Porter v Dugmore

Re: J. G. PORTER & ORS.
And: J. DUGMORE (1984) 3 FCR 396
No. NSW 7 of 1983
Industrial - Conciliation and Arbitration
7 IR 120

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
INDUSTRIAL DIVISION
Smithers(1), Keely(2) and Sheppard(3) JJ.

CATCHWORDS

Industrial - Conciliation and Arbitration Act - OK card policy - policy involving union approval before employment sought or taken by members - was the policy authorized by the rules of the registered organization either expressly or impliedly - construction of rules - implied terms - policy invalid unless supported by the rules.

Conciliation & Arbitration Act 1904 s.141

Conciliation and Arbitration - Union resolution adopting policy requiring members seeking work in a different section of the industry to obtain Union approval - O.K. Card System - Whether the policy expressly or impliedly authorised by the rules - Construction of rules - Considerations relevant in construing rules - Implied terms - Policy invalid unless supported by the rules. Conciliation and Arbitration Act 1904 (Cth), ss 140(1), 141, 143(1)K - Conciliation and Arbitration Regulations, reg. 115(1)(b).

HEADNOTE

The appellants appealed against a decision of the court requiring the Printing and Kindred Industries Union (the Union) inter alia, to perform and observe the rules of the Union by treating as null and void and of no effect a policy resolution of the New South Wales branch of the Union passed on 23 August 1977. The resolution instructed all members executives and officials in the New South Wales branch to maintain strict adherence to the continuing use and issue of the O.K. Card and affirmed as a policy generally that members who gained admission to the Union through one section of the industry were not entitled to work in any other section of the industry without having obtained permission from the Executive. This policy was known as the O.K. Card System. This resolution was passed following the Australian Industrial Court decision in Clarke v. Printing and Kindred Industries Union (1976) 30 FLR 39 in which it was declared that Branch rr. 7 and 10, which contained the formal provisions dealing with the O.K. Card System contravened the provisions of s. 140(1) of the Conciliation and Arbitration Act 1904. The appellants contended that notwithstanding the Australian Industrial Court decision there was nothing in the rules which expressly or impliedly prohibited the Union or its branches from having the policy in question. Although there was no rule which specifically authorised the organisation to have such a policy, the policy was a matter of management of the affairs of the Branch and as such was authorised by the rules conferring upon it powers of management as an autonomous Branch.

Held (per Smithers and Sheppard JJ., dismissing the appeal): (1) The rules did not authorise the adoption and implementation of the policy of the O.K. Card System.

(2) By virtue of reg. 115(1)(b) of the Conciliation and Arbitration Regulations it was a condition of registration that the Union was an association for furthering and protecting the interests of its members. Thus to be valid according to the Act and the regulations the adoption and implementation of the policy in question must have the quality of an activity for furthering and protecting the interests of the members of the organisation.

Williams v. Hursey (1959) 103 CLR 30, referred to.

(3) No policy may be adopted by the Union unless it is authorised by a rule and if that rule permitted the management committee or any other body of the Union to implement a policy contrary to law or contrary to a law it would to that extent contravene s. 140(1) of the Conciliation and Arbitration Act 1904 (Cth) and be void.

R. v. Commonwealth Industrial Court; Ex parte The Amalgamated Engineering, Union Australian Section (1960) 103 CLR 368, referred to.

(4) The O.K. Card System is one which operates in restraint of trade but it ought not merely for that reason to be regarded as contrary to law or contrary to a law although as such it would be unenforceable.

Buckley v. Tutty (1971) 125 CLR 353 at 380, referred to.

(5) There must be some implied limitation on the power of management. It cannot be that any restriction on the right of members in relation to their search and acceptance of employment, which management may see fit to impose on members, on the ground that in the view of management it is calculated to further and to protect the interests of the members, is within the management power conferred by the rules.

(6) The limitations on the power of management must be found in the construction of the rules and to find the true construction of the rules regard should be had to the nature of the organisation as a corporation created by law for special purposes and subject to special conditions and also the consensual element in the relationship between members of a registered organisation and the organisation.

Gordon v. Carroll (1975) 27 FLR 129, referred to.

(7) In construing the management rule what is to be identified is the presumed intention of the parties by reference to its express terms and the nature and quality of the transaction. It is appropriate to have regard to the nature of the organisation as an entity the function of which is to further and protect the interests of members. This is the fundamental consideration going to the width of the powers of management. The nature of the organisation so expressed is the consequence of what would in any event be assumed in relation to a trade union but it is impressed on the organisation by s. 132 of the Act and reg. 115(1)(b). The members contemplated by the condition in reg. 115(1)(b) are all members. The prevention of a member or members from seeking or taking employment available to them is an act inherently hostile to their interests. Such hostility is incompatible with the furtherance and protection of the interests of those members and so, of the members as such. The powers of management on their proper construction did not extend to the adoption and implementation of the policy.

Codelfa Constructions Pty Ltd v. State Rail Authority of New South Wales (1981) 56 ALJR 459; Heimann v. Commonwealth of Australia (1938) 38 SR (N.S.W.) 691; Shirlaw v. Southern Foundries (1926) Ltd (1939) 2 KB 206; Liverpool City Council v. Irwin (1977) AC 239, referred to.

(8) (Per Keely J.) If the rules did authorise any governing body of the Union to adopt and implement the O.K. Card System those rules would, to that extent, contravene the provisions of s. 140 of the Conciliation and Arbitration Act 1904 (Cth).

(9) The rules do not authorise and could not authorise the Union, the Branch or any other body within the Union or Branch to resolve upon a policy or to take steps designed to ensure that the members abide by a policy of the Union or of the Branch where the policy is contrary to one of its registered rules or would be contrary to s. 140 of the Act if it were incorporated in a rule or tend to frustrate the policy and main purpose of the Act.

Williams v. Hursey (1959) 103 CLR 30, referred to.

(10) Nor would the policy be supported as an exercise in persuasion as the evidence was clear that the policy was enforced by sanctions.

HEARING

Sydney, 1983, November 14-16; 1984; April 2. #DATE 2:4:1984

APPEAL.

Appeal from a decision of Northrop J.

D.M. Ryan Q.C., J.W. Shaw and S. Rothman, for the appellants.

M.F. Holmes, for the respondent.

Cur.adv.vult.

Solicitors for the appellants: Geoffrey Edwards & Co.

Solicitors for the respondents: Walter Gibbs & Donald.

J.J.I.

ORDER

1. The appeal be dismissed.

Appeal dismissed.

JUDGE1

The appellants are members of the Printing & Kindred Industries Union (the Union), an organization of employees registered under the Conciliation & Arbitration Act 1904 (the Act) and hold office in the New South Wales Branch thereof. The respondent is a member of the Union in its NSW Branch.

On 11 September 1983 orders were made by Northrop J. pursuant to s.141 of the the Act to the effect that:-

1. The respondents and each of them perform and observe the rules of the Printing and Kindred Industries Union by treating the resolution passed at the mass meeting of members of the New South Wales Branch of the union on 23 August 1977 as null, void and of no effect to the extent that the said resolution instructs them to maintain the strictest adherence to continuing the use and issue of the OK card pursuant to the OK card system.

2. The respondents and each of them perform and observe the rules of the Printing and Kindred Industries Union by not taking any action with the object or effect of enforcing the policy of the OK card system as instructed by the mass meeting of members of the New South Wales branch on 13 August 1977.

3. Rule to show cause otherwise be discharged.

These orders arose out of findings by the learned Judge that the appellants regarded themselves as bound to implement what was called a policy enunciated at a mass meeting of the New South Wales Branch of the Union on 23 August 1977 in the following terms:-

This Meeting further rejects the statement of the Judges who attacked the honesty and integrity of the Federal Secretary, NSW Branch President and Branch's Secretary and Assistant Secretary who gave evidence on behalf of the Union membership.

We further instruct our Branch officials that there is to be no departure from the protection of our industry, classifications and rates of pay that our various classifications command.

We support our Federal Secretary, our NSW Branch Executive and officials, together with all members who have worked and demonstrated to protect our rules and policies and we condemn and will remember those who have sought and are seeking to do us so much harm."

This resolution was passed in the wake of a decision of the Australian Industrial Court in Clark v. Printing & Kindred Industries Union & Ors. (1976) 30 FLR p.39 in which it was declared that Branch rules 7 and 10 theretofore standing as rules of the Branch, contravened the provisions of s.140(1) of the Act. That decision established that those rules were void and of no effect for all purposes in all courts: see The Queen v. Commonwealth Industrial Court; Ex parte The Amalgamated Engineering Union, Australian Section (Shearer s Case: (1960) 103 CLR p.368 per Fullagar J. at p.378; Cook v. Crawford (1982) 43 ALR 83 per Sheppard J. at p.148 at seq.

Rules 7(g) and (i) and r.10(5) were in the following terms:-

"7(g). A member having gained admission to the branch through the section of the industry shall not be entitled to work in any other section without having obtained permission from the executive in accordance with these rules.

7(i). Any member wishing to accept employment in any section of the trade other than that in which he is registered in the branch records shall first apply to the executive for approval. If the member's application is refused and he accepts employment outside such section he shall render himself ineligible to continue his membership at the union.

10(5)(a). Any member who, having obtained a job or position from any employer, shall commence work before obtaining an O.K. card may, after full, inquiry and careful consideration by the executive, be fined a sum not exceeding ten dollars ($10) for each such offence.

(b). Any member leaving one employer and commencing work for another employer without first obtaining an O.K. card, may, after full inquiry and careful consideration by the executive, be fined a sum not exceeding ten dollars ($10) for each such offence.

(c). Any member of the branch in the employ of any employer who fails to ask another member or non-member about to start work in his department in his place of employment to produce to him the O.K. card of the branch, or on the failure of such other member or non-member to obtain and produce to him such O.K. card fails to notify such failure to the secretary-treasurer within twelve hours thereafter, may, after full inquiry and careful consideration by the executive be fined a sum not exceeding ten dollars ($10) for such offence.

(d). The secretary-treasurer shall forthwith supply to any member applying for the same at the registered office of the branch an O.K. card in the form set out hereunder; provided that such member at the time of such application is a financial member of the branch."

On 5 September 1977 a meeting of the Executive of the Branch endorsed the resolution passed at the mass meeting on 23 August 1977. Thereafter the policy referred to was published in the journal of the Branch. It was found by the learned Judge that since 5 September 1977 the Executive of the Branch, being the Committee or Management or the Branch, had accepted as a statement of policy binding on all members of the Branch, the resolution of 23 August 1977. And it was found by his Honour that the members of the Executive thereafter continued to "implement and enforce" that policy in the same manner as if rules 7 and 10 were still valid and in full force.

The proceedings before the learned Judge were instituted as a result of what occurred after the closure of a Sydney printing establishment called Sungravure Pty. Ltd. (Sungravure) as a result of which a number of members of the Union lost their employment. Some, including the respondent to this appeal, sought work of a kind associated with lithographic printing. Lithographic printing is achieved by a process different from that involved in gravure printing, but it seems that a person trained in gravure printing can easily adapt to lithographic printing. There is no suggestion in the evidence that the respondent would not be competent to work as a lithographic printer. The respondent sought and found employment with an establishment called Associated Lithescans where the work performed by him was almost identical with what performed by him at Sungravure. He took this employment without seeking or obtaining an OK card from the Union. Thereafter by reason of conduct engaged in by way of implementation of the policy of the Branch relating to the issue or OK cards by the appellants Cooke, Taylor and Henderson, difficulties arose between the respondent and the Executive of the Branch. In relation to those difficulties the respondent commenced proceedings in the Supreme Court of New South Wales. Those proceedings were settled in a manner favourable to the respondent. On 26 April 1982 the respondent obtained a rule nisi pursuant to s.141 of the Act seeking orders that the appellants perform and observe the rules in various respects, in substance, by refraining from engaging in conduct constituting implementation or enforcement of the OK card policy or system.

It was said by Mr. Ryan for the appellants that there is nothing in the rules which expressly or impliedly prohibits a union or branch governing body from having the policy in question. He conceded that there is no rule which specifically authorizes the organization to have such a policy. But he contended that the policy was a matter of management of the affairs of the Branch and as such was authorized by rules conferring upon it powers of management as an autonomous Branch. He emphasised that the implementation of the policy depended upon persuasion only. He pointed out that in accordance with the principles explained in Williams v. Hursev (1959) 103 CLR p.32, union conduct which is reasonably within the objects of the Union are within its legal capacity. The objects of this Union are wide and it was said that the provisions of the policy are an appropriate means of achieving those objects or, at least, that what is so appropriate is a matter for decision by Branch management. Mr. Ryan pointed out that amongst the objects of the Union as set out in the Federal rules are:-

(3) to improve the economic conditions of members;

(4) to assist by just and equitable methods in the settlement of any differences which may exist between members or between members and their employers:

(6) to assist and support any scheme calculated to benefit the employees of the Printing & Kindred Industries or any process appertaining thereto:

(8) to protect the industrial, economic or financial welfare of members: and

(28) such other objects as the Council of the Union may from time to time determine.

Mr. Ryan contended that it was for the relevant union or Branch management body to determine the means adopted to achieve these objectives. He said there were good reasons for the Branch to introduce an orderly system of controlling the employment of members in the industry especially in a time when unemployment was high. It was said also that such a system was calculated to protect those already employed in one section of the industry from persons displaced from some other section.

As Mr. Ryan presented the appellants case, it appeared that it was considered a critical element that the policy adopted by the Branch did not expose those who did not comply with it to Branch disciplinary action. The policy was not a rule, nor did the rules provide penalties for its contravention. In essence the policy was but the declaration of what was considered desirable conduct on the part of members, and its implementation depended on persuasion of members to observe it.

However, whatever might be the situation in a case in which the Union had a policy which was genuinely but an exhortation to observe certain canons of conduct and genuinely not subject to enforcement in any form, that is not the situation existing in this Branch in relation to the policy in question. The policy emerged as a consequence of the deletion from the rules of Branch rules 7 and 10. Even while the proceedings in Clark's Case (supra) were pending in the Australian Industrial Court a mass meeting of members of the Branch was held at which the following resolution was passed:-

"This mass meeting of PKIU members, representing all sections of the Industry, condemns and rejects the iisructive interference with the rules and policies of our Union and calls upon the Australian Industrial Court to reject the application of the employer acting through his pocket against our Branch Rules.

Any failure of the Court not to take heed of our request will be done in the face of our firm declaration to uphold and carry out all the present and future rules and policies of the Union with special emphasis on our OK Card."

On 10 August 1977, following the judgment of the Australian Industrial Court, a meeting of delegates and Fathers of the Chapel (FOC), being honorary officers of the Branch, met and resolved in substance that no person would be allowed to start work without first having obtained an OK Card from the Branch, that no member would be allowed to work outside his or her classification without the permission of the Branch, and that the rules and policy of the Union would be adhered to strictly.

On 15 August 1977 a special meeting of the Executive of the Branch resolved as follows:

"That the Executive implements the decision of the 9th April, 1976 industry mass meeting, and further that the recommendations of the FOCs and delegates meeting of 10th August. 1977, be endorsed, and that the date of Tuesday, 23rd August be scheduled for the recommended mass meeting and the bulletin as printed, be circulated with any necessary amendments."

On 23 August 1977 a mass meeting of members of the Branch adopted the following resolution:

"This PKIU NSW Industry Mass Meeting instructs all members in all shops to our executives and officials, to maintain the strictest adherence to continuing the use and issue of our OK Card."

Thereafter on a number of occasions there were published in the Union journal, notices relating to the policy of which the following is an example:-

OK CARDS

"The attention of all members is drawn to the rules and policies of the Branch regarding employment. Canvassing of jobs is not permitted and no member shall start work without an OK card."

It is to be noted also that the membership card issued to the respondent in 1980 is endorsed with what are called "notices" reading. "Do not answer advertisements or canvass jobs" and "Apply to Branch Officer for your O.K. Card before starting on any job".

In the light of the foregoing there can be no real doubt that the Branch Executive officially decided that notwithstanding the decision in Clarke's Case (supra) the practices previously obtaining pursuant to rules - and 10 should continue to be observed as a conscious policy of the union operating by virtue of a decision of the Executive and according to the will of the Executive. The justification for this course was, as indicated in para. 12 of the agreed facts, that since August 1977 there had been but a policy of the Branch, whereas prior to that, there was an enforceable and certified rule.

In the course of argument it was intimated to Mr. Ryan that it was necessary for the Court to understand what the OK card system involved. Thereupon discussion ensured as follows:-

MR RYAN: In this union, as I said before Clark's case struck them down, it was more than ,it committed the union to direct which employees were allowed to present for vacancies in the trade, so that before presenting for a particular vacancy a member had to obtain an OK card.

SHEPPARD J: For a job?

MR RYAN: For a job, addressed in effect to the prospective employer.

SHEPPARD J: Is that the policy they want to implement?

MR RYAN: Substantially it is the policy, but as I say the critical difference is they no longer seek to implement as a rule with the consequences of a rule. They simply say it would be desirable if members continued, before applying for a job, to obtain the OK card, we advocate that the practice be continued, but we sub silentio cannot do anything about it under the rules.

. . .

The union policy was that priority should be given to vacancies in the lithographic section to those who had come up through the ranks, as it were, through that section and the indication was OK cards would not be given to Mr Dugmore or those like him while other members of the union, as the union saw it, had prior claims to those vacancies were unemployed.

That is in effect the way the practice obtained and a practice which, as we said, could be enforced by resort to the rules before the rule was struck down in Clark's case, but notwithstanding that striking down the union has continued to advocate it as a desirable practice, one that had been stripped, as we perceive, of its legal sanctions.

. . .
If all that is done, as we put it, is to endeavour by moral persuasion to seek the adoption of a particular code of conduct or policy, then rules of their nature can have nothing to say one way or the other about them.

From these statements and the evidence it is clear that the features of the policy are:-

(a) its terms are expressed to members in the imperative mood;

(b) it forbids canvassing of employers by members seeking employment without an OK card approval to do so;

(c) it forbids the taking of employment without the approval of the Branch;

(d) it forbids acceptance of promotion in employment without approval of the Branch;
(e) it lays down no criterion by which approval for canvassing or taking employment or promotion in employment will be granted;

(f) it has been operated to prevent members of the Branch whose membership is expressed to be in the "photogravure" classification from working in lithographic printing.

It is to be observed that Federal Rule 58 provides:-

"(1) A member having gained admission to the Union through one section of the Printing and Kindred Industries Union shall not be entitled to work in any other section without having first obtained the permission of the Board of Management of the Branch where such member may propose to work.

(2) Any member accepting employment in any section of the trade other than that to which he has been admitted as a member of the Union shall render himself ineligible to continue his membership of the Union unless he first produces to the Secretary of the Branch to which he is attached, such evidence as may be required and satisfy the Board of Management of the Branch of his competency to undertake and perform such other employment."

The membership card of the respondent is endorsed "Sungravure Ltd - Membership No. 80069 - Classification M/A 26-A Photogravure Camera OP - Financial Position . . . ". Presumably the expression "OP" means "operative".

It is implied in r.58 that a person competent to operate in a section other than in respect of which his membership was obtained is entitled to work in that other section if he satisfies the Board of Management of his competence to work therein. It is not suggested in this case that the Board of Management was not satisfied of the competence of the respondent to work as a lithographic printer. The claim of the appellants is that competent or incompetent, he may not seek or take employment as a lithographic printer or indeed any employment without first having obtained approval of the Union in respect thereof. Accordingly, r.58, even if valid, does not touch the issues in this appeal.

It is clear therefore, that the grant of approval in respect of the issue of an OK card in respect of any proposed employment is in the unfettered discretion of the Union, or in practical terms the executive of the Branch. It follows that the policy enables the executive to decide whether a member shall ever be employed in an occupation upon which his eligibility to membership of the Union depends. It enables the Executive to decide what employer he may work for and whether he may take promotion. It enables the Union to decide, as between various members seeking employment in any existing vacancy, which member or members is or are to be employed. The implications of this policy in conditions of full employment go to the fundamental freedom to work where work can be found. In conditions when work is hard to find the consequences to individual members of the exercise of the discretionary function of the Executive and the Branch Officers could be most serious. Whatever may be said as to the possible benefits of an orderly system of work sharing or allocation according to stated rules or principles, it is difficult to justify a system according to the policy in question where the Executive is in a position to prefer one member or group of members against another in the matter of permitting them to work here, or there, or not at all. There is of course no discernible hint in the rules that in the pursuit of the objectives of the organization the governing bodies of the Union may adopt policies under which, in the matter of employment, those bodies may favour one member of group of members against another or prevent members from seeking or taking employment or promotion in employment. And there is no implication to that effect unless it be found in the generality of the terms in which the objectives are expressed.

The observations of Fullagar J. in Williams v. Hursev (1960) 103 CLR p.30 at p.67 et seq speak of the capacity of an organization registered under the Act to act as a legal personality with powers which are defined indirectly by that Act and directly by the rules of the organization which derive their authority from the Act. He said:-

"If the rules on their true construction empower the organization . . . to make a levy for the assistance of a political party then that power must be regarded as derived from the Act. . . . The Act and the regulations expressly permit the rules of the organization to provide for "any other matter not contrary to law". Whatever may be the scope of the words "not contrary to law" it is clear that it is not and never was contrary to law or forbidden by law that any person should engage in political activities. There is of course one other limitation on the powers which a registered organization may take to itself by its rules and that is that nothing is permissible which would tend to frustrate the policy and main purpose of the Act. Compare Australian Workers Union v. Coles (1917) VLR 322 at pp.336 and 337. But that limitation is not transgressed by a rule which gives a power to use funds for political purposes. The application of funds for the support of a political party, is . . . a traditionally accepted means of "furthering or protecting the interests" of members of an association of workers or employers".

Speaking of organizations registered under the Act his Honour said at p.68:-

"It has been accepted ever since 1908 that the Commonwealth may create such corporations and if it can create them, it must be able to define their powers. They must be associations of employees or employers formed for the purpose of protecting and advancing the interests of their members, and no reason exists for saying that they cannot be empowered to do anything "not contrary to law" which is calculated to protect or advance those interests - to engage in propaganda by means of a newspaper, to contribute to the funds of a political party favourable to those interests.".

By virtue of reg.115 (1) (b) of the Conciliation and Arbitration Regulations it was a condition of registration of the organization, when application was made for registration, that it was an association for furthering and protecting the interests of its members. There can be no doubt that that same purpose remained an essential element in the nature of the organization when, on registration, it became a corporation under the Act. Thus to be valid according to the Act and the regulations, as indicated by Fullagar J. in Williams v. Hursev (supra) in the foregoing passages, the adoption and implementation of the policy in question must have the quality of an activity of Branch management for furthering or protecting the interests of the members of the organization considered as an organization of employees in the categories of employment relevant to eligibility for membership thereof. Whether it has that quality is the central issue in this case.

Also, according to those observations of Fullagar J. in Williams v. Hursev (supra), it must be asked whether the policy is contrary to law. Regulation 115(1)(g) authorises the organization to make rules providing for any matter not specified in reg.115(1)(d) which is not contrary to law. It is not suggested that an activity contrary to law is tolerable merely because it is carried out pursuant to a policy rather than a rule. But of course no policy may be adopted unless it is authorised by a rule. And in this case the authorising rule is said to be the management rule. If that rule permitted the management committee or any other body of the Union to adopt and implement a policy contrary to law or contrary to a law (see s.140(1)(a) of the Act) it would to that extent contravene s.140(1) of the Act and be void: see Menzies J. in Shearer's Case (supra) at pp. 387 and 388. And it would be void to the extent mentioned from the time when it was adopted as a rule of the organization: see Shearer's Case (supra) and Cook v. Crawford (supra). The policy is one which operates in restraint of trade, and in my view, in unreasonable restraint of trade, but it would seem that it ought not merely for that reason to be regarded as contrary to law or contrary to a law. As was said in Bucklev v. Tuttv (1971) 135 CLR at p.380, "the law treats unreasonable restraints as unenforceable because it is contrary to the public welfare that a man should unreasonably be prevented from earning his living in whatever lawful way he chooses. . . ." It was said by St. John J. in Clark v. Printing & Kindred industries Union (supra) at p.63:-

"If 'the law' and 'a law' are distinct in meaning, apart from the former being used generically and the latter specifically, it is hard to see the distinction. To my experience the words 'contrary to a law' in a statute are peculiar to this Act. But at least 'contrary to a law' imports proscription or prohibition of conduct in the law referred to by the use of the words 'contrary to'. It does not, readily at least, fall into use to describe a rule of law which in effect says that the law does not prevent one engaging in certain conduct but will not assist one if one does so engage. In this respect the doctrine of restraint of trade in trade union rules, was before in the Act in the same category as the 'gentleman's agreement' in which the parties have no intention of entering into a legal contractual relationship as in the classic case of Balfour v. Balfour (1919) 2 KB 571. Rather than being 'contrary to law' the contract in restraint of trade is within the law in the sense that it is not proscribed.

Nevertheless the Judges in Clark's Case were of the opinion that rules 7 and 10 imposed conditions on members which were unreasonable and oppressive (Dunphy J.); unreasonable dictatorial and oppressive (Joske J.); or oppressive or unjust (St. John J.). Rules 7 and 10 therefore contravened the provisions of s.140(1)(c) of the Act. It follows that if the management rule read in conjunction with the objects of the Union would on its proper construction authorise the adoption and implementation of a policy which operated in the same way and to the same effect as rules 7 and 10 then that rule would be, to that extent, in contravention of s.140(1)(c) of the Act.

It is my view that the management rule is not to be so construed. As has been indicated, the rules of the organization do not, in specific terms, authorize or forbid the adoption and implementation of the policy in question. But they do clothe the management bodies of the Union, including the Branch Executive, with management powers. Federal r.50 provides:-

"(1) The powers and duties of a Branch shall be to take such steps as may be necessary to carry out the rules and objects of the Union as well as the rules and objects of the Branch. . . . Such powers and duties may be exercised by the Board of Management of a Branch subject to such control by the Branch members in General meeting (or in aggregate meeting, annual conferences or special conference as the Rules of the Branch may provide in lieu of a general meeting), or otherwise, as the members of the Branch may provide. . . ."

In the construction of this rule in conjunction with the objects of the Union as set forth in r.3 it is relevant to have regard to the nature of the organization. It is one of those organizations referred to by Fullagar J. in Williams v. Hursev (supra) which is formed for the furtherance and protection of the interests of the members. It is also an organization of persons whose reason for being members is that they are employees in one of the relevant occupations. Their status of employee is the product of the exercise of their individual rights to seek and take employment where it is available. It is their status as working employees which provides point and interest to their membership. At first sight, therefore, the notion that membership will involve a surrender of the right to seek and take employment is somewhat startling. The notion that management is authorised to require such a surrender depends upon acceptance, totally, of the view that it is for management to decide what is best for the furtherance and protection of the members and to implement that view, even if what is so decided may seriously interfere with the ordinary right of persons to earn a living in their chosen occupation. The question is whether r.50 should be construed as producing this state of affairs.

It is clear that there must be some implied limitation in the power of management. It cannot be that any restriction on the right of members in relation to their search and acceptance of employment, which management may see fit to impose on members or some members, on the ground that in the view of management it is calculated to further and protect the interests of the members, is within the management power conferred by r.50. The adoption by management of a policy that no member should work in the industry during the first ten years of his membership could hardly be accepted as being within the management power. Whatever limitation there is, however, must be found in the true construction of the relevant rule. To find the true construction regard must be had to the nature of the organization as a corporation created by law for special purposes and subject to special conditions: see s.132 of the Act and req.115.

In the construction of the rules of the organization it is permissible to take into account that there is a consensual element in the relationship between a member of a registered organization and the organization. In Gordon v. Carroll (1975) 27 FLR p.129 at pp.155 and 156, (1975) 6 ALR p.579 at pp.602 and 603 the Australian Industrial Court (Smithers, Woodward and St. John JJ.) made the following observations:-

"That the rules have a consensual basis before registration of an organization is perfectly clear, . . . it appears to us that the rules retain a consensual element after registration, even though the character of the organization may have changed from an unincorporated association to a corporation by the event of registration. It also seems clear that s.141 is designed to supplement the member's power of enforcement under the common law and therefore, if the requisite proprietary interest resided in the member, proceedings at law or in equity would be available to him after registration. Dixon J. seems to have had this in mind in Ex parte Barrett, supra, where (1945) 70 CLR at 164, he said: "The attack upon the section depends upon the view that it undertakes to confer upon the Arbitration Court jurisdiction to enforce the rights of members under the rules of an organization considered as a contract inter socios, a contract inter socios deriving its obligatory force either from the common law governing voluntary associations, as modified by such legislation as the English Trade Union Act 1871. . . . . or from registration under State legislation of that kind."

. . .

Nowhere in the decided cases is there any suggestion to the contrary of the view that the rules, at least for purposes of construction, whatever the position may be as to enforceability, should be regarded as a contract between members. In Hay v. Australian Workers Union 53 CAR 108, O'Mara J. in an application under s.58E of the Act, as it was in 1944, examined the rules of a respondent organization to discover whether there was anything which "either expressly or by implication prohibits or invalidates the action which was taken with respect to the nominations". This approach has not been dissented from in any decision of this court and there have been many cases, for example, in which requirements of natural justice have been implied into rules. However, it does not appear that the approach taken by O'Mara J. or any similar approach, has been the subject of attention by the High Court. Nevertheless, we are clearly of the view that such implied terms can arise in proper circumstances and, if they do, implied terms can be the subject of directions pursuant to s.141.

In considering whether terms should be implied we follow the test laid down in Heimann v. Commonwealth (1938) 38 SR (NSW) 691."

In the judgment appealed against the learned judge referred to a submission made to him on behalf of the applicant, that from the fact that the Australian Industrial Court had declared that rules 7 and 10 contravened s.140(1) of the Act, there should be implied in the rules of the Union a provision that the members and officers of the Branch would not engage in conduct giving effect to the OK card system. The observations quoted above from Gordon v. Carroll (supra) were relied on in support of this submission. His Honour took the view that it was doubtful that that case was authority for the proposition asserted. Clearly that doubt was well founded. His Honour added, however, in general terms, that there were great difficulties in accepting the concept of implied rules for the purpose of orders and directions being made and given under s.141 of the Act. But it would seem that this general observation is not to be understood as an indication that the true meaning of rules is not to be gathered from the literal meaning of the words used and what is seen to be implicit in them having regard to relevant circumstances. Indeed in discussing the powers of the members to adopt resolutions instituting the policy in issue in this case, his Honour said:-

"In the present case the power of the members of the Branch to adopt the resolution as determining policy, must be found in the rules of the Union or of the Branch. The power may arise from express rules or by implication."

As pointed out by Beaumont J. in Jess v. Scott & Ors (No. 1 of 1984, 2 March 1984) unreported, the problem is always to ascertain the meaning of rules upon their true construction. As to the general observation of the learned trial judge, he said:-

"These remarks were made obiter but, in any event, if by these observations his Honour meant no more than that a remedy under s.141 is not available where the source of the right sought to be enforced is the general law as distinct from the operation of the rules on their true construction, I would respectfully agree. In particular, I would agree that s.141 cannot be invoked in aid of an equity which exists independently of the operation of the rules on their true construction.".

In the proceedings before Beaumont J. in which those comments were made the applicant sought to restrain the expenditure of Union funds for the support and candidature of one member in an election to office in the Union. It was objected by the respondent that there was no rule restraining such expenditure. His Honour said:-

"In my opinion, these rules, as a matter of construction, should be construed to mean that there is at least implicit in them the usual obligation that all such powers shall be exercised bona fide for the benefit and in the interests of union members as a whole. In my view, such an obligation is derived from the meaning of the rules as a matter of their true construction: it is not derived from and does not have its source in any independent equity or any other right which may exist under the general law."

In support of the view that the true construction of a rule is something distinct from its literal meaning his Honour referred to Nqurli Ltd. v. McCann (1953) 90 CLR p.425 at p.438 and Vatcher v. Paull (1915) A.C. 372 at p.378.

The question whether there is a limitation upon the powers of management of the Union pursuant to which the adoption and implementation of the policy the subject of this case would be beyond those powers, may be approached by two avenues. First by enquiring what upon their true construction the rules provide. Secondly, by enquiring whether a term forbidding the adoption and implementation of the policy is to be implied. It is convenient to pursue the second avenue first. It is pointed out by Mason J., with whom Stephen J. agreed, in Codelfa Constructions Pty. Ltd. v. State Rail Authority of New South Wales (1981) 56 ALJR 459 at p.464 (Codelfa) that the evolution of the law as it affects the construction of contracts is that it centres upon the presumed, rather than the actual intention of the parties. His Honour observed that once it is accepted, as his Honour does accept, that in the construction of the contract account is taken of the presumed intention of the parties, it naturally follows that account should also be taken of their presumed intention when the Court is called upon to decide whether a term is to be implied. He pointed out that the enquiry, in accordance with this principle, as to the existence of an implied term, provided a less restrictive approach than that propounded by older authorities exemplified for instance by the statement of Jordan C.J. in Heimann v. The Commonwealth of Australia (1938) 38 SR NSW 691 at 695, which confines recourse to the intention manifested by the express terms of the contract. If, therefore, one were to treat the construction of the rules, as if they were but the terms of a contract, it would at least be permissible to apply the test propounded by Mackinnon J. in Shirlaw v. Southern Foundaries (1926) Ltd. (1939) 2 KB 206, that the implied term, if it exists, is something "so obvious that it goes without saying . . . ". Compare the remarks of Mason J. in Codelfa (supra) at p.461. It was pointed out by Mason J. at p.462 of Codelfa (supra) that for the purpose of construing the terms of a contract, although evidence of prior negotiations and of the parties intentions is not admissible, evidence restricted to the factual background known to the parties at or before the date of the contract, including evidence of the "genesis" and objectively of the "aim" of the transaction is admissible. Those observations in association with those of Lord Wilberforce in Liverpool City Council v. Irwin (1977) AC 239 at 254, as to the necessity of reading into the contract there under consideration, that which "the nature of the contract itself implicitly requires", would appear to supply the test as to the existence or otherwise of an implication in the rules of the Union that the powers of management were subject to a limitation excluding from such powers the adoption and implementation of the policy the subject of this case. To assess the presumed intention of the parties, regard would be necessary to the genesis and objectively, the aim of the association of members with each other in the Union. Relevant factors would be that promotion and protection of the interests of persons as employees in a relevant category of employment was an important purpose of the organization and of members for joining the Union and that the Union offered the benefits of combined action by members through it as the representative of all of them, that all adult members paid the same membership fees, that great flexibility had to be conferred upon management in the choice of the means by which the objects of the Union might be pursued, but also that every object specified in the rules was but a facet of the fundamental object, namely the furtherance and protection of the interests of members.

In the light of the above a claim by the Union of the right, flowing from the powers of management in the rules, to forbid its members even to look for work, or to take employment, without the approval of the Union, would be seen to be incompatible with the nature of the members mutual association. Such incompatibility would be confirmed by the realization that it was contended that the Union might discriminate in the matter of giving approval to work as between member and member, and as between groups of members, and that the grant or approval of such discrimination would proceed, not according to specified principles, but according to discretion of management. In my view the inevitable conclusion would be that it goes without saying that the powers of management were subject to a limitation which would exclude the adoption and implementation of the policy under consideration in this case.

But the problem in hand would seem rather to be one of construction of the terms used as ascertained by what has been referred to as the orthodox exercise, than to be solved by an enquiry as to the presence or otherwise of an implied term. One turns therefore so to construe the powers of management in the rules. In that exercise what is to be identified is the presumed intention of the parties by reference to its express terms and the nature and quality of the transaction. It is appropriate to have regard to the nature of the organization as an entity the function of which is to further and protect the interests of the members. To my mind this is the fundamental consideration going to the width of the powers of management. The nature of the organization so expressed is the consequence of what would, in any event, be assumed in relation to a trade union, but it is impressed on the organization by s.132 of the Act and reg.115(1)(b). Undoubtedly the members contemplated by the condition expressed in reg.115(1)(b) are all the members. The prevention of a member or members from seeking or taking employment available to them is an act inherently hostile to their interests. Such hostility is incompatible with the furtherance and protection of the interests of those members, and so, of the members as such. The powers of management on their proper construction do not extend to the adoption and implementation of the policy under consideration in this appeal.

In The Queen v. The Australian Broadcasting Tribunal & Ors (1980) 144 CLR p.45 there was a question of construction of the powers of a statutory body upon which was conferred an unqualified statutory discretion. It was held that the discretion so conferred was unconfined unless it was affected by limitations to be derived from the context, scope and purpose of the statute.": see the unanimous observations of the Court at p.50. Compare the observations of Dixon J., as he then was, in Water Conservation & Irrigation Commission NSW v. Browning (1947) 74 CLR p.492 at p.505. In these cases no limitation relevant to the exercise of discretion there in question was found. But in the instant case consideration of the context, scope and purpose of the rules, and of the organization itself, appear to me to provide a clear limitation. The object, of the organisation to which all the objects expressed in r.3 of its rules are directed, is the furtherance and protection of the interests of the members. As indicated above, the adoption and implementation of the policy is incompatible with this object. And of course for this purpose it matters not whether the source of the policy is to be found in the decision of a management body of the Union, or a branch thereof, or a mass meeting of branch members. None may travel outside the scope and purpose of the organization.

It is of course apparent that if the rules by which powers of management are conferred on any governing body of the Union, did, on their proper construction, authorize such body to adopt and implement the policy, under discussion in this case, those rules would, to that extent contravene the provisions of s.140(1) of the Act in the same way and for the same reasons as rules 7 and 10 were held to contravene the provisions of that section in Clarke s Case supra.

It remains to consider whether, if the adoption and implementation of the relevant policy cannot be supported as an exercise in management pursuant to r.50 or any other rule, it can be supported as an exercise in persuasion. On this basis it would have to be inferred that the Branch is to be understood as inviting members To refrain from seeking or making employment without obtaining approval in accordance with the OK card system, on the basis that there was no obligation under the rules or otherwise to accept the invitation, and that there would be no sanction if they ignored the OK card system. No doubt Mr. Ryan turned to the notion that the situation might be as indicated to avoid the difficulty inherent in an OK card system imposed upon the membership by a Branch which intended to see that members complied with it and were subjected to sanctions of some kind if they did not.

The evidence is crystal clear that this is exactly what was involved in the adoption by the Branch of the OK card policy. Mr. Ryan acknowledged that there had been instances in which members had been "cited" before the Rules Enforcement Committee of the Union, but, he contended that such proceedings had been isolated and irregular. Nevertheless the policy is the creature of the Branch, its content is ultimately to be found in the resolutions of the Branch mass meeting and of the Branch Executive. It is to be observed that Branch r.51 provides as follows:-

"(1) The Executive or a General Meeting may suspend, fine, expel, reprimand, rebuke, censure or in any other way discipline any member (not being an officer or office bearer of the Union or the Branch proved to the satisfaction of the meeting concerned to have been guilty of:

. . .

(h) Refusing to abide by and give effect to such resolutions as may from time to time be made by the Executive or the Council of the Union or the Branch Executive or by members in general meeting assembled, as the case may be.

It could hardly be regarded as irregular, to use Mr. Ryan's term, to take action under this rule. The minutes of the Executive Meeting of 7 December 1983 reveal repeated citations of one Kearney for canvassing and that he was fined $5 for a 1977 canvass, $10 for a 1981 canvass and starting without an OK card, $30 for non-appearance before the Rules Enforcement Committee, and $10 for non-appearance at the October meeting of the Rules Enforcement Committee. Other instances of fines for non-observance of the policy are also recorded. It appears that the respondents contended at the hearing before Northrop J. that the enforcement of the OK card policy or system was justified by Branch r.51(1)(h). The evidence of Mr. Cooke, the Assistant Secretary of the NSW Branch of the Union, is unequivocal as the following passage shows:-

"MR. HOLMES: Were you involved in the citation of persons who breached the rules in relation to OK cards before 1977? --- Yes.

From 1974 when you commenced as branch officer in charge of employment up until 1979 when you ceased as branch officer in charge of employment your practice on citation in relation to OK cards was the same? --- Yes.

In fact in real terms the Australian Industrial Court decision meant nothing to the OK card system? --- I think it meant a lot from a personal point of view but the wishes of the membership were that the OK card'system should prevail and a meeting of the members decided the policy should remain, and I carried out the policy from that time on.

The short answer to my question is, yes, there has been no change? --- No, there has been no change.

HIS HONOUR: Yes or no. You said yes, he said - no, there has been no change.

MR HOLMES: Well, in real terms there has been no change as a result of the Australian Industrial Court decision, has there? --- No.

In relation to somebody who has gained employment without an OK card, it has been the practice of the union since 1977 to take action against them for breach of union policy? --- Yes.

That practice would lead to them being called before the rules enforcement committee? --- Yes.

And that practice could lead to a fine being recommended by the rules enforcement committee? --- Yes.

And that practice could lead to the executive of the New South Wales branch affirming that fine? --- Yes.

And requiring a member to pay money for starting work without an OK card?--- Yes.

In the practical life of a trade union there are more ways than one of enforcing a policy or of persuading members to comply therewith. This was exemplified in the actions of Mr. Henderson, an organizer of the Union, in relation to the failure of the respondent, Mr. Coggan and Mr. Keen, who took employment with Associated Lithoscans without obtaining approval in accordance with the OK card policy. Henderson regarded it as his duty to administer the OK card policy. He called at Associated Lithoscans and addressed the Union members, being fellow employees of the respondent and Coggan and Keen. He explained to them that they were in breach of policy for working with the respondent and Coggan and Keen and that they could be charged with an offence under the Union rules and possibly fined and that he would be bringing the matter before the Committee of Management. He said in evidence in this case, that it was his objective to bring about the dismissal of the respondent from his employment. In the event the fellow employees did call upon Associated Lithoscans to dismiss the respondent and Coggan and Keen. It was explained to these members by Henderson that he expected their fellow employees to get them the sack, but it would be better if they resigned. This was part of the activity of the Union which was the subject of the proceedings in the Supreme Court of New South Wales mentioned at an early part of these reasons. That Union activity failed in its objective, but it illustrates the kind of pressure which might be put upon members without the will or the resources to seek protection at law. Mr. Henderson gave evidence as follows:-

MR HOLMES: It was clear when you went on Tuesday Mr. Dugmore had no OK card? --- Yes.

It was clear Mr. Coggan and Mr. Keen had no OK card? --- That is correct.

It was clear that union members with OK cards had been working alongside them since the time they commenced the year before? --- That is right.

It is clear it is part of the OK card policy that union members are obliged to inform the union if somebody starts work without an OK card? --- That is correct.

So when you arrived on the Tuesday there was a breach of policy? --- That is correct.

And that it had taken place --- That is correct.

That breach had been in existence for some months? --- That is right.

And you had no doubt about that whatsoever? --- No.

You had no doubts that those members, other than Mr. Keen and Coggan and Dugmore, had breached the union's OK card policy? --- Yes.

In those cases it would be usual for you to cite them? --- Yes.

It would be usual for you to say they would have to appear before a meeting of the executive? --- Yes.

That is what happened on this occasion? --- No, it did not happen. I did not cite them.

Do you deny using the word cite at all? --- No.

HIS HONOUR: The question is a bit ambiguous.

MR. HOLMES: Do you deny using the word cite? --- Or could cite. You said they could be cited ---

HIS HONOUR: On this occasion did you say words to that effect? --- Yes. Certainly I explained they were in breach of policy and they could be cited.

In other words charged with an offence and brought up before the appropriate committee? --- Yes.

MR HOLMES: And possibly fined? --- Yes.

If you like you then expected the members at Associated Lithoscans to justify their actions? --- What do you mean by justify?

It was up to them to explain that they had failed to notify the union? --- No, not for me if I had cited them. It was up to them to make that in front of the committee.

. . .

MR HOLMES: It is part of your job as an organizer

HIS HONOUR: To ensure ---

MR HOLMES: --- that the policies are abided by? --- Correct.

If you are aware of any breach, you report that to the branch? --- Yes.

If it is a clear breach you cite the members to appear before the branch? --- I may not, but I am involved. On the other hand I could, but it might not be me personally.

Were you an organiser before 1977? --- I think so.

Did you enforce the rules before 1977? --- I take up this word enforce.

If I delete the word enforce, you administer OK card rules in exactly the same way as you administer the OK card policy? --- Yes.

It is apparent therefore that the submission that the adoption of the policy should be seen to be but an invitation to members to participate in a self denying ordinance, according to its terms, they being free to participate or not to participate, and without fear of punishment if they did not, lacks reality and just cannot be accepted.

Its only possible justification would be that its adoption was authorised by the rules. In the light of the foregoing it cannot be supported by reference to the rules. Accordingly the appeal should be dismissed.

JUDGE2

This is an appeal against the judgment of a single Judge of the Court (Northrop J.) in which the following orders were made under s. 141 of the Conciliation and Arbitration Act 1904 (the Act) :-

"1. The respondents and each of them perform and observe the rules of the Printing and Kindred Industries Union by treating the resolution passed at the mass meeting of members of the New South Wales branch of the union on 23 August 1977 as null, void and of no effect to the extent that the said rresolution instructs them to maintain the strictest adherence to continuing the use and issue of the OK card pursuant to the OK card system.

2. The respondents and each of them perform and observe the rules of the Printing and Kindred Industries Union by not taking any action with the object or effect of enforcing the policy of the OK card system as instructed by the mass meeting of members of the New South Wales branch on 23 August 1977.

3. Rule to show cause otherwise be discharged."

The "OK card system" referred to in those orders was in 1976 the subject of certain rules of the New South Wales branch of the Printing and Kindred Industries Union (the union). The Australian Industrial Court in Clark v Printing and Kindred Industries Union and Others (1976) 30 F.L.R. 39 held that rules 7 and 10 of those Branch rules contravened s. 140(1)(c) of the Act - per Dunphy J. at p. 48 and Joske J. at p. 59; St John J. held (at p. 64) "that the whole of pars. (g) and (i) of r. 7 and the whole of r. 10 contravene sub-s. (1) of s. 140".

The full text of branch rules 7 and 10 were set out by Joske J. at pages 54-57 of the report. It is sufficient for present purposes to quote from that report the following parts of those rules:-

"7. Admission of Members:

(a)(i) Any person working in New South Wales desirous of becoming a member of the Printing and Kindred Industries Union, shall forward, or cause to be forwarded, to the secretary of the branch an application for membership in duplicate.

.....

(iii) The applicant shall sign a declaration agreeing to abide by the rules of the union and the branch and any amendments thereto made in manner provided by the rules.

.....

(g) A member having gained admission to the branch through one section of the industry shall not be entitled to work in any other section without having obtained permission from the executive in accordance with these rules.

(h) Any person gaining admission by false representations or who is proved to have been guilty of any violation of the rules or policies of the branch shall be dealt with by the executive in accordance with these rules.

(i) Any member wishing to accept employment in any section of the trade other than that in which he is registered in the branch records shall first apply to the executive for approval. If the member's application is refused and he accepts employment outside such section he shall render himself ineligible to continue his membership of the union.

.....

10. O.K. Card:

(1) An O.K. card is a document in the form prescribed by cl. 6 of this rule and issued by the branch to a financial member attached to the branch which member is seeking employment in the industry within the area of the branch or who desires to transfer from his employer to another employer within the area of the branch.

(2) An O.K. card is not a clearance certificate or a transfer as specified in r. 11.

(3) An O.K. card issued by the branch is valid only in the area in which the branch has jurisdiction and for the specific purpose for which the O.K. card has been issued.

(4) A member who falsely obtains an O.K. card or having been issued with such a card alters it may be charged with a breach of r. 51.

(5) (a) Any member who, having obtained a job or position from any employer, shall commence work before obtaining an O.K. card may, after full inquiry and careful consideration by the executive, be fined a sum not exceeding ten dollars ($10) for each such offence.

(b) Any member leaving one employer and commencing work for another employer without first obtaining an O.K. card may, after full inquiry and careful consideration by the executive, be fined a sum not exceeding ten dollars ($10) for each such offence.

(c) Any member of the branch in the employ of an employer who fails to ask another member or non-member about to start work in his department in his place of employment to produce to him the O.K. card of the branch, or on the failure of such other member or non-member to obtain and produce to him such O.K. card fails to notify such failure to the secretary-treasurer within twelve hours thereafter, may, after full inquiry and careful consideration by the executive, be fined a sum not exceeding ten dollars ($10) for each such offence.

(d) The secretary-treasurer shall forthwith supply to any member applying for the same at the registered office of the branch an O.K. card in the form set out hereunder, provided that such member at the time of such application is a financial member of the branch.

(e) If the secretary-treasurer shall believe that a breach of this rule or any part thereof may have been committed by any member, he shall cause a notice in writing to be sent to such member through the post office addressed to such member at his last known address, requiring such member to attend before the executive at a meeting thereof to be held not earlier than ten (10) days after the date of posting of the said notice. Such notice shall briefly state which of the matters of complaint set out of pars. (a), (b) or (c) of this rule is alleged against such member. Whether or not such member duly appears before the executive as directed by the said notice the executive shall at the time appointed by such notice for such member to appear duly inquire into and hear and determine the said matter, and if the executive shall find such member guilty, such member may be fined by it as hereinbefore provided.

(6) The O.K. card shall be in the following form:

"PRINTING AND KINDRED INDUSTRIES UNION

NEW SOUTH WALES BRANCH

O.K. CARD

The bearer of this card ........ ........ ........ ........ ...

Roll No. ........ ...... is a financial member of the Union and is entitled to all the privileges of a financial member.

Union Classification ........ ........ ........ ........ ......

Proposed Employer ........ ........ ........ ........ ......

........ ........ ........ ........ ........ .. Issuing Officer

........ ........ ........ ........ ........ ... Date of Issue

This card is not transferable"

In holding that those rules contravened s. 140(1)(c) of the Act Joske J. (at pp. 58-9) said:-

"Every man has a right to work and his right to work is not to be unreasonably interfered with or obstructed in any way by any person, body or organization in the absence of statutory authority for the interference or obstruction.

Rules 7 and 10 undoubtedly, in my opinion, have the effect of rest raining a member of the organization from carrying his calling and, indeed, from engaging upon his calling. It is said for the organization that there is no obstruction because the secretary is bound to supply the O.K. card referred to in the rules. It is pointed out in reply that he can set out any classification on the card which he in his absolute discretion determines and it may not be the classification which relates to the job the member is seeking. However, whilst agreeing that this is a fatal objection to the validity of the rules and makes them unreasonable and oppressive, I am of opinion that there is an even more vital objection. The insistence that there shall be an O.K. card before work is permitted is an obstruction or interference with a right to carry out a member's calling and it is an impediment to his right to obtain a job. No statutory justification exists for this requirement. It is unreasonable, dictatorial and oppressive."

Dunphy J. (at p. 48) expressed similar views and quoted the following passage from Buckley v. Tutty (1971) 125 C.L.R. at p. 380:-

"... it is contrary to the public welfare that a man should unreasonably be prevented from earning his living in whatever lawful way he chooses and that the public should unreasonably be deprived of the services of a man prepared to engage in employment."

Since that decision branch rules 7 and 10 have been deletewd and a new rule 7 inserted which said that "The provisions of Union Rule 5, Admission of Members, are hereby incorporated in these Rules."

Federal rule 57 is in the following terms:-

"Union 57. - O.K. Card.

(1) A Branch shall make provision in its Rules for the issue of the O.K. Card provided such Branch Rules do not conflict with the Rules and By-Laws of the Union.

(2) An O.K. Card is a document in the form prescribed by Clause (6) of this Rule and issued by a Branch to a financial member attached to that Branch which member is seeking employment in the Industry within the area of the Branch or who desires to transfer from his employer to another employer within the area of the Branch.

(3) An O.K. Card is not a Clearance Certificate or a Transfer as specified in Rule 6.

(4) An O.K. Card issued by a Branch is valid only in the area in which the Branch has jurisdiction and for the specific purpose for which the O.K. Card has been issued.

(5) A member who falsely obtains an O.K. Card or having been issued with such a Card alters it may be charged with a breach of paragraph (c) of Clause (3) of Rule 47.

(6) The O.K. Card shall be in the following form:-

Printing and Kindred Industries Union

........ ........ ........ ... Branch

O.K. CARD

The bearer of this Card ....... (Name) ........ ....... Roll No. ........ ........ is a financial member of the Union and is entitled to all the privileges of a financial member.

Union Classification ........ ........ ........ ........

Proposed Employer ...... (Name and Address) ........ .

........ ........ ...... Issuing Officer

........ ........ ...... Date of Issue

This Card is not transferable."

Mr D. Ryan, of Queen's Counsel, who appeared with Mr J.W. Shaw and Mr S. Rothman for the present appellants, did not ask the Court to review the decision in Clark's case and accepted that the branch rules there under consideration contravened s. 140 of the Act. He accepted that the O.K. card policy could not be enshrined in rules in terms of former rule 7 and rule 10 and that the policy is incapable of being enforced by imposing any legal sanction for its breach.

He submitted that the resolution passed at the mass meeting of members of the New South Wales branch on 23 August 1977 (the resolution to which the orders challenged in this appeal refer) was "no more than a declaration of policy, incapable of legal enforcement... of no effect ... (and) to say also it is null and void adds nothing to that truism". He submitted that the learned trial Judge had taken the view that "the respondents were purporting to give legal effect ... to something which could have no legal effect" and that, as the respondents were not purporting to give legal effect to the policy there was no foundation for the order.

Mr Ryan said that it may have been open to the learned trial Judge to make an order in the terms of the first order under appeal if it were amended to read as follows:-

"the respondents and each of them perform and observe the rules of the P.K.I.U. by treating the resolution passed at the mass meeting of members of the New South Wales branch of the union on 23 August 1977 as null, void and of no legal effect by refraining from enforcing or seeking to enforce or applying any sanction or penalty against any member in purported pursuance of the rules of the union for any alleged failure to adhere to the union's policy in respect of the use or issue of an O.K. card."

He made it clear that the appellants did not submit to such an order but it is convenient to refer to it in these reasons as the appellants' alternative order. Mr Ryan explained the reason for the inclusion in the alternative order of the words "in purported pursuance of the rules of the union", saying that the appellants conceded that an order under section 141 will go where the organization goes beyond advocacy of a policy and purports to apply sanctions under its rules in ways which are not permitted.

As to the second order under appeal, Mr Ryan submitted that it was not authorized by s. 141 of the Act to the extent that its effect is to restrain advocacy or persuasion or recommendation with the object of furthering the O.K. card policy; further, that, if it only restrains the taking of action by enforcing, through the imposition of penalties under the rules, the O.K. card policy, then it adds nothing to the appellants' alternative order. He submitted that s. 141 did not authorize the making of an order:-

"... to restrain the advocacy or implementation short of enforcement by rules of a policy. That we submit is what the second part of his Honour's order purports to do ... we accept that where the rules provide a code as it were for the application of specific sanctions then it is not open to the organization to apply those sanctions for offences other than those specified in the rules."

The appellants' submission concedes that, where the rules provide specific sanctions for specified conduct, then those sanctions can not be imposed upon members for conduct which does not fall within the conduct so specified. As Mr Ryan said "One starts with the assumption that there is no power to affect adversely the rights or obligations of a member unless it is specifically conferred." He said that the answer to the question whether the appellants' alternative order would leave it open to the respondents to condemn or reprimand the applicants for failing to comply with the union's O.K. card policy "would depend on whether the power to reprimand or condemn was conferred by the rules or not. If it were conferred by the rules then its exercise would be delimited by the rules, that was why we were concerned to include the words, 'pursuant to the rules'" (in the appellants' alternative order).

Branch rule 51 expressly confers a power to reprimand or censure a member for refusing to abide by resolutions of certain bodies. It includes the following:-

"51. Violation of Rules

(1) The Executive or a General Meeting may suspend, fine, expel, reprimand, rebuke, censure or in any other way discipline any member (not being an officer or office-bearer of the Union or the Branch) proved to the satisfaction of the meeting concerned to have been guilty of:

(a) Dereliction of any duty imposed by the rules or by refusing to carry out any direction given to him in accordance with the rules by any officer or body constituted under the rules;

.....

(g) Refusing to abide by the Rules of the Union or Branch;

(h) Refusing to abide by and give effect to such resolutions as may from time to time be made by the Executive or the Council of the Union or the Branch Executive or by members in general meeting assembled, as the case may be."

Mr Ryan submitted that:-

"... if a penalty were sought to be applied by invocation of rule 51(h) that would contravene an order of the kind postulated at page 67 of the transcript (i.e. the appellants' altrnative order) ... what would ot be caught up by such an order would perhaps be informal criticism of members .. refusing to adhere to the policy"

He contended that there is a very real difference between formal action under Branch rule 51 and informal criticism such as an "organizer or a job delegate saying to a man, you have failed to adhere to the policy and ... we consider you acted contrary to the interests of the union".

Mr Ryan conceded that the appellants' alternative order would be breached if the respondent purported to use branch rule 51 against a member for a breach of the O.K. card policy. He also conceded that such an order would not permit the respondents to reprimand or censure a member for a breach of the O.K. card policy, even if, in taking that action, they did not purport to act under branch rule 51(1)(h) e.g. because they considered that the resolution which the member refused to abide by (such as that of 23 August, 1977) was a resolution of "a mass meeting of members of the Branch" and was not a resolution "by members in general meeting assembled" within the meaning of Branch rule 51(1)(h). He said that if such conduct by the respondents occurred then, even though it was not taken under branch rule 51(1(h), it would nonetheless breach the appellants' alternative order because it is conduct of the same genus as that falling within rule 51 and is impliedly excluded because branch rule 51(1) represents a code dealing with that area.

However, Mr Ryan's concession was very plainly based upon, and limited by, the words "reprimand" and "censure" appearing in branch rule 51(1). In his submission there would be no breach of the appellants' alternative order if members or officers of the union were to "cite him to attend a meeting, so exercising powers which fall within that context, were to say to him he has disregarded our policy or flouted our policy, he therefore has not acted as an honourable member of the union and we accordingly make clear our disapprobation of that conduct". The basis of that submission is that such actions would merely "informal criticism" and would not constitute a reprimand or censure within Branch rule 51(1); the answer to the question whether such actions would breach the appellants' alternative order would depend on "... the degree of formality that adheres in the words censure, reprimand and so on, rather than observing some procedural proprieties leading up to the taking of some action".

The way in which that proposition, if correct, would operate in practice was made clear; the appellants submitted that their alternative order would not forbid the carrying of a resolution in the terms of the one prepared by a meeting of the full time officers of the branch endorsed, by approximately 150 delegates of the branch from Metropolitan shops and endorsed on 29 September, 1982, at a meeting attended by approximately 1,500 members of the branch. That resolution included the following:-

"P.K.I.U. Delegates Meeting

Proposed resolution on the defence of Union policies.

We again reiterate our intention to uphold all Branch policies which have been the strength and protection for all members, in particular our 'O.K.' card policy and call upon all members to maintain vigilance and full compliance in regard to new employees having obtained an O.K. card prior to commencing employment.

.....

We call upon John Dugmore, as a member of the P.K.I.U., to withdraw his action against the Union and his fellow members, and recognise that his continuance to do otherwise will be seen by the majority of his fellow members as supportive and in the interests of those parties whose objectives are contrary to the P.K.I.U.."

Mr Ryan agreed that that resolution, carried after the institution of the proceedings which led to the order by the learned trial Judge, was "intended to convey to Mr Dugmore that if he continued with the action that he would be seen to be acting in a way contrary to the interests of the union". However, he submitted that "it is not punitive or disciplinary in the terms of (Rule) 51 - it is, we would say, rather educative in the sense that it seeks to bring to the notice of the member what it is that is considered contrary to the policy, to express the opinion of the meeting"; it fell within the category of "moral persuasion which is sought to be exercised".

I am unable to accept that the resolution of 29 September, 1982, was "educative" and "not punitive or disciplinary". In my opinion it falls within the meaning of the words "suspend, fine, expel, reprimand, rebuke, censure or in any other way discipline any member ..." appearing in branch rule 51(1) in conferring power upon the Executive or a General Meeting to take such disciplinary action. The resolution was not in terms a formal "censure" of the applicant but the whole tenor of the resolution was plainly censorious of the applicant's conduct and equally plainly, in my view, constituted a "rebuke" of the applicant; if it could be described as "educative" then it is only in the sense in which the use of solitary confinement or the lash in some penal systems could be said to be "educative". The resolution was plainly intended to induce the applicant - not by "moral persuasion" but by a fear of the consequences - to withdraw his application to this Court and to henceforth abide by the O.K. card policy. I add parenthetically that the resolution of September, 1982, which is not the subject of any specific order, has been referred to only because the submissions relating to it illustrate the appellants' submission as to the distinction drawn between conduct which might be the subject of an order under s. 141 and conduct which (in the appellants' submission) lay outside the scope of that section because it was not punitive or disciplinary and did not come within the meaning of the words used in branch rule 51(1).

The appellants' submissions conced that the O.K. card policy cannot legally be incorporated in a rule. However, it is contended that it is permissible for a meeting, called under the rules, of the branch or of a committee or other body constituted under the rules, to carry a resolution establishing or confirming the O.K. card policy and for meetings of such bodies to carry resolutions from time to time directed towards ensuring that the O.K. card policy is adhered to by the members. That submission is put on the basis that those resolutions, and consequential actions by the officers and organizers of the branch, are merely the use of advocacy and moral persuasion to induce members to abide by such a policy and are permissible - provided that the resolutions and other actions do not constitute an attempted "legal" enforcement of that policy by using the penalty provisions of the rules.

The appellants submit that s. 141 of the Act does not authorize the making of an order giving directions that the respondents perform and observe the rules by refraining from calling such meetings or carrying such resolutions. They contend that:-

"there is ... a very real legal difference between activities conducted pursuant to the rules and the implementation of a policy seeking to persuade the members to act in a particular way. That is because we agree or we concede that now there are no rules, sanctions cannot be enforced against members who breach the policy."

However, in my view, the "activities conducted pursuant to the rules" (referred to in that contention) must include the holding of meetings and the passing of resolutions because the times for holding meetings, the right to vote at meetings, the quorum, the method of calling meetings, the method of giving notice of the meetings and the conduct of the meetings "in due and proper form: are all matters for which the rules provide - see Branch rules 28(g), 29, 29(c), 29(b), and 44(a) respectively. Further, it is part of the duty of branch organizers to see that the policies of the union and of the branch are at all times observed (Branch rule 47(b)).

On this aspect it is of assistance to note the manner in which the rules operate in relation to the union and the branch, including their government, structure, funds and officers. The officers of the union and of the New South Wales branch are elected under the rules. Their salaries and expenses are paid out of funds which are raised "for carrying out the objects and Rules of the Union or of the Branch" - see Federal rule 3 and Branch rule 3. It is to be noted that "the funds of the Union or a Branch shall not be expended for purposes other than those set out in these Rules" - see Federal rule 32(2) and Branch rule 23(a)(viii). Those funds largely consist of the contributions and levies paid by the members in accordance with the rules, for which contributions and levies the union is empowered to sue under s. 148 of the Act.

Between General Meetings of the members, the affairs of the branch "will be controlled by" the Branch Executive Committee, which is created by Branch rule 28, and, subject to the direction of the members in General Meeting assembled, has wide powers including the power to control the funds of the branch, to form, disband or direct Sub-branches, Committees, Chapels and Sub-chapels and to direct that meetings of those bodies be held. It has power to:-

"(xii) control the property and investments and funds of the Branch;

(xiii) authorise the formation, amalgamation or disbandment or direct in any way the Executive thinks proper any Sub-Branch, Committee, Chapel, or Sub-chapel, within the jurisdiction of the Branch;

(xiv) direct, in manner provided for in these Rules, that a meeting be held of a Sub-branch, Committee, Chapel or Sub-chapel, or section of members of the Branch, with power to discipline according to Rule those failing to attend;

.....

(xvi) ... cite a member or members before it;

(xvii) generally govern and tranact the business of the Branch according to Rule;"

Sub-paragraphs (xiii) and (xiv) above must be read in the light of Federal rules 50 and 52. Federal rule 50 is a long rule, headed "Powers and Duties of a Branch", which includes the following provision:-

"(2) And, as to the Board of Management of a Branch, the said powers and duties shall also include the taking into consideration and deciding upon all matters relating to the admission of persons to membership, and all matters affecting the membership rights and industrial interests of members which may happen during the time intervening between the General Meetings (or between Conferences, where Rules of a Branch provide for Conferences in lieu of General Meetings) of the Branch ...."

Federal rule 52 is in the following terms:-

"Union 52 - Chapels and Committees

Each Branch is hereby empowered to establish in accordance with its Rules or by such manner as it deems proper a Chapel or Committee or Committees in each work place and to regulate the business of such Chapel or Committee or Committees according to Rules which have been approved by the Branch."

The powers given to the Executive Committee under the rules must also be read in the context of other rules expressly referring to the policies of the Union and the Branch". Federal rule 18(2)(b) gives the Council the right "to decide upon the policy of the Union in all matters affecting the members". Branch rule 47(b) provides that it "will be the duty of an Organizer to see that the Rules and policies of the Union and the Branch are at all times observed ...". Branch rule 56 provides that "Chapel Rules shall conform with the Rules and policies of the Union and Branch and are subject to endorsement by the Branch." These rules as to the policies of the Union or the branch are of some importance in considering the appellants' submission as to the difference between activities pursuant to the rules and the implementation of the O.K. card policy. It will be noted that most of the rules to which reference has been made could be used in taking action to ensure that members abide by the O.K. card policy (cf. the organizers' duty to see that policies are at all times observed).

The importance of having rules dealing with such matters is recognized by the express requirements of the Conciliation and Arbitration Regulations (the regulations) made under the Act. Regulation 115 imposes various duties upon organizations including the following:-
"(1) The following conditions are prescribed conditions to be complied with by an association applying for registration, namely:-
.....
(b) the association shall be an association for furthering or protecting the interests of its members;
(c) the association shall not be wholly or partially .... conducted, directly or indirectly, for the purpose, or with the view, of opposing, injuring or prejudicing the interests of ... employees ... whose interests it purports to represent, further or protect;
(d) the affairs of the association shall be regulated by rules .... providing, in relation to the association, for -

(i) the election of -

(a) a committee of management of the association and of the branch of the association;

(b) officers of the association and of each branch of the association; and;

(c) any conference, council, panel or other body (additional to the committee of management), which is empowered to determine policy or to exercise functions of management in the association or branch;

(ii) the powers and duties of the committees and of officers;

(iii) the manner of summoning meetings of members and of the committees; ....

(ix) the mode in which the property of the association is to be controlled and its funds invested;

(x) the yearly or other more frequent audit of the accounts;

(xi) the conditions under which funds may be disbursed;

....

(i) none of the rules of the association shall be a rule which, if the association were registered, would contravene sub-section (1) of section 140 of the Act.

...."

In considering the Court's power under s. 141 it is useful to refer to other sections of the Act. Section 143(1) of the Act permits an application for the cancellation of the registration of an organization on the ground "(k) that the organization has engaged in, or is engaging in, conduct or activities not authorized by or in accordance with its rules."

Section 140(1) of the Act includes the following provision:-
"(1) The rules of an organization -
(a) shall not be contrary to, or fail to make a provision required by, a provision of this Act, the regulations or an award or otherwise be contrary to a law;
....
(c) shall not impose upon applicants for membership, or members, of the organization, conditions, obligations or restrictions which, having regard to the objects of this Act and the purposes of the registration of organizations under this Act, are oppressive, unreasonable or unjust;
...."

In my opinion it is not permissible for the union or a branch, or an executive or other committee or officers (in each case elected and exercising their powers under the rules) to take action to call meetings of committees or of members, or to prepare recommendations for resolutions to be carried at such meetings or to take part in any such meetings where such actions are for purposes which include the purpose of ensuring that members adhere to the O.K. card policy. Any such action would "tend to frustrate the policy and main purpose of the Act" (per Fullagar J. in Williams v. Hursey (1959) 103 C.L.R. 30 at p. 68), including the purposes manifested by s. 140 and s. 143(1)(k) of the Act. The policy, it is conceded by the appellants, would contravene s. 140 if it still appeared in the registered rules. In my opinion it is an fortiori case where, as was demonstrated by the evidence before the learned trial Judge, the action taken included actions on a regular and extensive scale by organizers whose salaries and expenses were payable out of branch funds.

In my opinion the rules do not authorize and could not authorize the union, the branch or any other body within the unio or branch to resolve upon a policy, or to take steps designed to ensure that the members abide by a policy, of the union or of the branch where that policy (a) is contrary to one of its registered rules or (b) would be contrary to s. 140 of the ACt if it were incorporated in a rule, or (c) would "tend to frustrate the policy and main purpose of the Act" (Hursey's case (supra)).

I agree with Smithers J. that the prevention of members from seeking or taking employment available to them is an act inherently hostile to their interests, is incompatible with the furtherance and protection of the interests of those members and that the powers of management, on their proper construction, do not extend to the adoption of the O.K. card policy or its implementation.

The resolution of 23 August, 1977, should be read in a context which includes resolutions carried by various meetings in 1976 and 1977 which are conveniently set out in passages in the judgment of the learned Judge. They were not challenged by the appellants, and commence with a reference to a mass meeting of members of the branch on 9 April, 1976, where the resolution carried included "... our firm declaration to uphold and carry out all the present and future rules and policies of the Union with special emphasis on our O.K. Card."

On 10 August 1977, following the judgment of the Australian Industrial Court, a meeting of delegates and Fathers of the Chapel (F.O.C.), being honorary officers of the Branch, met and resolved in substance that no person would be allowed to start work without first having obtained an O.K. Card from the Branch, that no member would be allowed to work outside his or her classification without the permission of the Branch and that the rules and policy of the Union would be adhered to strictly.

On 15 August 1977 a special meeting of the Executive of the Branch resolved as follows:-
"That the executive implements the decision of the 9th April 1976 industry mass meeting, and further that the recommendations of the FOCs and delegates meeting of 10th August, 1977, be endorsed, and that the date of Tuesday, 23rd August be scheduled for the recommended mass meeting and the bulletin as printed, be circulated with any necessary amendments."

The resolution of 23 August 1977, referred to in the orders under appeal, was of a mass meeting of members of the Branch who adopted a resolution which included the following:-
"This PKIU NSW Industry Mass Meeting instructs all members in all shops ... to maintain the strictest adherence to continuing the use and issue of our OK Card."
....
"We support our Federal Secretary, our NSW Branch Executive and officials, together with all members who have worked and demonstrated to protect our rules and policies and we condemn and will remember those who have sought and are seeking to do us so much harm."

On 5 September, 1977, a meeting of the Executive of the Branch endorsed the resolution passed at the mass meeting on 23 August 1977. The policy thus adopted has been published in the journal of the Branch; a typical example of the publicity given to the policy is the following advertisement which has been published regularly:

"OK CARDS

The attention of all members is drawn to the rules and policies of the Branch regarding employment. Canvassing of jobs is not permitted and no member shall start work without an OK Card."

The resolutions carried before 23 August, 1977, reinforce my opinion that the resolution carried on that day, to which the orders under appeal referred, cannot be regarded as merely a declaration of policy in respect of which the members were to be subject to no more than "advocacy" and "moral persuasion" by the executive committee, the officers and the organizers. In any event, for the reasons already given, I do not consider that the branch or its committees or officers or organizers were authorized to establish or confirm the O.K. card policy.

In my opinion the learned trial Judge had power under s. 141 to make an order giving directions to the respondents in the terms of the first order set out earlier.

Mr Ryan submitted that the second order made is too wide and is not authorized by s. 141 in that it would restrain the respondents from taking action in the form of advocacy or persuasion or recommendation by them, with the object of furthering the O.K. card policy.

I have already expressed the opinion that the O.K. card policy could not validly be established or confirmed by the branch or its committee or officers or organizers. In my opinion, the Court had power to give directions that the respondents perform and observe the rules of the union by refraining from taking any action with the object or effect of enforcing the O.K. card policy as instructed by the mass meeting of members of the branch on 23 August, 1977. Accordingly, the appeal should be dismissed.

JUDGE3

In this matter I have had the advantage of reading the judgment to be delivered by Smithers J. I am in agreement with his reasons and conclusions and with the order which he proposes.

[1984] FCA 61

02 APRIL 1984