Pillar, D.I. v McDonald, T.
[1991] FCA 228
•03 MAY 1991
Re: DAVID INGLES PILLAR
And: T. McDONALD; B. ETHELL; E. BOATSWAIN; S. SHARKEY; D. McDONALD;
B. CARSLAKE; L. FRASER; W. TROHEAR; V. RAFFA; M. CORDWELL; R. TODD;
G. WASSON; M. BINGHAM and D. MATTHEWS
No. V I34 of 1991
FED No. 228
Industrial Law
(1991) 37 IR 103
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
Gray J.(1)
CATCHWORDS
Industrial Law - registered organisation - amalgamation - rules required national conference to approve amalgamation - decision of national executive - whether rules overridden by Act - whether decision of national executive validated by Act - whether national executive "committee of management".
Words and phrases - "committee of management" - "manages the affairs".
Industrial Relations Act 1988 ss.4, 195, 196, 208, 209, 240, 244, 252, 253G, 253ZD, 253ZF.
Conciliation and Arbitration Act 1904 ss.141, 171B, 171C.
HEARING
MELBOURNE
#DATE 3:5:1991
Counsel for the applicant: Mr A.M. North QC,
Mr H. Borenstein
Solicitors for the applicant: Harry Nowicki and Co.
Counsel for the respondents: Mr S. Rothman, Mr Sorby
Solicitors for the respondents: Taylor and Scott
JUDGE1
On 18th April 1991, I heard an urgent application in this matter. The applicant sought interim orders, pursuant to s.209(4) of the Industrial Relations Act 1988 ("the Act"). At the conclusion of the hearing, I dismissed the application for interim orders and reserved my reasons. I now give the reasons for that order.
The Building Workers' Industrial Union of Australia ("the B.W.I.U.") is an organisation of employees, registered pursuant to the Act. The respondents together constitute the national executive of the B.W.I.U. The Australian Timber and Allied Industries Union ("the A.T.A.I.U.") is another organisation of employees, registered pursuant to the Act.
On 22nd February 1991, the national executive of the B.W.I.U. carried a lengthy resolution, concerning a proposed amalgamation between the B.W.I.U. and the A.T.A.I.U. The resolution endorsed a scheme of amalgamation, rules of the proposed amalgamated union and a document containing the case for amalgamation. It authorised the first respondent, the national secretary, to take all steps necessary to effect the amalgamation, including lodging a formal application with the Industrial Registrar and the Australian Industrial Relations Commission for approval of the amalgamation, and an application pursuant to s.241 of the Act, for a declaration that a community of interest exists between the B.W.I.U. and the A.T.A.I.U. in relation to their industrial interests. The resolution also authorised the national secretary to lodge an application for exemption for the B.W.I.U. from the requirement to conduct a ballot of its members. The national secretary was further authorised to make alterations of a consequential or incidental nature to the rules or other documents referred to in the resolution and to change any of the documents, if required by the Industrial Registrar or the designated Deputy President of the Australian Industrial Relations Commission, so that the application should conform to the requirements of the Act.
On 11th April 1991, the applicant commenced this proceeding by obtaining a rule to show cause, pursuant to s.209 of the Act. The rule calls upon the respondents to show cause why an order should not be made that they perform and observe the rules of the B.W.I.U., by treating as null and void and of no effect the resolution of 22nd February, so far as it purported to approve the proposed amalgamation and so far as it purported to approve proposed rules for the proposed amalgamated union.
On 15th April 1991, various applications came on before Deputy President Moore, a designated presidential member of the Australian Industrial Relations Commission for the purposes of Division 7 of Part IX of the Act, which is concerned with amalgamations between organisations. Those applications included an application under s.244 of the Act which, if successful, would mean that the proposed amalgamation could proceed without the necessity for a ballot of the members of the B.W.I.U. on the question whether they approve the amalgamation. Under s.253G of the Act, the designated presidential member must grant an application for exemption from a ballot if the total number of members that could be admitted to membership of the proposed amalgamated organisation does not exceed twenty-five per cent of the number of members of the applicant organisation, unless the designated presidential member considers that, in the special circumstances of the case, the exemption should be refused.
The applicant in this proceeding appeared by counsel before Deputy President Moore. The learned Deputy President was informed of the grant of the rule to show cause in this Court, and was invited to refrain from hearing the applications before him until such time as the validity of the national executive's resolution of 22nd February was determined in this Court. After hearing submissions, the learned Deputy President indicated that he would proceed with the hearing of the applications which were before him, but would not make any orders until 19th April 1991, so that the applicant would have an opportunity to apply to this Court for an interim order. It was for this reason that an urgent hearing on 18th April was conducted.
In his notice of motion, the applicant sought interim orders in terms similar to the final relief sought in the proceeding. On the return of the notice of motion, Mr North QC, who appeared with Mr Borenstein of counsel for the applicant, accepted that a more appropriate form of order would be an order restraining the respondents from taking any further step to implement the resolution, pending the hearing and determination of this proceeding. The matter therefore proceeded on the basis that that was the order sought. The respondents appeared by Mr Rothman and Mr Sorby of counsel.
The applicant obtained his rule to show cause upon an affidavit, in which he referred to provisions of the rules of the B.W.I.U., under which the national conference is required to take certain steps in respect of any proposed amalgamation, and provided hearsay evidence that the national council had not taken the requisite steps with respect to the particular proposed amalgamation. The affidavit also contained criticisms of various provisions of the rules adopted by the national executive for the proposed amalgamated union. It was suggested that, if those rules came into operation, they would be in contravention of, or fail to make provisions required by, ss. 195 and 196 of the Act.
The argument based on the content of the proposed rules was not pressed on the application for an interim order. The Court will not ordinarily entertain an application with respect to provisions of rules which are not yet in operation. See McLeish v. Faure (1979) 40 FLR 462, especially at pp 465-467 and 473. Safeguards exist within the process for the approval of a proposed amalgamation, to ensure that proposed alterations of rules comply with, and are not contrary to, the Act. See, for instance, s.252(1)(d). Further, if and when the proposed rules come into effect after amalgamation, any member of the resulting organisation may take proceedings pursuant to s.208 of the Act to challenge the validity of any provision of the rules, or to claim a declaration that the rules fail to make a necessary provision.
With respect to his argument that the endorsement of the proposed amalgamation by the national executive was not done in compliance with the rules, the applicant faces a number of difficulties. In an affidavit filed on their behalf, the respondents have indicated that they propose to contend as a matter of fact that the national conference did approve the proposed amalgamation at a meeting on 27th September 1990, when it had before it a memorandum of understanding between the A.T.A.I.U. and the B.W.I.U., and carried a resolution, proposing a series of amalgamations and authorising the national executive and national officers to finalise the scheme of amalgamation and any necessary rules. This issue will involve questions of fact and of the construction of the resolution of the national conference. It is unnecessary to say anything more about it at the present time.
Of more importance at the present stage are two sections of the Act, which the respondents contend will save the resolution of the national executive in any event. The first of these provisions is s.240, which provides as follows:
"240(1) The scheme for a proposed amalgamation, and each alteration of the scheme, must be approved, by resolution, by the committee of management of each existing organisation concerned in the amalgamation.
(2) Despite anything in the rules of an existing organisation, approval, by resolution, by the committee of management of the scheme, or an alteration of the scheme, is taken to be sufficient compliance with the rules, and any proposed alteration of the rules contained in the scheme, or the scheme as altered, is taken to have been properly made under the rules."
The other provision is s.253ZD, the relevant parts of which are as follows:
"253ZD. (1) Subject to this section and to section 253ZF, an act done in good faith for the purposes of a proposed or completed amalgamation by:
(a) an organisation or association concerned in the amalgamation; or
(b) the committee of management of such an organisation or association; or
(c) an officer of such an organisation or association;
is valid despite any invalidity that may later be discovered in or in connection with the act.
(2) For the purposes of this section:
(a) an act is treated as done in good faith until the contrary is proved; and
(b) a person who has purported to be a member of the committee of management, or an officer, is to be treated as having done so in good faith until the contrary is proved; and
(c) an invalidity in the making or altering of the scheme for the amalgamation is not to be treated as discovered before the earliest time proved to be a time when the existence of the invalidity was known to a majority of members of the committee of management or to a majority of the persons purporting to act as the committee of management; and
(d) knowledge of facts from which an invalidity arises is not of itself treated as knowledge that the invalidity exists.
(3) This section applies:
(a) to an act whenever done (including an act done before the commencement of this section); and
(b) to an act done to or by an association before it became an organisation."
Counsel for the applicant contended that neither of these sections touched the resolution of the national executive of 22nd February, because the national executive was not the "committee of management" of the B.W.I.U., within the meaning of that phrase as used in s.240 and in s.253ZD(1)(b). This argument requires reference to the rules of the B.W.I.U.
The national executive is constituted by rule 17.1. It consists of the national president, the national senior vice-president, three national junior vice-presidents, a national secretary, two national assistant secretaries and such branch secretaries who are not elected to any of the aforementioned positions. Rule 17.21 is of considerable importance. Its relevant provisions are:
"The National Executive shall, subject to the review of its actions by National Conference have the care, control, superintendence, management and administration in all respects of the affairs, business, National funds and property of the union and without limiting the generality of the foregoing it may -
(a) Interpret and enforce the general policy of the union as decided by National Conference.
(b) Decide questions of policy not covered by National Conference decisions.
(c) Control and conduct the business and affairs of the union while National Conference is not in session. ......
(g) Expend such moneys by way of ordinary expenditure as may be necessary. ......
(k) Control and supervise the work of the National Officers of the union. ......".
Rule 17.22 provides that all acts and decisions of the national executive shall have full force and effect and full validity unless and until reversed or amended by national conference. Rule 17.23 provides for meetings of the national executive to be held at such time and place as shall be decided by the national secretary and the national president, provided that a majority of members of the national executive may demand a meeting. Rule 17.24 provides for a telegraphic, telex or postal vote of members of the national executive.
The national conference is constituted by rule 15.1, as the supreme governing body of the B.W.I.U. It is convened biennially, or specially in accordance with the rules. Under rules 15.2 and 15.3, it consists of full time national officers and delegates from branches, the number elected by each branch being calculated according to a formula related to the number of members in the branch, calculated by dividing the branch income by the annual contribution. The powers of the national conference are set out in rule 15.9. The important provisions of that rule are as follows:
"9. National Conference shall have power:
(a) To take such steps subject to these rules as it shall think fit to carry out all or any of the objects of the Union and to raise or spend such funds as are necessary to carry out the objects.
......
(f) To deal with and decide any matter submitted to it by any Branch of the union.
(g) To confirm, over-rule or otherwise deal with decisions of National Executive. ......
(i) To exercise all or any of the powers of the National Executive.
(j) To make, alter and rescind rules. ......".
Provision is made in rule 15.14 for a special conference. A special conference may be called by resolutions from a majority of branches, a petition signed by not less than ten per cent of the financial members of the B.W.I.U. or by direction of the national executive. Provision is also made in rule 15.14 and rule 35 for the taking of a postal vote of members of the national conference.
The phrase "committee of management" is defined in s.4(1) of the Act, for relevant purposes, as "... the group or body of persons (however described) that manages the affairs of the organisation ...". Counsel for the applicant sought to argue that the national executive of the B.W.I.U. did not fit this description. They pointed to the status of the national conference as the supreme governing body, to its powers, especially those concerned with deciding policy and altering rules, and to its ability to control and override the national executive. They relied on the possibility of special conferences and postal votes of members of the national conference, to counter the proposition that a body which meets only biennially could not be said to manage the affairs of the B.W.I.U.
This argument has little likelihood of success. The powers of the national executive are broad, and are obviously entrusted to it as a body which is likely to meet with reasonable frequency and to have full responsibility for controlling the affairs of the B.W.I.U., subject only to prior policy decisions or subsequent reversal of its decisions by the national conference. Dictionary definitions of the verb "manage", relied on by counsel for the respondents, indicate clearly that the national executive "manages" the affairs of the B.W.I.U. The relevant definition from the Shorter Oxford English Dictionary (3rd ed.) is, "To control the affairs of (a household, institution, state, etc.) ...". That of the Macquarie Dictionary is, "to conduct affairs". In common parlance, it is unnecessary to have the ultimate power of decision in order to manage; a company may have a "manager", who is responsible to a board of directors, which has ultimate decision-making power.
The definition of "committee of management" in the now repealed Conciliation and Arbitration Act 1904 ("the C. and A. Act") was similar to the present statutory definition. In Re Airline Hostesses' Association (1980) 48 FLR 214, a Full Court of five judges considered whether the proposed rules of an organization complied with statutory requirements. The rules contained a two-tiered system, under which a federal council possessed plenary powers, but was capable of delegating them to a federal executive, save for the power to amend or rescind rules. The majority of the Court held that the federal executive was the committee of management of the organization. At p 216, Bowen C.J. expressed the view that the federal executive was the committee of management. At p 225, Smithers J. (in a dissenting judgment) expressed the view that the federal council was the committee of management. Later in his Honour's judgment, however, at p 239, he conceded that, "It may be that the federal executive conforms more to the concept of a committee of management." At p 251, J.B. Sweeney J. held that, "It is clear from the rules that the federal executive is a committee of management within the definition of "committee of management" in s.4 of the Act". In separate judgments, Evatt and Northrop JJ. expressed their agreement with the reasons of Bowen C.J. and J.B. Sweeney J. There is therefore a decision of a Full Court, binding on me, which I consider to be in point, on the meaning of the definition of "committee of management". That decision stands squarely in the way of the applicant's argument in the present case.
It follows that the applicant is most unlikely to succeed in contending that the national executive of the B.W.I.U. is not its "committee of management", for the purposes of s.240(1) and s.253ZD(1)(b) of the Act. The result will be that s.240(2) will operate to override the provisions in the rules of the B.W.I.U., under which the decision to embark on a proposed amalgamation is committed to the national conference. Section 253ZD will also operate to validate the decision of the national executive of 22nd February, if any invalidity is later discovered in or in connection with that decision. Even if the national executive is held not to be the committee of management, the act of applying for approval of the scheme of the proposed amalgamation, and making the other associated applications, would be validated either by s.253ZD(1)(a), as an act of the B.W.I.U. itself, or by s.253ZD(1)(c), as an act of the relevant officer who filed or caused to be filed the applications. Section 253ZD is an enabling provision, and should be read broadly.
Counsel for the applicant contended that the effect of s.253ZD could be avoided by the making of an interim order of the kind sought in the present proceeding. They relied on passages from the judgments of some of the members of the High Court of Australia in R. v. Joske; Ex parte Shop Distributive and Allied Employees' Association (1976) 135 CLR 194. In that case, the High Court was considering the granting of prerogative writs in respect of the exercise of the powers of the Australian Industrial Court under the predecessor of s.209(4) of the Act, namely s.141(2) of the C. and A. Act. One argument with which the High Court dealt was that the Australian Industrial Court lacked jurisdiction to restrain on an interim basis certain acts, because of the presence in Part IXA of the C. and A. Act of validating provisions. This argument was rejected. References were made to two of the validating sections in the C. and A. Act, ss. 171B and 171C. The present equivalents of those provisions are found in ss. 255 and 258 of the Act respectively. Under s.171B, all acts done in good faith by collective bodies or persons holding office were validated automatically, notwithstanding any invalidity afterwards discovered in the election or appointment of the collective body or any member thereof, the election or appointment of the person holding office or the making or alteration of a rule. Some of the members of the High Court in the Joske case appear to have acted on a misconception as to the effect of s.171B. They appear to have assumed that, like s.171C, it required application to be made and a court order before it was effective. Thus, at p 207, Stephen J. spoke of "the grounding of an application for validation under s.171B". At p 214, Mason and Murphy JJ. referred to an argument that, "the invalidity or its consequences could be cured subsequently by an order under ss. 171B or 171C". To the extent to which the Joske case might be regarded as authority for the proposition that s.171B could never be regarded as standing in the way of an application for interim orders under s.141(2) of the C. and A. Act, the decision cannot be followed. It must be regarded as having been reached per incuriam, because of the misconception of the effect of s.171B. In any event, the decision in the Joske case is distinguishable on more than one ground. All of the acts with which the Australian Industrial Court dealt in that case were prospective; not having been performed at the stage when that court made its interim orders, they could not have been validated by s.171B. Further, s.171B of the C. and A. Act and the present s.253ZD are very different in their terms and their effects. The former saved a broad class of acts from the effects of a limited class of invalidities. Section 253ZD saves a limited class of acts from the effects of all invalidities.
As I have said, s.253ZD of the Act operates of its own force and effect to validate automatically acts which have been done in respect of the proposed amalgamation. The consequences of those acts cannot therefore be restrained by the powers given in s.209(4) of the Act. It is true that further acts in the chain of events leading to the proposed amalgamation may occur, and may be validated by s.253ZD. The Court cannot use invalidities already cured to prevent the occurrence of those future acts. It is also true that the applicant might apply under s.253ZF, and, by showing substantial injustice, persuade the Court to undo the validating effect of s.253ZD. The possibility that such an application might be made in the future cannot constitute a ground for the granting of any restraining order under s.209(4).
The alleged breach of the rules, on which the applicant relied in obtaining his rule to show cause, has therefore been cured both by the effect of s.240(2) and by the effect of s.253ZD. It must be remembered that I have reached these conclusions on the basis of argument put in circumstances of urgency, and on an interim basis only. The applicant may persuade the Court on the hearing of his rule to show cause that he is entitled to have the rule made absolute. After hearing argument in support of the interim application, however, I was of the view that the applicant's chances of success in the proceeding were so slight that it would be improper to grant an interim order in his favour. For the reasons which I have now given, I dismissed his application for interim orders.
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