The Motor Inn, Motel and Accommodation Association

[2015] FWC 25

[2015] FWC 25

FAIR WORK COMMISSION

DECISION

Fair Work (Registered Organisations) Act 2009
s.30(1)(c) RO Act - Cancellation of registration on FWC's Own Motion

The Motor Inn, Motel and Accommodation Association
(D2013/107)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 9 JANUARY 2015

Section 30(1)(c) of the RO Act - cancellation of Registration on Fair Work Commission's own motion.

Legislative Provision

[1] This is an application on the Fair Work Commission’s (the Commission) own motion to cancel the registration of the Motor Inn, Motel and Accommodation Association (MIMAA) pursuant to s.30(1)(c) of the Fair Work (Registered Organisation’s) Act 2009 (the RO Act).

[2] Section 30(1)(c) provides:

“30 Cancellation of registration on technical grounds etc.

(1) The FWC may cancel the registration of an organisation:

. . .

(c) on the FWC’s own motion, if:

(i) the FWC has satisfied itself, as prescribed, that the organisation is defunct; or


(ii) the organisation is an organisation of employees, other than an enterprise association, and has fewer than 50 members who are employees; or


(iii) the organisation is an enterprise association and has fewer than 20 members who are employees; or


(iv) the organisation is an organisation of employers and the members who are employers have, in the aggregate, throughout the 6 months before the application, not employed on an average taken per month at least 50 employees; or


(v) the organisation is not, or is no longer, a federally registrable association.”

[3] Section 30(2) provides:

“(2) Before the FWC cancels the registration of an organisation under:


    (a) paragraph (1)(b) on application by a person interested or by the Minister; or


    (b) paragraph (1)(c);

the FWC must give the organisation an opportunity to be heard.”

[4] The effect of cancellation of registration is that the organisation ceases to be an organisation and a body corporate under this Act, but does not, because of the cancellation, cease to be an association (s.32(a) RO Act).

[5] If it considers an organisation is defunct pursuant to s.30(1)(c), regulation 36 requires the Commission to carry out a range of inquiries and Gazette notices, if necessary.

“36 Cancellation of registration of defunct organisation (s 30 (1) (c))

(1) For paragraph 30 (1) (c) of the Act, the FWC must, with a view to satisfying itself that an organisation is defunct, comply with the following subregulations.

(2) The FWC must make appropriate inquiries by letters sent by post to:

(a) the organisation at its office; and


(b) the members of the committee of management of the organisation as last known to the FWC at their postal addresses as last known to the FWC.

(3) If, after inquiries made under subregulation (2), the FWC fails to satisfy itself whether the organisation is defunct, the FWC must publishin the Gazette a notice stating that:

(a) subject to consideration of any objections lodged in accordance with the notice, the registration of the organisation will, at the end of one month after the date of publication of the notice, be cancelled on the ground that the organisation is defunct; and


(b) a person who wishes to show cause why the registration of the organisation should not be cancelled on that ground may, within one month after the date of publication of the notice, lodge with the FWC a notice of objection.

(4) A notice of objection must:

(a) be in the form set out in the Procedural Rules or in a form otherwise approved by the President; and


(b) be lodged with the FWC; and


(c) comply with the requirements of regulation 14.

(5) If a person has lodged a notice of objection under paragraph (3) (b), the FWC must give the person an opportunity to appear before it and to be heard in support of the objection.”

Background

[6] MIMAA was originally registered in 1971 as “The Motor Inn and Motel Association of Australia”. The name was changed to MIMAA in 1991.

[7] The application to apply to cancel MIMAA’s registration was commenced by a “show cause” letter sent from the Regulatory Compliance Branch of the Commission (RCB) to MIMAA on 16 April 2013. This was followed by an exchange of correspondence and then a report dated 28 August 2013 to Vice President Watson, head of the Organisations Panel from the RCB.

[8] This report sets out in detail the instances of non-compliance by MIMAA with its obligations under the RO Act. It attaches the various items of correspondence since 2010 from the Commission and the financial reports provided to the Commission.

[9] The issues raised include:

● Failure to lodge a properly compliant financial report since the 2007 financial year;

● Failure to provide annual returns of information for 2012 and 2013;

● A substantial decline in industrial activity was evidenced from what has been lodged;

● Since 2002 MIMAA only lodged one financial report on time;

● Non-compliance with various MIMAA rules with respect to governance of the organisation, e.g. annual meetings and elections;

● In some years MIMAA reported less than five members, in others over 600;

● Minimal participation in Commission matters.

● It appeared that MIMAA was effectively run by the Accommodation Association of Australia (AAA) a non-registered organisation.

[10] In correspondence between the RCB and MIMAA in April - August 2014 it was conceded that MIMAA had been a “dormant entity since 2010”. It appears that its register of members is not separate to AAA. Its registration had been kept solely for the purpose of participation in Commission proceedings. The view was formed that MIMAA was “defunct” pursuant to s.30(1)(c)(i) of the RO Act.

[11] The response of 27 August 2013 is on AAA letterhead and was signed by its General Manager, Operations, Michael Georgeson.

[12] He states that it had been intended to wind-up MIMMA but it was decided by AAA to keep it for participation in Commission proceedings. AAA is the “present operational entity” and acts for MIMAA. Mr Richard Munro is the Chief Executive Officer of AAA. Financial reports, elections and governance have been carried out in respect of AAA on behalf of MIMAA. As at 30 June 2013 there were 877 members of AAA “which have then become members of MIMAA”. Finally, options to address the issues raised by the Commission were set out.

Commission Proceedings

[13] The file was allocated to me and a number of preliminary hearings/conferences took place on 18 October 2013, 17 December 2013, 10 March 2014 and 1 August 2014. MIMAA was represented by Mr Georgeson and Mr Munro.

[14] On 18 October 2013 I ordered that MIMAA provide to the Commission a report which demonstrates that MIMAA is not defunct prior to the next hearing. In particular, it requested proposals as to how compliance with the RO Act will be addressed with respect to:

1. Rules

2. Membership

3. Elections

4 Returns to the Commission

5 Financial returns.

[15] MIMAA’s report of 10 December 2013 sets out the reasons why it is not defunct and the actions it proposed during 2014, to rectify the issues raised in respect of the above five issues. These were:

● rule changes to ensure the organisation operates in accordance with the Act;

● perhaps most importantly, elections to constitute a new National Council and officers;

● correction of the outstanding financial returns in consultation with its auditors and the Commission;

[16] The task for me, following further consultation with the RCB was to set out a program of action for MIMAA to pursue and ensure they complied. This was set out in transcript on 17 December 2013:

“THE DEPUTY PRESIDENT: Right. So let's summarise. So what I would propose is that you lodge the prescribed information for elections in the organisation, to be conducted by the AEC, by the end of January. Secondly, that you lodge outstanding returns – that is to say administrative officer returns and so on, as required by the Act – by 14 February for previous years. And that the 2014 return would be lodged in accordance with the legislative requirement, that is by 31 March 2014. And then thirdly, that the auditor's report for the financial year 2012/2013 would be lodged by the end of January. Do you agree with all that?

MR GEORGESON: Yes.

MR MUNRO: Yes.

THE DEPUTY PRESIDENT: Okay. Now, I might say none of that prejudges what happens with respect of this ultimately. And it doesn't mean that the regulatory compliance branch may not be obligated to carry out an enquiry. I suppose it partially depends on where we get up to there. So I think the view I take about this is we are trying to take some small steps to guide us on what should be done. I mean, noting also the fact that I think I gathered from what you are saying, that you are not dismissing the possibility that you might not want to continue with registration, on balance overall. It may all become too hard.

MR MUNRO: It's an option.

THE DEPUTY PRESIDENT: It's an option. All right. So I think in the light of that, I think what I would do is to provide a copy of this transcript also to the regulatory compliance branch so that they know what is going on, and we should relist the matter for report, depending on where all that has got to, by probably I suppose some time towards the end of February, I guess”

[17] The election process was delayed. However, at the 1 August 2014 report back it was agreed that the matter be set down for hearing on 28 October 2014. Directions were issued to MIMAA and a further report requested from the RCB.

[18] At the 28 October hearing MIMAA was represented by Mr A. O’Brien, with Mr M. Georgeson and Mr R. Munro.

MIMAA’s submission

[19] By the time of the hearing, a number of steps had been taken to address the issues of concern:

● 2012 - 2014 returns lodged;

● Elections conducted by the Australian Electoral Commission had been completed, after one mishap where not enough nominations were received. A new National Council and Officers were elected;

● Rule changes had been lodged with the Commission;

The deficiencies with respect to the financial reports remained, however. Work was clearly underway with auditors to ensure compliance.

[20] A written submission and a witness statement of Richard Munro, now described as Executive Director of MIMAA were provided prior to the hearing.

[21] MIMAA’s evidence is that it has over 500 members. If it is accepted that these are bona fide members and not simply AAA members, s.30(1)(c)(iv) does not apply. They employ many thousands of employees. If MIMAA’s members are, in the majority, federal system employers, it is still a federally registrable association pursuant to s.30(1)(c)(v).

[22] The question to be determined is whether MIMAA is “defunct” pursuant to s.30(1)(c)(i).

[23] The transgressions of MIMAA summarised above are admitted, but it is submitted that they are not determinative of whether the organisation is defunct. Ongoing compliance with the registration requirements of s.19(1) are not a test of whether an organisation is defunct.

[24] It is submitted that the steps required by Regulation 36 have not occurred.

[25] In his witness statement, Richard Munro qualifies the previous admission that MIMAA was “dormant” and argues that this is not the same as being defunct. He testifies to the over 500 hospitality employer members of MIMAA in New South Wales and Queensland. He also summarises the arrangements between AAA and MIMAA for the provision of administrative services. It is also submitted that MIMAA’s members will be disadvantaged by the removal of the automatic right to make award variation applications upon deregistration.

[26] MIMAA’s written submission was supplemented by oral submissions at the hearing. Most of the debate was about the meaning of “defunct”.

[27] After the hearing the following further written submissions were received:

(a) Mr O’Brien on behalf of MIMAA - 31 October 2014

This detailed the pre-1988 legislative provision that all the requirements of an organisation applying for registration be maintained. The Industrial Relations Act 1988 maintained the “defunct” test but did not continue the previous “catch all” provision.

(b) RCB - 7 November 2014

This demonstrated that Regulation 36(2)(b) had been complied with by correspondence to the last known office holders of MIMAA.

(c) Mr O’Brien on behalf of MIMAA - 18 November 2014

This submits that the functions to be carried out by the Commission pursuant to Regulation 36(2)(b) must be carried out by a Presidential Member and that this has not occurred in this case.

Is MIMAA Defunct?

[28] I accept that s.30(1)(c)(iv) and (v) have no application in this case. There is no reason not to accept the 2013 organisational return to the Commission that MIMAA had 512 members as at 31 December 2013 and that that number has not reduced. They are a variety of substantial employers in the hospitality industry. It is clear MIMAA remains a federally registrable association as defined by s.18A of the RO Act.

[29] The case against MIMAA is that it is defunct because of its persistent non-compliance with its obligations under the RO Act and its lack of industrial and other activity. There is a related argument that MIMAA is not a genuine association because it is really a “shell” operated by AAA, which itself is not registered.

[30] Submissions were made by Mr O’Brien at the hearing and more particularly in the written submissions of 18 November 2014 about the operation of Regulation 36 which I do not accept.

[31] I do not agree that the letters of inquiry to be sent under Regulation 36(2) must be sent in the name of the Presidential Member hearing the case. I was referred to a number of cases where this has occurred, and others where the function has been carried out by the General Manager (or its predecessor) or staff (such as the RCB) on delegation. There is nothing to indicate that this function must be performed after the matter has commenced to be heard by the Presidential Member.

[32] In addition, Regulation 36(3) which requires gazettal, only operates if the Commission is not satisfied that the organisation is defunct. If the Commission is already satisfied that the organisation is defunct, no gazettal is required.

[33] I accept that deregistration of an organisation on the Commission’s own motion is a serious step and should not be taken without exhausting all avenues of inquiry. In MIMAA’s case it was always clear who the Commission should be contacting and the “dialogue” went on for many years. I find that the Commission has acted appropriately and in accordance with Regulation 36.

[34] I am not satisfied that MIMAA is defunct in accordance with s.30(1)(c)(i).

[35] In The Registrar v Master Hairdressers’ Association of WA, Industrial Union of Employers [2004 WAIRC 11936] a Full Bench of the Western Australian Industrial Relations Commission provided the following definition of “defunct” which I believe is appropriate:

“16 The word “defunct” means, in its most relevant definition, “no longer operative” (see The Macquarie Dictionary, 3rd Edition).

17 I am satisfied and find, on all of that evidence, that the respondent is no longer operative, has not been for almost 18 months, has no prospect of ever being operative again, and is therefore “defunct” within the meaning of s73(12)(b) of the Act.”

There had been no elections, no meetings of governing bodies and there were no members.

[36] In The Australian Commercial Dental Laboratories Association (NSW) [2012] NSWIRComm 136, a Full Bench of the Industrial Court of New South Wales held that the organisation was defunct as a result of its failure to lodge returns, conduct elections or lodge financial returns.

[37] In these and other cases, not only has there been a lack of compliance with reporting obligations but there has been a fundamental breakdown in the operations of the organisation such as failure to hold elections or meetings of governing bodies or to provide evidence of membership. Often there has been a failure to respond to correspondence from the relevant regulatory authority. This would be expected to extend over a lengthy period of time to lead to a finding that the organisation is defunct.

[38] In a recent decision Australian Childcare Centres Association, [2014 FWC 5498, Watson VP dealt with a similar case to MIMAA. He found that whilst the organisation had been deficient in its reporting, it had taken steps to remedy this since the proceedings commenced before him. It had elected new officials, and lodged returns and financial reports. He therefore determined that the organisation was not defunct.

[39] Similar steps have been taken by MIMAA. It has had elections conducted by the Australian Electoral Commission for new officers and National Council. There is evidence of meetings of the governing body taking place. Rule changes have been made. Returns have been lodged. The financial reports are still not in a format which would be acceptable to the Commission but I was assured that this process was underway.

[40] In the circumstances, I do not think that this level of inactivity is consistent with the high bar that must be reached for an organisation to be considered defunct.

[41] I also accept that the argument that MIMAA is not a “genuine” organisation because of its link to AAA is not a ground for deregistration. It is true that s.5(3) for the RO Act sets out standards to be maintained. These are:

“5 Parliament’s intention in enacting this Act
. . .
(3) The standards set out in this Act:

(a) ensure that employer and employee organisations registered under this Act are representative of and accountable to their members, and are able to operate effectively; and


(b) encourage members to participate in the affairs of organisations to which they belong; and


(c) encourage the efficient management of organisations and high standards of accountability of organisations to their members; and


(d) provide for the democratic functioning and control of organisations; and


(e) facilitate the registration of a diverse range of employer and employee organisations.”

[42] However, unlike legislation prior to 1988, the fact that an organisation has not maintained all of the criteria for registration set out in s.19(1) is not a ground for deregistration. The test is whether the organisation is defunct. By way of analogy, there are branches of Federal organisations where the members, finances and property, reside in the parallel state-registered union. There are even more where the reverse applies. The fact that the relevant entity does not have independent financial and administrative affairs does not prevent it maintaining registration under the relevant industrial legislation.

Conclusion

[43] Because I have found that MIMAA is not defunct I propose to take no further action in relation to this matter and close the Commission’s file. I expect that MIMAA will now be diligent in complying with its obligations. If it is not, the Commission will take appropriate action pursuant to the RO Act.

DEPUTY PRESIDENT

Appearances:

A. O’Brien with M. Georgeson and R. Munro for MIMAA.

Hearing details:

Sydney:

2013

October 18;

December 17.

2014

March 10;

August 1.

October 28.

Final written submissions:

2014

October 31 (MIMAA);

November 7 (RCB), 18 (MIMAA)

Printed by authority of the Commonwealth Government Printer

<Price code C, PR559661>