Sharp v Sutton and Construction, Forestry, Mining and Energy Union
[1996] IRCA 388
•23 August 1996
DECISION NO: 388/96
CATCHWORDS
INDUSTRIAL LAW - REGISTERED ORGANISATIONS - "Amalgamation" of registered organisation with deregistered association - Whether amalgamation valid - Division 7 Part IX Industrial Relations Act 1988 not applicable - No other impediment to amalgamation under general law - Whether the Builders Labourers' Federation's (BLF) rule changes and agreements to amalgamate effective - Whether its Federal Council had power to effect an amalgamation with a registered organisation - Nature of rule changes necessary for amalgamation - New rules validly adopted - Sufficiency of notice of meeting - Whether assets of the BLF barred from transfer by the BLF (De-recognition) Act and Orders-in-Council - Construction of Orders-in-Council - Disposition of assets of BLF valid unless avoided by the Custodian - Jurisdiction of the Court to determine the question of validity of disposition of assets - Whether claim of invalidity colourable
Industrial Relations Act 1988 (Cth) ss. 258, 293
BLF (De-recognition) Act 1985 (Vic) s. 7(3)
Sutton v Sharp (1994) 1 IRCR 259
Henderson v Bank of Australasia (1910) 45 Ch. D. 330
Betts & Co v McNaghten [1910] 1 Ch. 430
Torbock v Lord Westbury [1902] 2 Ch. 871
McLure v Mitchell (1974) 24 FLR 115
Efstathis v The Greek Orthodox Community of St George (1989) 1 Qd. R. 146
Boland v Munro (1979) 48 FLR 66
Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations for Queensland (1995) 132 ALR 198
Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410
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IAN GORDON SHARP v JOHN DAVID SUTTON and CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION and COMMONWEALTH OF AUSTRALIA
VI 95/4819
THE STATE OF VICTORIA v JOHN DAVID SUTTON and CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION and COMMONWEALTH OF AUSTRALIA
VI 95/4820
JOHN ATKINSON and ORS v JOHN DAVID SUTTON and CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION and COMMONWEALTH OF AUSTRALIA
VI 95/4821
JOSEPH FERGUSON and ORS v JOHN DAVID SUTTON and CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION and COMMONWEALTH OF AUSTRALIA
VI 95/4822
Spender, Ryan and North JJ
Melbourne
23 August 1996
IN THE INDUSTRIAL RELATIONS COURT )
)
OF AUSTRALIA ) No VI 95/4819
)
VICTORIA DISTRICT REGISTRY )
ON APPEAL FROM A DECISION OF A SINGLE JUDGE OF THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
BETWEEN: IAN GORDON SHARP
(Appellant)
AND: JOHN DAVID SUTTON
(First Respondent)
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
(Second Respondent)
AND: COMMONWEALTH OF AUSTRALIA
(Intervenor)
CORAM: Spender, Ryan and North JJ
PLACE: Melbourne
DATE: 23 August 1996
MINUTES OF ORDER
THE COURT ORDERS:
That the appeal be dismissed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS COURT )
)
OF AUSTRALIA ) No VI 95/4820
)
VICTORIA DISTRICT REGISTRY )
ON APPEAL FROM A DECISION OF A SINGLE JUDGE OF THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
BETWEEN: THE STATE OF VICTORIA
(Appellant)
AND: JOHN DAVID SUTTON
(First Respondent)
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
(Second Respondent)
AND: COMMONWEALTH OF AUSTRALIA
(Intervenor)
CORAM: Spender, Ryan and North JJ
PLACE: Melbourne
DATE: 23 August 1996
MINUTES OF ORDER
THE COURT ORDERS:
That the appeal be dismissed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS COURT )
)
OF AUSTRALIA ) No VI 95/4821
)
VICTORIA DISTRICT REGISTRY )
ON APPEAL FROM A DECISION OF A SINGLE JUDGE OF THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
BETWEEN: JOHN ATKINSON & ORS
(Appellants)
AND: JOHN DAVID SUTTON
(First Respondent)
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
(Second Respondent)
AND: COMMONWEALTH OF AUSTRALIA
(Intervenor)
CORAM: Spender, Ryan and North JJ
PLACE: Melbourne
DATE: 23 August 1996
MINUTES OF ORDER
THE COURT ORDERS:
That the appeal be dismissed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS COURT )
)
OF AUSTRALIA ) No VI 95/4822
)
VICTORIA DISTRICT REGISTRY )
ON APPEAL FROM A DECISION OF A SINGLE JUDGE OF THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
BETWEEN: JOSEPH FERGUSON & ORS
(Appellants)
AND: JOHN DAVID SUTTON
(First Respondent)
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
(Second Respondent)
AND: COMMONWEALTH OF AUSTRALIA
(Intervenor)
CORAM: Spender, Ryan and North JJ
PLACE: Melbourne
DATE: 23 August 1996
MINUTES OF ORDER
THE COURT ORDERS:
That the appeal be dismissed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS COURT )
)
OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY )
ON APPEAL FROM A DECISION OF A SINGLE JUDGE OF THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
VI 95/4819
BETWEEN: IAN GORDON SHARP
(Appellant)
AND: JOHN DAVID SUTTON
(First Respondent)
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
(Second Respondent)
AND: COMMONWEALTH OF AUSTRALIA
(Intervenor)
VI 95/4820
BETWEEN: THE STATE OF VICTORIA
(Appellant)
AND: JOHN DAVID SUTTON
(First Respondent)
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
(Second Respondent)
AND: COMMONWEALTH OF AUSTRALIA
(Intervenor)
VI 95/4821
BETWEEN: JOHN ATKINSON & ORS
(Appellants)
AND: JOHN DAVID SUTTON
(First Respondent)
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
(Second Respondent)
AND: COMMONWEALTH OF AUSTRALIA
(Intervenor)
VI 95/4822
BETWEEN: JOSEPH FERGUSON & ORS
(Appellants)
AND: JOHN DAVID SUTTON
(First Respondent)
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
(Second Respondent)
AND: COMMONWEALTH OF AUSTRALIA
(Intervenor)
CORAM: Spender, Ryan and North JJ
PLACE: Melbourne
DATE: 23 August 1996
REASONS FOR JUDGMENT
THE COURT: These are appeals from certain orders made by the Chief Justice on 24 August 1995. As his Honour acknowledged in his reasons for those orders, many of the relevant facts had earlier been recounted by him in reasons for judgment in a related matter reported sub.nomSutton v Sharp (1994) 1 IRCR 259. The action has its genesis in the cancellation of the registration as an organisation of employees of the Australian Building Construction Employees' and the Builders Labourers' Federation ("the BLF"). That cancellation occurred by force of the Builders Labourers' Federation (Cancellation of Registration) Act 1986 (Cth) ("the Cancellation Act") which took effect on 14 April 1986. Section 2 of the Builders Labourers' Federation (Cancellation of Registration Consequential Provisions) Act 1986 (Cth) ("the Consequential Provisions Act") came into effect immediately after the Cancellation Act. In part, the Consequential Provisions Act provided that certain provisions of s. 143 of the Conciliation and Arbitration Act should not apply to the BLF. However, the Consequential Provisions Act preserved the application to the BLF of s. 143(6) of the Conciliation and Arbitration Act which provided:
Upon the cancellation of the registration of an organization, the organization shall cease to be an organization and a corporation under this Act, but shall not by reason of the cancellation cease to be an association. The property of the organization shall, subject to any order which the Court, upon application by a person interested, may make with respect to the satisfaction of the debts and obligations of the organization out of that property, be the property of the association and shall be held and applied for the purposes of the association in accordance with the constitution and rules of the organization insofar as they can be carried out or observed notwithstanding the deregistration of the organization.
Section 2 of an Act of the Victorian Parliament, the BLF (De-recognition) Act 1985, provided that its provisions were to come into force as fixed by proclamation but, in effect, not before the cancellation of the registration of the BLF had been accomplished by or under legislation of the Commonwealth Parliament. Section 7(1) of the BLF (De-recognition) Act empowered the Governor-in-Council by Order to "provide for the restriction of the use of funds or property of BLF and for the control of those funds and that property". Section 7(2) of the BLF (De-recognition) Act provided that an Order made under sub-s. (1) should, unless sooner revoked, cease to be in force at the expiration of six months from the date on which it came into force but might be extended by a further Order. A succession of Orders-in-Council has been made purporting to affect the funds and property of the BLF. The first, published on 13 October 1987, committed to Dr Sharp (the Custodian) "possession, custody and control of the funds and property of BLF". As far as is relevant, that first Order-in-Council stipulated:
Possession, custody and control of the funds and property of BLF is hereby committed to Ian Gordon Sharp (hereinafter called "the Custodian").
No person shall pay or dispose of any of the funds or property of BLF or of any interest therein, or create any encumbrance or charge in respect thereof, without the prior written consent of the Custodian. Any such payment disposition encumbrance or charge shall be void, at the option of the Custodian.
The Custodian may refuse to give consent referred to in clause 2 hereof if he in his absolute discretion is not satisfied that the payment disposition encumbrance or charge is desirable to be made for the carrying out of the ordinary and proper affairs of BLF and for the benefit of its members.
The Custodian may pay or direct any person to pay from the funds or property of BLF such sum as appear to him in his absolute discretion to be desirable to be made for the carrying out of the ordinary and proper affairs of BLF and for the benefit of its members.
A person who is in possession of or who has the custody or control of any funds or property of BLF or of any document or title thereto or document relating to the title thereto or of any books of account, records, document or computer records relating thereto or to the acquisition, use, disposition, possession, custody or control thereof:
(a)shall forthwith inform the Custodian thereof;
(b)shall on demand by the Custodian or by a person authorised by him in writing deliver the same up to the Custodian or such authorised person and shall take all such steps as the Custodian or such authorised person may require to put him in possession custody or control thereof;
(c)shall not part with such possession, custody or control save to the Custodian or such authorised person.
...
The Custodian shall forthwith take possession custody and control of the funds and property of BLF.
For the purpose of performing his functions under this Order the Custodian may:
(a)enter on and take possession custody and control of all premises which are or appear to be in the possession of or occupied by BLF (by itself or any of its officers, servants or agents);
(b)seize and retain all documents, records and property in any such premises which may reasonably be regarded as being or relating to or connected with the funds or property of BLF.
Subject to any further Order in Council and so long as this Order or any extension thereof is in force the Custodian shall remain in possession custody and control of the property and funds of BLF for the purposes of carrying out the ordinary and proper affairs of the BLF pursuant to clauses 3 and 4 of this Order.
By a supplemental Order-in-Council of 10 November 1987, the Custodian was empowered to "vest in himself as Custodian any funds or property of BLF". As recounted by Wilcox CJ (125 ALR at 647) the subsequent history of delegated legislation was as follows:
These Orders were further supplemented on 22 December 1987. On 12 April 1988 all the Orders were extended, with a variation of the Supplemental Order of 22 December. They were again extended, with another variation, on 17 May 1988. On 11 October 1988 all the previous orders were extended, without further amendment, to 11 April 1989. Since that time the orders have been regularly extended, at intervals of about six months. The most recent extension, as at the date of the hearing of the motion, was made on 17 March 1994 and operative until 16 September 1994.
The constitutional validity of the Victorian legislation was upheld by a majority of the High Court in Dobinson v Crabb (1990) 170 CLR 218.
On 30 March 1994, an amalgamation or merger was purportedly effected between the BLF and an organisation of employees in the building and construction industry, the Construction Forestry Mining and Energy Union ("the CFMEU") which has at all material times been registered under the Conciliation and Arbitration Act and later under the Industrial Relations Act 1988 (Cth). The amalgamation or merger to which we have just referred was effected by an agreement in writing between the CFMEU and the BLF of which the following recitals were regarded as relevant by the learned primary Judge:
AND WHEREAS the CFMEU has reached agreement to the extent possible to effect an amalgamation and/or merger between it and various State registered unions in the States of Tasmania, South Australia, Western Australia and Queensland ... which State registered unions have a continuing relationship with the BLF
AND WHEREAS the BLF has passed rules to enable it to amalgamate and/or merge with the CFMEU
AND WHEREAS the CFMEU and BLF have reached agreement to amalgamate and/or merge and in so doing rationalise trade unions in the building and construction industry.
His Honour also reproduced (125 ALR at 648) the following clauses from the amalgamation agreement:
The BLF and CFMEU agree that on and from 31 March 1994 there shall be an amalgamation and/or merger of the BLF into the CFMEU.
On and from 31 March 1994 the BLF shall be and become an integral, inseparable and inseverable part of the CFMEU and shall amalgamate and/or merge with the CFMEU.
On and from 31 March 1994 all assets and liabilities of the BLF shall merge with the assets and liabilities of the CFMEU to be held and controlled in accordance with the rules of the CFMEU and this agreement and shall be treated as if such assets and liabilities were, at all times, the assets and liabilities of the CFMEU. Such funds shall, to the extent that prior to 31 March 1994 they were funds under the control of a BLF branch, other than the BLF, Victorian Branch, be and become funds under the control of the respective Construction Labourers' Divisional Branch established consequent upon this agreement and, otherwise, the funds of the BLF shall be held in accordance with paragraph 11 herein. In the case of the funds of the BLF, Victorian Branch they shall be and become funds under the control of the Building Unions Division, Victorian Divisional Branch.
For all purposes and in all proceedings, an asset or liability of the BLF existing immediately before 31 March 1994 is taken to have become and to have been at all times an asset or liability of the CFMEU on and from 31 March 1994.
Corresponding agreements were entered into between the CFMEU and the State-registered Unions which had separate corporate existence in the States of Tasmania, South Australia, Western Australia and Queensland and were analogues of the Branches of the BLF as formerly registered under the Commonwealth legislation. There was no analogous agreement with any similar entity in Victoria because the industrial legislation of that State did not confer separate legal personality on any such entity. Nevertheless there was an agreement purportedly between the Victorian Branch of the BLF and the BLF itself on the one hand and the CFMEU on the other, whereby it was agreed, amongst other things, that "the Victorian Branch should amalgamate with the CFMEU on and from 31 March 1994". By way of supporting the agreements to which we have just referred, the BLF had purported to amend its Rules by inserting the following new Rule:
SPECIAL RULE - AMALGAMATION
Notwithstanding any other rule, it is and shall be an object of the Federation, and the Federal Council shall have the power to take all or any steps to amalgamate, federate, affiliate and otherwise merge the Federation, and/or any Branch of the Federation and/or any State registered organisation to the extent that the State registered organisation is a Branch of the Federation with the Construction, Forestry, Mining and Energy Union by resolution of a simple majority of those in attendance at the Federal Council Meeting.
Another new Rule 29, provided part of the machinery for implementing the proposed amalgamation by providing, amongst other things:
(ii)On and from the day fixed for the amalgamation and/or merger to take effect, all assets and liabilities of the Federation shall merge with the assets and liabilities of the CFMEU and become assets and liabilities of the CFMEU to be held and controlled in accordance with the agreements for amalgamation and/or merger, and shall be treated as if they always were assets and liabilities of the CFMEU.
(iii)For all purposes and in all proceedings, an asset or liability of the Federation existing immediately before the day fixed for the amalgamation and/or merger is taken to have become and to have been at all times an asset or liability of the CFMEU on and from the day fixed for the amalgamation and/or merger.
The CFMEU also amended its national Rules to facilitate the merger by inserting a new Rule 42B which provided for the treatment of the former assets and liabilities of the BLF as assets and liabilities of the CFMEU and directed that the funds comprised in those assets should "be and become funds under the control of the respective Construction Labourers' Division Branch established consequent upon these Rules and otherwise held by the Building Union's Division as Divisional Funds". Amongst other clauses of Rule 47B was:
(vi)On and from the day fixed for the amalgamation and/or merger any and all members of the remaining branches of the BLF, if not already members of the CFMEU, shall be and become members of the CFMEU and be treated in the CFMEU as if all of the period of their membership in the BLF was membership in the CFMEU (except as otherwise provided for in the specific rules dealing with the merger in the rules of the Building Unions Division).
The learned primary Judge identified nine discrete sub-issues which he saw as arising from the proceedings before him which had commenced by an application as amended by Mr Sutton who was a National Assistant Secretary of the CFMEU and the Divisional Secretary of its Building Unions Division seeking amongst other relief:
1. A determination under section 258 of the Industrial Relations Act, 1988, as amended, of the question whether an invalidity has occurred in the management or administration of the Second Applicant or the making or alteration of the Rules of the Second Applicant in relation to the merger of the Australian Building Construction Employees' and Builders' Labourers' Federation, a trade union of employees and an incorporated association with the Second Applicant.
2. A declaration under section 258 of the Industrial Relations Act, 1988, as amended, that no invalidity has occurred in the management or administration of the organisation or a Branch of the organisation or the making or alteration of the rules of the organisation or a Branch of the organisation in relation to the merger of the Second Applicant with the Australian Building Construction Employees and Builders Labourers' Federation.
3. In the alternative to paragraph 2 above and/or to the extent that there is found to be an invalidity of the kind referred to in paragraph 1 hereof an order that:
(a) the invalidity be negatived and/or modified and that the consequences in law of any such invalidity be negatived or modified so that the aforementioned merger is effective;
(b) any act, matter or thing rendered invalid by or because of the invalidity be validated.
4. An order that Rule 42B of the National Rules of the Second Applicant is valid and effective and the rule changes made pursuant to the arrangement between the Second Applicant and the Australian Building Construction Employees' and Builders' Labourers' Federation are valid and effective and operate in full and, in particular, that all property, assets and liabilities held, prior to 31 March 1994 by the Australian Building Construction Employees and Builders' Labourers' Federation or held on their behalf are now property, assets and liabilities of the Second Applicant.
5. An order that the BLF (Derecognition) Act, 1985 (Vic) in so far as it affected the Australian Building Construction Employees' and Builders Labourers' Federation and in so far as it affects the Construction, Forestry, Mining and Energy Union is in contravention of section 92 of the Constitution and is invalid.
6. An order that all funds held by the First Respondent in his capacity as Custodian appointed under the BLF (Derecognition) Act, 1985 (Vic), which are all funds now of the Second Applicant, be transferred to accounts designated by the Second Applicant being accounts in the name of the Building Unions Division of the Second Applicant and the Victorian Building Unions Divisional Branch of the Second Applicant.
7. A declaration that the BLF (Derecognition) Act, 1985 (Vic) and the Orders in Council made pursuant thereto, to the extent that they now purport to deal with the funds of the Second Applicant, being an organisation registered pursuant to the Industrial Relations Act, 1988 as amended, are inconsistent with the Industrial Relations Act, 1988 as amended and are inoperative.
In the course of the argument before this Full Court, the issues identified by his Honour became crystallized into five separate questions. It is convenient to deal with each of them in order.
Was it open as a matter of law for the CFMEU to merge or amalgamate with all or any of the BLF as an unincorporated association or the BLF State-registered Unions in South Australia, Queensland, Tasmania, Western Australia and New South Wales?
The learned Chief Justice held that, putting to one side any implication which may arise from the amalgamation provisions of Commonwealth industrial legislation (now Division 7 of Part IX of the Industrial Relations Act), there is no impediment to an amalgamation or merger between a registered organisation and unincorporated association. We agree. The Industrial Relations Act postulates the continuing existence of a registered organisation unless conditions contained in the statute are satisfied. However, provided that the members of an unincorporated association are eligible for membership of a registered organisation, it is open to the members of the unincorporated association to agree, in accordance with its Rules, that its members shall henceforth become members of the registered organization and that the unincorporated association shall thereupon cease to exist. As part of the same arrangement, the members of the dissolving unincorporated association may agree, again subject to its Rules, to transfer to the registered organization the assets of the unincorporated association formerly held on behalf of themselves pursuant to its Rules. However, such a transfer is not essential to the so-called amalgamation or merger. It is equally open to the members of the unincorporated association to resolve that the assets held in its name be distributed between the persons who were members at a given date, or be donated to some charitable body or other entity having similar objects (not being the registered organization with which the amalgamation or merger is to be effected). In the context of an amalgamation or merger of the kind just described, it is open to those members of the unincorporated association who do not wish to become members of the registered organization to resign from the unincorporated association before the reception of its members into the registered organization. Alternatively, on becoming members of the registered organization, they may resign from that body in accordance with its Rules.
In the reasons at first instance, his Honour concluded that the amalgamation which presumptively occurred here was not governed by Division 7 of Part IX of the Industrial Relations Act. He rejected the argument that Division 7 constituted a code governing the amalgamation of a registered organization with any other entity whether a registered organization or not. We agree that, on its proper construction, Division 7 is confined to the amalgamation of two or more registered organizations. That it says nothing about other forms of so-called amalgamation or merger is borne out by the express provisions of s. 293 governing a proposed amalgamation between a registered organization and an associated body being a State-registered counterpart in a prescribed State of a Branch of the registered organization. For these reasons, we agree with the learned Chief Justice that arrangements of the kind in question between a registered organization and unincorporated association, if properly to be described as an amalgamation at all, have been left by Parliament to the general law of voluntary associations.
Did the BLF effectively change its Rules and conclude agreements to merge with the CFMEU?
On 16 and 17 September 1993 there was a meeting in Adelaide of the Federal Council of the BLF which purported to effect certain amendments to its Rules and to approve and authorize the execution of various agreements related to the proposed amalgamation with the CFMEU. Among those amendments was the deletion of Rule 23 which provided:
The Federation shall be dissolved when a four-fifths (4/5ths) majority of members voting by ballot shall so decide.
The meeting of Federal Council also purported to insert into the Rules of the BLF a new Rule 28 which read:
Notwithstanding any other rule, it is and shall be an object of the Federation, and the Federal Council shall have the power to take all or any steps to amalgamate, federate, affiliate and otherwise merge the Federation, and/or any Branch of the Federation and/or any State registered organisation to the extent that the State registered organisation is a Branch of the Federation with the Construction, Forestry, Mining and Energy Union by resolution of a simple majority of those in attendance at the Federal Council Meeting.
It is not disputed that the Federal Council of the BLF had plenary power to alter, repeal or add to its Rules. That was conferred by Rule 8.1 which, after vesting "supreme control of the Federation" in the members, provided, so far as is relevant:
The supreme control vested in the members shall be exercised on their behalf by the Federal Council which shall have the general control and conduct of the members of the Federation and without limiting the foregoing, the powers and duties of the Federal Council shall include the following:
(a) To direct the policy of the Federation in all matters affecting the interests of the members.
(b) To repeal, alter or add to the Rules.
...
(q) To do anything which might be done by any Committee or body or meeting or officer of the Federation or any part thereof.
The machinery requirements attending Rule changes were stipulated as follows by r. 22:
1. No new Rules shall be made nor shall any of the Rules for the time being of the Federation be altered, amended or rescinded, except by and at a meeting of the Federal Council voting by post or telegram.
2. Notice of any proposed new Rule or alteration, amendment or rescission shall be sent to each Branch at least one month prior to the meeting of the Federal council, at which the proposed new Rule or Rules are to be discussed. Where the vote is to be taken by post or telegram the notice referred to shall be sent to each Branch at least one month prior to the sending out of the letters or telegrams.
3. The Branches may instruct their delegates as to how they shall vote on the proposal, but in the absence of such instruction delegates shall have a free hand.
4. Any new Rule or Rules or alteration, amendment or rescission of Rules decided upon by the Federal Council shall be binding on all branches, and members.
The notice which had been sent to each Branch in purported compliance with r. 22(2) did not correspond with the text of new r. 28 as adopted at the meeting of 16-17 September 1993. Rather, the notice incorporated a form of the proposed new Rule which excluded from the grant of power to effect an amalgamation with the CFMEU, an amalgamation with the NSW Branch of the BLF or its State-registered counterpart. Nor did new Rule 28 include the following sub-rule which the notice had indicated would be part of the proposed new Rule to be considered by Federal Council:
Where any resolution involves an amalgamation, federation, affiliation and otherwise a merger concerning a branch of the Federation which may or may not also be a State registered organisation, the property (whether real or personal) of the Federation as at 15th September 1993 under the control of the said Branch and/or State registered organisation (or which but for legislation, either State or Commonwealth, would be under the control of the said branch or State registered organisation) shall be dealt with as if it is and/or remains the property (whether real or personal) of the Branch and/or State registered organisation.
The learned Chief Justice concluded that the variations to the text of new Rule 28 as proposed and adopted at the Federal Council meeting of 16 September were within the scope of the proposed new Rule or alteration or amendment of the existing Rules of which notice had been given. In this context he relied on Henderson v Bank of Australasia (1910) 45 Ch. D. 330, Betts & Co v McNaghten [1910] 1 Ch. 430, Torbock v Lord Westbury [1902] 2 Ch. 871, McLure v Mitchell (1974) 24 FLR 115 and Efstathis v The Greek Orthodox Community of St George (1989) 1 Qd. R. 146. Similar reasoning was used by Evatt and Northrop JJ as members of a Full Court of the Federal Court to uphold notice of a proposed change to the Rules of a registered organization in Boland v Munro (1979) 48 FLR 66 esp. at 74. See also per Keely J at 86.
We take leave with respect to doubt the correctness of Wilcox CJ's conclusion that the Federal Council of the BLF had power, without any amendment of its Rules, to effect a merger with the CFMEU. His Honour's reasoning on this aspect was expressed as follows:
The BLF was never dissolved. It was merged with another body. Merger is different to dissolution. The nature of the merger arrangement with CFMEU is apparent from the agreement of 30 March 1994, a portion of which I quoted in my earlier judgment at 648. Clause 2 of that agreement is particularly pertinent;
"2. On and from 31 March 1994 the BLF shall be and became an integral, inseparable and inseverable part of the CFMEU and shall amalgamate and/or merge with the CFMEU".
The intention was that the BLF would continue as part of a larger body, within which, by virtue of their ex-BLF membership, BLF members would enjoy specific rights. Its assets would become CFMEU assets. By contrast, upon a dissolution, BLF would have ceased to exist. The members would have had no continuing rights, other than a right to share in the distribution of the association's net assets.
In our view, that passage extends to an unincorporated association the mistaken notion of separate existence of a Branch of a registered organization which was exposed, after his Honour gave judgment, by the High Court in Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations for Queensland (1995) 132 ALR 198 where it was observed in the joint judgment of Brennan CJ, Deane and Dawson JJ at 203:
The view taken by the majority in the Federal Court was that the Queensland branch of the ATAEA, being an entity which was distinct from its members, was not capable of registration under the Queensland Act or did not achieve corporate personality upon registration under that Act. That view cannot, in our opinion, be sustained. Although the condition upon which registration of an industrial union could be granted under s 26(1) of the Queensland Act was that it answer the description of an "industrial association" or a "trade union of employees", neither of those terms, by itself, connotes the existence of a legal entity. The terms "association" or "union" connote a relationship among persons "associated" or "united" for a common purpose or to share a common interest. These are terms descriptive of a relationship (typically, a contractual relationship) between persons; they are not descriptive of entities invested with a legal personality. Of course, when the law governs a relationship among persons, its operation (and sometimes its expression) may be mistaken for a law which prescribes the capacities of an artificial person. Thus we may speak of the assets and liabilities of a partnership, though legal personality is an attribute only of the members of the partnership, not of the partnership. The term "partnership" connotes the relationship between the partners, not an entity different from them. Pollock observes that "[i]n the case of an ordinary partnership the firm is treated by mercantile usage as an artificial person, though not recognised as such by English law; and other voluntary and unincorporated associations are constantly treated as artificial persons in the language and transactions of everyday life". Unless the references of ordinary speech and the legal conception of a corporation are distinguished, confusion arises as to the meaning of terms such as "association" or "union". When the Queensland Act provided for the registration and consequent incorporation of "any industrial association or trade union of employees", it authorised registration to be effected when there were a number of persons associated or united for an industrial purpose or to share an industrial interest.
A branch of a federal industrial organisation is not a person; it has no existence apart from that of the members of the branch. The word "branch" in that context is no more than a collective noun which, although singular in form, is used with a plural implication. That was made clear in Williams v Hursey by Fullagar J, with whom Dixon CJ and Kitto J agreed, when he pointed out that a branch of a federally registered organisation has no corporate character and no separate existence as a juristic person. He said of the Hobart branch of the Waterside Workers' Federation of Australia that it:
"is not an `unincorporated society, fellowship, club or association'. It has no separate identity - no existence apart from the registered organisation, of which it is an integral and inseverable part. Its members are merely a section of the total membership of the federation - locally organised for the sake of convenience, but in no respect independent of the federation, and in all respects subject to the control of the federation".
Irrespective of the intention of its Federal Council, it was impossible for the BLF to continue as part of a larger body within which, by virtue of their former-BLF membership, BLF members would enjoy specific rights. Any rights henceforth to be enjoyed by former members of the BLF will be enjoyed by virtue of their newly-acquired membership of the CFMEU and the contract made with that organization by them or on their behalf. Any continuing rights will not be exercisable by them qua members of the BLF.
However, if we are correct in the view already expressed that the deletion of r. 23 governing dissolution was effectively achieved, other necessary aspects of the so-called merger or amalgamation were effectuated by the subsequent valid adoption (by postal ballot) of new r. 29. That Rule was in the following terms:
Where the Federal Council approves, ratifies or otherwise enters into an agreement for the amalgamation of the Federation with the Construction, Forestry, Mining and Energy Union referred to in these rules, such agreement shall provide for arrangements relating to the membership of the Federation being and becoming, by virtue of the amalgamation and/or merger, members of the Construction, Forestry, Mining and Energy Union (CFMEU) and the General Secretary shall be authorised to bind the members of the Federation in relation to any application for membership or transfer of membership.
(ii)On and from the day fixed for the amalgamation and/or merger to take effect, all assets and liabilities of the Federation shall merge with the assets and liabilities of the CFMEU and become assets and liabilities of the CFMEU to be held and controlled in accordance with the agreements for amalgamation and/or merger, and shall be treated as if they always were assets and liabilities of the CFMEU.
(iii)For all purposes and in all proceedings, an asset or liability of the Federation existing immediately before the day fixed for the amalgamation and/or merger is taken to have become and to have been at all times an asset or liability of the CFMEU on and from the day fixed for the amalgamation and/or merger.
(iv)On and from the day fixed for the amalgamation and/or merger, an instrument in which the Federation is mentioned (other than the Builders Labourers' Federation Cancellation of Registration Act, 1986, as amended and the Builders Labourers' Federation Cancellation of Registration - Consequential Provisions Act 1986) continues in full force and effect, save and except to the effect that such instrument is contrary to the rules of the CFMEU, in which case the instrument shall cease to have effect on the CFMEU.
All officers of the Federation must take such steps as are necessary to ensure that the amalgamation and/or merger is fully effective.
(vi)On and from the day fixed for the amalgamation and/or merger any and all members of the various branches of the Federation shall be and become members of the CFMEU and be treated in the CFMEU as if all of the period of their membership in the Federation was membership in the CFMEU and all other persons, if any, who, prior to the day of amalgamation and/or merger, were members of the Federation shall, immediately prior to the taking effect of the amalgamation and/or merger, cease to be members of the Federation.
(vii)The terms of this rule shall have effect notwithstanding the terms of any other rule of the Federation (including any branch thereof) including any rule relating to dissolution.
On and from the day fixed for the amalgamation and/or merger the Federation shall cease to exist otherwise than as an inseverable, inseparable and integral part of the CFMEU.
As to new r. 29, the learned Chief Justice observed:
I agree with counsel for the applicants that the new rule 29 was the "effective rule change". This rule dealt with the transfer to CFMEU of BLF members and BLF assets and liabilities. It made provisions inconsistent with the existing rules. These amendments were clearly necessary. But the validity of rule 29 has not been questioned.
If no challenge to r. 29 can be sustained as a matter of internal administration of the BLF in accordance with its rules, it was effective, as against the members for the time being of the BLF, to vest its assets in the CFMEU, at least in equity. The officers of the BLF, including the trustees, were thereupon obliged by r. 29(v), subject to any external constraints, to give effect to that vesting of its assets in the CFMEU. The equitable title of the CFMEU to those assets could, if necessary, be translated into full legal and beneficial ownership by an appropriate order for specific performance directed to the trustees or other relevant former officers of the BLF.
Did the BLF (De-recognition) Act and the Orders-in-Council made thereunder operate as a bar up to 31 March 1994 to the transfer to the CFMEU of any of the assets of the BLF?
The learned Chief Justice held that the Orders-in-Council did not operate as a bar to the transfer of the assets of the BLF to the CFMEU. He construed clause 2 of the Order-in-Council to mean that a disposition was void only if the Custodian elected to avoid it, and he found that the Custodian had not elected to avoid the disposition which had been part of the amalgamation agreement. Thus, there are two issues involved in this case, one of construction and one of fact. It is convenient to deal with the point of construction first.
The starting point in construing clause 2 is the language of the clause. The first sentence proscribes specified acts, and the second sentence sets out the consequence on the transaction of committing one of the proscribed acts. The natural reading of the second sentence is that the Custodian may elect to avoid the transaction. The specific result of such an election by the Custodian is that the disposition is void. The corollary of the language of the provision is that if the Custodian does not make the election the disposition is not void. It suggests that, failing the Custodian's election, the disposition is valid.
The alternative construction of the second sentence treats the words "shall be void" as describing the status of a payment or disposition effected in breach of the proscription in the first sentence. On this view, a disposition made without prior consent of the Custodian is void. The second sentence then proceeds to give the Custodian an option to confirm the already existing state of voidness, or to confer validity on the disposition. We reject this construction because it does not reflect a natural reading of the sentences. By conferring an option on the Custodian the draftsman may be taken to have intended to allow the Custodian to elect either to avoid or validate the transaction. That the election is between avoiding or not avoiding the transaction is indicated by the fact that a positive exercise of the option is expressed to avoid the disposition. The meaning contended for by the appellants requires the addition of words such as "unless validated" after the word "void", so that the sentence would read "Any such payment, disposition, encumbrance or charge shall be void unless validated at the option of the custodian".
Section 7(3) of the BLF (De-recognition) Act 1985 provides for a penalty for contravention of the Order-in-Council. In a number of cases, the fact that a statute imposed a penalty on the doing of a particular act has been seen as an indication that the statute intended to render that act void. In Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410, Mason J (as he then was), at 423, indicated as follows what he regarded as the proper approach to assessing the impact on a contract of a statutory instrument which purports to prohibit its making:
The principle that a contract the making of which is expressly or impliedly prohibited by statute is illegal and void is one of long standing but it has always been recognized that the principle is necessarily subject to any contrary intention manifested by the statute. It is perhaps more accurate to say that the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction and that the principle to which I have referred does no more than enunciate the ordinary rule which will be applied when the statute itself is silent upon the question. Primarily, then, it is a matter of construing the statute and in construing the statute the court will have regard not only to its language, which may or may not touch upon the question, but also the scope and purpose of the statute from which inferences may be drawn as to the legislative intention regarding the extent and the effect of the prohibition which the statute contains.
Mr Sutherland QC, who appeared with Mr Hardingham for the first and second appellants, relied on Yango to urge this Full Court to look at the purpose of the legislation. He argued that the purpose of the Order-in-Council would be better achieved by construing it as avoiding every disposition made in contravention of the Order which the Custodian did not elect to validate. He relied on the other paragraphs of the Order-in-Council to demonstrate that its purpose was to commit possession, custody and control to the Custodian, and to give the Custodian absolute discretion in spending funds for carrying out the affairs of the BLF. This scheme manifested an intention on the part of the Governor-in-Council to invest the Custodian with a very high degree of control over the property of the BLF. That degree of control, it was argued, was more consonant with a construction of clause 2 which resulted in the avoidance of all dispositions, subject to validation at the option of the Custodian, than the construction which treated all dispositions as valid subject to avoidance by the Custodian. However, on either approach, the Custodian has very considerable power. He has the last say whether to avoid or validate a transaction. The purpose of the paragraph, namely, to repose in the Custodian a power to determine whether or not a disposition should take effect, is not materially affected by the choice of one construction rather than the other. Both secure the purpose of the Order-in-Council. Thus, the purpose and scope of the Order-in-Council does not militate against the natural reading of the language of clause 2.
A final consideration which supports the construction which we favour is that the proscription of clause 2 is directed to the person paying or disposing of funds or property of the BLF. It is not directed to the person receiving or acquiring such funds or property. As the proscribed transaction may involve an innocent third party who receives or acquires the property, it is unlikely that the framers of the Order-in-Council intended, without saying so, to render the transaction immediately void against such a party, but liable to be made subsequently enforceable at the election of the Custodian.
Thus, in our view, the disposition which was the subject of the amalgamation agreement was valid unless avoided by the Custodian. It thus becomes necessary to determine the factual question whether the Custodian did elect to avoid the disposition. The Custodian was not party to the amalgamation agreement and was not advised of it by the parties to the agreement. Before the making of the amalgamation agreement he had lodged Queen's caveats against the certificates of titles to land of which the BLF was the registered proprietor thereby ensuring that he would be given notice of any subsequent dealing with that land. The caveats did not indicate that he objected to a particular dealing. His attitude is evidenced by paragraph 5(e) of the Defence filed in these proceedings in response to paragraph 5 of the Amended Statement of Claim. Those pleadings are in these terms:
Amended Statement of Claim:
5. On 30 March 1994 the Second Applicant executed an agreement with the Australian Building Construction Employees and Builders Labourers Federation (hereinafter "the BLF") which agreement had effect on and from 31 March 1994.
Defence:
5. They deny each and every allegation made in paragraph 5 and, without prejudice to the generality of that denial, deny that any valid agreement was concluded:
...
(e)(i) The De-recognition Act and the Orders-in-Council made thereunder provide that possession, custody and control of the funds and property of the BLF is committed to the first respondent and that no person shall pay or dispose of any of the funds or property of the BLF or of any interest therein or create any encumbrance or charge in respect thereof without the prior written consent of the second respondent and that any such payment, disposition, encumbrance or charge shall be void at the option of the first respondent;
(ii)the first respondent has not given written consent or any consent at all to any disposition of funds or property of the BLF to the second applicant;
(iii)the first respondent regards any attempt by the BLF to dispose of funds or property of the BLF to the second applicant as void;
(iv)thus insofar as the purported agreement and/or any rule changes within the BLF purport to direct, allow or effect payment or disposition of funds or property of the BLF to the second applicant otherwise than subject to the written consent of the first respondent the purported agreement and/or rule changes are invalid.
That paragraph of the Defence thus restates the construction of clause 2 of the Order-in-Council which we have already discussed and rejected, namely that it rendered void ab initio any purported disposition of the funds or property of the BLF without the consent of the Custodian. Accordingly, no reference was made to the alternative construction requiring the Custodian to elect to avoid the disposition or to any facts which might be said to amount to such an election. Rather, the Custodian maintained the assertion that no election was necessary. In our view, the learned Chief Justice was correct in finding nothing in the pleadings capable of constituting an election by the Custodian to treat the disposition as void.
That conclusion and the absence of any suggestion that the Custodian has exercised his election in any other way, leaves open the question whether he could still do so. Since it has to be exercised within a reasonable time, any subsequent attempt by the Custodian to vindicate some new alleged election will confront formidable obstacles the significance of which may vary in respect of different assets under his control and the extent (if any) to which third parties claim to have acquired interests therein. However, it is inappropriate for this Full Court to say any more about this question.
If "yes" to (3), were the Orders-in-Council made after 31 March 1994 effective to prevent transfer to the CFMEU of any of the assets which the BLF held before the purported amalgamation or merger?
In the light of the negative answer which we have given to the third question, it is unnecessary to address this question.
Did this Court acquire jurisdiction from the institution of the amended application filed 3 May 1994 to determine whether there had been a valid and effective disposition to the CFMEU of the funds and assets of the BLF, possession, custody and control of which had formerly been vested in the Custodian?
The appellants contended on the appeal that the Court lacked jurisdiction to hear and determine the case because the respondents' invocation of s. 258 of the Act was colourable. The learned Chief Justice dealt with this argument in his initial decision in this matter, dismissing the appellants' motion for a declaration that the Court lacked jurisdiction and that the application be dismissed: Sutton v Sharp (1994) 1 IRCR 259. We agree with the reasons he gave, at 273-4, for the conclusion that the invocation of s. 258 was not colourable. These reasons were adopted by the Chief Justice in the judgment under appeal. His Honour dealt with the argument further in the judgment under appeal, at 45. We also agree with those further reasons of the Chief Justice for his conclusion that the invocation of s. 258 was not colourable. There is nothing which we can usefully add to those reasons on this aspect of the case.
On 28 September 1995, the learned Chief Justice granted a stay pending appeal of the orders made by him so far as they affected real estate transferred by the BLF to the CFMEU. The stay was expressed to endure until the determination of this appeal. It therefore no longer has effect. Subject to the giving of certain undertakings by the national Secretary of the CFMEU, his Honour refused to grant a stay in respect of the personalty transferred by the BLF to the CFMEU. On 20 October 1995, this Full Court also refused a stay in relation to the personalty. The consequence of our conclusion in this appeal is that the personalty was property transferred to the CFMEU, and no further reference to the application for a stay in relation to the personalty is now required.
In accordance with these reasons, the Court will order that each of the appeals be dismissed.
I certify that this and the preceding twenty-four (24) pages are a true copy of the Reasons for Judgment of the Court.
Associate:
Date:
Date of Hearing : 5 and 6 February 1996
Date of Judgment : 23 August 1996
VI 95/4819
Counsel for Appellant : Mr I.G. Sutherland, QC
with Mr I.J. Hardingham
Solicitors for Appellant : Victorian Government Solicitor
Counsel for 1st and 2nd : Mr S. Rothman
Respondents with Mr H. Borenstein
Solicitors for 1st and 2nd : R.L. Whyburn & Associates
Respondents
Counsel for 5th Respondent : -
Solicitor for 5th
Respondent : J.N. Zigouris & Co
Appearances in Person : Mr M. Greany
: Mr M. Young
: Mr Dalton
Counsel for Intervenor : Mr H. Burmester with Mr T. Ginnane
Solicitors for Intervenor : Australian Government Solicitor
VI 95/4820
Counsel for Appellant : Mr I.G. Sutherland, QC
with Mr I.J. Hardingham
Solicitors for Appellant : Victorian Government Solicitor
Counsel for 1st and 2nd : Mr S. Rothman
Respondents with Mr H. Borenstein
Solicitors for 1st and 2nd : R.L. Whyburn & Associates
Respondents
Counsel for 5th Respondent : -
Solicitor for 5th
Respondent : J.N. Zigouris & Co
Appearances in Person : Mr M. Greany
: Mr M. Young
: Mr Dalton
Counsel for Intervenor : Mr H. Burmester with Mr T. Ginnane
Solicitors for Intervenor : Australian Government Solicitor
VI 95/4821
Counsel for Appellants : -
Solicitors for Appellants : No appearance
Counsel for 1st and 2nd : Mr S. Rothman
Respondents with Mr H. Borenstein
Solicitors for 1st and 2nd : R.L. Whyburn & Associates
Respondents
Counsel for 5th Respondent : -
Solicitor for 5th
Respondent : J.N. Zigouris & Co
Appearances in Person : Mr M. Greany
: Mr M. Young
: Mr Dalton
Counsel for Intervenor : Mr H. Burmester with Mr T. Ginnane
Solicitors for Intervenor : Australian Government Solicitor
VI 95/4822
Counsel for Appellants : Mr M.S. Jacobs, QC
with Mr A.S. Kostopoulos
Solicitors for Appellants : Athena Touriki & Co
Counsel for 1st and 2nd : Mr S. Rothman
Respondents with Mr H. Borenstein
Solicitors for 1st and 2nd : R.L. Whyburn & Associates
Respondents
Counsel for 5th Respondent : -
Solicitor for 5th
Respondent : J.N. Zigouris & Co
Appearances in Person : Mr M. Greany
: Mr M. Young
: Mr Dalton
Counsel for Intervenor : Mr H. Burmester with Mr T. Ginnane
Solicitors for Intervenor : Australian Government Solicitor
8
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