Ward, L.E. v Williams, H

d5J	C A T C I - l k l O R D S

Applicants

Respondents

The

ques t ion

these

p roceedings

ra i ses

can

s ta ted

thus :

Unsuccessfu l

cmdida tes

a u n i o n

e l e c t i o n ,

a f t e r

the

e l e c t i o n

i s conclxded,

apply f o r an e lec tora l

inqui ry

under

5 .159

t he

Conc i l i z t i cn

and

k b i t r a t i o n

Act

1 9 0 4 ,

( " t h e A c t " ) .

.. .

the

r e t u r n of

t he spp l i ca t ron

t h e r d e n i s i ,

a f t e r

hear ing t h e

parties

raii2~0~1t

ob jec t ion

by the recpondencs, I

ordered tl?at t h e respqndents show came "-aihg order:

should n o t '.e

mxle under

s.141 of

t h e

Conc i l i a t ioc an6 L r t i t r a t t o n

Act

l?O4,

g i v i n g

d i r e c t i o n s

chat

the

respondents

o b s s r ~ ~ e

t k r u l e s oE

th?

Transport

Workers'

Union

Aus t ra l ia

and

that the respondents,

and

each

of them,

treat ss n u l l , and vcrid

and of no

fo rce or

e f f e c t

the

fo l lowing

r e so lu t ions

purpor.tedlg

ca r r i e?

the

3r lnch Cn~. r t f t ree of

E?%r.qecent c.f

"ne

Tcmzport Norkers '

Unlon

h s t r a l i a ,

zueensl ind Eransh,

zsme1;r:-

I	3 .
I

e l e c t i o n

~~73s

conducted

under

s.170

the

C,xc i l i a tTcn

+nd A r b l t r a t i m

Act

l?04 f o r

larcjs nuxber

pos i t i ons

i n t'ne

pu?ensland Branch of

the Tratlspor? Glorkers'

Union

Aus t r a l i a

( " the Union"!.

Noninations

opened on

November, 1382 and the p o l l c losed on 3 March. 1923 and was dec lared on 10 ?.!arch, 1983. On l1 'May, 1983 the 1r.dustrial Reg i s t r a r , pu r sumt t o s.151(1) GC the Act, on the app l i ca t ion of

fou r of

the p resen t

app l i can t s

and

one o t h e r ,

referred

EO "she

Court an a p p l l c a t i c n

c l a in lna that there had

Seen irregularities

in or ir. connection 571th those e l ec t zms .

c .

1 .

1 4

October,

19?3, Fitzgerald

J . declared

the

elections

f o r a l l F . U t

one

t he

posit~ons void:

see

Penhs l lur ick

!l98?-84) 51 .".L.!?.

5.89.

2 1

October,

ISE3, F i t z g e r a l d 5.

~n?.de nr?ers for "e-d

e l e c t i o n s

t o

be held

i n accgr&mce with

s.165.

of the

Ac t am3

eade orders

f o r

the

hcldinq

o f f i ce - , pe rd ing the r e su l t s

t he

new e l e c t i o n s .

His Hcnour

observe i , at

p.595:-

"I t vas

not

i n d i spu te ,

that,

even i n t5e

absence

of 3~ e:<pr?~s prn-r is lcn in ar! grganlzaL1on's

rules, t k e r e

is an

i lnp l ic i t

p rohib i t ion

u?on

the

use

th? r e s c ~ c ~ r c e . ~

o r fu rds

an orqaniza t ion

t o support

one

candidate

i n an

electin?

T n

circumstanc+s 57Lere they ha~a.~e

b en denied or will

be	den ied to mothe r cand ida te . "

He concluded that: there

had

been such m e and, f o r that reason,

made the orders

I have

indicated.

The new elections dlrl nct KeTUlt in a decisive Yrictory

for either ;earl. P!?'.'

hrcl defeated Mr. Nilllams for the position

of EKanCh Secretary af the flniorl, and

M r . Rilliaxs defeated Kt-.

Ward for the position of cecretary of the Frisbanr Sci>-Er.?ch of

Qn 15 March, 199<, ';h? Branch Comsittee

nf :-lanageaent by

v o t e of

to 5

K ? S O ~ V E ~ inter ilia

that

flr. Hilliam

appointed a Branch OrqanT-er and that branch

organisers report to

the Brisbane Zub-Eranch Cecrerary on 311 natters.

O?. 2P Pkrck,

Neaves J. granted a rule nisi calling on

Mr. Idilliams and othezs

to show cause why orders should nnt be

macle which would have the

effect of restcaning

them from giving effect tc the resolutions

of 15 March, 1984; he qrsnted an interim injunction. On 29 Ma;7,

1984, Meaves

J. dischxgecl the rule to

show cause and dissolved

the interim injunctmn.

The present application challenges the validity of two

resolutions zf the Sranch Committee

of ManaTement, the first axle

on 20 October, 1983 and the second on l9 April, l?&%. It is not disputed by the respondents t h t the purpose of those resolutions

was to use

the funds of the Unior. to pay the legal costs

of the

respondents to the e.lectora1 inquiry by Fitzgerald J.

Shortly

put, the argunent

of the applicants is that it is contrary to the

rules of the 1Jnic-n fgr ?he EKFLIIC~

Comnittes of

!-!anagewent t o

authorise the payment

of the

leqal costs of tEe

members of the

Each of the app l i can t s is 3 rwnber of

the

Trampcart

blorkers'

Uninn

kustral ia , which i s an

o rganisa t ion

employ?es registered

pursuant t o the Ec t .

There

i s a branch of

the Union known as the

Queensland

Sranch

which

i s i tself

divided

i n t o

n i n e

sub-branches,

one of the sub-branches

being

the

Brisbane

Sub-aranch.

It i s

necrssary t o

r e f e r t o s0~c.e of

the r u l e s

t h e

Union.

1 .

alia,

(h)

!il

(k)

(l)

...

Rule E; provides that, subjecc to the Act, t?-e suprerr.e

control of t he Union is vestec? in the Federal Council. There is

3 Federal Cosmitt%

of Management and, when the Federal Council

is not assembled. in meeting, subject to the Rules,

the F?rleral

Cornnittee of Msna7;rnent is invssted ~ 7 1 t h

executive powers fo r the

purpose of determining any matters affecting

the interests of the

Union or its menbnbers or any business submitted to

it (through the

office

the

Federal Secretary) in writing by a Sranch.

(Sub-rule X(?.)

1 .

Rule 30 provides ,

it? p a r t , -

I' Rrar.ch

Ccmmitte?

ncf

Var.ag=mer.t

- ConstFtution znd Fc-xers

???>SKY C@!ANITTEE c)€ I-LUThGZVEW >.?ID O'F1CEF.S

(a)

Each

Rrar.ch

shall i n xcordat?ce with t-'n?s?

Rules e l e c t a

C m n i t t e e of !!ar:aqener?t

to be I..r.c~~,m

as the Ermch Cmnitr tee

Manaqener?t whLch shall,

s u b j e c t

t o

these rule^,

have

con t ro l of

all

business of

t he 1Jninn wi th in

the

a rea

over

which

c c n s t i t u t e ? t o o p e r a t e .

Each

F r s ~ c h Committee

of 14anagement

shall

c o n s i s t

Branch

Pcesident,

Bra ch

Vice-Pres-dent, Zranch

Secrttary, twc Trus tees a.n.4

not less than sevep.	and	not	mors than	eleven
Committeemen. ...

(d)

Hithout

l imi t ing

i t s powers

i n any

way each

Branch	Coxnittee	of Management shall	have poweer
t0:-
. . .

(ii) Vote

and

expend

ar.y money that ?my 2,

necescsry

connezion

with the bus iness

the Branch;

( P )

F.11

p a i d o f f i c e r s ,

Organizers

and

employees

a Branch shall 3 e

s u b ~ e c r :

t o

t h e

c o n t r o l

ar.3

d i r e c t i o n of

t>-e Branch Connittee

Kanagenent a s

expi-essed through the Branch Secretary.

" Branch Trlustses shall -

. . .

(iii) Subject

t o d i r e c t i o n

t1-L.-

Brznch Cornmitt.-?

of Vanagement,

con t ro l all p r ~ p e r t y of

th.-

B~xIc?: ; . .

Sub-rule

-18(e) ( v ) provides:-

It i s

n o t

c h d l s n g e d

t h a t

i n the

mmutes of the Sranch

Committee nf

X3nag31ent, there i s no

r e so lu t ion which

expressly

a u t h w i s e e

the

provis inn

less1

a s s i s t a n c e

f o r

the

Williams/McPaul

team i n the

e lec tora l

inqui ry

ccnduct rd

before

F i t zge ra ld

The

f i r s t

t he

r e so lu t ions

with

which

th i s

app l i ca t ion

is cmcerned ,

that

of the

October, 2.983.

was

passed by a Sranch

Committee

of Management, the

conposi t ion of

which was d i f f e r e n t

fron the

composition

of the Branch Comrnittee

Management which passed

the second resolut ion in quest ion

on 9

A p r i l ,

1984,

the new

e l e c t i o n o r d e r e r l

Mr.

Jus t ice

F i tzgera lc !

havinq occurred

i n the meantims.

10.

W-. J. Murrioch of Ccl.msel, vho

appeared for the

dpplicants, conceeefi that h ~ s case did not depend on there belnq

prior authorisation by the Br-x?ch Comnittee of ManageT.ent, for the

engagesent of Messrs. Ibcl-nss2.n Douglas before the representation

they provlded at the electocal i n c p i r y . It is his su'.miss~o;;.

that i,he Zranch rcmmittee of Man?qe>ent did r.nt have power to

pass resolutions of the kind ir. .rr,uestiot?: the p?.yment tc which

the resolutions

?.re directed could neither be authorised In

advance, 0:- subsequently r-?.tif iPd.

In contesting the viliditg nf the resolutions of t_he

Branch Committee of

F?.!anaqener.t

seekirq to pay the ley31 expenses

of the Williams/McPaul tea? in

the I4R.3 electcral inquiry o u t of

the

organisation's

flunds,

the

applicants

c~-lbmitted

th-t

the

organisation's rules, express and implied, did not permit the use

of the

organisation's funds for such a purpose.

In short, they

assert th3t the resolutions under attack are beyond power.

Mr.

Grove appeared for the Transport Workers' Union of Australis at the electoral inquiry and ?lessrs. Macrossan Douglas and cout?sel briefed by them appeared for Mr. Killiams and a series of other individual members of his team.

The subsidiary submissign was, if the Sranch Committee

of Management did

havs the power to resolve as they did, it $ 7 ~ 5

not a bona fide exercise of that

power. In this

respect,

attention was directed to the fact that the ffrst resolution,

October, 1983,

was given one day before the orders

by Mr.

Justic?

Fitqecald directing new elections and making interim

orders for the

hclding of positions prior to

thdse elections.

was

submitted by the applicants that, while the

Sranch Committee

of r-lmayexent has wi6e powers ir! relation to the

conduct of the

business nf th? E~-snc!:,

the i~ -I :h>ri t ies establish

- -

that the sponsorship

nf particular candidates in

a Union electlon

is m

part of that hlsziness; likewise, it

was said, support for

those individual candidates in litisation arising out of

a Union

election is no business

of the Branch.

It was sai? that the

electoral inquiry was

plainly litigation as between rival groups

of election candidates, and there

~ 7 . 5 nothing to

suggest that

provision of legal representaticn

L @ the respondents

that

inquiry could be

rzgardec? a limitimafe business

of the meabers nf

the 9ueenslar.d

Eranch st

l h r g e .

The ipterests of

the members

lay with :h:

appearance of

the organisation,

which

was

represented

snd

represented

separately.

The submission was that the resources of the Union

are to be used for the benefit of the members as a whole and not for the benefit of particul?.r individuals or officials, and the rules must- be taken by implicatim t o preclude the selective use

of the funds of

the Unior. to aid one group

of members

of the

Union, the respondents, in a

matter arising under 5.161

of the

Act and not another group,

t k applicants.

I'he ssme principle,

it was said, applies both to

rche conduct of. the ballot as well as

to the litigation between candidates arising out

f the ballot.

Most

the decided cases are cases that have be5n

decided in

relation to conduct that occurred either prior to or

during

election.

3Jo

authority G J ~ S referred

to which

specifically dealt witk litigation 3ristv.q out nf

a?. electior..

Mr. t-lurdoch submitted thac the principle for which the applicant-s

contend. is ar. extenzion of the principle that appe6.rs Int*r alia from Short v. M~llir.crrs (1472) C.F . .P .Sd , >?here the C c l ~ r t (Kelly

C.J., Foster w d Ki:-Th:r

JJ.) said at ~p .87-38 : -

"It must be plain

that

ob;:cts

cf the

organization car? only be carried out

in,accnrdance

with

its rules .

The

b r a ~ c h in respect

of its

zffairc is fucthrr limited,

the actainaent of

the objects nf the organization by

it, ty the

branch r u l s s .

The

hrzr.c'n rules provide

for- t he

election nf g f f i c e r s

and menhers of its Cn??itte?

of Managexent. Although thet-e 1s no specific rule against the s e of the resources and funds of th?

organization

f o r

the

support

particular

candidates

any

such

election,

to use thc

property and

resourceS of

the brapch fnr

s u r h ?.

purpose would deny the rlqht

of such candidates

were not to be supported by the organization, its Committee of Management, its several authorities,

its

resources

fun&,

the

freedor!

and

equality in their

candidature

which

the

election rules i n p l y t3ey are entitled.

The funZs

and resourc5s of the organization

belong as much

to them and their supporters.as to their opponents

and

theirs.

It cannot

denied

that

provizions of the P.ct and the regulations are directe6 to the end of hzving the managenent and control of the affairs and transactions of ?.n

organization

reposed

a democratically

and

freely

elected

body of executive

and

administrative

officers.

So far as the

organization is concerned every member. qualified

under its r u l e s , has the right to stand for

election to an office. To allow the rEsoucces of

the organization to be used in

a campaign for his

defeat G70Uld be a denial of that fundamental

right. It would enable the existing executive,

whose hands tine resources of the organization lie,

use those resources to defeat

all opposition

to, or criticism of, its will. It could result in

a complete tyranny and a permanent denial of the

democratic nature of the organisation, which the

I	Act and the regulations are calculated to ensure."
l

, .

13.

Mr. Kurdoch, in the course

of argument, accepted that

there might be circumstances in which Union funds could be used to pay the legal ccsts of respondents C O m election inquiry. It

may be acceptable if the

Umon agreed to pay both sides.

Tn$

I '

applicants submitted that the resolutions in this case were not

passed bona fide, based on

a reasonable belief that

it was for

the benefit and the interests of

the members of the Union

as a

whole. Shortly put, the case for the applicants was that the

respondents inclu6ed people who

ad their own legal expenses from

the inquiry to pay, they had the numbers

03 tine Branch Cotmittee

of Management and used

thes to get their expenses paid.

Eir .

McMurdo

counsel,

who

appeared

for

the

respondents, submitted that the Sranch Committee

of Management

had

pover

pass

the

resolutions

question,

that

power

deriving from

s u b r u l e

3O(d)(ii); it

was prnperly open

'so the

Branch Committee of Management

to determine that the expenditure

in question 67as in pursuit of the general objects set out in Rule

2 of the Union.

In support

of the primary submission it was said that

the members of the Queensland Branch of the Union could properly

be said

to have had

a real interest

in the electoral inquiry

being contested

in the normal manner by the respondents having

legal representatiorr at it.

Further, the application for an

electoral inquiry alleged

large number of irregularities set

out in some fourteen paragraphs.

The ground on which Mr. Justice

F'itzgerald declared the elections void

was based on but two of

those grounds.

In particular, allegations rGhich were not the

subject of determlnation by his Honour included allegations that

persons unknown recorded

?or? than one vote, that persons unknown

had recorderi

votes which they were not er?titled to record, that

persons unknovn had interfered

wxth

ballot papers to produce 3

higher vote fsr one sub-hrw.ch orqaniser in

t h ~

Ipsvich District

in comparison with the :eve"

branch organisers in the Brisbane

District, and that some members had received two sets of ballot

papers rlhile other nernbers had received incomplete sets

of ballot

papers. Those questions,

it was said, were 5uch that it was in

Lhe interests of the Branch mentbers of the Union generally to

see

thdt those claims vere properly investigated in the course of the

inquiry and, to that end, pay for the legal representation	of the
respondents.

It was submitted that this was not

a case where a

section

of Union merbers had received preferential treatment:

there was no evidence to suggest that the applicants had asked

for the costs

their representation at the inquiry and been

refused or, alternatively, if they were to

so apply,

they would

_ .

be refused

by the Branch

Cornnittee of Management.

This was to

say that, pace Short

v. Wllinqs (supra), the Branch Committee

Management was not conferring

particular advantzge on the

respondents to the electoral inquiry which

was not available to

the other party

to that inquiry. In support

of this, reference

was made to earlier disputes between the parties where the costs

of both sides, if I may I use that expression, were paid out of

Branch funds.

It was further

said that the electoral inquiry invrJ1vsd

a real question of law of quite general importance, viz.

, the

nature of an "irregularity" for the purpose

o€ S .l65 of the Act.

His Honour in that case concluded that conduct

vhirh

dcres not

meet either of the descriptions of irregularity in s.165(4) mighY

nonetheless constitute an irregularity for the purposes of

s.165.

His Honour considered and rejected the subr?.ission by the counsel

appearing for the respondents at the electoral inquiry that

breach of the rules is not

an irregularity unless it is

a breach

"whereby the full and free recording

votes by

all persons

entitled to record votes, and by no other persons, or

a correct

ascertainment or declaration of the results

of the voting is, or

is attempted to be, prevented

hindered."In his Honour's

conclusion, he

distinguished and doubted the correctness

of &

Australian Postal and Telecmmunications Union:

Ex parte Xilson

(1979) 28 A.L.R.330.

This consideration, it was said,

~7.35 a

quite

independent

matter

but

pne

which

entitled

a aranch

Committee of Management

to conclude that representation for the

respondents to the inquiry concerned

with

that question was a

matter properly within the business df the Branch Committee of

Management.

The ordering of new elections, it was

said,

is a

discretionary matter and would certainly involve extra costs to

the members

the Queensland Branch. Some of the persons who

were respondents to

the

electoral inquiry were persons against

whom no irregularity

was

suggested other than their being

member of

a team. It was accepted that, although the Branch

was

not represented at the inquiry, that did not meSn that the Branch

16.

members were not able t3 derive benefit from the representation

of the respondents, it being perceived that there was some value

to the

Branch menbers in the respondents being represented. It

17as, therefore, not a purpose extraqenus to the good. management

of the business of the Union to fund that representation. -.

On a question of

bona fides, it was submitted that, the

onus being

those who allege the absence of good faith to

establish it, the evidence was quite insufficient to enable

thar;

onuc

discharged,

particularly having regard

the

disclosure that w?.s made to the Branch Committee df Fanagement at

all material periods.

Important

the

resolution

these

conflicting

assertions are the factual circumstances in which Mr. Williams

retained Messrs. Macrossan Douglas, and how the matter was dealt

with at the various meetings of the Branch Committee of

Management.

Frank Peginald George Garrett,

in the electoral inquiry,

swore an affidavit on 21 October,

1983, dealing with what

occurred at the meeting of the 20 October, 1983. He referred to Mr. Williams producing towards t'ne end of the meeting an account f o r payment from Messrs. Macrossan Douglas G Byme, solicitors,

for

an amount in excess

$17,000 and saying to the meeting

words to the fOllO57ing effect:-

17.

"I have here for payment an account from Macrossan,

Douglas, solicitor.?, vhich

I hqve p a i d , and I want

the Branch Committe? of Management to endorse my

action.

discussed this matter with the Federal

Secretary in Felbourne

when the electicrn enquiry

application was filed, and he advised ne to refer

the matter

to the U~ion's solicltors, and the

Union would accept responsibility for payment.

Some

you

people may not be on the Branch

Coamittee

Managenent nest month,

- I'm not

saying

Ynat

you won't

be,

but

here'

S a

possibility that you aon't be, and I don't ~7ant	o
be 1ef t with this,"

indicating the account which he had in his hand.

And later in

his affidavit

Mr. Garrett 5w~re:-

"Allan McDaul, the present Industrial Qfficer

the Union, then stated that he ( McPaul) was

present when the Ferleral Secretary, Ivar? Hodqson,

told Nilliams that the Union would pay the legal

expenses of the Trlilliams/McPaul team in the

current

Application by John Penhallurick and

others for

an election enquiry."

He continued:-

"I	then asked whether the action taken by John

Psnhallurick

and

others. was

against

the

Williams/HcPaul team or against the Union, and

Hughie Williams said

'No,

the action is against

all elected off fcers'

In a letter dated 30 Nove.nber, 1983, under the hand

of I.

Hodgson, the Federal Secretary of the Transport Workers' Union

Australia, addressed to "ALL MEMBEXS FXTEPAL COUNCIL, Re Inquiry into QLD Branch Elections, Federal Court of Australia Affidavit by F. Garrett, No.Q2 of 1983", Mr. Hodgson said:-

"Fle

,ase fit?d attach

.ed copy of affidavit o€ Frank

FtPl

tnald

Georqe

Garrett an office< of OIJF

015. Branch.

??his document was tendered to the F'eder?.l	Court of
Australia on 2lst Crtober 1983.

Please be

advised that at no

time did I (Fderal

Secretary)

advise

the

Qld.Branch

Secretary

t o

refsr rke matter to

the unicn's solicitors m d at

no time did I authorise expenditure of the union's

funds

to pay

any accounts to any legal firm in

respect of this matter.

Indeed I do not have the authority to

so."

This

matter,

not

unnaturally,

was

the

subject

vigorous

cross-examination

of Mr. Milliams

before

me.

His

account,

notwithstanding the letter

of Mr. Hodgson, wa? that, shortly

after the %ay meetinq

the Federal Council in Canberra,

spoke to Yessrs. Macrossan Douglas,'

who were the solicxtors for

t'ne Union in respect

of Queensland matters. He says that

he spoke

to the solicitors not on

his personal behalf but on behalf of the

Union. In the course

of his evidence, Mr. Williams said:-

"At a

meeting of the Federal Council in Canberra,

... the federal secretary, during

a recess, showed

ne a note

- It may have been a

copy of a telex -

indicating that

a challer.ge had taken place and

certain

conversations

took

place

between

the

federal secretary and myself, together with the

Queensland branch president, Mr. Henry Asplin,

Mr.

Stewart Crosby

of Tcowooda Queensland, and with

Mr. Allan McPaul.

A statement

57as made to me by

the federal secretary strongly indicating to

that upon my return to Brisbane that I should go and see the union's solicitor. I did as he suggestd and brought all relevant matters back to

the

branch

coamittee

of management.

hmediate nest

branch

committee

management

meeting, at all branch committee of management

meetings after, they were endorsed by the branch

committee of management, and all affidevits and

all copies of correspondence xere stamped with the

branch committee of management stamp and signed by

the then president,

Mr.

Rod Newton, and that is

why I acted.

19.

Mr. Hodgson was not called

as a witness.

Having given considerable attention to this aspect

the evidence, I am satisfied on

all

of the mterisl

there was

such a

discussion ?.S

Nr. Williams alleges and that that was t E

basis of

his instructing Messrs. Facrossan Douglas.

It may be

that Mr.

Xodgson’s remarks were construed by those to whom they

vere made other than as he

had intended. I am satisfied that on

the material there

~ 7 ~ s

concealment of the fact that the basis

on which Messrs. Macrossan Douglas were retained by Mr. Williams

was not in any personal

way,

but as State Sgcretary of the

Queensland Branch

(as he was then) and on

behalf of the elected

officials of tine Union whose elections were challenged.

I am of the view that there was

no absence of good faith

on the part of Mr. Williams and others on the Branch Committee of

Management in respect of these resolutions, even though there was

a measure

of personal interest by some of those members in the

resolutions

that

were

passed

the

Branch

Committee

Management.

The minutes

of the Branch Committee of Management

are

illuminating. In the minutes of the meeting	of 16	June, 1983,
this entry appears:-

2@.

From Facrossan	!?e: Application for Election Inquiry	-
D o u 3 l x	Advising hearin9 - Turs3ay. 9.30 am

27th Mav,

1983

3lst May, 1983

Telex from	Re: Hearing
Federal Secretary
27th !':3V, 1983

From

State

Sec.

Re:

Hearing

to Fed Secretary

31st Mav, 1983

From Macrossan

Re: Election Inquiry

Douqlas

enclosing copies of thirty-one

14th June, 1983

Affidavits.

Moved G. Thies 'That H. Milliams'

report 5e sdopted.

Secon6ed J. Hinspeter and carried."

(These thirty-one affidavits were

f i l e d on behalf of the

applicants for the electoral inquiry.:

The minutes of the meeting on 21 July. 1983, as part of

matters arising

from the minutes

of the previous meeting on 16

June,

1983,

record :

Memo

All

Re: Federal

Court

Challenge to

Organisers

from

198211983

T.W.U. Electims

State Secretary

13th Julv l983

In the minutes of the meeticg of 18 August, 1903, in respect of ahtcmnt.: passd. for pqment-. the minutes record:-

"Moved D. Barden, seconded A. McPaul 'That payment.

Carried "

21.

The amounts passed for payment at th?.t meeting are set out in a

schedule to thos? Inirlutrs, bjhich include at page 7- an iten:-

"Macrossan Douglas - advices in relation to 1983 E1ecti@r?5

$2434. 8$"

I regard this

as significnt evidence, preceding as it does the

first resolution questioned here.

In the

minutes

of 15 Septeder, 1983,

the

Correspondence section, there is noted:-

From 1.lacrossan Douglas Re: 1983 Election Inquiry -

to State Sect. matter listed f o r hearing in

30th F~uqust, l983	Federal Court from 4th to	7th
October."

The next meeting was on

20 October, 1983, at whlch the

first resolution the subject

of attack was passed. Prior to thar:

meeting, by letter dated 13 October, 1983, Messrs. Macrossan

Douglas had rendered an account for

an amount slightly in excess

of $17,000.

That account is addressed

to the Branch Secretary,

Transport Horkers' Union

Australia, Queensland Branch, Room

13, Trades Hall, Brisbane,

as is the covering letter, and

each of

them is headed

"Re 1983 Election Inquiry".

The account, which

includes outlays to senior and junior counsel, commences:-

“To our professional chargps herein acting on yo2-w

behalf in relatim tc this mstter doing all work application for an election inquiry including

necessary

and

Incidental

to resisting

the

particular the

f ollow~nq:

- ”

vhereupon various matters are itemised

The respondents submitted but without elabcration that

there was no jurisdiction in

t‘ne Court to give dirgctions for the

performance of or observance of, or alcernatively that there was

no scope for, implied rules in

the affairs of an organisation

registered pursuant to the

Act.

Mr. McMurdo referred to tkre judqment of Neaves J. in Ward & Ors. v. Williams 6 Ors. (unreported, 29th May, 19841,

where his Honour cites Duqaore

v. Porter 6 Ors. (Northrop J.

unreported, 17th December, 1982): cf.

Gordon v. Carroll

1975 6

A . L . R .

579 at 602-3; Re Penhallurick (1983)

51 A.L.P.. 589 at 595;

Jess v. Scott (Beaumont J. unreported, 2 Narch, 1984); Porter v.

Dusmore (Ful l Court unreported, 2 April, 1984).

In the light

of the judqments

of Evatt, Northrop and

Gray JJ. in Scott v. Jess (unreported, 5 October, 1984), the

proper question is not whether the Court

has power to direct the

performance of implied rules, but rather of determining the

limitations of	any particular power qranted by the rules of	an
organisation.

In Iillen v.

Townserd ( 1 9 7 7 ) ?l F.L.R. 431, Northrop and

Cvntt JJ. aL

483 et seq, give a valuable analysis of the nature

the

power

conferred

rules

an organisation.

F. t

pp.483-486, they say:-

"In our opinion,

megbers of the

committee of

management of an organization, a brmch of an organization or a sub-branch of a branch of an organization owe a fiduciary duty to meTil_hers of the organization, to members within the branch and

to members within the sub-branch as the case may

be. Members of committees of management are to be

compared ~75th directors of incorporared bodies

being

Companies

incorporated

under

legislation

such

the Conpanies Acts of the .States of

Australia.

'Re courts have devsloped principles

of law of general

application

regulating

the

manner

which

directprs

companies

are

required to

exercise powers conferred upon them.

Subject

necessary

adaptations,

similar

prnciples

of law should apply to regulate the

exercise of powers confzrred upon meabers of

committee of management of an organization

or of a

branch of an organizaticn or of

a sub-branch of a

branch of an Organization.

There are many similarities between organizations

and legal persons incorporated under the Companies Within organizations, the committees of management m. ...

constitute the

managing group. The duty imposed

upon directors of a company incorporated under the Companies Acts and the duty. imposed upon members

of a

committee of

management are but aspects of

the

application

a wider

principle

law

applicable where persons have

a discretion in the

exercise of powers.

The relevant principle is stated in Mills v. Mills

...

(1938) 60 C.L.R. 150. In that case a resolution

passed by the directors of a

company to increase

the voting power

of one of the dkectors but which

was believed by the directors to

be in

the best

interests

the

company

was

challenged,

unsuccessfully,

the basis that one of the

directors thereby derived some benefit. Dixon

said:

'Directors of a

company are

f iduc iary agents,

ar!d

a power conferred upon them cannot be exercised

in order to obtain some private advantage or for

any purpose foreign to the power. It is only one

applicatinn of the general doctrine'expressed by

Lord Morthington in Aleyn

v. Belchier

(1758) 1

2s .

Eden 117, at p.138; 28 E.?. 634, at p.537: 'MO point is better established than that, a person

havipg a power, must execute it bona

f lde for the

en6 designed, otherwise it is corrupt and void.'

Upon the facts

of the present

case, or at all

events upon

the expressions used by Lowe J. in

statlng 'nis

findings, it may be thought that a

question arises vhether there must be

an entire

exclusion of all reasons, motives or aims on the

part of the directors, and

all of them, which are

not relevant,

the

purpose

a particular

po~er

. '

...

The application

the

g neral

equitable

principle to the acts of directors managing the

affairs of

a company cannot, be as nice as it is

in	the case of a trustee exercising a special

power of appointment.

must, as it seems to

substantial

take

me,

object

the

accomplishment of which formed the real

ground of

the board's action. If this is within the scope of the power, then the power has been validly exercised. But if, except for some ulterior and

illegitimate object, the power would not

have

been exercised, that which

has been attempted as

an ostensible exercise of the power will be void,

notwithstanding

that

directors

the

may

incidentally bring about

a result which

is within

the purpose of

the power and

xhich they consider

desirable': (1938) 69 C.L.R. at pp.185-186."

The

effect of that analysis in that officers of

organisation are under

a duty to exercise powers conferred on

them by the rules of the organisation	b o m ftde for the purposes
for Gjhich the powers are conferred.

This fundamental principle applies, of course, not only

to officers of organisations.

In the liqht of the above, the

principles developed by the Courts in relation to the exercise of

powers by directors of companies

have a present utility.

2 5 .

In Mills v. HFlls (1938) 60 C.L.P. 1 5 0 , Dixon J.,

(as he

wcls then) said at

p. le5:

"Directors of a company are fiduciary agents, and

power conferred upon them cannot

be exercised Tn

order to obtam

some private advantage or

for any

purpose foreign

to the power.

That directors must exercise their poweers bon3 fide just another way of saying that the

power must be used for the

purpose for which it was conferred: Australian Metropolitan

L F f e

Assurance Co.Ltd. 77. Ure (1923) 33 C.L.R.

199 at 217, per Isaacs

J.; and see Pravident International Corporstion v. International

Leasins Corporation C19693 1 N.S.W.R..

424 at 436, per Helsham J.

In H3rlowe's Mominees

Pty.Ltd.

v. Nondside

(Lakes

Entrance) Oil C0.M.L. (1968) 121 C.L.R. 483, Barwick C.J.,

McTiernan and Kitto

JJ. at p.493 said:-

"Directors in whom are vested the right and duty of

deciding where the company's interests lie and how

they are to be served may

be concerned with

a wide

range

practical

considerations,

and

their

judgment if exercised in good

faith and not for

irrelevant purposes, is not open to review by	the
courts.

A director "could take advantage of the

powr to benefit

himself if such a benefic was incidental to

a bona fide exercise

of the power but

he could not use the power ostensibly to benefit

the company but really to benefit himself ..."

: Msurli v. NcCann

(1953) 90 C.L.R.425, per Williams A.C.J.,	Fullagar & Kitto JJ.,
at p.440.

26.

That case was one

r,7here the purpose of the directors in

issuing

shares was to

preserve

their

own

control

the

management: similar. vitiating purpose was found to exist in

v. Symons G Cn.Ltil. C19037

2 Ch.506; Piercy V. S.Yi1ls & Co.Ltd.

C19201 1 Ch.77; and Hoqq v. Cramphorn Ltd. C19673 Ch.254 at 267.--

By way of a comprehensive summary of

a director's duty,

Gibbs

(as

~ 7 a s then), in Ascot Investments ?ty.Ltd. v.

Harper (1981) 148 C.L.R.337, said at

348-9:

"The

directors

are

bound

exercise

their

discretion bona fide ir. what t'ney

consider to be

in the

interests of the company, and not for any

collateral

purpose,

but

s bject

that

qualification their discretion is absolute aqd

uncontrolled: in re Smit3 G Favcett Ltd. E19427

Ch.304, at pp.306-308);

Charles Forte investments

Ltd. v. A.randa (C19647

Ch.240,

pp.252-254,

260-261); Australian Metropolitan Lif- Ass~.~ra?ce Co.Ltd. v. Ure (1923) 33 C.L.R. l99 at pp.205-206, 217-220, 223). This rule is an application of the general principles governing the exercise by directors of their powers; those principles are

-..

establish

that the onus of proving

that

the

directors in refusing registration did not act in

good faith in vhat they coqsidered to be in the

interests

the

company

lies

those

who

challenge their decision."

this

exegesis,

the

many

cases

concerned

with

allegation of improper use of the resources

of unions in the

context of elections are but instances of the application

of the

fundamental principle that officers have

duty to exercise

conferred powers bona fide for the purpose	for which the poweers
are conferred.

37.

The difficulty, both in company

law and.

in industrial

law, frequently lies in applying	the principles to the particular
facts.

It is clear that in some cases a

controlling body of a

union may properly provide out of union

funds the costs of legal

representation: see Hill

v. Archbbold C19683 1 Q.E.686 and Scsv=ns

v. Keoqh C. Ors. (1946) 72 C.L.R.l.

The

fact

hat

representation was

to be provided to persons who had a real and

personal

interest

the

provision

such

funds

circumstance ~7hich

has to be looked at carefully but fairly, but

certainly does not determine the propriety of any such payment.

In Hill v. Archbold, C19687 1 Q.B. 686, Lord Denning

M.R. said at pp.695-696:-

"The	other point is whether the payment of the

costs is permitted by

the rules of the union. Mr.

Hill has pointed out, and it is admitted, that

there is no specific provision in these rules to

authorise

the

payment.

Nevertheless,

all

associations have power to

do everything which is

fairly. Incidental to achieving their objects.

For

instance, this very union

has power to employ and

pay officials, although there is nothing specific

on the point. They can pay then! pensions and

everything vhich a

good employer would do for his

servants, even though the rules say Rothing about

it. So a l s o it see~".s to me that when a servnt is involved in litigation

which arises out of

his

work wlth the union,

it is within the power of the

union to help him in his litigation."

And per Eanckwel-ts L.J. a t 699:-

“Thnugh

no express provisior!

1 s contained in the

rules of the union for the application of funds for supportin7 servants m officials of the unlon

who

find themselves encpqsd in litigation, it is

view perfectly clear that that is fairly

ancillary to the management of the union and its business. In my opinion the executive were fully justified in providing for the costs of the two officials it? the present case vhich they ir.curred

in the actions broucjht by them, even though the

result of those

actions

was

that

they

were

unsuccessful.

”

In Stevens v. Keoah (1946) 73 C.L.R.l, .the High Court

(Starke,

Dixon,

McTiernan

and

Williams

JJ., Latham

C.J.

dissenting) held that payment by the Police Association of

New

South Nales of the costs of

a libel action brought by a police

officer against the Commissioner

of Police was

not ultra vires or

beyond the poweres of the Police Association: see per Starke

at p.23, Dixon J. at pp.33, 27-8, McTiernan J. at p.30, and

Williams J. at p.35.

In the facts of the present case, proper regard has to be given to the existence

of self interest by some

of the members

the Branch Committee

of Management; notwithstanding that

consideration, the Court should not lightly conclude that the

resolutions were not made bona fide, in the sense explained

earlier in these reasons. It

is clear from the extracts of the

minutes prsviously set out that the question

of authorisation by

the Brisbane Committee

of Management of the payment of legal

costs of the respondents

to the electoral inquiry preceded that

2 9 .

inquiry and In no way depended upon,

er was a conseqwmce o f , the

results or that inquiry. Nor, in my view, can it properly be

concluded that there has b?en demonstrated

an attitude to e:<_oend

funds of

the union in

a partisan w a y ,

fwouring one group while

- -

at t‘ne same time denying another.

I an rick satisflec? that the

resoluttons in question were

beyond the proper power of the respective Branch Committees	of
Management.

For

the

above

reasons,

the

rule

to show

cause

discharged. I will hear the parties

on costs.

[1985] FCA 252

14 Jun 1985