss Nilsen was irrelevant to the selection for dismissal. This is consistent with the evidence of Mr Davis, which I accept, that the loss of membership did mean there was some work which Miss Nilsen could not do for reasons of confidentiality, but that that work was “not a great deal”. Mr Simpson, on the other hand, gave evidence that the meeting determined that the loss of membership was not irrelevant. He also gave evidence that Miss Nilsen could not do half her duties as a result of her loss of membership of the Institution. I reject this evidence as another instance of Mr Simpson tailoring his evidence in an attempt to discredit the Trust.
The suggestion that the presence of Mr and Mrs Brown in July, and Mrs Bugslach in September, demonstrated a concern with confidentiality was merely speculation on the part of Miss Nilsen. I accept the explanations given by Mr Davis, and find that the events were not connected with any concern about confidentiality. Even if they did show a concern by Mr Davis and Mr Curran for confidentiality, there is, again, no suggestion that the events played any part in the consideration of the termination of Miss Nilsen’s employment.
FAILURE TO GIVE NOTICE
The applicant argued that Miss Nilsen was given only seven days’ notice after 25 years of employment. It was contended that this notice did not satisfy the requirement that an employer be “good and considerate to its employees” enunciated by Lord Denning in Woods v W.M. Car Services (Peterborough) Ltd [1982] ICR 693. That was a case concerning implied terms in a contract of employment. No claim in contract was made in the present case. In Nettlefold v Kym Smoker Pty Ltd (unreported, IRCA, 4 October 1996), Lee J discussed Lord Denning’s statement in relation to the meaning of the expression “valid reason” in s 170DE(1). Perhaps the applicant’s argument here was intended to be directed again to the validity of the reason for the termination of employment. Whatever the legal basis of the argument, the factual basis did not exist. The applicant was told on 16 December 1994, by letter, that her employment would end on 22 December 1994. She was then paid five weeks in lieu of notice. She therefore received the equivalent of nearly six weeks’ notice. This is in excess of the legal requirement of s 170DB. Thus, the termination was not unlawful by reason of any inadequacy of notice.
LACK OF CONSULTATION
The applicant contended that she had not been given a chance to put her view as to possible alternatives to termination of her employment. Once again, the legal significance of this contention was not provided and, again, I can only surmise that it was intended to demonstrate a lack of a valid reason for the termination. Prior to State of Victoria v The Commonwealth (1986) 138 ALR 129, questions of procedural fairness were considered under s 170DE(2). After that decision, the question arises whether the concept of valid reason in s 170DE(1) encompasses procedural fairness. Given the lack of legal argument by the applicant on this subject, I would be very reluctant to determine such an important issue unless it was necessary. It is not necessary in this case because there was no lack of fairness in this regard. My reasons for this conclusion are as follows.
By a letter dated 1 August 1994, Mr Nilsen wrote on his professional letterhead as a legal practitioner to the Trust, as follows:
“Margaret Nilsen has instructed me to act on her behalf in all matters relating to her relationship with the Loyal Orange Institution of Victoria and its subject Trust (Loyal Orange Trust): In particular the major terms and conditions of her employment and her membership of the Loyal Orange Institution of Victoria.”
When Miss Nilsen received the letter dated 8 September 1994 concerning confidentiality, Mr Nilsen replied on her behalf with a lengthy questioning of the scope of the obligation of confidentiality and a strenuous defence. When Miss Nilsen received the letter dated 18 October 1994 concerning opening Mr Curran’s mail, Mr Nilsen again wrote a lengthy defence, with numerous counter-allegations against the Trust. On 27 October 1994, Miss Nilsen received the first notice to staff, which is set out earlier in these reasons, advising her that the annual meeting of the Institution would be considering the reduction of staffing levels and the closure of the bookshop, to address the operating deficit of the Trust. On 8 November 1994, Miss Nilsen received the second notice to staff, which is also set out earlier in these reasons, advising her that the annual meeting of the Institution had passed resolutions to reduce staff by one and to close the bookshop on 23 December 1994. The notice advised that the actions taken on the resolutions could affect Miss Nilsen. This was fair and proper notice in circumstances in which Mr Nilsen had advised that he was acting for Miss Nilsen in a professional capacity in relation to employment matters. Further, Miss Nilsen had expressed her view to Mr Brown and other members of the Trust. Mr Brown said:
“She wouldn’t listen to anything to that [sic]. It was that ‘The bookshop must stay,’ you know, ‘I don’t want to close the bookshop, it’s going to stay here forever.’ Wasn’t interested in listening to anyone on matters of why should it close or if there is a financial reason - ‘No, I’m not interested in those things.’”
This evidence was not challenged by the applicant. And, finally, at the meeting of the Trust on 25 November 1994, Mr Brown raised the issue of consultation. He had seen a TV programme three weeks before which stressed the need to consult with employees before dismissal. He explained:
“I went back to the criteria again and after seeing that program on TV it had a, for consultation with the people that you were going to make redundant and it put large emphasis on consultation with those. I then brought that up to the members that we had it on the criteria that we should talk to these people before you make the final decision and I put it to the members that before we make this final decision now we should go and speak to either party; that idea then was rejected by the members. The fact that they had all known Margaret and Jeff Davis for a period of 25 years, except for about two people which was Mr Simpson and Mr Whitten, they would have known them for about three years or three to four years; they then went through, look, we know the respective duties that they’ve had and what they can do for us, each individual person, and they believed that to go and speak to either of them wouldn’t be doing the trust any good. So, when all these arguments were put forward for that I listened to it and then I agreed with them and it was put to the vote again and it was a unanimous vote that no, we don’t go and speak to either party, and we left it at that.”
Miss Nilsen was taking legal advice. Her adviser was active in protecting her interests. The Trust had notified her of the possible threat to her employment and, at the meeting on 25 November 1994, the Trust considered the need for further consultation. The Trust was a small organisation and the members were very familiar with the abilities of Mr Davis and Miss Nilsen. They were aware of Miss Nilsen’s attitude to her possible redundancy. In the light of those matters, they determined not to consult further. All these factors lead to the conclusion that Miss Nilsen was fairly treated on this matter.
THE VALIDITY OF THE SELECTION PROCESS
The applicant argued that the selection process was unfair because Mr Curran and Mr Davis, the other two candidates for dismissal, were involved in the process of selection. Their involvement was to seek advice from Hunt & Hunt as to the proper procedure to be followed and Mr Curran summarised the advice in the guidelines which he handed to the members of the Trust at the meeting on 25 November 1994. During the final address, I asked Mr Nilsen whether he contended that the contents of the guidelines were unfair. He said that they were not. This response was plainly correct. If the content of the guidelines were not unfair, then the mere fact that Mr Curran and Mr Davis performed the administrative and clerical functions of obtaining the advice and producing the guidelines cannot be attacked. The Trust was a very small organisation which employed only three people. The role of the Secretary and his assistant was to provide administrative and clerical support to the Trust. Both had been involved in obtaining legal advice from Hunt & Hunt in the past. It was sensible that they would do so on this occasion. Their involvement did not invalidate the selection process.
VALIDITY OF THE EXPULSION OF MISS NILSEN FROM THE INSTITUTION
The focus of the applicant’s case throughout has been the injustice and invalidity of the blackballing of Miss Nilsen from membership of the Institution on 1 June 1994. Miss Nilsen had devoted 25 years of her working life to the work of the Institution and the Trust. She was a firm believer in the Protestant cause. Long-standing friendships had been formed with fellow believers. Her brother, sister, brother-in-law and nephew were all Lodge members. She lived with her brother and nephew at 13 Howard Street, West Melbourne, and the household was a focus for, and regular meeting place of, a strong Protestant believer community. Given her long and deep commitment to the cause and the people of the Institution, Miss Nilsen’s expulsion was a very traumatic experience. Her deep upset came through in her evidence. She often returned to the expulsion, even when the questions did not require it. Much of her evidence was an attempt to vindicate her reputation - to show the world that she was “not guilty” of any impropriety. This meant that she spent a good deal of time explaining her virtues, and pointing out the shortcomings of those involved in the process of expulsion.
It is clear that her very strong emotional reaction has coloured the way she views the Institution and its members. Several lengthy, emotional outbursts capture the essence of her concerns in this litigation. I can do no better than allow her to speak. The first exchange occurred after a question about why Miss Nilsen did not apply for readmission to the Institution after expulsion. The Institution had invited her to do so. The lady who moved the motion for re-ballot, Miss Dingwall, was expelled and readmitted on application. A number of witnesses, including Mr Curran, said that they were shocked that Miss Nilsen had been blackballed. She was a highly regarded member of the Institution. Miss Nilsen said:
“HIS HONOUR: Just before you go on, Mr [sic] Nilsen, the last two lines of the letter suggest that you can apply for re-admission? --- The reason why I didn’t reply [sic] for re-admission is I didn’t believe I had justly been black-balled. I had been given no right of reply. From what my nephew said he pleaded for his life and they brought the gavel down and the last thing he said, ‘If I am the guilty one,’ or similar words to that, ‘If I am the one that has done the wrong thing I will resign,’ and then he pleaded, ‘My mother will be disappointed,’ and they brought the ballot [sic] down and quite a number of the senior men and highly qualified men did ring on several occasions to speak to me about the concern they had for the young man and not one person spoke in his favour, nobody was willing to say, ‘I will speak on his behalf,’ and they brought the gavel down and they said, ‘The meeting will proceed.’ I believe up until that proceeding Mr Brown, the Grand Master, was in the chair. The Deputy Master would go to take over from him because there was a possibility that he would be black-balled, too, and as my young nephew was going out the door he was the last man, well, he was an officer, Mr Baxter said, ‘Make sure that you shut the door and listen.’ During the time of the black-balling my nephew was very, very upset and Dr Ely was there and she said, ‘Under the circumstances what would your grandmother do?’ He said, ‘My grandmother would pray,’ and the young man put his hands together and she put her hand like that and he was praying about it and while he was praying he said, ‘I’m going aunty,’ he called Jean Aunty Jean, she had known him since he was 2, and he passed out and he had an epileptic fit, and Mr Davis rang me shortly after, the phone was engaged and he said, ‘Oh, Margaret,’ he said, ‘Neil’s not well and Jean has asked me to ring you to ask Raymond to come and pick him up.’ It was very, very sad to see the young man, he was so distraught and I was so close to him because when he came to live with us we looked after him and nurtured him. He had spent 11 months in hospital. His father was in the outback, and mother missionaries in the outback at Warburton Ranges and he was so close to us, he was closer than our son. We loved him and he sat there crying and my brother picked him up like a baby and carried him out.
MR BOURKE: Now - - -? --- And they had no feeling for him. That was the worst - and the Reverend Coffey rang me. He was a past Grand master and a chaplain. And he rang me and he said, ‘Could you tell me what really happened to Neil and Jean? They disappeared.’ he rang me two Fridays in sequence and he said, ‘Again, tell me.’ There was no mention made to the meeting why they disappeared; no public announcement. The ballot, from what I can remember people saying, finished well after 12 o’clock, nearer 12.30, and not one word was said why that Neil wasn’t man enough - and Jean - to go back into the meeting. The only one that went back was Janice Dingwell [sic]. They could have said that Neil had collapsed. There was no shame that he’d taken a fit. And Reverend Coffey, he couldn’t understand; and he did say to me, ‘This will be one of my longest memories,’ he said, ‘that will last with me. Neil could have died and they wouldn’t have mentioned. This is why I’m so upset. and I’m sorry that I’ve made it public. And Mr Davis, he also knew Neil. This is what is so sad. These men, that not one would plead, not for - I didn’t need anyone to plead for me, but for Neil.
Now - - -
HIS HONOUR: Well, Mr Nilsen - Ms Nilsen, would you like to have a break for 10 minutes” --- No, no, I’m right. It’s only a split second. That was, you know, one’s member of the family. I can stand up and fight for myself, but Neil, he’s so special to me.
MR NILSEN: Now, Ms Nilsen, the judge asked you before you told him about events on the - when you were black-balled, but you gave one reason why you have not applied. The evidence before the court by Mr Davis and Mr Curran is that you can reapply. Now, you told the judge that you do not think you have done anything wrong? --- I believe I haven’t.
If there is another - is there another reason why you would not go down the track of applying again for membership? --- Firstly, I believe that I was innocent, and if I was to reapply, for the whole world it would give them the impression that I was guilty.”
Miss Nilsen gave evidence that she had refused to bank a cheque for termination payments of $16,087.20 from the Trust. When asked for the reason, her response was:
“I decided myself that I wouldn’t cash it because it’s like going back into the Loyal Orange Institution. You questioned me yesterday, sir, about why I hadn’t re-applied to go back into the institution; because the same people that black-balled me the first time would be the same people. They’re judge and jury and all in one, you’ve got no right of appeal and I viewed that exactly the same as getting the cheque, and I would have been happier if they hadn’t given me any cheque. It wouldn’t - I would have as Mr Curran has taught me, God’s will happens and it is God’s will, it doesn’t matter what happens.
[HIS HONOUR:] But our system includes a practice that one way of compensating people for all the dislocation and the trauma that comes with the termination and inadequate though it is, but that is the best our system can do is to give some monetary compensation, and whilst I will understand your distress about the termination I find it hard to understand why you regarded the offering of a cheque as something that was done in bad faith or sinister or unfeeling or lacking in kindness? --- Well, I myself, your Honour, believed that it was that I had accepted what they had done, and this is the same with the black-balling. You have to accept it and once you accept it they say, ‘Look, it’s gone through the bank, this is it’.
But that was something upon which you could get legal advice, was it not? --- Well, I decided that I wasn’t going to accept it and nobody would tell me that I was to do it ...... Once I make up my mind, there’s no-one in the world, not even my twin sister, could plead with me. I am my own person, and I’ve always been an individual. I’ve stood up for people, I’ve pleaded for people and if Mr Davis was in my position, I would have done the same to him. I would have warned, said ‘Geoff, this is going to happen, this is the procedure’ but not once did he ever given me an inkling, and I’ll never forget it. But this is the whole tragedy. I would have done anything to save him, and he never did one thing, not even cover for me, he never pleaded for me. He never even pleaded for Neil, from what the people said, and they were never told that he was blackballed and he could have died, and it was so hurtful. The blackballing was worse than getting the sack. Everybody knows about it, the whole world knows about it, and everybody thinks that I’m a wicked person, to be blackballed and expelled from the institution, and there was no right of appeal, there were no charges laid, only bickering like a bar-room brawl. I’ve never been in a bar, I’ve never tasted alcohol, we’ve never alcohol at the meal table and Mr Davis is fully aware of it. We don’t behave like it was bickering like a bar room brawl, and I’m a total abstainer. I wear the white badge of the women, the World Women’s Temperance Association, and to be linked with alcoholics and down and outs, it was so hurtful. If it had been just bickering, but it was bickering like a bar room brawl, and no charge was laid.”
Miss Nilsen’s brother, Mr Nilsen, is an active organiser of bodies promoting the Protestant cause. He was a major participant in the events which led up to the expulsion of Miss Nilsen. He was also blackballed. Prior to his expulsion, he had joined with Dr Ely in criticising the administration of the Institution and the Trust. Mr Nilsen is a solicitor and acted as Miss Nilsen’s solicitor in these proceedings. He appeared in Court as her advocate in the last eight of the eleven hearing days. In the light of his sister’s distress at her expulsion, and his own personal involvement in the events, it is perhaps not difficult to understand why the conduct of the case concentrated on the expulsion. The evidence of witnesses called by the applicant and cross-examination of the respondent’s witnesses was largely concerned with this event, and a substantial part of the written and oral final submissions were concerned with arguments that the expulsion was invalid.
Mr Nilsen argued that the blackballing was invalid because the notice of the meeting of the Grand Executive on 1 June 1994 did not include a reference to the intention to re-ballot LOL 111. Mr Nilsen also argued that because Mr John Brown was himself subject to re-ballot it was improper for him, in his capacity as Grand Master, to make the ruling that the re-ballot was to determine membership of the Institution and not only membership of LOL 111. Other complaints included the allegation that no person was permitted to speak in relation to the expulsions, that detrimental material was read to the meeting about Miss Nilsen, that no charges were laid, that no right to be heard was accorded to those to be re-ballotted, and that no right of appeal was allowed. These were the very complaints which Miss Nilsen, Mr Nilsen, Dr Ely and Mr Hawthorn threatened to take to court if the Grand Lodge did not hear their appeals against expulsion on 5 November 1994. The complaints were not taken to court at the time. However, the hearing of the application in respect of termination of Miss Nilsen’s employment has proved to be the occasion used for the ventilation of their complaints.
As I have found, the evidence in this case demonstrates that the reason for the termination of Miss Nilsen’s employment was that the Trust needed to reduce staff to contain the operating deficit, and her skills were less useful to the needs of the Trust than the skills of Mr Davis. While there was considerable dissension between Mr Nilsen and his supporters, and Mr Davis and his supporters, prior to the termination of employment, the dissension did not cause the Trust to dismiss Miss Nilsen. In these circumstances, the validity of the expulsion does not arise for consideration. It is not a matter which should be determined in the context of the issues arising in this proceeding.
CONCLUSION
For these reasons the application is dismissed. The respondent foreshadowed an application for costs under s 347. I will hear argument on this matter on a date to be fixed.
I certify that this and the preceding
sixtyseven (67) pages are a true copy of the reasons
for judgment of his Honour Justice North.
Associate:
Dated: 20 February 1997
APPEARANCES
Counsel appearing for the applicant: A. Flower, 25-27 June 1996
Solicitor for the applicant: R. Nilsen
Counsel appearing for the respondent: J. Bourke
Solicitors for the respondent: Hunt & Hunt
Dates of hearing: 26-28 June, 25-29 November,
2, 12-13 December 1996
Date of judgment: 20 February 1997
2