Rayner v Riley

Case [2020] FCA 587

FEDERAL COURT OF AUSTRALIA

Rayner v Riley [2020] FCA 587

File number: VID 152 of 2018
Judge: SNADEN J
Date of judgment: 6 May 2020
Catchwords:

INDUSTRIAL LAW – application under s 164 of the Fair Work (Registered Organisations) Act 2009 (Cth) for an order directing the performance or observance of union rules – interpretation of union rules – whether funds owing to a former employee of a union should be paid from funds under the control of the branch within which she was employed or the division within which that branch was founded – whether resolutions directing transfer of money from funds controlled by the branch to funds controlled by the division were valid under the union’s rules – whether the court should decline to grant relief on discretionary grounds – application dismissed

UNION RULES – validity of resolution – whether reasonable notice was given of a meeting at which a resolution was passed – whether resolution was made beyond power – separate resolution to ratify, authorise and/or endorse a prior resolution – validity of latter resolution – whether ratification could operate retroactively – whether latter resolution was invalid insofar as it purported to ratify, authorise or endorse an earlier resolution after the time for compliance therewith had expired – whether latter resolution was made beyond power – whether latter resolution was made in accordance with union rules – whether demand for payment made in consequence of latter resolution was a demand that the resolution authorised – whether the maker of the demand considered that it was reasonable in the circumstances

Legislation: Fair Work (Registered Organisations) Act 2009 (Cth) Pt 2, ss 164, 164A, 164B, 338 and 329
Cases cited:

Construction, Forestry, Mining and Energy Union; ex parté WJ Dean & Sons Pty Ltd (1994) 181 CLR 539

Mellor v Horn (1988) 25 IR 157

Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504

Rayner v Ellery [2016] FCA 771

Date of hearing: 10-11 October 2019
Registry: Victoria
Division: Fair Work Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 142
Counsel for the Applicant: Mr R Reitano with Mr T Borgeest
Solicitor for the Applicant: Slater and Gordon
Counsel for the First to Ninth, Eleventh to Thirteenth, and Fifteenth to Sixteenth Respondents: Mr E P White
Solicitor for the First to Ninth, Eleventh to Thirteenth, and Fifteenth to Sixteenth Respondents: Gordon Legal
Counsel for the Tenth and Fourteenth Respondents: The Tenth and Fourteenth Respondents did not appear

ORDERS

VID 152 of 2018
BETWEEN:

GREGORY RAYNER

Applicant
AND:

SUSAN RILEY

First Respondent

JOHN ELLERY

Second Respondent

KEVIN WELBOURN (and others named in the Schedule)

Third Respondent

JUDGE:

SNADEN J

DATE OF ORDER:

6 MAY 2020

THE COURT ORDERS THAT:

1.The amended originating application filed 13 December 2018 be discontinued as against the second, ninth, tenth, twelfth, thirteenth and fourteenth respondents.

2.Mr David Ketchion and Mr Andrew Young be joined in the matter as the fifteenth and sixteenth respondents respectively.

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AGLC
Rayner v Riley [2020] FCA 587
Case
[2020] FCA 587
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, Rayner (the applicant) filed an application against Riley and others (the respondents), seeking an order to direct the performance or observance of union rules. The case centred around the interpretation of union rules regarding the payment of funds owing to a former employee from either the branch or division funds. The respondents argued that the resolutions directing the transfer of money from branch funds to division funds were invalid and that the court should decline to grant relief on discretionary grounds.

The primary legal issues addressed by the court included the validity of the resolutions directing the transfer of money from branch to division funds, the requirement for reasonable notice of meetings where resolutions were passed, whether resolutions were made beyond power, the validity of separate resolutions to ratify, authorise, or endorse prior resolutions, and whether the latter resolution was invalid if it purported to ratify, authorise, or endorse an earlier resolution after the time for compliance had expired. The court also considered whether the latter resolution was made beyond power, whether it was made in accordance with union rules, and whether a demand for payment made in consequence of the latter resolution was a demand that the resolution authorised.

The court found that the Divisional Executive Resolution was validly made and that the Branch Council of Management (BCOM) was required to comply with it. The court rejected the respondents' contentions regarding the validity of the Divisional Conference Resolution, holding that it was not so internally inconsistent as to be meaningless and that its purpose was to confirm the requirement that the Branch pay to the Division what the Division had paid to Ms Willoughby. The court also found that the payment regime imposed by the applicant was not one that he considered reasonable in the circumstances. The court exercised its discretion not to grant relief, considering it futile given the Branch's inability to pay the demanded amounts, the potential risk of placing the Branch in administration, and the Division's refusal to endorse the Branch's Business Case document.

The final orders included discontinuing the amended originating application against certain respondents, joining two additional respondents, and dismissing the amended originating application filed on December 13, 2018.

Orders

Orders of the court

1. The amended originating application filed 13 December 2018 be discontinued as against the second, ninth, tenth, twelfth, thirteenth and fourteenth respondents.

2. Mr David Ketchion and Mr Andrew Young be joined in the matter as the fifteenth and sixteenth respondents respectively.

3. The amended originating application filed 13 December 2018 be dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Similarly, reference is made throughout these reasons for judgment to sums of money being transferred or paid, or being required to be transferred or paid, by the Branch to the Division. Clearly, neither the Branch nor the Division is or was capable of holding property in its own right. The only relevant legal entity capable of doing so is and was the CEPU. Those references, then, are to be understood as references to the transfer or payment of money from an account or funds controlled by the Branch to an account or funds controlled by the Division. Again, that is consistent with the manner in which the parties’ submissions were advanced and there is no ambiguity as to what is meant by each such reference.THE EVIDENCE The applicant was the sole witness in his own case. He read four affidavits, namely:(1)an affidavit that he swore on 13 February 2018;(2)an affidavit that he swore on 21 June 2018;(3)an affidavit that he swore on 10 August 2018; and(4)an affidavit that he swore on 4 February 2019.Those affidavits were read subject to objections that were resolved without the court’s intervention. The applicant was cross-examined in respect of some of that affidavit evidence. The respondents led evidence from each of the first and second respondents (who are, respectively, the current and former secretary of the Branch). They read five affidavits, namely:(1)an affidavit affirmed by the second respondent on 27 July 2018;(2)an affidavit sworn by the first respondent on 27 July 2018;(3)an affidavit sworn by the first respondent on 28 February 2019;(4)an affidavit sworn by the first respondent on 13 May 2019; and(5)an affidavit sworn by the first respondent on 23 September 2019.Those affidavits were read without objection. Each of the first and second respondents was cross-examined. The trial uncovered very little in the way of contested evidence. All of the summary that appears above ([9]-[27]) emerges without controversy from the affidavit evidence that was put before the court. The cross-examination of the applicant fixed substantially upon the financial position of the Branch and his state of mind when he wrote the 23 October Letter (by which he purported to exercise the power reposed in him by the Divisional Conference Resolution). I address that financial position in more detail below: it suffices, for now, to summarise that the Branch has (and had) limited financial resources. It was put to the applicant that it was not reasonable to expect—and, more precisely, that he could not reasonably have expected—that the Branch should pay to the Division the amounts that were demanded of it given its perilous financial state. He denied that those expectations were unreasonable. Of particular significance, he gave the following evidence during cross-examination:Given your answers to questions so far that you thought you were just providing the resolution of the divisional conference, is it fair to say then that you didn’t at that time turn your mind to whether the payment of $15,000 a month was reasonable?---No, I didn’t turn my mind to whether it was reasonable. It was the decision of a conference and I implemented it.

Decision

Reasons for decision

It follows that the Divisional Executive Resolution did not involve the exercise of a power with which the Divisional Executive was not invested.Conclusion The Divisional Executive Resolution was validly made. The BCOM was required to comply with it: Divisional Rules, rr 44(b) and 77(a) (above, [39], [42]).VALIDITY OF THE DIVISIONAL CONFERENCE RESOLUTION As is outlined above, the respondents’ contentions with respect to the Divisional Conference Resolution distil into five discrete categories. The first four correspond, in order, with the four paragraphs of the Divisional Conference Resolution. The fifth relates to the 23 October Letter, by which the applicant purported to exercise the power conferred upon him by the last of those four paragraphs. The conclusion reached above in respect of the Divisional Executive Resolution resolves some, but not all, of the questions that the respondents have raised about the validity of the Divisional Conference Resolution. It is convenient now to turn to those questions.Ratification, authorisation and endorsement of the Divisional Executive Resolution The respondents contend that the first paragraph of the Divisional Conference Resolution “…is so internally inconsistent…as to be meaningless”. I reject that submission. It proceeds upon an unrealistic and pedantic parsing of the terms in which the paragraph—and the resolution more broadly—is expressed. The meaning of the paragraph—read both alone and in context—is beyond any real doubt. Its purpose was to clothe with the authority of the Divisional Conference the requirement that had been imposed upon the Branch by the Divisional Executive: namely, the requirement that the Branch pay to the Division what the Division had paid to Ms Willoughby. The Divisional Conference sought to succeed where the Divisional Executive had failed (wrongly or otherwise). It is not the case that the Divisional Conference’s “ratification” of the Divisional Executive Resolution implied that the latter was invalid. The Macquarie Dictionary defines “ratify” as:1.to confirm by expressing consent, approval, or formal sanction.2.to confirm (something done or arranged by an agent or by representatives) by such action. In context, it is abundantly clear that the Divisional Conference sought to impress upon the BCOM that compliance with the Divisional Executive Resolution was not optional. It might well have done so in terms less susceptible to the kind of criticisms that the respondents now level: perhaps other verbs would have been more suitable; perhaps it was not necessary to use all of the verbs (ratify, authorise, endorse) that were used. But there is no room to doubt that the respondents understood perfectly well what the paragraph sought to convey, no matter the minor imperfections inherent within it, upon which they now seek to capitalise. Respectfully, the submission that it was unclear what was meant by that paragraph, or that it lacked any apparent meaning, is contrived.

Ratio Decidendi

Legal Principle Established

Fifth—and in relation to the 23 October Letter by which the applicant purported to exercise the authority reposed in him by the Divisional Conference Resolution—the respondents contend that the payment regime that the applicant sought to impose upon the Branch was not one that he considered to be reasonable in the circumstances. They describe that regime—$15,000.00 per month—as “patently an unreasonable demand”; a circumstance of which they attribute to the applicant some awareness.Discretionary considerations Even assuming that either or both of the Divisional Executive Resolution or the Divisional Conference Resolution (or, in the case of the latter, the 23 October Letter that purported to give effect to it) were valid, the respondents contend nonetheless that the court should decline, on discretionary grounds, to grant the relief that is sought. That submission is put in four ways. First, it is said that the court should refrain from granting relief because it would be futile to do so. The Branch, so the submission continues, does not have the means to pay the Division what has been demanded. Perhaps more accurately, it is said that assets to which the Branch has access are insufficient to meet those demands. Were the court to order that the BCOM do what is unable to be done, the result would be the respondents’ potential exposure to individual charges of non-compliance with the court’s orders (and, potentially, contempt of the court). Second, it is said that a grant of relief in the form sought would run the risk that the Branch would need to be “placed in administration” (in the sense described by r 45 of the Divisional Rules). That, the submission continued, would lead to membership resignations, which would significantly compromise the Branch’s operations and its capacity to represent those whose memberships remained in place. The Branch has, in recent times, embarked upon measures to shore up its financial position, including by means of cost cutting and the engagement of a membership officer. An order requiring what the Division has demanded would put those measures (and the viability of the Branch more broadly) at risk. Third, it is said that the court should decline to grant relief on discretionary grounds because of the Division’s refusal to endorse the Branch’s Business Case document (above, [22]). Additionally, the respondents made much of the fact that the time (or times) by which the Division (and the applicant) sought to compel the BCOM to pay what was demanded has long since passed. Predominantly, that submission was put as a reason why the court should find that the Division’s (and, in the case of the 23 October Letter, the applicant’s) decrees were invalid. To me (and for reasons that will be explained), it looms larger in the context of the court’s discretion to grant the relief that the applicant seeks. It probably (again, for reasons that will be explained) looms even more elementally than that: namely, as an issue going to the court’s power to grant the relief that the applicant seeks.VALIDITY OF THE DIVISIONAL EXECUTIVE RESOLUTION