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State of Victoria v Sutton

State of Victoria v Sutton

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HIGH COURT OF AUSTRALIA

GAUDRON, McHUGH, GUMMOW, KIRBY AND HAYNE JJ

THE STATE OF VICTORIA FIRST APPELLANT

THE HONOURABLE STEPHEN
GEORGE ALLEY SECOND APPELLANT

and

JOHN DAVID SUTTON FIRST RESPONDENT

CONSTRUCTION, FORESTRY,
MINING AND ENERGY UNION SECOND RESPONDENT

The State of Victoria v Sutton (M5-1997) [1998] HCA 56

2 September 1998

ORDER

Appeal allowed.

Set aside the order of the Full Court of the Industrial Relations Court of Australia.

Remit the matter to the Full Court of the Industrial Relations Court of Australia to determine any remaining issues under a Notice of Contention in or to the effect of that filed by the respondents in this Court and dated 1 April 1997.

On appeal from the Industrial Relations Court of Australia

Representation:

I G Sutherland QC with L Kaufman for the appellants (instructed by Victorian Government Solicitor)

S C Rothman SC with H Borenstein for the respondents (instructed by
R L Whyburn & Associates)

Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

The State of Victoria & Anor v John David Sutton & Anor

Property – Vesting of property of unincorporated association in Custodian – Inability of association to dispose of property vested in Custodian.

Property – Disposition – Prohibition on disposition without prior written consent of Custodian – Disposition in breach of prohibition "void, at the option of the Custodian" – Whether disposition in breach of prohibition void or voidable.

Property – Option to avoid disposition – Manner of exercising option – Period of time in which option to be exercised – Method of communicating exercise of option.

Industrial law (Cth) – Registered organisation – Cancellation of registration – Effect upon property of organisation.

Words and Phrases – "void" – "option" – "election".

Builders Labourers' Federation (Cancellation of Registration) Act 1986 (Cth).

Builders Labourers' Federation (Cancellation of Registration Consequential Provisions) Act 1986 (Cth).

BLF (De-recognition) Act 1985 (Vic).

Workplace Relations Act 1996 (Cth), s 347.

Workplace Relations and Other Legislation Amendment Act 1996 (Cth), Sched 16.

GAUDRON, GUMMOW AND HAYNE JJ. On 30 March 1994, the Australian Building Construction Employees' and Builders Labourers' Federation ("the BLF") entered into a written agreement ("the amalgamation agreement") with the Construction, Forestry, Mining and Energy Union ("the CFMEU"). This was expressed to bring about "an amalgamation and/or merger of the BLF into the CFMEU" so that "all assets and liabilities of the BLF shall merge with the assets and liabilities of the CFMEU". At the date of the agreement the CFMEU was, and the BLF was not, an organisation of employees registered under the Industrial Relations Act 1988 (Cth) ("the 1988 Act")[1].
[1]Since 25 November 1996 titled the Workplace Relations Act 1996 (Cth) ("the Workplace Relations Act"). See s 2(1) and cl 1 of Sched 19 of the Workplace Relations and Other Legislation Amendment Act 1996 (Cth).
This case concerns the effectiveness of the amalgamation agreement in light of Orders in Council previously made…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1998] HCA 56
Decision Date: 2 September 1998

CaseChat Overview and Summary

The High Court of Australia heard an appeal concerning the validity of a purported transfer of property from the Builders Labourers' Federation (BLF) to the Construction, Forestry, Mining and Energy Union (CFMEU). The State of Victoria and the Custodian of the BLF's property contended that the transfer was void because the Custodian had elected to treat it as such, in accordance with Orders in Council made under Victorian legislation. The central dispute revolved around whether the Custodian's actions had effectively avoided the disposition of the property to the CFMEU.

The legal issues before the High Court included whether a disposition of property prohibited by an Order in Council, which stated it was "void, at the option of the Custodian," was in fact void or merely voidable. The Court also had to determine the manner in which the Custodian could exercise this option to avoid the disposition, the timeframe within which such an option must be exercised, and the method by which the exercise of this option should be communicated. Furthermore, the Court considered the effect of the cancellation of the BLF's registration under Commonwealth industrial law on its property.

The High Court reasoned that the Orders in Council, enacted under Victorian legislation in anticipation of the BLF's de-registration, empowered the Governor in Council to restrict the use and control of the BLF's property. The Court found that the Custodian's pleading in defence, asserting that the purported amalgamation agreement was void, constituted a sufficient exercise of the power of avoidance and communication of that exercise. Consequently, any disposition of property in favour of the CFMEU had been avoided. The Court held that the CFMEU was not beneficially entitled to the property in question.

The High Court allowed the appeal, setting aside the order of the Full Court of the Industrial Relations Court of Australia. The matter was remitted to the Full Court of the Industrial Relations Court of Australia to determine any remaining issues raised by a Notice of Contention filed by the respondents.

Orders

Orders of the court

Appeal allowed.

Set aside the order of the Full Court of the Industrial Relations Court of Australia.

Remit the matter to the Full Court of the Industrial Relations Court of Australia to determine any remaining issues under a Notice of Contention in or to the effect of that filed by the respondents in this Court and dated 1 April 1997.

Background

Background to the litigation

The principal issue in the case is whether the whole or part of a purported transfer of property, then owned beneficially by members of the BLF, is void. The State and the Custodian contend that it was void because, acting under Orders in Council enacted before the transfer was made, the Custodian has elected to treat the transfer as void. In my opinion, the purported transfer of property to the CFMEU has been avoided by the Custodian in accordance with his powers under the Orders in Council and the CFMEU is not beneficially entitled to the property.Factual background The CFMEU is an organisation of employees registered under the Industrial Relations Act 1988 (Cth). The BLF was formerly an association registered under the Conciliation and Arbitration Act 1904 (Cth). Its registration was cancelled on 14 April 1986 pursuant to the Builders Labourers' Federation (Cancellation of Registration) Act 1986 (Cth). Immediately before its de-registration, the BLF, as a federally registered organisation, held corporate status under the Conciliation and Arbitration Act. Upon de-registration, pursuant to s 143(6) of the then Conciliation and Arbitration Act[42], the BLF lost its corporate status and its property reverted to "the association" to be dealt with according to the rules of the organisation[43]. That is, the property became the property of the members of the association collectively at the time of de-registration[44].[42]Which continues to apply pursuant to the Builders Labourers' Federation (Cancellation of Registration - Consequential Provisions) Act 1986 (Cth).[43]s 143(6) of the Conciliation and Arbitration Act provides that:"(6) 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."[44]Dobinson v Crabb (1990) 170 CLR 218 at 220-221; Bacon v O’Dea (1989) 25 FCR 495. In 1985, in anticipation of the Commonwealth legislation, the Parliament of Victoria enacted a statute entitled the BLF (De-recognition) Act 1985 (Vic) which was to come into force after the Commonwealth legislation cancelling the registration of the BLF took effect. Section 7 of that Act provided that:"7(1) For the purpose of protecting the rights of persons who have ceased to be members of BLF, the Governor in Council may by Order published in the Government Gazette provide for the restriction of the use of funds or property of BLF and for the control of those funds or that property.(2) An Order made under sub-section (1) – (a) shall come into force upon the date of publication of the Order in the Government Gazette; and(b) shall, unless sooner revoked, cease to be in force at the expiration of 6 months from the date on which it came into force but may, at any time while it remains in force (including a time when it remains in force by virtue of a previous extension or previous extensions under this paragraph), be extended in duration by a further Order made by the Governor in Council and published in the Government Gazette.(3)A person shall not contravene an Order made under sub-section (1).Penalty: 100 penalty units."

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GAUDRON, GUMMOW AND HAYNE JJ HUGH J

The Custodian became aware of what had been done only with the initiation by the CFMEU of the litigation in the IRC. The pleading by the Custodian in the defence on 28 October 1994 that "the purported amalgamation agreement was and is void" was sufficient exercise of the power of avoidance and communication of its exercise. It follows that on 24 August 1995 the IRC should not have granted a declaratory order that the CFMEU was "beneficially entitled" to funds or property vested in the Custodian. As to beneficial entitlement to real property, any such disposition in favour of the CFMEU had been avoided. As to the funds on deposit, they had been vested in the Custodian and his statutory title to them had not been divested by the amalgamation agreement.Conclusion The order of the Full Court was that the appeal to it be dismissed. The appeal to this Court from that order should be allowed and the order should be set aside. The matter should be remitted to the IRC for determination of any remaining issues under a Notice of Contention in or to the effect of that filed by the respondents in this Court and dated 1 April 1997. During argument in this Court, the parties concurred in that course. It will be for the Full Court of the IRC to determine what, if any, leave is required from it before those issues may be raised and whether any leave should be given. If the appellants ultimately are successful in the Full Court, it will be for it to determine what, if any, order should or can be made in the proceeding itself to reverse the consequences of compliance with order 4 of the orders made by Wilcox CJ. If the respondents ultimately are successful in the outcome of the appeal, it would still be for the Full Court to consider whether the relief given by Wilcox CJ requires variation to bring it into proper form. We refer, for example, to the absence of any representative order with respect to the members of the BLF and also to the making of a declaration as to the title to the real property in the absence of the registered proprietors. Schedule 16 to the Workplace Relations and Other Legislation Amendment Act 1996 (Cth) provides in certain circumstances for the exercise by the Federal Court of Australia of the jurisdiction of the IRC with respect to acts or omissions occurring before the "transfer day" (25 May 1997). However, item 63 of Sched 16 provides that this transfer of jurisdiction does not apply to a proceeding (defined in item 62 so as to include an appeal) which had been completed in the IRC before 25 May 1997. The appeal to the Full Court of the IRC had been completed by the order dismissing it made on 23 August 1996. Indeed, the jurisdiction of this Court under s 73 of the Constitution had been enlivened by the grant on 14 February 1997 of leave to appeal pursuant to s 432(2) of the Workplace Relations Act. Schedule 16 does not operate by intervening between the grant of leave in this Court and the delivery of its judgment so as to require any remitter to be directed to the Federal Court rather than the IRC. It is to the IRC, not the Federal Court, that the remitter from this Court should now be directed.

Ratio Decidendi

Legal Principle Established

Established by: GAUDRON, GUMMOW AND HAYNE JJ, HUGH J

Full text does not contain this section.