James Alexander Bacon; Steve Black and Kevin Noel Reynolds v Peter John O'Dea [1989] ACTSC 8 (22 February 1989)

SUPREME COURT OF THE ACT

JAMES ALEXANDER BACON; STEVE BLACK and KEVIN NOEL REYNOLDS v. PETER JOHN
O'DEA
S.C. No. 679 of 1988
Real Property

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Kelly J.(1)

CATCHWORDS

Real Property - Land registered in name of organization formerly registered under the Conciliation and Arbitration Act 1904 - Registration cancelled - Property of organization thereupon vesting in its successor unincorporated association - Land purchased by ACT Branch of organization - Custody, control and management of land vested in that Branch - Caveat against dealings with land lodged by Branch secretary - Application on behalf of unincorporated association for removal of caveat - Whether association entitled to removal of caveat - Whether interest claimed on behalf of Branch too wide.

Conciliation and Arbitration Act 1904 - ss.133A, 140 and 143(6)

Builders Labourers' Federation (Cancellation of Registration) Act 1986 - s.3.

Real Property Ordinance 1925 - ss.104 and 105.

Krantz v. Federated Clerks Union of Australia (1984) 58 ALR 189

Imlach v. Daley (1985) 60 ALR 377

Allen v. Sideris (1984) 3 FLR 548

Williams v. Hursey [1959] HCA 51; (1959) 103 CLR 30.

Concrete Constructions (NSW) Pty Ltd. v. Australian Building Construction Employees and Builders' Labourers' Federation & Others, Federal Court of Australia, 25 August 1988 (unreported)

Hall v. Job [1952] HCA 57; (1952) 86 CLR 639

HEARING

CANBERRA
22:2:1989

Counsel for the Plaintiff Mr. S. Walmsley

Solicitors for the Plaintiff Macphillamy Cummins & Gibson

Counsel for the Defendant Mr T. Higgins QC with Mr R. Crowe

Solicitors for the Defendant Pamela Coward & Associates

ORDER

The Court declares that the unincorporated association known as the Australian Building Construction Employees' and Builders Labourers' Federation (the Federation) is by operation of law, namely, s.143(6) of the Conciliation and Arbitration Act 1904, the successor in title in equity to the residue unexpired of the lease from the Commonwealth of Australia of the land known as Block 27, Section 78, Division of Griffith in the Australian Capital Territory, being the whole of the land comprised in Crown Lease Register Volume 183 Folio 77 to the organization formerly registered under the Act and also known as the Australian Building Construction Employees' and Builders Labourers' Federation but the registration of which has now been cancelled by virtue of the provisions of s.3 of the Builders Labourers' Federation (Cancellation of Registration) Act 1986 and entitled on lodgment of the appropriate instrument under the Real Property Ordinance 1925 and upon compliance with the requirements of the Registrar of Titles to have that title registered in the names of trustees holding its legal estate in the said residue unexpired on its behalf but subject to the right of the Australian Capital Territory Branch of the Federation to exercise, subject to the rules of the Federation, the right of custody, control and management of the land above described and the building erected thereon.

THE COURT ORDERS THAT:-

1. Caveat No. 596870 lodged by Peter John O'Dea against
registration of any Memorandum of Transfer or
instrument affecting the residue unexpired of the
Crown Lease of Block 27, Section 78, Division of
Griffith in the Australian Capital Territory being the
whole of the land comprised in Register Volume 183
Folio 77 be removed.
2. Peter John O'Dea or some one or more officers of the
Australian Capital Territory Branch of the Federation
duly appointed in that behalf be at liberty to lodge a
caveat against registration of any Memorandum of
Transfer or instrument affecting the residue unexpired
of the Crown Lease of Block 27, Section 78, Division
of Griffith in the Australian Capital Territory being
the whole of the land comprised in Register Volume 183
Folio 77 claiming as an estate or interest in the said
land the right to exercise, subject to the rules of
the Federation, the right of custody, control and
management of the said land and the building erected
thereon.
3. The parties have liberty to apply.

DECISION

The parties are the four elected Trustees of the Australian Building Construction Employees' and Builders Labourers' Federation (the Federation). Rule 9(a) of the Rules of the Federation provides for the election of its Federal Management Committee (the Committee) from its Federal Council. The Committee consists of the Federal President, the General Secretary, the Federal Vice-President, the Federal Treasurer and the four Trustees. The defendant is the Secretary of the ACT branch of the Federation.

2. In mid 1982 he began negotiations to purchase the residue unexpired of the lease from the Commonwealth of Australia of land known as Block 27, Section 78, Griffith, the whole of the land comprised in Crown Lease Register Volume 183, Folio 77. At a meeting of the Federation held on 21 July 1982 in Melbourne he reported that his Branch was negotiating the purchase for the sum of $110,000 and said that approximately $50,000 was needed to make the building erected on the land suitable for office use. He said that his Branch would be asking the Branches (by which I assume he meant the other Branches of the Federation) for temporary loans to cover the deficit. He spoke about the rules in connection with the matter and indicated that his Branch would prefer the building not to be identified in the name of the Federation but in the name of a trust company. The minutes of the meeting record that the General Secretary, Mr N. Gallagher, stated that legal advice should be obtained on this last point. It was then moved "that the ACT Branch proceed with the purchase of the property". General discussion took place on the rules and it was finally resolved that the ACT Branch Secretary's report on the purchase of the property be adopted. The motion "that the ACT Branch proceed with the purchase of the property" seems not to have been seconded or passed.

3. In October or November 1982 the defendant sought legal advice about the proposed purchase. In the light of that advice he formed the view that it would not be possible for the Branch to purchase the property in its own name as it was not an independent legal entity.

4. On 9 November 1982 a general meeting of the ACT Branch resolved that the relevant Branch executive members be authorised to sign the contract for the purchase of the land. At that point the Branch needed $52,000 over and above its own resources to complete the purchase and the necessary fitting out of the building. Of this, $20,000 had been pledged by the Queensland and South Australian Branches. On 15 November 1982 the defendant attended a meeting of the Federal Council of the Federation held in Sydney. At that meeting he reported that the ACT Branch was proceeding with the purchase of the land. After the meeting he had a conversation with Mr Gallagher, who was also the Secretary of the Victorian Branch of the Federation. Mr Gallagher told him not to worry about seeking a loan of $32,000 from a bank because the Victorian Branch would lend it. He asked the defendant to write concerning the matter. Subsequently he received a draft of the letter which the Victorian Branch required. He wrote the letter on 1 December 1982 to Mr Gallagher in his capacity as Secretary of the Victorian Branch of the Federation. The text of the letter read:-

"As reported to the Federal Management and
Federal Council, the ACT Branch has signed
a contract to purchase a building for the sum
of $110,000.00. We are then required to
spend $52,000.00 on renovations for it to be
suitable for use as office space.
In order to finance the project we need to
borrow $52,000. At this stage the South
Australian and Queensland Branches have
granted us a five year interest free loan of
$10,000.00 each. We had intended to approach
the Commonwealth Bank for a loan of
$32,000.00 for the balance. However, since
discussing the matter with you in Sydney we
are asking the Victorian Branch to give
consideration to granting a five year loan of
$32,000.00.
Should the Victorian Branch require any
further information for consideration of this
request, we would be happy to supply it."

5. The draft contract for sale showed the buyer's name originally as "Australian Building Construction Employees and Builders' Labourers' Federation Australian Capital Territory Branch" but the last four words were struck out. The following description and address were inserted in handwriting:-

"an industrial organisation duly incorporated
pursuant to the Conciliation and Arbitration
Act 1904 (the Act) whose registered office is
at Basement, Trades Hall, Cnr Victoria and
Lygon Streets Carlton South in the State of
Victoria."

6. Contracts were exchanged on 9 December 1982 and settlement was effected on 29 April 1983. A total of P'N $111,124.32 was paid at settlement wholly from the ACT Branch funds. The sum of $52,000 borrowed from other branches was used to defray the costs of refitting the building.

7. Mr Gallagher was invited to attend the formal opening of the building in August 1983 but was unable to do so. He sent a letter dated 31 August 1983 which included the following paragraphs:-

"Your achievement along with the Branch
Executive and members, will go down as a
milestone in the history of the Federation,
by being able to own your own property. It
could only be achieved with the full support
of the ACT membership.
Allow me to congratulate you on the very fine
achievement."

8. By then the land had been registered in the name of the Federation. Its name, description and address shown in the Register were as set out in the contract for sale.

9. On or about 14 April 1986 the registration of the Federation pursuant to the Act was cancelled. Section 143(6) of the Act says:-

"Upon the cancellation of the registration of
an organization, the organization shall cease
to be an organization and a corporation under
this Act, but shall not by reason of the
cancellation cease to be an association. The
property of the organization shall, subject
to any order which the Court, upon
application by a person interested, may make
with respect to the satisfaction of the debts
and obligations of the organization out of
that property, be the property of the
association and shall be held and applied for
the purposes of the association in accordance
with the constitution and rules of the
organization insofar as they can be carried
out or observed notwithstanding the
deregistration of the organization."

10. It follows, therefore, that despite the cancellation of the Federation's registration its constitution and rules govern the manner in which property may be held. It is convenient to continue to refer to the unincorporated association as the Federation.

11. On or about 13 October 1987 the Victorian Government appointed a custodian to take control of the assets of the Federation. Having regard to that appointment, the defendant sought legal advice as to the protection of the assets of the ACT Branch and on 8 December 1987, at a general meeting of the members of the ACT Branch, it was resolved that the Secretary should place a caveat as advised. The defendant thereafter instructed the Branch's solicitors to lodge a caveat. The interest claimed therein was:-

"as Secretary of the Australian Building
Construction Employees (sic) and Builders'
(sic) Labourers' Federation (Australian
Capital Territory Branch) (hereinafter called
'the ACT Branch'). The Caveator claims on
behalf of the members of the ACT Branch the
beneficial ownership of the whole of the
unexpired residue of Crown Lease Volume 183
Folio 77 arising from the purchase of the
property pursuant to an unconditional
Agreement for Sale made on the 9th December
1982 between the Shell Company of Australia
Limited and The Australian Building
Construction Employees (sic) and Builders'
(sic) Labourers' Federation in which the
whole of the purchase price of $110,000.00
was provided from the Branch Fund of the
Australian Capital Territory which, by reason
of the de-registration of the Australian
Building Construction Employees (sic) and
Builders' (sic) Labourers' Federation, is now
an unincorporated Association"

12. Following lodgment of the caveat the plaintiffs' solicitors wrote requesting its removal on the ground that the defendant had no caveatable interest in the land. The defendant instructed his solicitor to advise the plaintiffs' solicitors that the caveat was placed by him only in his capacity as Secretary of the ACT Branch of the Federation and that he claimed no personal interest in the property except the interest he had in common with other members of the ACT Branch. The caveat was designed, the letter went on, to protect the interests of Federation members in the property as a consequence of the deregistration. The property in question was to be held and used only in accordance with the Federation rules for the benefit of Federation members. The letter concluded:-

"Accordingly, it is not necessary, nor is it
prudent for the caveat to be removed. So far
as our client is aware there is no more
appropriate person than he to protect the
property interests of ACT Branch Members."

13. The plaintiffs commenced proceedings requiring the defendant to show cause why the caveat should not be removed. The defendant was ordered to deliver points of claim. He pleaded first that he sought relief on behalf of the members of the ACT Branch, that the Federation purchased the property, that the purchase was made on behalf of the ACT Branch of the Federation and that the moneys for the purchase were paid from the Branch fund operated pursuant to the rules of the Federation, that on 20 August 1983 the Federation was registered as proprietor of the land, that since 29 April 1983 all outgoings and other liabilities relating to the land had been paid from the ACT Branch fund, that before 14 April 1986 the Federation was a corporate body by virtue of its registration under the Act and that having been deregistered it became an unincorporated association. The defendant claimed that the land is owned beneficially by the members of the ACT Branch of the Federation.

14. The defendant claimed a declaration that the land was beneficially owned by those members and an order that the trustees of the ACT Branch of the Federation or their nominees or some other fit and proper persons be appointed as trustees of the land in place of the Federation and an order that the Crown Leasehold in question be vested in the trustees to be held by them for the members from time to time of the ACT Branch of the Federation and subject to the rules thereof.

15. By their points of defence the plaintiffs denied that the defendant had standing to seek the relief claimed, pleaded that it was the Federation that had purchased the land, denied that the purchase was made on behalf of the ACT Branch of the Federation or that the purchase moneys were paid from its funds, alleged that the land was purchased by and remains the property of the Federation, alleged that if it were true that all outgoings and other liabilities relating to the land had been paid from the ACT Branch fund such payments were made from the property of the Federation and denied that the land was owned beneficially by the members of the ACT Branch. The plaintiffs claimed a declaration that the land was the property of the Federation and a declaration that it is beneficially owned by its members. They sought an order that the trustees be appointed as trustees of the property in place of the Federation, its registration having been cancelled, and an order that the Crown Leasehold in question be vested in the trustees appointed by the Court to be held by them for the members from time to time of the Federation subject to the rules thereof.

16. When the matter came on to be heard, counsel for the plaintiffs abandoned the point that the defendant had no standing and defined the issue as whether it was possible for a branch of the Federation to hold property on its own.

17. It is common ground that the rules of the Federation remain in force except insofar as they can apply only to a body corporate. The rules must, of course, be viewed now as those of an unincorporated association.

18. Rule 5(n) of the rules empowers the Federation to acquire property of all kinds. Rule 6(d) provides that every member of the Federation shall be deemed to be attached to the branch of the Federation established in the State or Territory in which he resides. Rule 7 provides for the establishment of a Federal Council composed of the General Secretary and delegates from each branch of the Federation.

19. Rule 15(a) provides that:-

"The property of the Federation shall consist
of the Federal Fund and the Branch Funds for
which provision is respectively made by Rules
16 and 17 ... All of such funds shall at all
times be and remain the property of the
Federation."

20. Rule 16(a)(i) defines the Federal Fund, so far as is relevant, as "Any real or personal property of which the Federal Council has or is entitled to have the right of custody control or management".

21. Rule 17(a)(i) provides that "Each Branch shall have a Branch Fund which shall be managed and controlled in accordance with the Rules of that Branch and which shall consist of any real or personal property of which the Branch has or is entitled to have the right of custody control or management."

22. Under the heading "Branch Rules" and the sub-heading "Government of Branches", rule 1 reads:-

"All members of the Federation shall be
members of the Branch established in the
State or Territory in which they reside.
Subject to the Rules and to the decisions of
Federal Council and the Federal Management
Committee, the meetings of the Branch shall
have the general control and conduct of the
business of the Branch and decisions of the
meetings shall bind all members of the
Branch."

23. This rule may be contrasted with rule 8 which deals with the powers and duties of Federal Council. It states in part that:-

"The supreme control of the Federation is
vested in the members of the Federation.
Subject thereto, the supreme control vested
in the members shall be exercised on their
behalf by the Federal Council which shall
have the general control and conduct of the
members of the Federation and without
limiting the foregoing, the powers and duties
of the Federal Council shall include the
following:
...
(k) To impose levies upon any one or more
Branches or upon the members, or any
specified category of the members, or
any one or more Branches of the
Federation, provided that no member
shall be liable to pay levies to an
amount of more than $20 in any one year
and provided further that a levy imposed
upon a Branch or category of members
shall be referable to expenditure
incurred or to be incurred for or on
behalf of that Branch or category of
members.
...
(n) To forthwith demand or cause to be made
an audit of the books and accounts of
any Branch and for that purpose take or
direct any person to take possession of
and impound all property, books, bank
books, documents and correspondence from
any Branch or premises or official,
member or employee thereof."

24. I note that rule 16 corresponds generally with s.133A(2) of the Act while rule 17 corresponds generally with s.133A(3).

25. The history of that section was examined by Gray J in Krantz v. Federated Clerks Union of Australia (1984) 58 ALR 189 at pp 192-3 and by Evatt and Northrop JJ in Imlach v. Daley (1985) 60 ALR 377 at pp 387-391. Because I am concerned with the Australian Capital Territory Branch of the Federation, it seems to me that none of the difficulties which may become apparent when a Branch of an organization incorporated under the Act is also a union or association registered under the law of one of the States deriving from that law a legal personality (see Moore v. Doyle (1969) 15 FLR 59) arises.

26. But it seems to me that the rules of the Federation are designed to give at least some measure of autonomy to its branches in matters affecting those branches only. When s.140 of the Act, which provides in part:-

"(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;
...
(d) shall be such as to provide for the
autonomy of a branch in matters
affecting members of the branch only and
matters concerning the participation of
the branch in any State industrial
conciliation and arbitration system."

is read with s.133A, the conclusion that many of those rules were drafted to meet the requirements of those two sections is inescapable.

27. But a Federal organization's State or Territorial Branches which do not have corporate personality by virtue of their participation in any State industrial conciliation and arbitration system or under the Act have no "legal existence as (...) juristic persons separate from that of the organization itself". Allen v. Sideris (1984) 3 FLR 548 at p 560, per Toohey J, citing Williams v. Hursey [1959] HCA 51; (1959) 103 CLR 30.

28. Accepting the validity of the rules and in particular of rule 15 (and their validity was not challenged), it seems to me that the Federation is the owner of all the property, wherever situate, of the union, whether it be classified as Federal Fund or Branch Fund.

29. This view accords with that expressed, obiter, by Morling J in Concrete Constructions (NSW) Pty Ltd. v. Australian Building Construction Employees and Builders' Labourers' Federation & Others, Federal Court of Australia, 25 August 1988 (unreported) at p 30 of the typescript of his reasons for judgment.

30. The judgment of Fullagar J, with whom Dixon CJ and Kitto J concurred, in Williams v. Hursey (supra) dealt with the matter, at pp 54-5, as follows:-

"But I need not pursue the matter further,
because, whatever the rules may do or fail to
do, they have, in my opinion no application
to the present cases for the reason that the
'Hobart Branch' of the federation is not an
'unincorporated society, fellowship, club or
association'. It has no separate identity -
no existence apart from the registered
organization, of which it is an integral and
inseverable part. Its members are merely a
section of the total membership of the
federation - locally organized for the sake
of convenience, but in no respect independent
of the federation, and in all respects
subject to the control of the federation.
The branches are permitted within limits to
make rules of their own, but the rules which
they make derive authority from the rules of
the federation. It is contemplated that a
branch may have 'property and moneys', but,
if r.15 of the Hobart branch rules means that
the beneficial ownership thereof is in the
members of the branch, it is inconsistent
with r.10(A) of the rules of the federation
which makes the 'fund and property' of the
organization and its branches subject to the
'care, superintendence, management and
administration of the governing body of the
Organization for the carrying out of the
objects of the Organization'. The position
is precisely analogous to that which was held
by this Court to subsist in Hall v. Job
((1952) [1952] HCA 57; 86 CLR 639) and there is a passage in
the judgment in that case which, if we read
'Federation' or 'Organization' for
'Institution' and 'Branch' for 'Lodge', is
exactly applicable to the present case. The
passage is as follows: '... an individual
cannot be a member of the (Branch) except as
a member of the (Federation). The mutual
rights and obligations of the members of the
(Branch) spring from the rules of the
(Federation), and cannot be altered except as
those rules provide. The purposes which the
members of the (Branch) have in common are
none other than the purposes for which they
are members of the (Federation). The
(Branch) does not exist as a society of
persons who desire to associate exclusively
with one another for agreed purposes; it
exists as an integral part of a larger
organization, of which all the members are
associated for the pursuit of purposes common
to them all in accordance with a constitution
which governs them all. A subordinate
(Branch) is therefore not to be considered as
if it were an association by itself; it is in
truth a branch of the (Federation), a section
of its membership, which provides, for those
who belong to it or may be admitted to its
meetings, machinery for the enjoyment of the
rights and benefits, and for the performance
of the obligations and functions, which are
the incidents of their membership of the
(Federation).' ((1952) 86 CLR at p 650)."

(I have for convenience sake made the changes suggested by his Honour in the passage he quotes from Hall v. Job.)

31. It follows, I think, that rule 15(1) does no more than state the legal position.

32. However, that, as it seems to me, is not the end of the matter. Rule 17 affords a Branch, at least the Australian Capital Territory Branch, of the Federation a measure of autonomy in respect of the property the use and management of which it enjoys. On the facts of this case I am satisfied that the money used to purchase the land came from the Branch's funds and it accepted, as it was entitled to do, a liability or liabilities in respect of the moneys which it borrowed from other Branches. I think that in the light of Hall v. Job (supra), it cannot be said that the land is beneficially owned by the members of the Australian Capital Territory Branch. But that does not mean that they do not have rights in connection with it, rights for which the rules provide safeguards. Although the Federal Council has the power to impose upon the Branch a levy in excess of the sustentation fees referred to in rule 16(a)(ii), such a levy shall be referable only to expenditure incurred or to be incurred for or on behalf of that Branch. It is, I think, significant that the basic assets of the Federal Fund consist of any real or personal property of which the Federal Council has or is entitled to have the right of custody, control or management and that the basic assets of a Branch consist of any real or personal property of which the Branch has or is entitled to have the right of custody, control or management. The extent of the interest of the Federal Council in the Federation's property and of a Branch in a Branch Fund is therefore exactly the same, subject, of course, to the overriding right of property which the Federation has under rule 15. But a Branch cannot be deprived of its interest in its Branch Fund without the consent of the Branch concerned for rule 17(c) provides that rules relating to a Branch Fund shall not be altered except with the consent of the Branch concerned. The rule in question is a rule of the Federation and so binds the Federation. In the light of Williams v. Hursey (supra) the Branch is to be considered as its members acting in some form of unincorporated association.

33. I do not think it necessary to attempt to analyse the precise nature of the estate, if it may be so called, which the Branch has in the land. It is sufficient, I think, that it is entitled to have the right of its custody, control or management. Subject to the rules of the Federation, I think that, on the facts proven, it has the right to all three. Whatever the true description of its interest in the land is, there can, I think, be no doubt that the Branch has such an interest and that that interest, which is co-extensive with its right of custody, control and management of the land, is an interest which is capable of supporting a caveat.

34. That does not deprive the Federation of its rights as owner of the land; it simply makes those rights subject to the interest of the Branch in it. The Federation is, in my opinion, the beneficial owner of the land subject to that interest and is therefore entitled as an unincorporated association to have that beneficial interest recorded in some suitable way. The effect of deregistration is that the unincorporated association which the Federation now is, is, in the absence of registration in the names of appropriate trustees, the successor in equity to the beneficial owner of the land.

35. I think it inappropriate that the Register show a situation which is not correct when it is clear that the unincorporated association has trustees who may properly hold the land on its behalf.

36. I therefore declare that the unincorporated association known as the Australian Building Construction Employees' and Builders Labourers' Federation (the Federation) is by operation of law, namely, s.143(6) of the Conciliation and Arbitration Act 1904, the successor in title in equity to the residue unexpired of the lease from the Commonwealth of Australia of the land known as Block 27, Section 78, Division of Griffith in the Australian Capital Territory, being the whole of the land comprised in Crown Lease Register Volume 183 Folio 77 to the organization formerly registered under the Act and also known as the Australian Building Construction Employees' and Builders Labourers' Federation but the registration of which has now been cancelled by virtue of the provisions of s.3 of the Builders Labourers' Federation (Cancellation of Registration) Act 1986 and entitled on lodgment of the appropriate instrument under the Real Property Ordinance 1925 and upon compliance with the requirements of the Registrar of Titles to have that title registered in the names of trustees holding its legal estate in the said residue unexpired on its behalf but subject to the rights of the Australian Capital Territory Branch of the Federation to exercise subject to the rules of the Federation the right of custody, control and management of the said land and building erected thereon.

37. It follows from what I have said that the interest claimed in the caveat, the beneficial ownership of the whole of that residue as residing in the members of the ACT Branch of the Federation, cannot be supported and an order for the removal of that caveat must go. However, the appropriate officers of the Australian Capital Territory Branch of the Federation, no doubt trustees appointed under the Rules of the Branch, are, in my opinion, entitled to lodge a caveat against dealings with the land claiming as the appropriate interest on behalf of the members of the Australian Capital Territory Branch the right to the custody, control and management of the said land and of the building erected thereon in accordance with the rules of the Federation.

38. There will be a declaration accordingly. I give liberty to apply and will hear argument on the question of costs.