Wright v McLeod

Re: STEPHEN WRIGHT AND JUDITH MARY WALKER
And: K. McLEOD, J. ANGUS, P.K. REYNOLDS, V. WINNEY, B. PENDERGAST, R. THOMAS,
K. DAVERN, I. GRANT, J. EASTON, I. WEST, J. BOOKER, G. DUNCAN, J. DWYER, J.
CONVERY, I. LARCOMBE, M. CLARK, J. WILSON, G. CHRISTIE, R. PURVIS, L. ASPINAL,
J. TROUSDALE, I. THOMAS, K. HALLAM, B. DUNN, P. BRENT, P. THOMPSON, AND THE
AUSTRALIAN INSURANCE EMPLOYEES UNION (1983) 74 CLR 146
NSW No. 4 of 1983
Industrial Law
6 IR 203

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
INDUSTRIAL DIVISION
Bowen C.J.(1), Smithers(2), Evatt(3), Northrop(3) and Sheppard(4) JJ.

CATCHWORDS

Industrial Law - Conciliation and Arbitration - Rules of Registered Organizations - Provision for amendment by Federal Council - Postal ballot of Council members - Relevance of plebiscite provisions - Whether rule - amending provisions oppressive, unreasonable or unjust - Objects of the Conciliation and Arbitration Act - Balance between democratic control and viability of organization - Whether rules provide for control of Federal Council by members of organization - Effect of orders under s.140 of Conciliation and Arbitration Act.

Conciliation and Arbitration Act 1904, ss. 2, 132, 139(4), 140, 141.

Conciliation and Arbitration Regulations, sub-reg. 115(1)(d)(v) and (xiv).

Industrial Law - Registered organisation - Rules - Provision for amendment by Federal Council - Postal ballot of Council members - Plebiscite provisions - Whether rules contravened Conciliation and Arbitration Act or Regulations - Whether rules providing for amendment of rules were oppressive, unreasonable or unjust - Objects of Conciliation and Arbitration Act - Balance between democratic control and viability of organisation - Whether rules provided for control of Federal Council by members of organisation - Effect of orders under s. 140 of the Conciliation and Arbitration Act 1904 (Cth), ss 2, 132, 139(4), 140, 141 - Conciliation and Arbitration Regulations, reg. 115(1)(d)(v) and (xiv).

HEADNOTE

In proceedings under the Conciliation and Arbitration Act 1904 (Cth) the applicants, who were branch officers of a registered organisation, sought orders under s. 141 that certain amendments to the rules of the organisation were invalid and also sought orders that particular rules contravened s. 140(1)(c). The applicants' case was that the rules of the organisation providing for the amendment of its rules were invalid either in themselves or against the background of the rules as a whole. The rules of the organisation included the following:

"19. Powers and Duty of Federal Council

The Federal Council shall, subject to control by the members as hereinafter

mentioned, be the supreme governing body of the Union and have the management and control of the affairs of the Union and, without limiting the generality of the foregoing, shall in particular have power -

. . .

(b) Subject to Rule 57 to make, add to, amend and rescind these Rules."

Rule 23 provided for matters requiring decision between Federal Council meetings and the submission of particular matters to Federal Council members with the recording of votes by post, lettergram or telegram with a decision of the majority being binding.

Rule 57, of the rules of the organisation provided in part:

"57. Alteration to Rules

Amendments may be made to these Rules or new Rules or any Rule may be

deleted or deleted and replaced by a new Rule by a resolution of Federal Council carried by a two-thirds majority of members voting . . . ."

Federal Council consisted of the President and Secretary of each of the six branches, additional delegates from each branch according to its size, and the five officers of the Council ex officio.

Held, per Bowen C.J., Smithers, Evatt and Northrop JJ.; Sheppard J. dissenting - (1) The rules relating to amendment of rules were not contrary to and did not fail to make a provision required by the Act or the regulations and were not otherwise contrary to law.

(2) The rules did not impose conditions, obligations or restrictions which were oppressive, unreasonable or unjust.

Municipal Officers' Association of Australia v. Lancaster (1981) 54 FLR 129; Lovell v. Federated Liquor and Allied Industries Employees Union of Australia (1978) 35 FLR 72; Cook v. Crawford (1981) 52 FLR 1; on appeal (1982) 43 ALR 83; Linehan v. Transport Workers Union of Australia (1981) I.A.S., Current Review 570; McLeish v. Faure (1979) 40 FLR 462; McLeish v. Kane (1978) 36 FLR 80; Boland v. Munro (1980) 48 FLR 66; Squires v. Stephenson (1983) 4 IR 1, referred to.

(3) Rule nisi discharged.

HEARING

Canberra, 1983, July 25, 26, 27; November 28. #DATE 28:11:1983

RULE NISI.

The applicants sought orders under the Conciliation and Arbitration Act 1904 (Cth) that certain rule amendments to the rules of a registered organisation were invalid and that particular rules of the organisation contravened s. 140(1) of the Act. The matter was referred to a Full Court to be heard.

R. C. Kenzie, for the applicants.

P. R. A. Gray, for the respondents.

A. J. Boulton of the Australian Council of Trade Unions, amicus curiae.

Cur. adv. vult.

Solicitors for the applicants: Turner Freeman.

Solicitors for the respondents: Maurice, Blackburn & Co.

T.J.G.

ORDER

1. The Interim Order of 11 February 1983 be vacated.

2. The Rule to Show Cause be discharged.

Orders accordingly.

JUDGE1

This is the return of a rule to show cause granted by Evatt J. on 11 February 1983. The applicants are members of the Australian Insurance Employees Union (the "Union"), an organization registered under the Conciliation and Arbitration Act 1904 (the "Act"). Stephen Wright is the Treasurer and Judith Mary Walker is the Secretary of the New South Wales branch of the Union and both are members of the Federal Council and the Federal Executive. The respondents are the Union itself and the remaining members of the Federal Council.

The applicants seek several orders pursuant to s.141 of the Act. These are specified in the rule nisi, as amended. They are as follows:-

"1. That the Respondents (other than the lastnamed Respondent) and each of them perform and observe the Rules of the Australian Insurance Employees' Union by treating the postal ballot of members of the Federal Council in relation to amendments to Rule 18(a),(b),(e) and Rule 26 of the certified Rules of the Union, scheduled for completion at 4.00pm on Friday 11 February, 1983 as null and void.

2. That the Respondents (other than the lastnamed Respondent) and each of them perform and observe the Rules of the Australian Insurance Employees' Union by taking no further step towards obtaining the certificate of the Federal Industrial Registrar in respect of amendments to Rule 18(a),(b),(e) and Rule 26 made pursuant to the postal ballot of members of the Federal Council concerning amendments of the said Rules, scheduled for completion at 4pm on Friday 11th February, 1983.

3. That Rule 57 of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(a) of the Conciliation and Arbitration Act, 1904 as amended.

4. That Rule 57 of the Rules of the Australian Insurance Employees Union contravenes Section 140(1)(c) of the Conciliation and Arbitration Act, 1904, as amended.

5. That the Rules of the Australian Insurance Employees Union contravene Section 140(1)(a) of the Conciliation and Arbitration Act, 1904 as amended in that the said Rules fail, and in particular Rules 19(b), 23(a) and (b) and 57 fail to make a provision required by the Act and by the Regulations made pursuant thereto.

6. That Rule 23(a) and (b) of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(a) of the Conciliation and Arbitration Act, 1904 as amended.

7. Rule 23(a) and (b) of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(c) of the Conciliation and Arbitration Act, 1904 as amended.

8. Rule 19(b) of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(a) of the Conciliation and Arbitration Act, 1904 as amended.

9. Rule 19(b) of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(c) of the Conciliation and Arbitration Act, 1904 as amended."

The relevant parts of s.140(1) are:

"The rules of an organization -

(a) shall not be contrary to, or fail to make a provision required by, a provision of this Act, the regulations or an award or otherwise be contrary to a law; . . . .

(c) shall not impose upon applicants for membership, or members, of the organization, conditions, obligations or restrictions which, having regard to the objects of this Act and the purposes of the registration of organizations under this Act, are oppressive, unreasonable or unjust;"

Interim orders in the form of paragraphs 1 and 2 were made on 11 February 1983. Order 1 was vacated by consent on 18 February 1983.

Two other matters (being proceedings 40 and 42 of 1982) between the parties to these proceedings were heard together by Evatt J. in February this year. The matters involve a challenge to the validity of the rules constituting the Federal Council and Executive, and the validity of certain actions proposed to be taken by the Executive. At the request of the parties, judgment has not been delivered in these matters and it was agreed that the present hearing would be conducted on the footing that both the Council and the Executive were validly constituted. Pursuant to s.118C, Evatt J. ordered that the present proceedings be heard by a Full Court. This Court has granted leave to appear as amicus curiae to Mr. Boulton, solicitor for the Australian Council of Trade Unions (the "ACTU") representing its members. He has supported the submissions of the respondents.

Counsel for the applicants characterised the basis of his submissions as being that the rules of the Union providing for the amendment of its rules were invalid either in themselves or against the background of the rules as a whole. The rule amendment procedure of the Union is governed by an interaction of rules 19(b), 23 and 57 which I set out in full:

"19. - POWERS AND DUTY OF FEDERAL COUNCIL

The Federal Council shall, subject to control by the members as herinafter mentioned, be the supreme governing body of the Union and have the management and control of the affairs of the Union and, without limiting the generality of the foregoing, shall in particular have power:-

(a) . . .

(b) subject to Rule 57 to make, add to, amend and rescind these Rules.

(c) - (t) . . .

All decisions of the Federal Council shall be final and shall remain in force unless and until varied, amended or annulled at a subsequent meeting or ballot of the Federal Council or by a plebiscite of members of the Union.

23. - MATTERS REQUIRING DECISION BETWEEN FEDERAL COUNCIL MEETINGS

(a) On a motion passed by the Federal Executive that any matter requires a decision of the Federal Council between biennial meetings that matter shall be submitted to the Council for decision. Such matters may be forwarded by post, lettergram or telegram to each of the members of the Federal Council in such form as is determined by the Federal Executive.

(b) The members of Federal Council shall record their vote on the matter so submitted by post, lettergram or telegram addressed to the Federal Secretary and the decision of the majority shall be binding as if such decision were obtained by vote at a regularly constituted meeting of the Federal Council.

(c) All votes of their confirmation shall be signed by members of Federal Council recording the same. If any vote be recorded by means other than letter then such vote shall be confirmed by letter signed by the Federal Councillor.

(d) If a majority of the members of Federal Council notify the Federal Secretary that the matter so submitted to them is of such importance that a meeting of the Federal Council should be convened to deal with it, then such Federal Council shall be forthwith convened by the Federal Secretary to meet at such time and place as the Federal Executive shall determine.

(e) If a special Federal Council meeting be held for the purposes of the immediately preceding clause such other matters as the Federal Executive or Federal Council shall determine may be submitted to the meeting. . . . . .

57. - ALTERATION TO RULES

Amendments may be made to these Rules or new Rules made or any Rule may be deleted or deleted and replaced by a new Rule by a resolution of Federal Council carried by a two-thirds majority of members voting. On a motion to alter any rule or to make a new Rule or to delete a Rule all Councillors present shall vote; provided that where an alteration to any Rule is rendered necessary by an amendment to the Conciliation and Arbitration Act, a requirement of the Industrial Registrar or an order of the Industrial Court and such alteration is submitted to a postal ballot of members of the Federal Council pursuant to Rule 23 of these Rules, the fact that not all members of the Federal Council cast a vote in such ballot shall not invalidate such ballot and any alteration so submitted shall be deemed to have been approved by the Federal Council if approved by a two-thirds majority of members voting."

To determine the validity of the rule changing mechanism in this case, it will be necessary to consider the rules of the organization as a whole. The Union is divided into six branches, one in each State. Under the present rule 18(a), the Council consists of the President and Secretary of each branch, additional delegates from each branch according to its size, and the five officers of the Council ex officio. The Executive consists of the same ex officio officers, plus the President and one other delegate from each branch (rule 25).

As well as providing for a biennial meeting in October (rule 20(a)), the rules provide that a special meeting of the Council is to be called on the written request of three branches or by an Executive resolution (rule 20(c)). Rule 20(d) requires that two months' notice of the biennial meeting and fourteen days' notice of a special meeting is to be given to each branch and sub-branch.

Rule 22(a) provides that a branch may notify the Federal Secretary of any business it desires the Council to consider at the biennial meeting and rule 22(b) states that upon receipt of such notifications, a Council agenda is to be forwarded to each branch and sub-branch. The members can therefore bring business before the Council meetings. If members cannot persuade their branch to make such a request, they can at a general meeting or branch plebiscite direct the branch committee to do so. A member can request the Federal Executive to list any matter for discussion by the Council (which power is granted to the Executive by rule 22(d)) but could not compel the Executive to do so.

At a Council meeting the Council may deal with any matter whether or not it appears on the agenda (rule 22(c)). A copy of the minutes of each Council and Executive meeting is to be forwarded to each branch and sub-branch (rule 27(a)).

Rule 61 provides that a quorum of the Council shall be one-half of those eligible to be present, provided that no less than three branches are represented. Rule 60 provides for voting by proxy at, inter alia, Council meetings. Finally, there are provisions in rules 58(a) and 65 for a plebiscite of all members to be held.

The facts that led to the present proceedings can be stated shortly. At the commencement of the hearing of the other two matters before Evatt J., a postal ballot of the Council was in progress relating to amendments of certain rules including rule 18. This is the postal ballot referred to in proposed orders 1 and 2. His Honour was informed on February 9 that the rule changes had been adopted. The applicants allege that one result of the purported amendment to rule 18 would be, by abolishing some ex officio positions on the Council, the removal of Judith Mary Walker from Council membership. The applicants claim that the rule changes are to be treated as null and void because the rule amending procedures of the Union are contrary to the Act.

The general principle that this Court was asked to consider was contained in paragraph 13 of the Affidavit of Stephen Wright. This Affidavit was treated as the applicants' points of claim. Paragraph 13 reads:

"I submit that the rules of the organization, and in particular Rules 23(a) and (b) and 57, insofar as they permit the Federal Council of the organization to alter the Rules of the organization without recourse to the branches of the organization or the membership as a whole contravene s.140(1)(a) or, alternatively s.140(1)(c) of the Act. In the alternative, I submit that the Rules of the organization and in particular Rules 23(a) and (b) and 57 fail to make a provision required by the Act or the regulations made pursuant thereto."

The interaction of Rules 57 and 23 present some ambituity. Rule 57 refers to the need for all members "present" to vote when voting on rule amendments (which term I shall use for present purposes to include deletion, replacement or insertion of rules). However, it later speaks of such a vote taking place pursuant to Rule 23. Although the word "present" could be taken to imply the necessity of a meeting, with the use of the Rule 23 procedure only available in the certain limited circumstances outlined in the proviso in Rule 57, both parties agreed that the preferable interpretation was that any rule amendments could be made pursuant to the Rule 23 procedure. The difference was therefore that for rule amendments within the Rule 57 proviso, not every member need vote - a resolution would pass if two-thirds of those returning their votes were in favour of it. Otherwise, as all must vote, any non-vote would be treated as a no vote. I will proceed on the basis of this interpretation, although it is not crucial for these proceedings.

In considering whether the rule amending procedures are "oppressive, unreasonable or unjust" under s.140(1)(c), it has to be borne in mind that it is the organization itself which has the right to decide on the format and content of the rules that govern it. Deane J. in Municipal Officers Association v Lancaster (1981) 37 A.L.R. 559 at p.589 said:

"It cannot however, be too strongly stressed that, subject to those constraints and restrictions, the content of the rules of a registered organization is primarily a matter for the members, Watson v Australian Workers' Union (1967) 10 F.L.R. 347 at 361; Cassidy v Amalgamated Postal Workers' Union (1967) 11 F.L.R. 124 at 126/7; Wiseman v Professional Radio and Electronics Institute of Australasia (1978) 20 A.L.R. 545 at 561; Re Airline Hostesses' Association (1980) 37 A.L.R. 110 at 148, per J.B. Sweeney J. This Court has no authority generally to supervise the contents of the rules or to require that the rules comply with what those constituting the Court might see as preferable, desirable or ideal. To put the matter differently, it is for the members, or those entrusted by the members in that regard, to decide the content of the rules. The function of this Court is to determine, in accordance with ordinary judicial procedure, whether some provision or provisions of the rules adopted by, or on behalf of, the members can properly be described not merely as undesirable but as oppressive, unreasonable or unjust."

(See also the judgment of Evatt and Northrop J.J. at p.577).

As both judgments in Lancaster's Case proceed to explain, however, in following this approach the Court is directed by the section to have "regard to the objects of this Act and the purposes of registration of organizations under the Act." (See also Allen v Townsend (1977) 31 F.L.R. 431 at p.467; Wiseman's case (1978) 35 F.L.R. 24 at p.34; Lovell v Federated Liquor and Allied Industries Employees' Union of Australia (1978) 35 F.L.R. 72). The "chief objects" of the Act are listed in s.2 and include:

"(f) to encourage the democratic control of organizations so registered and the full participation by members of such an organization in the affairs of the organization."

The chief objects are not the only objects of the Act. Further, to clarify the Act's objects, including the chief objects, the Court needs to make close reference to the provisions of the legislation, and to the method by which the legislature has implemented its objects (see Lancaster's Case supra at p.579).

The word "democratic" is capable of a number of meanings ranging from total delegation of all power to elected representatives through to full participation by all members in every decision. Importantly, object 2(f) itself speaks of "the full participation by members of such an organization". In Lovell's Case (supra), Smithers and Evatt JJ emphasised the participatory aspect (at p.83):

"It would seem that the democratic concept underlying the provisions of the Act is that of substantial participation by the whole of the membership, in the management of the organization. Democracy according to its ordinary current meaning may exist in various forms and in varying degrees. Government of the members, by the members, and for the members in some pure and undiluted form may be an ideal."

Again, (at p.84) their Honours stated that:

"It is an object of Parliament to encourage full participation."

(See also Cook v Crawford (1982) 43 A.L.R. 83 at p.147).

In my opinion, one of the objects of the Act is to encourage participatory democracy - it seeks to achieve more than members merely voting for representatives and then not participating in Union affairs. However, the Court's approach in deciding the validity of certain rules is not simply to measure them against all the objects of the Act and determine whether they comply with each. As Deane J stated in Lancaster's Case supra at p.590:

"This does not, however, impose a requirement that every provision in the rules of an organization should either serve or be consistent with those objects or purposes. Nor does it alter the fact that the operative test is whether, having regard to those objects and purposes, the relevant condition, obligation or restriction can properly be described as oppressive, unreasonable or unjust. It does, however, mean that in answering that question it is necessary to take into account relevant objects of the Act and relevant purposes of the registration of organizations under the Act."

Evatt and Northrop J.J. (at pp.578-9) adopted the words of Mason J. and those of Murphy J in R v Hunt Ex Parte Sean Investments Pty. Limited (1979) 25 A.L.R. 497 in also deciding that, "having regard to" means taking into account, considering and giving due weight to.

In having, regard to the purposes of the registration of the organization, as well as to the objects of the Act, the Court must take notice of the fact that these include allowing the organization to function efficiently. As Sweeney, Evatt and Northrop J.J. said in McLeish v Kane (1978) 36 F.L.R. 80 at p.90:

"The Court in exercising its present jurisdiction is concerned with all the objects of the Act and clearly it is fundamental to these objects that there be not only democratically controlled organizations but that these organizations should be viable. In other words, we must take care to ensure not only that democratic control is encouraged but also that the organization remains viable. This means that questions of balance must arise."

See also Deane J in Lancaster's Case supra at p.590.

The balance between full participation in the democratic process and organizational efficiency is a difficult and recurring one which can only be decided according to the circumstances of each case. In fact, Counsel for the applicants conceded that these rules were not bad merely because they allowed the Council to alter the Union's rules. I am of the opinion that this concession was well made. In many organizations, it would not be workable or efficeint to submit every rule change to a general meeting or plebiscite. Some changes need to be made swiftly, some may be minor procedural matters. In some organizations plebiscites will of necessity be slow and costly. Furthermore, the respondents expressed concern that members participation may in fact diminish if members have to vote on each rule change, and members may tend to avoid meetings if they know that there will be considerable time taken up discussing legal niceties of rule amendments. This reasoning is further strengthened by the Act itself. The definition of office in s.4 includes:

"(c) the office of a member of any conference, council, committee or other body within the organization or branch which, under the rules of the organization or of the branch is empowered to make, alter or rescind rules. . . ."

The Act therefore contemplates that the rules can empower, inter alia, a council to amend the rules. This is not qualified in any way. Nor is reg.115(1)(d)(xiv) qualified. It may be said that the Act and regulations treat it as a matter for the organization itself to decide whether it wishes to give its council this power.

However, Counsel for the applicants submitted that the present rules were contrary to the Act in allowing the whole of the rule amending process to take place at Council level without any participation by members or branches being required. It was submitted that the rules allowed rule changes to be made by Council:
(a) without the organization having any notice of such proposals (Rule 22(c));
(b) by postal ballot thus preventing debate and exchange of ideas as at a meeting;
(c) by only a small number of Council members, if the subject matter fell within the proviso aspect of Rules 57.

I find considerable force in these submissions. A Full Court of this Court held, by majority, in Cook v Crawford (supra) that a new rule amending procedure which stated that:

". . .the Council may at any time make or amend any Rules. . . . ."

contravened s.140(1)(c). Applying the majority view, two decisions of Sheppard J. in Squires v Stephenson (unreported, delivered 14 February and 22 April 1983) emphasised the need for members' participation in rule changing procedures. The rules of the organization concerned allowed the Council to alter the rules by, inter alia, postal vote. His Honour held that this contravened s.140(1)(c) and further suggested that rule amendments ought not be made "otherwise than by reference to the membership of an organization." In the second judgment, his Honour held that a proposed rule allowing the Council to amend the rules but requiring such decisions to be ratified by a general meeting contravened the section as it "took out of the hands of the membership all power to amend the rules." His Honour stated that such amendments should only be effected by plebiscite.

It must be remembered that each of the above decisions was based on its own individual circumstances. It is to be noted that in Cook v Crawford the rule amending procedure had previously required such proposals to be approved at a special branch meeting and then be considered by all other branches. In Squires v Stephenson, his Honour stated that it had been the Association's practice to make major rule alterations by plebiscite only. I am unable, however, to agree with the suggestion that the law requires, as a general rule, that it is necessary for members to participate in every rule change for the rule amending procedures to comply with the Act. Rule amending procedures must be considered against the background of the rules of the particular organization.

It is important that the Council here is a democratically elected body. The rules provide for elections pursuant to ss.133 and 133AA and, as stated, it is assumed that the Council is validly constituted and satisfies the standard outlined in McLeish v Kane (supra). There are further safeguards expressed in the rules as outlined, especially with respect to quorum, proxies, notice and requirement of a two-thirds majority to pass a rule amendment. Such provisions go a long way towards indicating that the rule amending procedures of this organization, even though concentrating such important power in the hands of the Council alone, do not contravene s.140(1)(c). On the other hand, it is argued that, if the Union has decided that it is desirable to grant to the Council the power to alter the rules without the necessity of any recourse to members, this restriction on the members' rights will be contrary to s.140(1)(c) unless the rules as a whole make sufficient provision for review of any such Council decision. This differs from the requirement of control contained in Regulation 115(1)(d)(v), which deals with the general control of committees by members in all respects.

The rules require that notice of Council resolutions be distributed to branches and sub-branches and be made available to members. If a member is dissatisfied with a decision he could, through his branch or the Executive, seek review of the Council's decision by the Council itself (Rule 19). Any rule amendments must be certified by the Industrial Registrar and a member can seek redress in this Court if he believes that they are contrary to the Act, although the Court cannot of course consider the desirability of any amendments. Members always have the ultimate right to vote out the Council at the next election.

However, the only direct control over a particular decision open to the members as a body is through the plebiscite provisions of the rules. Council decisions are expressly made subject to the results of plebiscites. This supremacy of a plebiscite is, however, of little practical benefit if it is too difficult for members to call one.

A plebiscite of members of this Union can be held at the instigation of the Executive or three branches. Given the geographical situation of the branches it may at times be difficult for even a large body of members to be able to employ this latter procedure. A plebiscite is also to be held on receipt of a petition signed by 15% of members. On present membership figures, this would require 3446 signatures.

I am mindful of the respondents' submissions that members of the Union are concentrated in particular areas and that it may be easier here than in some other Unions to collect such signatures. It is also undeniable that referenda are expensive, cumbersome and time consuming, and that to make them too easily available would not be in the best interests of the organization. Keely J. in Cook v Crawford supra at p.120 refers to the shortcomings of referenda.

However, a plebiscite in circumstances such as the present remains the major area of ultimate direct review of rule amendments. It is the means by which participation is possible for members after important rule changes have occurred. This is especially important if the Union has decided that it is desirable that the Council has the power to implement rule changes without giving notice to the members. A requirement that a written requisition from 15% of members must be received before a plebiscite is held may be difficult to comply with in practice. It is to be noted that the requirement to hold a branch plebiscite is only 10% of members. Even this percentage may be seen as too high in certain circumstances. In Squires v Stephenson, for example, Sheppard J. held that a requirement of 10% to call a plebiscite contravened s.140(1)(c) in the circumstances before him.

The potential importance of amendments to rules of an organization must be remembered. The rights of an individual member may be seriously affected by amendments to the rules of the organization to which he belongs. In considering whether rule amending procedures are mandatory or directory, Sweeney, Evatt and Northrop J.J. in Australian Transport Officers' Federation v State Public Services Federation (1981) 50 F.L.R. 438 at p.443 said:

"It is difficult to think of any subject matter more important in the affairs of an organization than its own legislative power...."

In Cook v Crawford supra (at p.97) Smithers J. expressed the view that:

"Changes in rules go to the heart of the fundamental rights and duties of members..."

It would seem to be desirable that the present rules should have a provision making it easier for members to call a plebiscite which concerns a decision of the Council to amend the rules. However, it must be emphasised that rules with a high percentage required to call a plebiscite, or even those lacking a plebiscite provision at all, are not simply for that reason contrary to s.140(1)(c). It is useful to compare the application of reg.115(1)(d)(v) to plebiscite provisions. Evatt and Northrop J.J. in Boland v Munro (1980) 37 A.L.R. 263 at p.277 said:

"The absence of the power to call for a referendum on the decisions of a committee will not necessarily mean that the rules fail to provide for the control of committees of the organization by the members. The presence of the power to call for a referendum on the decisions of a committee may, having regard to the other rules of the organization, ensure that the rules comply with Regulation 115(1)(d)(v), which rules otherwise would not comply with that regulation. Each case must depend upon its own facts and the particular rules of the organization involved."

Their Honours were speaking of "control" but the same idea is relevant to the present case. The mere fact that a Council is given power to amend rules without the existence in the rules of a liberal plebiscite provision will not automatically mean that the rules contravene s.140(1)(c). Each situation must be considered individually with particular regard to the mode of election of the Council, the rules relating to Council meetings, the position of branches in relation to the Council, the extent of the power of the Council to amend rules, any requirements for members' participation in the process and any other means of review of the Council's decision.

The question for this Court is not whether it would be desirable to have in the rules a provision for a plebiscite which, at all events, in respect of rule amendments might be more easily invoked than the provision in rule 58. The question raised by paragraphs 3 to 9 inclusive in the orders sought is whether rules 19(b), 23(a) and (b) and 57 which lay down the rule amending procedure, are contrary to s.140(1)(a) or (c).

In my opinion, these particular rules are not contrary to and do not fail to make a provision required by a provision of the Act or regulations and are not otherwise contrary to law, unless it be held they contravene s.140(1)(c). Notwithstanding that the power to amend the rules is concentrated in the hands of the Council, reg.115(1)(d)(v) is not, in my view, contravened. The whole of the organization's rules, the method of electing committees, the committee members' term of office and the power of a general meeting must all be considered (see Boland v Munro, supra). Taking these matters into consideration, it is my conclusion that lack of control is not demonstrated in the present circumstances. Thus the rules do not contravene s.140(1)(a); s.140(1)(c) takes effect in its own right.

The question, therefore, comes down to this: Do these rules impose conditions, obligations or restrictions which, having regard to the objects of the Act and the purposes of the registration of organizations under the Act, are oppressive, unreasonable or unjust? It does not appear to me they impose conditions, obligations or restrictions which are oppressive or unjust. Do they impose conditions, obligations or restrictions which are unreasonable? In determining this question, regard is to be had to the objects of the Act, which as we have seen, include as a chief object to encourage the democratic control of the Union and the full participation of members in the affairs of the Union (s.2(f)) and regard is to be had also to the purposes of the registration of organizations under the Act. Could a reasonable Union member, having regard to those considerations, wish to have such provisions in the rules of his Union? There is full representative democracy under the rules as a whole; what is somewhat deficient is provision for the participation of members. Is the deficiency such as to require a decision that these particular provisions in the rules impose restrictions which are unreasonable?

The matter has caused me some difficulty. However, having regard to the rules as a whole, I have come to the conclusion that rules 19(b), 23(a) and (b) and 57 do not contravene s.140(1)(a) or (c).

The interim order in paragraph 2 made on 11 February 1983 should be vacated and the rule nisi should be discharged.

JUDGE2

By an order nisi dated 11 February 1983 as amended on 26 July 1983 the applicants seeks an order pursuant to s.141 of the Conciliation & Arbitration Act 1904 (the Act) requiring the respondents to perform and observe the rules of the Australian Insurance Employees' Union (the organization) by treating a postal ballot of members of the Federal Council of the organization with respect to a proposed amendment of the rules of the organization as null and void, on the ground that the rules under which the ballot was instituted contravene one or other of the provisions of s.140(1)(c) of the Act, or alternatively, on the ground that, contrary to the provisions of s.140(1)(a) of the Act, the rules of the organization fail to make a provision required by the Act and regulations thereunder.

The immediate aim of the applicants is to prevent the taking of a postal ballot of members of the Federal Council of the organization pursuant to r.23(a) of the rules of the organization (the rules) in relation to proposed amendments to r.18(a), (b) and (e) and r.26. That ballot if carried by the required majority would alter the composition of the Federal Council. It would abolish the membership of Federal Council of the President and Branch Secretary of each branch, which under the existing rules is automatic. The proposed amendments would also change the composition of the Federal Executive.

The matter comes before this Full Court on a reference by Evatt J. pursuant to s.118C of the Act for a determination by this Court of an issue said to raise a matter of principle concerning provisions of rules of organizations of employees registered under the Act which provide for the amendment of such rules.

The issue is posed in paragraph 13 of the affidavit herein of the claimant Stephen Wright where it is said:

"I submit that the rules of the organization and in particular Rules 23(a) and (b) and 57, insofar as they permit the Federal Council of the Organization to alter the Rules of the Organization without recourse to the branches of the Organization or the membership as a whole contravene section 140(1)(a) or alternatively section 140(1)(c) of the Act. In the alternative I submit that the Rules of the Organization and in particular Rules 23(a) and (b) and 57 fail to make a provision required by the Act or the regulations made pursuant thereto."

This submission is based on the decision of the majority of the Court in Cook v. Crawford (1982) 43 ALR 83, and the observations of Sheppard J. in Squires v. Stephenson & Ors No. V6 of 1981 of 14 February 1983 (unreported). According to the former decision a rule conferring on the Federal Council of the Plumbers & Gasfitters Employees Union of Australia of power to make or amend any rule of the organization without reference to the branches of the organization or to its members contravened s.140(1)(c) of the Act notwithstanding certain provisions of the rules providing for review of decisions of Federal Council by itself and for the taking of a plebiscite to set aside or alter decisions of Federal Council. It was pointed out that the rule making power would extend to the repeal of the existing review and plebiscite provisions. In Squires v. Stephenson (supra) at p.37 it was observed by the learned Judge,

"It seems to me vital that any amendment of the rules is carried out after due notice, proper discussion and adequate consideration. . . . In my opinion it is quite undesirable that amendments to rules be made otherwise than by reference to the membership of an organization."

The decision in Cook v. Crawford (supra) was one in which I participated but as a dissentient so far as concerns the part of the decision referred to above. What I said appears at pp.98-101 of the report mentioned above and is relevant to the issues now before the Court.

The proposed amendment of the rules of the organization was initiated by the Federal Executive of the organization and pursued in the Federal Council pursuant to the provisions of rr.23(a) and (b) and r.57 of the rules.

Rule 19 of the rules provides that the Federal Council shall, subject to control by the members as mentioned thereafter, be the supreme governing body of the Union and have the management and control of the affairs of the Union and shall in particular have power, subject to r.57, to make, add to, amend and rescind these rules. Rule 57 provides as follows:-

"57. - ALTERATION TO RULES

Amendments may be made to these rules or new Rules made or any Rule may be deleted or deleted and replaced by a new Rule by a resolution of Federal Council carried by a two-thirds majority of members voting. On a motion to alter any rule or to make a new Rule or to delete a Rule all Councillors present shall vote; provided that where an alteration to any Rule is rendered necessary by an amendment to the Conciliation and Arbitration Act, a requirement of the Industrial Registrar or an order of the Industrial Court and such alteration is submitted to a postal ballot of members of the Federal Council pursuant to Rule 23 of these Rules, the fact that not all members of the Federal Council cast a vote in such ballot shall not invalidate such ballot and any alteration so submitted shall be deemed to have been approved by the Federal Council if approved by a two-thirds majority of members voting."

Rules 23(a) and (b) provide as follows:-

"23. - MATTERS REQUIRING DECISION BETWEEN FEDERAL COUNCIL MEETINGS

(a) On a motion passed by the Federal Executive that any matter requires a decision of the Federal Council between biennial meetings that matter shall be submitted to the Council for decision. Such matters may be forwarded by post, lettergram or telegram to each of the members of the Federal Council in such form as is determined by the Federal Executive.

(b) The members of Federal Council shall record their vote of the matter so submitted by post, lettergram or telegram addressed to the Federal Secretary and the decision of the majority shall be binding as if such decision were obtained by vote at a regularly constituted meeting of the Federal Council."

It is contended that upon the proper construction of these rules any amendment of a rule or any new rule may be made by the Federal Council on the initiative of the Federal Executive or on its own initiative by a two-thirds majority of members of Federal Council who vote on the question in meeting or by post, and without reference to the branches or the membership or any section of the organization. For present purposes I accept this contention in full. But if it were necessary to decide the matter I would, as at present advised, favour the view that an amendment or new rule can only be made at a meeting of Federal Council. By r.19 the power to make rules is conferred on Federal Council. Although Federal Executive has very wide powers the alteration of rules is not one of them. Rule 57, according to its heading and content, relates specifically to the making of amendments to rules. Rule 23 is a procedural rule which speaks generally, and under which any matter which in the opinion of the Federal Executive "requires a decision of the Federal Council between biennial meetings" may be referred to members of Federal Council for decision by postal vote. Were it not for the proviso to r.57 it would, to my mind, be quite clear that it is contemplated that the making of new rules and amendments to rules should occur only at a meeting of the Federal Council. Rule 57 deals specifically with a matter peculiarly within the authority of Federal Council. Rule 23 deals generally with any matter which, presumably, the Federal Executive might deal with itself, had it not formed an opinion with respect to the matter, that it required a decision of Federal Council. Such an opinion would be irrelevant to the matter of altering a rule. That matter must be dealt with by Federal Council.

As a matter of construction an alteration of rules, which is not within the power of the Federal Executive, might possibly fall within the range of matters which in the opinion of the Federal Executive might require the decision of the Federal Council, but does not do so comfortably. It would take little indication to establish that the rule dealing with the particular takes precedence to the rule dealing with the general. In r.57 there are to my mind two indications. The first is the presence in r.57 of the reference to "all councillor's present". In literal construction this is incompatible with a postal ballot. The next is that whereas r.23(b) provides that on a postal ballot the decision of the majority shall be binding upon the organization, r.57 provides that a two-thirds majority of members voting is required.

It is said, however, that the terms of the proviso assume that in relation all amendments to rules or new rules the terms of r.23 are applicable, with the consequence that a postal ballot vote may be effective. It appears to me however, that the proviso in r.57 tends in the opposite direction, namely, that it prescribes a procedure with respect to a restricted class of amendments to rules and new rules, and that it only applies in connection with that class. According to its terms it applies only to cases where an alteration is rendered necessary by an amendment of the Act, by a requirement of the Industrial Registrar, or an order of the Industrial Court. It goes on to say that where those circumstances exist "and such alteration is submitted to a postal ballot pursuant to r.23 of these rules" the fact that not all members of the Federal Council cast a vote shall not invalidate the ballot, and any alteration so submitted shall be deemed to have been approved by Federal Council if approved by a two-thirds majority of members voting. There is much to be said for the view that the reference to r.23 in the proviso is intended to authorise the use of the procedure provided for therein in relation to the special class of the amendments to rules mentioned, which have an administrative rather than a policy significance, to which the proviso relates. And indeed, the relaxation, in respect of that class of rule amendments, of the more strict provisions in the primary provisions of r.57 is easily understood. Generally, on amendments to rules and new rules, all members present must vote; on the restricted class of amendments dealt with by the proviso it is sufficient even if only two people vote or at least three.

However, my ultimate conclusion in this case is the same whether or not the procedure of postal voting by members of Federal Council on a reference from Federal Executive pursuant to r.23 is applicable to any proposed amendment to rules or new rule. The question of principle must be considered as arising in respect of a rule which confers on Federal Council the power to make any rule amendment or new rule by a two-thirds majority of members upon a postal reference to the members requiring their vote by post or to make rules of the special class by a two thirds majority of those voting on such a reference. The immediate question is whether there is anything incompatible with the provisions of the Act or the regulations thereunder in a rule which confers on a collective body of an organization such as a Federal Council a power so to make and amend rules without reference to the branches or membership of the organization.

It is said that such a rule inevitably imposes upon members conditions which, having regard to the object of the Act and of registration of organizations are unreasonable, oppressive or unjust. It must first be noticed that it is a mandatory requirement of reg.115(1)(d) (xiv) that the rules of an organization shall provide for the alteration of its rules. Also in considering the matter as one of principle it is necessary to assume that but for the rule in question, the rules of the relevant organization do comply with the provisions of the Act and the regulations. It must be assumed, therefore, that those rules provide:-
(a) for the election of the Federal Council and every other Committee or body which is empowered to determine policy or to exercise functions of management in the organization and its branches; (reg.115(1)(d)(i));
(b) for the election of such bodies by secret postal ballot as required by s.133 of the Act;
(c) for a degree of control of such bodies sufficient to meet the requirements of reg.115(1)(d)(v);
(d) that in the composition of the Federal Council there is branch representation so balanced as to comply with the standard defined in McLeish v. Kane (1978/79) 22 ALR 547 at 556-559.

The problem is whether having regard to the provisions of s.140(1)of the Act, it is permissible for a rule to provide that rules introducing new rules or amending existing rules may be made by the rule making authority other than, after what is called, reference to the branches or membership of an organization. Whether the reference might be merely by notification in some way of an intention to make or amend a rule, or would involve the seeking of branch or membership opinion in some form is not specified. Nor does it appear whether opinions so expressed should have effect as a veto or in some other way. But it is clearly contemplated that as a condition precedent to the making of an amendment to a rule or a new rule there shall be a reference to membership sufficient to meet the requirements of s.140(1)(c) in relation to the statutory objects of encouragement of democratic control and the participation of members in the affairs of the organization: see s.2(b) of the Act. It might be thought to be a real question whether a rule conferring a rule making power does impose upon members any conditions, obligations and restrictions within the meaning of s.140(1)(c) of the Act. Some support for this doubt might be found in Morris v. Federated Liquor and Allied Industrial Employees' Union (1978) 35 FLR 60 at p.70. However I do not think the doubt is soundly based. It is unnecessary to express a concluded view on the matter.

Section 140 of the Act is concerned with what is enacted by the rules of the organization looked at as a whole. It provides, not what any particular rule may not do or must do but what "the rules" shall or shall not do or be. Clearly the section contemplates that in a case where the rules contravene the provisions of sub-section (1) of s.140 it may be possible to identify a particular rule or even a part thereof which itself contains the offending provision see sub-sections 5D and 5G of the Act. But it is the existence of a contravention by the rules as a whole which is the first critical consideration. Accordingly it is impossible to determine the validity of a rule which, in its own terms, confers an unfettered rule making power without looking at the rules as a whole. And in relation to the current problem the provisions of reg.115(1)(d)(v) are important. The regulation states in imperative tones that the rules shall provide for the control of committees of the organization by the membership. Clearly if there be adequate control the fact that a particular body is empowered to make and amend rules would not offend s.140(1)(c). Control as envisaged by the regulation is directed to the protection of the members against excess or abuse of authority by governing bodies. Such bodies may be controlled by imposing conditions precedent to the exercise of their powers or by conferring on members or groups of members the capacity to institute a review of, or set aside, their decisions. According to the principle as submitted to this Court no control is adequate unless it provides as a condition precedent to the amending or making of rules some degree of membership participation at least through their branches. But reg.115(1)(d)(v) does not specify the type or degree of control required. It leaves these matters to the membership operating according to the constitution of the organization. It does not specify that the control should operate manifestly through conditions precedent to action, or as remedies after action or otherwise.

To require, therefore, that in relation to the rule making power control must be manifested in the provision of some condition precedent to the exercise of the rule making power, goes further than the regulations or the Act. In The Queen v. Dunphy & Ors Ex parte Maynes & Ors (1977/78) 139 C.L.R. 482 at p.492 his Honour Mason J. touched upon the question as to whether reg.115(1)(d)(v) is directed to the control of the members of the composition of managing committees or of the activities of committees or of both. He did not find it necessary to decide. However, it would seem a sound view that the regulation certainly applies to the activities of committees. Regulation 115(1)(d)(i) already provides for their election. And to speak of rules providing for the control of committees would not be an apt way of referring to rules requiring an elective process.

Accordingly, to my mind the validity of the rule in issue in this case really depends upon the answer to the question whether the presence of the general rule making power of the Federal Council causes the rules, as a whole, to impose upon members conditions which having regard to the objects of the Act and the purposes of registration of organizations under the Act are oppressive, unreasonable or unjust. Important relevant elements of the rules are the provisions for the election of the members of the relevant managing bodies of the Union, and the various avenues of reference and control available to the membership. Relevant features of the rules are as follows:-
(a) they make provision for the election of members of the Federal Council in accordance with the provisions of s.133 of the Act. The members of the Federal Council are elected either by direct secret ballot vote of the members of the organization or as branch delegates to Federal Council by secret ballot of members of the branches;
(b) the members of the Federal Council save the Federal Secretary and Assistant Federal Secretary hold office for only two years. The Federal Secretary and Assistant Federal Secretary hold office for four years;
(c) the Federal Executive consists of the Federal President, Federal Vice President, Federal Secretary, Assistant Federal Secretary, Federal Treasurer, the President of each branch and one additional delegate from each branch;
(d) membership of branch committees of management hold office for two years. They are elected directly by secret ballot of members of the branch;
(e) the Federal Council must meet once in each two years and also on the written request of any three branches or upon a resolution of the Federal Executive or the request of the Federal Secretary or another officer;
(f) each Branch Secretary may require any business which his branch desires to have dealt with to be placed on the agenda of the biennial Federal Council meeting and the Federal Secretary must forward to each branch a copy of the agenda 21 days before the meeting;
(g) Federal Executive may direct the Federal Secretary to place any matter on the agenda for the biennial meeting of Federal Council;
(h) between Federal Council Meetings, Federal Executive may submit any matter to Federal Council for decision forthwith by postal vote of its members;
(i) a branch committee of management may instruct the branch representative to Federal Council or Federal Executive how they shall vote on any matter;
(j) rule alterations shall be made only in accordance with r.57;
(k) plebiscites of members may be held if required by resolution of the Committee of Management of three branches or by a requisition in writing signed by not less than 15% of the financial members of the organization;
(1) on the petition of three branches a plebiscite of all financial members to review a decision of Federal Council or Federal Executive and the result thereof shall be binding on all sections of the organization;
(m) Branch plebiscites may be held for any branch purpose at the discretion of the Committee of Management and shall be held if at least two hundred members or 10% of the Branch by written notice so require;
(n) Federal Executive must meet once each month and if requested by any two branches shall meet specially;
(o) There is to be an annual branch general meeting and a special general meeting shall be held at the request of 200 members or 10% of the membership.
(p) Branch Committees of Management meet bi-monthly.

Although reg.115(1)(d)(v) may not be directed to control of committees through the electoral process the regular accountability of officers including members of Federal Council and Federal Executive at elections is, from a practical point of view, an important aspect of membership control. It is important also that the provisions of s.133, introduced in 1973 provides for electoral procedures which, so far as seems possible, create in Committees of Management the quality of being truly representative of the electorate.

The question before this Court arises therefore with respect to an organization governed by representative bodies and subject to various controls. In addition there are many avenues by which members by themselves and through the branches can bring before Federal Council and Federal Executive proposals which seem appropriate to them. The management of the Organization through monthly Federal Executive meetings and two monthly branch meetings is ongoing and provides frequent opportunities for the conduct of union business.

Ultimately, therefore, the question is whether in the light of the structure and opportunity for membership action provided by the rules of this organization, the Court, "to determine (the matter) in accordance with ordinary judicial procedure" (see per Deane J. in Municipal Officers' Association of Australia v. Lancaster & Anor (1981) 37 A.L.R. 559 at 589) ought to determine that the general rule making power of the Federal Council is not only undesirable but is oppressive, unreasonable or unjust within the meaning of s.140(1)(c).

On the one side the fundamental changes in the structure of an organization and in the rights and duties of members which may be achieved by rule changes is emphasised. It is acknowledged that by reason of s.140(1) the only rules which might be made and validly affect the affairs of the organization or members are rules which are not oppressive, unreasonable or unjust. But it is truly said that this leaves wide scope for the making of rules which will affect the organization and the members in a multitude of ways in respect of management matters of great importance. It is said that the conditions of obtaining a plebiscite discount their effectiveness and that there is little else in the way of direct control. It is also said that the control exercised through branches is too indirect and inconclusive.

On the other hand it is said that the organization must retain a certain viability, meaning, I take it, that the capacity of the Federal Council to act effectively and swiftly in its role as the governing body of so large an organization must be assured. It must be sufficiently free to act as it sees fit in the industrial, business and internal relationships of considerable magnitude with which it is concerned. To restrict the governing body of the Union by introducing conditions precedent to the making and amending of rules would introduce unnecessary delay, uncertainty and expense. The same would be true if plebiscite provisions gave too ready access to that procedure. Clearly enough a general rule making power is a potent instrument for good or ill, in the management of the affairs of the Union. But of course whether an exercise of the power is for good or ill in any particular case depends upon what are, in truth, the best interests of the organization. There is no criterion by which those interests are to be recognized other than the view of the membership, and how best to get this than through genuinely elected bodies?

It is apparent that at this stage the two sides are debating what each sees as desirable. To my mind one is in that area in which the observations of Deane J. in Municipal Officers Association of Australia v. Lancaster & Anor (supra) at p. 589 are applicable, namely,

"The constraints and restrictions imposed, by positive and negative requirements of the Act and Regulations, upon the freedom of the members of an organization to select, for themselves, the rules which they consider appropriate for their particular organization, are real and significant. It cannot, however, be too strongly stressed that, subject to those constraints and restrictions, the content of the rules of a registered organization is primarily a matter for the members. . . . This Court has no authority generally to supervise the content of the rules or to require that the rules comply with what those constituting the Court might see as preferable, desirable or ideal."

In my opinion it is fair to say that in all the debate it has not been demonstrated that there is absent from the total situation established by the rules of the organization, some quality, regarded as so essential to representative or participating democracy that the situation can be said to be one lacking regard to the ideal of democracy and membership participation, in the context of the conduct of the affairs of the organization in accordance with the purposes of registration of the organization under the Act. Compare the observations of Stephen J. in McKinlay v. The Commonwealth 135 C.L.R. 1 at 57; (1975) 7 A.L.R. 393 at 632. The vital consideration in democracy is the degree of electoral accountability of the government to the membership. Other controls are but instruments for use when accountability has failed to achieve its objective. Where the electoral system is soundly devised, as in the case of this organization, the norm is that representative government will adequately reflect the will of the electorate. Controls such as plebiscites which are onerous and expensive exercises are appropriate only where there is a body of the membership sufficiently moved to challenge the government. In this organization, with available avenues, through the branches, and the Federal Executive, for the application of pressure to the Federal Council, and the plebiscite provisions in reserve, there are controls of significance. Also, despite the width of subject matter with respect to which rules may be made by the Federal Council it is an important consideration that, in a practical sense, the problem before the Court concerns only those rules which might be made, which, although unacceptable to some members, are not unreasonable, oppressive or unjust. Those which are offend s.140(1) and are invalid: see R. v. Judges of the Commonwealth Industrial Court Ex parte Amalgamated Engineering Union (Shearer's Case) (1960) 103 CLR 368; Cook v. Crawford (supra) per Sheppard J. at p.149. All the rules which are made reflect the view of a representative body and are thus the product of a system in which there is a significant element of democracy. Accordingly it is difficult to make a judicial finding that, in the absence of conditions precedent to the exercise of the authority of Federal Council to amend rules and make new rules, the rules of the organization contravene the provisions of s.140(1)(c). In my opinion no such finding could or ought to be made.

Accordingly I would reject the contention that rr.23(a) and (b) or 57 impose upon members conditions, obligations or restrictions which having regard to the objects of the Act and the purposes of registration of organizations under the Act are oppressive, unreasonable or unjust or that such rules fail to make a provision required by a provision of this Act.

This reference should be determined accordingly.

JUDGE3

The applicants are members of the Australian Insurance Employees' Union, "the Union", an organization under the Conciliation and Arbitration Act 1904, "the Act" The respondents, other than the Union, are members of the Union and are members of a committee of the Union, namely the Federal Council. The applicants bring these proceedings under s.141 of the Act. The Union was added as a party during the hearing of the application before this Court. Because of the orders sought under sub-section 141(8A) of the Act, it was necessary that the Union have the opportunity of being heard by the Court; see sub-section 140(5F). Two main issues are raised by the proceedings; first, whether a rule of the Union which empowers the Federal Council of the Union to make an alteration to the rules of the Union without direct consultation with or participation by branches or members of the Union contravenes sub-section 140(1) of the Act; secondly, whether the rules of the Union contravene sub-section 140(1) of the Act in a specified respect, namely that they fail to provide for the control of committees of the Union by the members of the Union. These two issues raise principles which have application generally to organizations. For that reason, the Court, constituted by a single Judge, ordered, pursuant to s.118C of the Act, that the proceedings be heard and determined by a Full Court.

The proceedings came on for hearing before a Full Court constituted by five Judges. Counsel appeared on behalf of the applicants and the respondents respectively. The Court gave leave to the solicitor for the Australian Council of Trade Unions, "the A.C.T.U.", to appear as amicus curiae on behalf of the members of the A.C.T.U. The solicitor for the A.C.T.U. made submissions supporting the view that a rule of an organization which empowered a committee of the organization to make an alteration to the rules of the organization without direct consultation with or participation by branches or members of the organization did not contravene sub-section 140(1) of the Act. The Court has received much assistance from the submissions of counsel and from the submissions of the solicitor for the A.C.T.U.

Reference is made to the relevant statutory provisions. Part VIII, comprising ss.132-158 inclusive, of the Act, is headed "Registered Organizations". In the Act, the word "organization", except where otherwise clearly intended, means any organization registered pursuant to the Act; sub-section 4(1). Under s.132, specified types of associations may, on compliance with the prescribed conditions, be registered as organizations. Sub-sections 132(2) and (3) are set out:

"(2) The conditions to be complied with by associations so applying for registration and by organizations shall be as prescribed.

(3) Upon registration, the association shall become and be an organization."

Sub-regulation 115(1) of the Conciliation and Arbitration Regulations prescribes conditions to be complied with by an association applying for registration and those conditions apply in relation to organizations; sub-reg. 115(2). The relevant parts of sub-reg. 115(1) are set out, but for the sake of clarity, the word "organization" is substituted for the word "association":

"REGULATION 115 - Conditions of registration

(1) The following conditions are prescribed conditions to be complied with by an organization . . . . . .

(d) The affairs of the organization shall be regulated by rules . . . providing, in relation to the organization, for:

(i) the election of -

(a) a committee of management of the organization and of each branch of the organization;

(b) officers of the organization and of each branch of the organization;

(c) any conference, council, panel or other body (additional to the committee of management), which is empowered to determine policy or to exercise functions of management in the organization or branch;

(ii) the powers and duties of the committees and of officers; . . .

(v) the control of committees of the organization and its branches by the members of the organization and the members of the branches, respectively; . . .

(xiv) the alteration of its rules."

In addition to the conditions referred to in sub-section 132(2), the rules of an organization must comply with the detailed conditions specified in sections 133 and 133A of the Act. Section 133AA provides that elections for specified offices within an organization shall be made by secret postal ballot. Under sub-sections 139(1), (2) and (3) of the Act, a change of the name of an organization or an alteration to its rules insofar as they relate to conditions of eligibility of membership of the organization or another specified matter do not have effect unless the Industrial Registrar consents to the change or alteration. Sub-section 139(4) is set out:

"(4) An alteration of the rules of an organization to which the consent of the Registrar under this section is not required does not have effect until particulars of the alteration have been filed in the office of the Registrar and the Registrar has certified that, in his opinion, the alteration complies with and is not contrary to the provisions of this Act, of the regulations or of an award and is not otherwise contrary to law and has been made in accordance with the relevant procedures laid down by the rules of the organization."

It should be noted that the words "and has been made in accordance with the relevant procedures laid down by the rules of the organization" were inserted into the sub-section in 1977.

The relevant parts of sections 140 and 141 of the Act are set out:

"140(1) The rules of an organization -

(a) shall not be contrary to, or fail to make a provision required by, a provision of this Act, the regulations or an award or otherwise be contrary to a law; . . .

(c) shall not impose upon applicants for membership, or members, of the organization, conditions, obligations or restrictions which, having regard to the objects of this Act and the purposes of the registration of organizations under this Act, are oppressive, unreasonable or unjust; and . . .

(2) A member of an organization may apply to the Court for an order under this section in respect of the organization. . . .

(5D) An order under this section may declare that the whole or a part of a rule of an organization contravenes sub-section (1) or that the rules of an organization contravene sub-section (1) in a specified respect.

(5E) Subject to sub-section (5F), the Court has jurisdiction to hear and determine an application under sub-section (2).

(5F) An organization in respect of which an application is made under this section shall be given an opportunity of being heard by the Court.

(5G) Where an order under this section declares that the whole or part of a rule contravenes sub-section (1), the rule or that part of the rule, as the case may be, shall be deemed to be void from the date of the order." "141.(1) A member of an organization may apply to the Court for an order under this section in respect of the organization. . . .

(1G) An order under this section may give directions for the performance or observance of any of the rules of an organization by any person who is under an obligation to perform or observe those rules.

(1H) The Court has jurisdiction to hear and determine an application under sub-section (1) . . . but, before making an order under this section, the Court shall give any person against whom the order is sought an opportunity of being heard. . . .

(8A) Where the Court, in considering an application under this section, finds that the whole or a part of a rule of the organization concerned contravenes sub-section (1) of section 140 or that the rules of the organization concerned contravene that sub-section in a particular respect, the Court may make an order setting out that finding and section 140 applies in relation to that order as if -

(a) that order had been made in proceedings relating to an application under that section; and

(b) the finding set out in that order were a declaration of the Court."

For the sake of completeness, it is necessary to make reference to two further provisions of the Act. Section 2 provides:

"2. The chief objects of this Act are -

(a) to promote goodwill in industry;

(b) to encourage, and provide means for, conciliation with a view to amicable agreement, thereby preventing and settling industrial disputes;

(c) to provide means for preventing and settling industrial disputes not resolved by amicable agreement, including threatened, impending and probable industrial disputes, with the maximum of expedition and the minimum of legal form and technicality;

(d) to provide for the observance and enforcement of agreements and awards made for the prevention or settlement of industrial disputes;

(e) to encourage the organization of representative bodies of employers and employees and their registration under this Act; and

(f) to encourage the democratic control of organizations so registered and the full participation by members of such an organization in the affairs of the organization."

By sub-section 4(1) of the Act, in the Act, except where otherwise clearly intended, the word "office" in relation to an organization, means, inter alia:

"(a) the office of a member of the committee of management of the organization or branch; . . .

(c) the office of a member of any conference, council, committee, panel or other body within the organization or branch which, under the rules of the organization or of the branch, is empowered to make, alter or rescind rules or to enforce, or perform functions in relation to the enforcement of, rules or to exercise any of the functions of management; . . ."

Turning then to the first issue raised in these proceedings. Among the orders sought by the applicants are orders that each of rules 19(b), 23(a) and (b) and 57 contravene:

(a) paragraph 140(1)(a) of the Act; and

(b) paragraph 140(1)(c) of the Act.

Although the proceedings were brought under s.141 of the Act, these orders can be made under sub-section 141(8A).

For the purposes of determining the first issue, it is not necessary to make a detailed reference to the rules of the Union. It is sufficient to say that the rules provide for the election of committees and of officers (see sub-reg. 115(1)(d)(i)(a), (b) and (c)), and that for present purposes the relevant committee is the Federal Council which is constituted by rule 18. In the present case, the issues raised do not entail an attack upon the composition of the Federal Council, and thus it is not necessary to consider the matters discussed in cases such as McLeish v. Kane (1978) 36 F.L.R. 80, particularly per J. B. Sweeney, Evatt and Northrop JJ. at pp.88-94.

Rule 19 specifies the powers of the Federal Council and the relevant power is set out:

"19. - POWERS AND DUTY OF FEDERAL COUNCIL

The Federal Council shall, subject to control by the members as hereinafter mentioned, be the supreme governing body of the Union and have the management and control of the affairs of the Union and, without limiting the generality of the foregoing, shall in particular have power:- . . .

(b) subject to Rule 57 to make, add to, amend and rescind these Rules."

Rule 20 contains provisions relating to meetings of Federal Council and rule 22 makes provisions relating to the agenda for Federal Council meetings. Normally each branch secretary is empowered to notify the Federal Secretary of all business his branch desires to have placed upon the agenda paper for biennial meetings of Council and notes of those items must be given to each branch before the meeting. Nevertheless, under rule 22 Federal Council is empowered to deal with any matter, whether it appears on the agenda paper or not. For the purpose of these proceedings it will be assumed that under rule 22 Federal Council is empowered to make a rule alteration without prior direct consultation with or participation by branches or members of the Union. The position need not be so extreme with respect to the exercise of the power to alter rules at special meetings of Federal Council, but for general purposes rule 19(b) is the rule which is being challenged and for the purposes of that challenge the extreme position is taken in favour of the applicants.

Rule 23 contains provisions enabling Federal Council to deal with matters between Federal Council meetings by what can be described as a postal vote. Sub-rules (a) and (b) are being attacked and they are set out:

"23. - MATTERS REQUIRING DECISION BETWEEN FEDERAL COUNCIL MEETINGS

(a) On a motion passed by the Federal Executive that any matter requires a decision of the Federal Council between biennial meetings that matter shall be submitted to the Council for decision. Such matters may be forwarded by post, lettergram or telegram to each of the members of the Federal Council in such form as is determined by the Federal Executive.

(b) The members of Federal Council shall record their vote of the matter so submitted by post, lettergram or telegram addressed to the Federal Secretary and the decision of the majority shall be binding as if such decision were obtained by vote at a regularly constituted meeting of the Federal Council."

Rule 57 provides:

"57. - ALTERATION TO RULES

Amendments may be made to these Rules or new Rules made or any Rule may be deleted or deleted and replaced by a new Rule by a resolution of Federal Council carried by a two-thirds majority of members voting. On a motion to alter any rule or to make a new Rule or to delete a Rule all Councillors present shall vote; provided that where an alteration to any Rule is rendered necessary by an amendment to the Conciliation and Arbitration Act, a requirement of the Industrial Registrar or an order of the Industrial Court and such alteration is submitted to a postal ballot of members of the Federal Council pursuant to Rule 23 of these Rules, the fact that not all members of the Federal Council cast a vote in such ballot shall not invalidate such ballot and any alteration so submitted shall be deemed to have been approved by the Federal Council if approved by a two-thirds majority of members voting."

Sub-section 140(1)(a) has been set out. The rules of the Union contain a provision for the alteration of its rules (sub-reg. 115(1)(d) (viv)), namely rules 19(b). It is difficult to see how the applicants can make out a case under paragraph 140(1)(a). It was suggested, that if the specified rules contravened paragraph 140(1)(c) of the Act, those ruels would be contrary to a provision of the Act under paragraph 140(1)(a). This is self-evident, but paragraph 140(1)(c) takes effect in its own right. It does not depend for its efficacy upon the application of paragraph 140(1)(a). If in any proceedings, the question arises whether a rule of an organization contravenes paragraph 140(1)(c), the Court has power to consider that matter without reference to paragraph 140(1)(a). The true position is illustrated by the following passage in McLeish v. Faure (1979) 40 F.L.R. 462 per J.B. Sweeney, Evatt and Northrop JJ. at pp.472-3:

"There is no doubt that where in proceedings brought under s.141 of the Act, a question arises whether a rule of an organization contravenes s.140 of the Act, the court has power to decide that issue, see Allen v. Townsend ((1977) 31 F.L.R. 431) per Evatt and Northrop J.J.: 'On these facts, it is necessary to consider whether the order sought under s.141 of the Act relying upon the invalidity of federal r.17(n) should be made. It is open to a party in proceedings under s.141 of the Act, or for that matter in any proceedings in any court where the matter may be an issue, to claim that a rule of an organization contravenes the provisions of s.140(1) of the Act and if upheld a party to those proceedings cannot rely upon facts dependent upon the validity of that rule. In legal proceedings of this kind, the invalidity arising from a non-compliance with the requirements of s.140(1) of the Act results from the operation of that subsection itself and the invalidity does not depend upon an order having been made in proceedings instituted under the provisions of s.140 of the Act."

"(ii) Delegates from Branches on the basis of one Delegate for each 1,000 financial members or part thereof."

It is also proposed to delete sub-paragraph (iii) of the Rule. The effect of this amendment, if passed, would be to take away membership of the Council from the President and Secretary of each Branch. The sliding scale in sub-paragraph (iii) would also go and be replaced by the new sub-paragraph (ii) which simply provides for one delegate for each 1,000 financial members or part thereof. If this were to occur, the second claimant would lose her position on Federal Council, she being a member thereof by reason of the fact that she is the Secretary of the New South Wales Branch.

The representation of the various Branches would change. On the figures earlier given, New South Wales would have ten representatives on Council, Victoria seven (or perhaps six, in the light of what we were told at the hearing), Queensland three, South Australia three, Western Australia two and Tasmania one. I have excluded from this statement the federal office bearers who are members of the Council by reason of the provisions of sub-paragraph (i) which is not altered by the proposal.

There are other amendments proposed. There is an amendment proposed adding a new paragraph (e) to Rule 18. Amongst other things, it provides that, where a person holds office as a President or Secretary of a Branch, he shall cease to be entitled to be a member of Council and/or a Delegate of that Branch to Council by virtue only of the fact that he holds such office as a President or Secretary of a Branch. It also provides that, where a Branch becomes entitled to more Delegates to Council than it had immediately prior to the certification of the new sub-paragraph (ii) of paragraph (a), the Branch shall be entitled to elect such extra number of Delegates to which it becomes entitled in accordance with Rule 40 which provides for Branch elections.

The only other amendment which it is necessary to mention is the addition of a new paragraph (c) to Rule 26, in the following terms:

"(c) Where, at a meeting of the Federal Executive, the delegates representing not less than three branches so request, a decision of that meeting shall be forthwith referred to the Committees of Management of the Branches for consideration and should the Committees of Management of not less than three Branches request the Federal Secretary in writing or by telegram within fourteen days of such Federal Executive meeting that the decision of the Federal Executive not be implemented, "then no action shall be taken on the decision until and unless ratified by the Federal Council either at a meeting of the Federal Council or pursuant to Rule 23 of these Rules as if a motion had been passed by Federal Executive that the matter required a decision of Federal Council."

In order that the amendments might be passed, the Federal Executive, on 24 January, 1983, authorised a postal ballot of Federal Council members pursuant to Rule 23(a). The Executive determined that the close of the ballot should be at 4 p.m. on 11 February, 1983, the day upon which his Honour granted the Rule in this case and reserved his judgments in the other cases. The ballot paper was despatched to members of Federal Council along with an explanatory letter dated 26 January, 1983.

By 9 February, 1983, ballot papers had been received from 21 members of the Council. All 21 ballot papers contained votes in favour of all of the proposed Rule changes. In evidence given in the other proceedings, the respondent, K. McLeod, who is the Federal Secretary of the Union, referred to the result of the ballot. He regarded the amendment as passed and said that it would be submitted to the Industrial Registrar for certification pursuant to s.139 of the Act upon the conclusion of the ballot.

The application is made pursuant to s.141 of the Act. Reliance is placed on the provisions of paras. 140(1)(a) and (c) thereof. Those provisions are as follows:

"140(1) The Rules of an organisation -

(a) shall not be contrary to, or fail to make a provision required by, a provision of this Act, the regulations or an award or otherwise be contrary to a law; . . . . . . . . .

(c) shall not impose upon applicants for membership, or members, of the organisation, conditions, obligations or restrictions which, having regard to the objects of this Act and the purposes of registration of organisations under this Act, are oppressive, unreasonable or unjust; . . . . . . . . "

Reference needs also to be made to sub-para.115(1)(d)(v) of the Regulations. It provides that certain conditions are prescribed conditions to be complied with by an association applying for registration. These include a condition that its Rules provide for the control of committees of the association and its branches by the members of the association and the members of the branches, respectively.

Central to the submissions made on behalf of the claimants are the provisions of para.(2)(f) of the Act. That paragraph is as follows:

"(2) The chief objects of this Act are - . . . . . . . . . . .

(f) to encourage the democratic control of organisations so registered and the full participation by members of such an organisation in the affairs of the organisation."

The specific submissions which are made on behalf of the claimants are:

(a) The Rules of the Union, and in particular Rules 23(a) and (b) and 57, insofar as they permit the Federal Council of the Union to alter the Rules thereof without recourse to the Branches or the membership as a whole, contravene para.140(1)(a) and/or para.140(1)(c) of the Act.

(b) Alternatively, that the Rules of the organisation, and in particular Rules 23(a) and (b) and 57, fail to make a provision required by the Act or the Regulations made pursuant thereto.

A principal submission made on behalf of the claimants concerns the proper construction of and place in the Act of para. 2 (f) earlier set out. That is the matter to which I propose first of all to come. Paragraph (f) was added to s.2 of the Act by the Conciliation and Arbitration Act 1973 (No.138 of 1973). The amendment came into operation on 13 November, 1973.

Although the matter may not have been finally resolved, the prevailing view in this Court is that, in order to determine the mischief at which a statute, or an amendment thereof, is directed, it is permissible to have regard to what is said by a Minister in a second reading speech. That was the view of Mason J. both in Wacando v. The Commonwealth (1981) 37 A.L.R. 317 (pp.335- 336) and Federal Commissioner of Taxation v. Whitfords Beach Pty. Limited (1982) 39 A.L.R. 521. In the latter case, his Honour said (p.533):

"As I said in Wacando v. Commonwealth (1981) 37 ALR 317 at 335-336, generally speaking, reference cannot be made to what is said in Parliament for the purpose of interpreting a statute. But in my opinion there are grounds for making an exception for the case where a bill is introduced to remedy a mischief. Then, to have regard to the purpose for which the legislation was enacted as stated by the Minister in charge of the bill would conform to the rule that extrinsic material is admissible to show "the mischief which the statute is designed to remedy. I acknowledge that the inadmissibility of Parliamentary debates, as an aid to the construction of statutes is supported by powerful authority. . . . . . . . . But there is a case for treating the Minister's statement, particularly when it is not contested, as cogent evidence of the mischief aimed at, evidence certainly as cogent as the extrinsic materials from which the court would draw an inference in many cases."

In T.C.N. Channel Nine Pty. Limited v. Australian Mutual Provident Society (1982) 42 A.L.R. 496 a Full Court of this Court applied what Mason J. had said. In the course of their reasons, their Honours referred to the passage which I have quoted from his judgment in the Whitfords Beach-case. They also referred (p.508) to the fact that no other members of the High Court who sat in either that case or in the Wacando case dealt with this question. They considered what Gibbs C.J. had said in the Whitfords Beach case as to the admissibility of Parliamentary debates not to be directed to the question of whether or not it was permissible to look at a Minister's second reading speech for the purpose of determining the mischief which the statute was intended to remedy. They concluded that the Hansard report of the second reading speeches of the relevant Ministers and the explanatory memorandum circulated to members of Parliament should be taken into account in order to determine the mischief at which the legislation under consideration was directed (p.508).

In my opinion it is helpful, in endeavouring to ascertain the mischief at which para. 2 (f) of the Act was directed, to consider what was said in the second reading speech made when the amendment was introduced. The Bill which became the Amending Act of 1973 was the Conciliation and Arbitration Bill 1973 (No.2) which was introduced into the House of Representatives by the then Minister for Labour, Mr. Clyde Cameron, on 30 August, 1973. The Bill replaced an earlier Bill which had been introduced into the House by Mr. Cameron on 12 April, 1973. In his second reading speech in support of the second Bill, Mr. Cameron incorporated what he had said when introducing the earlier Bill. He said (referring to the earlier Bill) (Hansard p.659):

"The third major change was provision for democratic control of unions and the fullest participation by union members in the affairs of their organisation. That is a principle which was clearly stated by the Australian Labor Party before it was elected to govern this country and it is a principle which has the wholehearted endorsement of the trade union movement and, I suggest, of the public at large."
In his earlier speech of 12 April, 1973, Mr. Cameron, under the heading "Participatory Democracy" had said (Hansard p.1431): "Participatory democracy will be an essential ingredient for the proper functioning of the amalgamated unions. As unions become larger, and their governing bodies become more remote from the membership, it will be important to safeguard against the development of bureaucratic relations between the leadership and the rank and file. This Government will encourage the elimination of tendencies that prejudice democratic control of trade unions by assisting rank and file members to bring their grievances over alleged defects in rules and in abuse of rules, to the Commonwealth Industrial Court for examination and, where called for, correction. . . . . . . . . . The platform of the Australian Labor Party calls upon the Government to ensure a system of democratic control of all unions, allowing fullest participation by members in their affairs. . . . . . . . . . Financial members are to be given an absolute right to vote in any election for office bearers and in plebiscites touching rules or policy. . . . . . . . . "

The matters which moved those responsible for the 1973 amendment were not then new nor peculiar to Australia. The opening chapter of "Union Democracy" (1956) by Lipset, Trow and Coleman (an American work) is entitled "Democracy and Oligarchy in Trade Unions". The second paragraph of the chapter is as follows (p.3):

"In few areas of political life is the discrepancy between the formal juridical guarantees of democratic procedure and the actual practice of oligarchic rule so marked as in private or voluntary organizations such as trade unions, professional and business associations, veterans' groups, and cooperatives. In fact, as many observers have noted, almost all such organizations are characterized internally by the rule of one-party oligarchy. That is, one group which controls the administration, usually retains power indefinitely, rarely faces organized opposition, and when faced with such opposition often resorts to undemocratic procedures to eliminate it. This is especially true for national organizations."

In the same vein are chapters 7 and 9 of a work, "The Industrial Democrats" by Radice (1978). In the second of these chapters, under the heading "The Iron Law of Oligarchy?", the author says (pp.165-166):

"In a previous chapter, it was pointed out that one of the current criticisms of trade unions is for their 'lack of democracy'. There is nothing particularly novel in this; indeed the most formidable critique of trade union democracy ever made was put forward by the German academic, Robert Michels, at the beginning of the twentieth century. Michels' famous work was mainly concerned with political parties; but he also concluded that 'in the trade union movement, the authoritarian character of the leaders and their tendency to rule democratic organisations on oligarchic lines, are even more pronounced than in the political organisations'. He gave a number of reasons why the 'iron law of oligarchy' was applicable to trade unions: it was impossible, because of the need for a permanent organisation and for organisers to conduct negotiations and arrange strikes for trade unions, to operate on the basis of direct democracy; officials stuck like limpets to their jobs for mainly economic and social reasons; and, because of their expertise and prestige, the membership acquiesced in their virtual permanence in office. Oligarchic control was also reinforced by mass apathy: 'The majority of members are as indifferent to the organisation as the majority of the electors are to parliament'. Michels pointed out that institutional needs could supplement and even displace the original goals of an organisation: 'The ... doctrines are, whenever requisite, attenuated and deformed in accordance with the external needs of the organisation. Organisation becomes the vital essence ... More and more invincible becomes its aversion to all aggressive action ... Thus, from a means, organisation becomes an end'."

Australian writings on the subject include "Trade Unions in Australia (1980) second edition, Martin, especially at pp.87-94, "Industrial Democracy in Australia" (1980) edited by Pritchard and "Democracy in Trade Unions" (1982), Dickenson, especially chapter 2 on "Theory and Practice of Democracy in Unions". In the second of the works cited under the heading "Trends in Democracy", the author deals with political democracy and organisational democracy. The latter is divided into two sub-headings "Shareholder Democracy" and "Trade Union Democracy"; see pp.101-107. I do not quote from these works. The discussion in them is along the lines of that in the overseas works to which I have referred.

Upon the basis of what was said in the second reading speeches to which I have referred, I conclude that the mischief at which para. 2 (f) was directed was the increasing tendency of trade unions to become undemocratic, not in the sense that their officials and council were not periodically elected, but in the sense that there was developing an undesirable tendency towards executives and councils becoming remote from the membership. There was inadequate consultation by them with the membership and a lack of participation by the membership in union affairs.

The ascertainment of the mischief at which a statute is directed is only one of the aids to its interpretation. One basic concern will always be with the language which is used. Although the proposition ought not to be stated too positively, it will usually only be in cases of ambiguity that the taking into account of the mischief a statute was intended to remedy will be of substantial assistance; Craies on Statute Law, 7th edition at pp. 85-86 and 96-98.

In my opinion there is a degree of ambiguity in para. 2 (f) of the Act. What is meant by the expression "democratic control of organisations"? As some of the writings earlier referred to point out, there are many types of democracy. An institution may be democratic but it may nevertheless not involve its members in any of its decision making. This may be done for them by a council or an executive. An institution is democratic because its governing body is elected. It will still be described as democratic notwithstanding that its governing body may make decisions of the most fundamental importance with respect to, for example, its policy and the basic structure of the organisation itself. Parliaments, particularly in countries which do not have written constitutions, provide an example of such an institution. Plainly it is correctly described as democratic.

Of course the democratic control of organisations is only one of the two matters which are to be encouraged by the operation of para. 2 (f). The other is "the full participation by members . . . in the affairs" of the organisation. But a question arises as to whether the content of these two concepts is different or whether they either mean the same thing or overlap to a substantial degree. Indeed one construction which is open is that the notion of full participation by members is but the spelling out of what is meant by democratic control. If this be right what the legislature has intended to encourage by including para. 2 (f) as a chief object of the Act is "participatory democracy" - a sub-heading in one of Mr. Cameron's speeches earlier referred to.

Having given the matter due consideration, that is, in my opinion, the meaning the paragraph was intended to have. I would not go so far as to say that the two concepts were intended to have precisely the same meaning; there may be shades of difference between them. But I think the better view is that by the paragraph the legislature has manifested an intention to encourage participatory democracy in the affairs of organisations. The emphasis is on the word "participatory". The participation is to be in "the affairs of the organisation", that is all its affairs, not just the election of officials.

In passing there are two matters which should be noticed. Firstly, participatory democracy is to be encouraged in all organisations whether of employers or employees. This case concerns a trade union and so the emphasis is upon an organisation of that kind. But organisations of employers are affected equally. Some of what I am about to say will have relevance for trade unions only, but most of it is of equal application to an organisation of employers.

Secondly, it ought to be clear that I am not concerned to express any personal opinion on the desirability or otherwise of participatory democracy in organisations registered under the Act. Whether it is good or bad is not for the Court; it is a matter for Parliament. The Court's task is to give effect, as best it can, to Parliament's intention. In the writings of students of organisational behaviour the balancing point of view is certainly found. It is that over-participation by members of a large, national organisation only tends to weaken it, with the result that it does not fulfil its intended role. Divisiveness and apathy amongst the membership result in it becoming inefficient and indecisive; participation by the members, instead of benefiting them, works to their disadvantage. It will later be seen that I think these considerations must be taken into account in the overall task of statutory interpretation which is involved. But they are not relevant to the question of what was the mischief to which para. 2 (f) of the Act was directed.

The meaning of para. 2 (f) having been determined, it is next appropriate to go to paras.140(1)(a) and (c). The second of these is of more relevance to the submission based on para. 2 (f), but I think one ought also to have regard to so much of para.140(1)(a) as provides that the rules of an organisation shall not be contrary to a provision of the Act. However, for the purpose of dealing with the submission, I do not think they add anything to what is provided for in para.140(1)(c).

The question which arises for consideration is whether Rule 57, providing as it does for the amendment of the Rules by the Federal Council without consultation of or participation by the members, imposes upon members conditions or restrictions which, having regard to the object of the Act stated in para. 2 (f), is oppressive, unreasonable or unjust. A connected but really independent question is whether that is so if one takes into account also the provisions of Rule 23 which enables decisions to be made by postal ballots if the Federal Council is not meeting. A possible result is that it would not be oppressive or unreasonable for amendments to be dealt with by a meeting of Federal Council where discussion can take place; it may be quite another to empower the making of amendments by postal ballot where no discussion (except of the most informal and incomplete kind) can occur.

In coming to grips with the claimants' submission it is necessary to reach a conclusion on the significance para. 2 (f) was intended to have as an object of the Act in the context of the operation of para.140(1)(c). In Cook v. Crawford (1982) 43 A.L.R. 83 I said (p.147):

"The Act speaks of the encouragement, not only of democratic control, but also of full participation by members in the affairs of an organization. Its use of the word 'encourage' does not suggest that any absolute standard is to be applied. Rather it is concerned to see the progressive attainment of the objects which it mentions."

I would adhere to what I there said.

In Municipal Officers' Association of Australia v. Lancaster (1981) 37 A.L.R. 559 Deane J. (when a judge of this Court) said (p.590):

"In the present matter, the applicants placed particular reliance upon the fact that among the 'chief objects' of the Act specified in s.2 is the object of encouraging 'the democratic control' of registered organizations and the 'full participation' by members of such an organization in its affairs. These, are, of course, ideals. If it were possible fully to attain them, it would be unnecessary to have any committee of management or council in an organization. The members, fully participating, would decide all questions by democratic decision. In practice, one must be satisfied with less than perfect democracy and less than full participation of members. Much must be left to office holders and to council or committee. Here, one encounters different levels at which the nominated objects of democratic control and full participation may be relevant. At one level, democratic control and full participation could be said to be best served by allowing the members to decide for themselves the manner of election of members of council (or committee) and of holders of office to which or to whom authority to make decisions or to perform acts is delegated. At another level, democratic control and full participation are most likely to be served by provisions which maximize the participation of members of the organization or of the relevant branch or section in the election process."

I would respectfully agree with those remarks and, in passing, I would add that I do not consider that they run counter to anything which I said in Cook v. Crawford (supra) or to the decision of the majority therein. I would reject submissions to the contrary which were made in the course of argument in this case. The remarks of Deane J. were made in the course of a case where rules providing for the election of office bearers were in question. He was not concerned with the procedure for amending rules. But the general purport of his remarks have a relevance for this case which I shall endeavour to explain a little later.

The next matter I wish to stress is the matter just mentioned, namely that what is in question here is the rule amending power. The question is whether the procedure provided for in Rule 57 (and Rule 23) operates unreasonably or oppressively from the point of view of the general membership of the Union. There has never been any question in this Court or in the Industrial Court that rule amendment is a fundamental matter. This is seen most clearly in decisions which have held that compliance with rule making or amending provisions in rules of organisations is mandatory and not directory. Substantial compliance is not enough; strict compliance is insisted upon. In Cook v. Crawford (supra) I quoted passages from the judgments in Roots v. Mutton (1978) 32 F.L.R. 15 and Morris v. Federated Liquor and Allied Industries Employees Union of Australia (1978) 35 F.L.R. 60 (43 A.L.R. at p.141). I regard them as so important that I quote again the passage cited from Roots v. Mutton and part of that cited from Morris' case. In Roots v. Mutton the Court said (p.19):

"Quite apart from the above considerations, there is a more fundamental reason for construing the procedural requirements contained in sub-c11 (2), (3) and (4) of r 28 as mandatory rather than directory. Underlying these provisions is the obvious philosophy that, apart from the case where amendment is necessary to comply with legislative requirements, amendments to the rules of the union should have a basis in the membership itself. The initial promoter of an amendment to the rules is seen as acting in his capacity as a member of the union rather than as an officer or as a member of the Federal Council or of the committee of a branch of the union. The proposed amendment must, if it is to be submitted to the Federal Council, be approved by a majority of the members of the branch to which the relevant member belongs at a meeting specially convened for the purpose of considering it. It cannot be dealt with by the Federal Council unless notice that it is proposed to consider it has been forwarded to all branches of the union not less than six weeks prior to the relevant meeting of the Federal Council. The requirement of notice to all branches is clearly designed to ensure that except where the proposed amendment is to meet legislative requirements, no amendment will be made to the rules of the union without the members of the union being, at branch level, given the opportunity of considering the proposed amendment and making their views known in relation to it. Since branches meet monthly, six weeks' notice is designed to ensure that each branch will meet after it gets notice of the proposed amendment and before the council meets."

It is perhaps unnecessary to say that when their Honours said that underlying the rules to which they referred was the obvious philosophy that amendments to the rules of the union should have a basis in the membership itself, they were referring to the philosophy which prevailed in the union with which they were dealing.

In Morris' case the Court said after referring to the reasons of the Court in Roots v. Mutton (p.64):

"Those reasons reflect the view that amendment of the rules of an organization is a matter going so fundamentally to the relationship between members and between branches that in the absence of clear provision to the contrary, there must be strict compliance with specified amendment procedures."

I wish next to make plain the relevance that I think the dicta in Roots v. Mutton and Morris' case have for this case. This is not a case of a challenge to the procedure invoked for the amendment of rules. It is not suggested that the procedure which the rules themselves lay down for amendment of rules has not been followed. No question of whether such procedure is mandatory or directory arises. That was the question in Roots v. Mutton and Morris' case and was the matter to which the Courts in those cases were addressing themselves when they said what they did in the passages I have quoted from their reasons for judgment.

Notwithstanding that to be the case, the dicta serve to emphasise the fundamental importance of rule amendment procedures. The reason they are important is that they enable the constitution of an organisation - the compact which governs the relationship of members with each other and the way their organisation is to be run and managed - to be changed. Some changes, it is true, will be of a minor, even insignificant, kind; others will need to be made as of course in order to comply with provisions of the Act or orders of the Court. But others will be of far reaching importance. The amendments here in question are in that category. They will, if brought into effect, change the composition of the Federal Council. I do not say that these will be a bad thing or a good thing. That has nothing to do with the question. Nor is it to the point that, if the amendments come into force, the second claimant will perforce lose her position on the Federal Council. What is important is that quite fundamental changes to the composition and balance of the Federal Council will be made by a decision in which the membership will not participate. Moreover the decision will have been made by members of the Federal Council in the isolation of a postal ballot without the benefit of the discussion which a meeting would provide.

My conclusions thus far are:-
1. A chief object of the Act is to encourage participatory democracy.
2. A rule will be invalid if it imposes upon members of an organisation a condition which, having regard to that amongst other objects of the Act, is, inter alia, unreasonable.
3. Alterations to the rules of an organisation are fundamental going as they do to the root of the compact which binds the members.
4. The only part which the membership may play in the alteration of the rules of the organisation here is by the election of officials or members of the Federal Council. That is subject to the plebiscite provisions provided for in Rules 58 and 65.

What follows from these conclusions? It would be absurd to suggest that the membership should play a direct part in the day to day conduct of the Union's affairs or in much of its decision making. It must be able to act through an executive and a council as it does. No one could reasonably suggest that the presence of para. 2 (f) in the Act required otherwise. So much is implicit in what Deane J. said in the passage earlier quoted from his judgment in the Lancaster case (see 37 A.L.R. at p.590).

But in my opinion some matters are of such fundamental importance that when decisions are to be made in relation to them, the membership must be involved. I use that expression broadly; the involvement may well vary depending on circumstances and depending upon the nature of the amendments to be made. If that is not so, I fail to see what effect can ever be given to the presence of para. 2 (f) in the Act. It is treated as no more than a platitude which may be conveniently ignored. The mischief which I believe para. 2 (f) was intended to overcome remains. All the evils which those responsible for the amendment in 1973 perceived continue to exist. It is no answer, in my opinion, to draw attention to the other objects of the Act, to the fact that organisations act through elected representatives or that to require involvement of the membership in some matters will cause difficulties in having decisions made expeditiously. Nor is it an answer to refer to the plebiscite provisions in Rules 58 and 65 or to the fact that there is no express provision in the Act requiring amendments of rules to be carried out in a particular way.

It is the object of the Act stated in para. 2 (f) which requires our attention in this case. Is it being given effect to or is it the case that it is not even receiving lip service? Elections are elsewhere provided for in the Act and the Regulations. The fact that a body acts through elected representatives does not mean that it engages in participatory democracy. Parliament does not. The fact that the involvement of the members may make difficulties for the executive provides no answer. One has to do the best one can. The Plumbers and Gasfitters Employees' Union of Australia, the union with which the cases of Roots v. Mutton (supra) and Cook v. Crawford (supra) were concerned, had in the opinion of the majority in the latter case a provision in its rules which sufficiently involved the membership in rule changing procedures. In the words of the Court in Roots v. Mutton underlying the relevant rules was the philosophy that, apart from the case where amendment was necessary to comply with legislative requirements, amendments to the rules should have a basis in the membership itself. The fact that that was so did not seem to provide any difficulty in that case, notwithstanding that the organisation is a national one with a substantial membership in each State.

I do not regard the position as overcome by the presence of the plebiscite provisions. I rejected a similar argument in Cook v. Crawford (43 A.L.R. at p.147). I would ahere to what I there said. It seems to me that plebiscite provisions enable matters to be rectified at too late a stage. Often the damage will be done and the position made irrevocable before they can be invoked. Furthermore, the plebiscite provision here requires a requisition signed by not less than 15 per cent of the financial members of the Union. That really does require an enormous number of signatures. It is true that a branch plebiscite can be requisitioned by as few as 200 members but even that is a considerable number and the holding of a branch plebiscite would not itself lead to the re-amendment of rules. Similar difficulties apply in the case of the power to review provided for in Rule 65.

Finally I do not think that the fact that there is no specific provision dealing with the question of rule amendment is to the point. The Act gives to organisations a great deal of flexibility in relation to the rules they may have. This is desirable because of the vast differences which there are in their nature, their size, their geographic location and the industries with which they are concerned. What it comes down to is giving effect to a clear provision of the Act. I repeat that in relation to such a fundamental matter effect is not given if rule amendments may simply be made by Council.

Still less will that be the case if the amendment is effected pursuant to a postal ballot held in accordance with Rule 23. There was discussion during the argument as to whether Rule 23 could apply except in cases where the amendment was rendered necessary by an amendment to the Act, a requirement of the Registrar or an order of the Court; see the provision to Rule 57 earlier set out. In my opinion the intention of the draftsman of the rule was that the provisions of Rule 23 were to apply in all cases of amendment. The only effect of the provision is to make it unncessary, in the cases specified in it, for all members of the Council to cast a vote in such cases. In the view that I take of the matter it is unnecessary for me to develop reasons why I consider the amendment of rules by postal ballot conducted by members of the Council to be contrary to para.140(1)(c) of the Act. All I would say is that the rules insofar as they permit this to be done plainly impose upon members conditions which are unreasonable.

It follows that I would make the orders which the claimants seek. That makes it unnecessary to deal with the other matter relied upon by counsel for the claimants, namely that there was insufficient control of the committees and branches of the union by the members; see sub-para.115(1)(d)(v) of the Regulations earlier referred to. But that is a submission which I would also uphold. The Federal Council meets every two years unless special meetings are called. Branches meet annually. Special meetings may be called at the written request of not less than 200 financial members or 10 per cent of the membership; otherwise the branch's affairs during the year are conducted by a committee of management. This Union's affairs are conducted by its officials, its Executive its Council and its branch committees of management. There is little place for participation, let alone control by the membership in its affairs. It has the hallmarks of an organisation of the kind which is likely to be run by officials increasingly remote from the membership. The plebiscite provisions do not in my opinion overcome that criticism.

I appreciate that a national organisation such as this is has difficulty in ascertaining directly the wishes or views of its membership. The membership is scattered throughout the whole of Australia although no doubt tending to be concentrated in or near capital cities. Counsel for the respondents said that the union movement as a whole had a suspicion of proxies except in limited situations such as are provided for in rules like Rule 60 of the Rules of this Union. Proxies are in regular use by shareholders in companies. To the uninformed there may be something strange in chairmen of meetings being able to produce proxies for overwhelming numbers of votes. But this will usually be because the proxies are given by large shareholders who are entitled to more votes than shareholders who hold few shares. Proxies would not work this way in a union such as this. Each member could only provide one. Proxies may be general or special and may be given either to the chairman of a meeting or to anyone else who will be present. By special I mean that they may indicate how the votes which they confer are to be exercised. There have been many revisions of the companies legislation in Australia and elsewhere in the last 30 years. I speak subject to correction but I have never heard it suggested that the system should be given up because of possible abuse. I would express the strong view that unions will eventually have to come to the use of proxies for the purpose of enabling them to ascertain the views of their members on fundamental proposals.

For the reasons I have given I would, as I have said, make orders in terms of those sought by the claimants.

[1983] FCA 351

28 NOVEMBER 1983