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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
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).
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 -
. . .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.
(b) Subject to Rule 57 to make, add to, amend and rescind these Rules."
Rule 23 provided for matters requiring decision between Federal Council
Rule 57, of the rules of the organisation provided in part:Council carried by a two-thirds majority of members voting . . . ."
"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
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] FCA 151; (1981) 54 FLR 129; Lovell v. Federated Liquor and Allied Industries Employees Union of Australia [1978] FCA 43; (1978) 35 FLR 72; Cook v. Crawford [1981] FCA 16; (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] FCA 38; (1979) 40 FLR 462; McLeish v. Kane [1978] FCA 44; (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. 28:11:1983RULE NISI.(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.The applicants sought orders under the Conciliation and Arbitration Act 1904
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.
DECISION
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 -provision of this Act, the regulations or an award or otherwise be contrary to a law; . . . .
(a) shall not be contrary to, or fail to make a provision required by, a
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 COUNCILmentioned, 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:-
The Federal Council shall, subject to control by the members as herinafter
(a) . . .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.
(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
23. - MATTERS REQUIRING DECISION BETWEEN FEDERAL COUNCIL MEETINGSdecision of the Federal Council between biennial meetings that matter shall be submitted to the Council for decision.
(a) On a motion passed by the Federal Executive that any matter requires a
. . . . .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."
57. - ALTERATION TO RULES
Amendments may be made to these Rules or new Rules made or any Rule may be
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] FCA 31; (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] FCA 10; (1977) 31 F.L.R. 431 at p.467;
Wiseman's case [1978] FCA 31; (1978) 35 F.L.R. 24 at p.34; Lovell v Federated Liquor and
Allied Industries Employees' Union of Australia [1978] FCA 43; (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] HCA 32; (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] FCA 44; (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] FCA 10; (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.
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 RULESdeleted 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."
Amendments may be made to these rules or new Rules made or any Rule may be
"23. - MATTERS REQUIRING DECISION BETWEEN FEDERAL COUNCIL MEETINGSdecision of the Federal Council between biennial meetings that matter shall be submitted to the Council for decision.
(a) On a motion passed by the Federal Executive that any matter requires a
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) [1978] FCA 44; 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] FCA 35; (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) [1978] HCA 19; 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 [1975] HCA 53; 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] HCA 46; (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.
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 registrationby an organization . . .
(1) The following conditions are prescribed conditions to be complied with
. . .providing, in relation to the organization, for:
(d) The affairs of the organization shall be regulated by rules . . .
(i) the election of -the organization;
(a) a committee of management of the organization and of each branch of
(b) officers of the organization and of each branch of the organization;committee of management), which is empowered to determine policy or to exercise functions of management in the organization or branch;
(c) any conference, council, panel or other body (additional to the
(ii) the powers and duties of the committees and of officers;members of the organization and the members of the branches, respectively;
. . .
(v) the control of committees of the organization and its branches by the
. . .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:
(xiv) the alteration of its rules."
In addition to the conditions referred to in sub-section 132(2), the rules
The relevant parts of sections 140 and 141 of the Act are set out:provision of this Act, the regulations or an award or otherwise be contrary to a law;
"140(1) The rules of an organization -
(a) shall not be contrary to, or fail to make a provision required by, a
. . .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
(c) shall not impose upon applicants for membership, or members, of the
. . .this section in respect of the organization.
(2) A member of an organization may apply to the Court for an order under
. . .rule of an organization contravenes sub-section (1) or that the rules of an organization contravene sub-section (1) in a specified respect.
(5D) An order under this section may declare that the whole or a part of a
. . .or observance of any of the rules of an organization by any person who is under an obligation to perform or observe those rules.
(1G) An order under this section may give directions for the performance
. . .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 -
(8A) Where the Court, in considering an application under this section,
(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 -amicable agreement, thereby preventing and settling industrial disputes;
(a) to promote goodwill in industry;
(b) to encourage, and provide means for, conciliation with a view to
. . .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; . . ."
(c) the office of a member of any conference, council, committee, panel or
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] FCA 44; (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 COUNCILhereinafter 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:-
The Federal Council shall, subject to control by the members as
. . .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.
(b) subject to Rule 57 to make, add to, amend and rescind these Rules."
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 MEETINGSdecision of the Federal Council between biennial meetings that matter shall be submitted to the Council for decision.
(a) On a motion passed by the Federal Executive that any matter requires a
Rule 57 provides: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."
"57. - ALTERATION TO RULES
Amendments may be made to these Rules or new Rules made or any Rule may be
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] FCA 38; (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) [1977] FCA 10; 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."
The reference in that passage to sub-section 140(1) is a reference
disjunctively to each paragraph of that sub-section. Each paragraph
has effect
in its own right and paragraphs (b), (c) and (d) do not need to rely upon the
effect of paragraph (a).
Rule 19(b) is a rule of the Union which provides for the alteration of the Union's rules. Sub-rules 23(a) and (b) and rule 57 contain procedural provisions and of themselves do not confer powers which contravene paragraph 140(1)(a) of the Act. Sub-rules 23(a) and (b) have general application and are not limited in their application to rule alterations. It follows that the applicants fail in their attack on rules 19(b), 23(a) and (b) and 57 insorfar as that attack is based on paragraph 140(1)(a) of the Act.
Turning to the applicants' attack on rules 19(b), 23(a) and (b) and 57,
based on paragraph 140(1)(c) of the Act, an initial question
must be dealt
with. Under paragraph 140(5D) the Court may declare that the whole or part of
a rule of an organization contravenes
sub-section 140(1) of the Act or, as an
alternative, the Court may declare that the rules of an organization
contravene sub-section
140(1) in a specified respect. The order made is of
importance since the consequences flowing from the order are different
depending
upon which order is made. If the former order is made, then as from
the date of the order, the whole or that part of the rule shall
be deemed to
be void from the date of the order. If the second order is made, no rule is
deemed to be void, but under sub-section
140(7) the organization has three
months within which to bring its rules into conformity with the requirements
of sub-section 140(1).
If it fails to do so, the Industrial Registrar is
required to bring the rules into conformity with the Act. The nature of the
different
forms of orders that can be made and the different consequences
flowing therefrom are discussed in Linehan v. Transport Workers'
Union of
Australia, Federal Court of Australia, Northrop J., 27 July 1981, presently
reported in (1981) L.B.Co's. Indus. Arb. Service,
Current Review 570 only. In
that judgment Northrop J. said:
"The third matter to be considered is the consequences which in law result
where a rule or the rules of an organization are contrary
to s.140(1) of the
Act. A summary of the history of s.140 of the Act is given in Wiseman v.
Professional Radio & Electronics Institute
of Australia [1978] FCA 31; (1978) 35 F.L.R. 24,
per Evatt and Northrop JJ. at pp.32-4 and a consideration of the principles
arising from that section appears at pp.38-42. See also
Egan v. Maher (No. 1)[1978] FCA 18; ,
(1978) 35 F.L.R. 197, per Northrop J. at pp.242-9. For present purposes, while
the general principles must be kept in mind, it is necessary to give detailed
consideration to proceedings brought under s.140 of the Act. In doing this, it
is to be remembered that s.141(8A) inserted into the
Act by s.17 of Act No.
108 of 1977, empowers the Court to make orders in matters brought under s.141
which have an effect similar
to orders made in matters brought under s.140 of
the Act.
Proceedings under s.140 of the Act may be commenced in the Court by a
member of an organization of by the Bureau, s.140(2) and
(5B), and subject to
giving the organization concerned an opportunity of being heard; the Court has
jurisdiction to hear and determine
the application in those proceedings.
Sub-section (5D) is of crucial importance. It confers powers on the Court as
follows:
'(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.'
The sub-section contains two limbs which are true alternatives. The words
'in a specified respect' are limited in their application
and apply only to
the words 'the rules of an organization contravene sub-section (1)'. They form
part of the second limb only. They
do not refer to the words contained in the
first limb of the sub-section.
The first limb makes provision for a declaration being made that the whole
or a part of the rule contravenes s.140(1). Where such
a declaration is made,
sub-section (5G) operates of its own effect and as a result the rule or the
part of the rule, as the case
may be, is deemed void from the date of the
order. The Act itself has the effect of making the rule void as against all
persons whether
those persons were parties to the proceedings in Court or not.
One effect of this is that any declaration must be directed to particular
words being all or part of the words in a rule. The Court cannot substitute
new words nor, under the first limb of sub-section (5D),
can it declare that a
rule or a part of a rule contravenes sub-section (1) in a specified respect.
The Act is specific and explicit.
Upon a declaration being made under the
first limb of s.140(5D), sub-section (5G) has the effect of making that rule
void for all
purposes. Even if subsequently the cause of the contravention is
removed, for example by an amendment of the Act, the rule or part
which has
been deemed void remains void. It needs to be re-enacted by the organization
before it can have any legal effect.
The second limb of s.140(5D) makes provision for a declaration being made
that the rules of an organization contravene s.140(1)
in a specified respect.
Where such a declaration is made, sub-section (7) operates of its own effect.
The organization has a period
of three months from the date of the declaration
in which to amend its rules to bring them into conformity with the
requirements
of s.140(1) as regards the matters that gave rise to the
declaration. If the organization has not done that within that period, the
Industrial Registrar has a duty imposed upon him to determine such alterations
of the rules as will, in his opinion, bring them into
conformity with those
requirements as regards those matters.
It is to be noticed that under sub-section (7) none of the rules nor any
part of them are deemed to be void. It is true that in
other legal proceedings
persons may not be able to rely upon those rules insofar as they are contrary
to s.140(1) of the Act, but
nevertheless, the rules are not void. In
particular, in the present case, if a declaration is made under the second
limb of s.140(5D),
the disentitled members of the Union gain no rights or
benefits additional to those they may have in the absence of any declaration
being made.
The power to make a declaration under the first limb of s.140(5D) is based
upon a case being made out that the whole or a part
of a rule contravenes
s.140(1). If such a finding is made, instead of making the declaration the
Court may adjourn the proceedings
under sub-section (6) for the purpose of
giving the organization an opportunity of altering its rules. The effect of
such an adjournment
is similar in many respects to a declaration made under
the second limb, but in the absence of the organization amending its rules,
the Industrial Registrar has no power to amend the rules. This distinction may
be of importance where the rules can be amended only
by a body which under the
existing rules is invalidly constituted. In those circumstances an alteration
of the rules made by the
Industrial Registrar could avoid many legal and
practical difficulties.
Power to make a declaration under the second limb of s.140(5D) is based
upon a case being made out that the rules of the organization
contravene
s.140(1) in a specified respect. As has been said in a number of cases, often
it is a nice question to determine what
case has been made out."
See also R. v. Dunphy; Ex parte Maynes [1978] HCA 19; (1978) 139 C.L.R. 482 per Mason J. at
p.489-90.
The applicants' attack on rules 19(b), 23(a) and (b) and 57 of the rules of the Union, insofar as it is based on paragraph 140(1)(c) of the Act, is not that those rules in themselves impose on members of the Union 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, but that because of the absence from the rules as a whole of provisions which require direct consultation with or participation by branches or members of the Union before the Federal Council makes a rule alteration, the specified rules contravene paragraph 140(1)(c) of the Act. It is doubted that this is a valid approach. In reality, the attack, if successful, would lead to a declaration under the second limb of sub-section 140(5D) of the Act. That question, however, need not be decided at present. It is sufficient to say that the difficulties facing the applicants are illustrated by the fact that their counsel was not able to formulate any principles of general application to support the contentions made.
The nature and effect of the provisions of paragraph 140(1)(c) of the Act
have been discussed at length in many recent cases. A
number of those
authorities are referred to by Northrop J. in Re Airline Hostesses'
Association [1980] FCA 110; (1980) 48 F.L.R. 214 at p.261. The passages there referred to
contain lengthy discussions concerning the concepts involved. More recently,
in Linehan's
case, supra, Northrop J. stated the purposes of the registration
of organizations under the Act as follows:
"In Wiseman v. Professional Radio & Electronics Institute of Australasia
[1978] FCA 31; (1978) 35 F.L.R. 24 Evatt and Northrop JJ. said at pp.38-9:
'The purposes of the registration of organizations under the Act, stated
broadly, are to facilitate the creation and settlement
of disputes arising
from industrial relationships between groups or classes of persons ascertained
by reference to the conditions
of eligibility prescribed by the rules of
organizations which, upon registration, become corporate bodies separate and
distinct from
their members: generally see Jumbunna Coal Mine, No Liability v.
Victorian Coal Miners' Association ((1908) 6 C.L.R. 309); The Queen v. Dunlop
Rubber Australia Ltd.; Ex parte Federated Miscellaneous Workers' Union of
Australia ((1957) [1957] HCA 19; 97 C.L.R. 71); Williams v. Hursey ((1959) [1959] HCA 51; 103 C.L.R. 30);
and The Queen v. Clarkson; Ex parte Victorian Employers' Federation ((1973)
[1973] HCA 57; 131 C.L.R. 100).'
That principle was elaborated upon in those reasons for judgment, but for
present purposes it is sufficient to stress the concept
that the essential
purposes of registration of an organization of employees is to permit the
organization to act as a party principal
in presenting and maintaining the
industrial interests of industrial groups of employees identified by reference
to the eligibility
rule of the organization, in the present case Rule 4 of the
Union. In the present case, any order which had the effect of affecting
adversely those persons who presently are validly eligible for membership of
the Union but who would cease to come within Rule 4
if paragraphs (2) and (3)
became void, would offend the concept behind the purposes of the registration
of organizations under the
Act. If possible, such a result should be avoided."
In considering the application of paragraph 140(1)(c), regard must be had to the purposes of the registration of organizations under the Act. It is important to remember that organizations should be financially viable in order to enable them to fulfill that purpose effectively. It is equally important to remember that an organization is free to choose its own internal structures including the procedures to be adopted in making a rule alteration and that the Court is not free to impose its modes of thought upon organizations because it considers certain structures to be more desirable than those chosen by the organization. It is equally important to remember that the Act itself attempts to give effect to the chief objects of the Act, as contained in s.2. Thus, the Act contains many sections providing the means for conciliation with a view to amicable agreement thereby preventing and settling industrial disputes. The Act contains many sections providing means for preventing and settling industrial disputes. The Act contains sections providing for the observation and enforcement of awards made for the prevention or settlement of industrial disputes. The Act contains many sections designed to encourage the organization of associations of employees and associations of employers and the registration of those associations under the Act. Those sections provide for the incorporation of organizations, the unique position of organizations within the industrial structures in Australia, the granting of monopoly powers of representation of industrial groups defined by reference to the conditions of eligibility of organizations, the benefits flowing from awards made in the settlement of industrial disputes and the facilitation of legal process to determine issues arising between members of organizations.
Paragraph 2(f) of the Act was first inserted in 1973. At the same time new
provisions implementing that new chief object were inserted
into the Act. The
history of the legislation has been referred to in a number of cases referred
to in Re Airline Hostesses' Association,
supra, at p.261 and need not be
repeated in detail. The position, however, is summarized in Municipal
Officers' Association of Australia
v. Lancaster [1981] FCA 151; (1981) 54 F.L.R. 129 by Evatt
and Northrop JJ. at pp.152-3:
"It is necessary also to make reference to what is meant by the words
'objects of this Act' appearing in s.140(1)(c) of the Act.
It is not
sufficient to take those words as referring only to the paragraphs appearing
in s.2 of the Act. It is true that those paragraphs
are said to be 'the chief
objects of the Act', but it is necessary to consider the method by which the
legislature has implemented
those objects. In Lovell v. Federated Liquor and
Allied Industries Employees' Union of Australia ((1978) [1978] FCA 43; 35 F.L.R. 72),
Northrop J. said: 'In 1973, object (f) was inserted in s.2 of the Act, s.3 of
Act No. 138 of 1973. The same Act substantially amended
s.133 of the 1904-1972
Act, s.52 of Act No. 138 of 1973. As a result of those amendments, thereafter
the rules of organizations had
to include provisions which ensured that all
financial members of an organization were enabled to participate in the
effective control
of the organization. Putting the matter another way, the
amendments to s.133 of the 1904-1973 Act were designed to give effect to
the
new object inserted in s.2 of the Act namely: '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'. Since 1973, s.133
of the 1904-1973 Act has
been amended further, but those amendments do not
detract from the object first inserted into the Act in 1973' ((1978) 35
F.L.R.,
at p.92). (Emphasis added.)"
That history is elaborated upon at pp.153-8. Section 133AA, inserted into the
Act in 1977, is a further illustration of the Legislature
giving effect to the
same object.
The nature of paragraph 2(f) of the Act and the sections of the Act giving
effect to that object can be illustrated by a consideration
of organizations
and their development. History shows that in the early guilds, the forerunners
of associations of employees and
of craftsmen, all decisions were made at
general meetings at which all members were entitled to be present and vote. As
the membership
of guilds grew, it became impracticable for that practice to
continue. Rules were adopted under which power was conferred upon committees
of a guild to make decisions binding upon all members. From the commencement
of the Act in 1904 it was necessary that the affairs
of organizations be
regulated by rules providing for the appointment of committees of management
and the powers and duties of those
committees. It is interesting to note that
in 1904 the word "appointment" was used. The use of the word "election"
developed much
later and as time passed Parliament laid greater and greater
stress upon the need for elections to be conducted by means of secret
ballots
and by means ensuring that every financial member had the opportunity to cast
a vote. The requirement that committees of
management be elected pursuant to
the rules of an organization and that those committees have powers, to some
extent is the very
antithesis of full participation by members in the affairs
of the organization as illustrated by reference to the practices of the
early
guilds. The position is illustrated clearly by Deane J. in the Municipal
Officers' Association case, supra, at p.166:
"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."
Under the Act, the affairs of an organization must be regulated by rules
providing for the election of committees which are empowered
to determine
policy or to exercise functions of management of the organization; sub-reg.
115(1)(d)(i). Over the years the Legislature
perceived apparent abuses as a
result of which some committees did no reflect the wishes of the members of
the organization. The
Legislature sought to resolve those abuses by inserting
into the Act special provisions to ensure that all members were able to
participate
fully in the affairs of their organization. This was done by
providing procedures by which all financial members were able to vote
for
officers, including members of committees, by secret ballot and all the other
means specified in the Act. At the same time, paragraph
2(f) was inserted into
the Act. In that paragraph the reference to "democratic control" is used in
the sense of control by ballot
as democracy is known in Australia, where the
relevant electorate participates in the affairs of the community by voting by
secret
ballot to elect the members of the governing bodies of the community,
whether at the Federal level, the State level or the Local
Government level.
The persons elected to those bodies then govern those communities until the
following election when the members
of the relevant electorate have another
opportunity to elect those or other persons to office. Under this system of
democracy, the
electorate exercises democratic control through the ballot box,
and in so doing participates in the affairs of the community. It
is in this
sense that in cases such as McLeish v. Kane, supra, the Court has had to
consider whether, having regard among other things
to paragraph 2(f) of the
Act, a rule of an organization contravenes paragraph 140(1)(c) of the Act.
Quite often the issue in that
type of case is whether rules which create an
imbalance between the value of votes of members of an organization are
appressive,
unreasonable or unjust. The position is illustrated by Deane J. in
the Municipal Officers' Association case, supra, at p.166:
"Section 140(1)(c) provides that the question whether a condition,
obligation or restriction is oppressive, unreasonable or unjust
is to be
determined 'having regard to' the objects of the Act and the purposes of the
registration of organizations under the Act.
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 (see generally Wiseman v. Professional Radio and Electronics
Institute
of Australasia ((1978) [1978] FCA 31; 35 F.L.R. 24) and Lovell v. Federated Liquor
and Allied Industries Employees' Union of Australia ((1978) 35 F.L.R., at
p.84)."
In many respects, s.15AA of the Acts Interpretation Act 1901 (inserted in 1981) is a latter-day provision similar to the principle behind paragraph 140(1)(c) of the Act.
At this stage, it is important to remember that the only prescribed condition relating to the alteration of rules of an organization is that the rules must make provision for the alteration of the rules. The Act contains no provisions specifying conditions relating to how those alterations are to be effected. The provisions of paragraph (c) of the definition of "office" contained in sub-section 4(1) of the Act make it clear that the legislature contemplates that a committee of an organization may have power conferred upon it to alter the rules of an organization. It is true that if the rules do prescribe procedures to be followed before a rule is altered, those procedures are mandatory; see Roots v. Mutton (1978) 32 F.L.R. 15. Rule 57 of the rules of the Union is such a provision. The rules of an organization are vitally important. Any alteration to the rules of an organization involves matters of importance, but that fact, by itself, does not distinguish rules from other matters involving organizations. Matters of policy may be of equal importance as alterations to rules, but that of itself does not justify a requirement that before any decision on a policy matter is taken by a committee of an organization, the rules should provide that the committee consult with or allow participation by the branches or members of the organization. Further, the mere fact that members directly participate in the affairs of an organization, apart from participating in the ballot for the election of members of a committee, does not ensure that actions taken by an organization will not be contrary to the Act; see for example Dugmore v. Porter, (1982) 3 I.R. 418.
In the present proceedings, no attack is made based on any imbalance in the weighting of votes for the election of members of the Federal Council. That issue arises in other proceedings before the Court constituted differently from this Full Court. The attack in the proceedings before this Court is directed to the absence of provisions in the rules relating to consultation with and participation by branches and members of the Union before a rule alteration is made under rule 19(b). The attack is based upon comments appearing in Cook v. Crawford (1982) 43 A.L.R. 83. Thus, it is necessary to consider those comments.
In Cook v. Crawford certain members of the Plumbers and Gasfitters
Employees' Union of Australia, "the Plumbers' Union", an organization
under
the Act, sought orders under s.141 of the Act requiring other members to
comply with the rules of the Plumbers' Union. For
many years the rules of the
Plumbers' Union contained procedural provisions that had to be followed before
a rule alteration could
be made. Those procedures were mandatory and were
discussed in Roots v. Mutton, supra. The Federal Council of the Plumbers'
Union,
after such procedural provisions had purportedly been followed, amended
the relevant rule, rule 28, to confer an unfettered power
on the Federal
Council to alter its rules. The trial Judge, Evatt J., having found that the
procedural provisions had been complied
with, held that the new rule was not
contrary to sub-section 140(1) of the Act; see Cook v. Crawford, [1981] FCA 16; (1981) 52
F.L.R. 1, at pp.22-24. On appeal, the Full Court was constituted by Smithers,
Keely and Sheppard JJ., (1982) 43 A.L.R. 83. On this aspect of the appeal,
Smithers J. at pp.98-101, expressing the same opinion as Evatt J., said at pp.
98-99:
"However, it is pointed out that the new r28(5) purports to confer on
Federal Council complete and unfettered authority to make
and amend rules as
it thinks fit and it is said that such a rule necessarily conflicts with
s140(1). To confer so much power in such
a fundamental area of the government
of an organization must, it is suggested, 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. But to my mind it is not clear that this rule
amendment does of itself operate to impose upon applicants for membership
or
members of the organization conditions, obligations or restrictions within the
meaning of those words in s.140(1).
There is no express provision in the Act or regulations pursuant thereto
that rules not offending any of the provisions of the
Act or regulations can
only be made by a rule making authority if certain conditions are observed. If
one were to attempt to find
such provision by implication the only source of
such an implication would be s140 itself. In Morris v. Federated Liquor and
Allied
Industries Employees' Union of Australia ((1978) 21 ALR 425) it was
argued that a rule making power which was expressed in terms making no
provision for the autonomy of branches and wide enough
to authorize the making
of a rule which invaded the autonomy of a branch in contravention of
s.140(1)(d), was contrary to the provisions
of that section. The Full Court of
the Federal Court held that the rule, although conferring a rule making power
in such wide terms,
did not contravene the section. If the power were used to
make a rule which contravened s140(1)(d), that rule would, of course, be
invalid."
Keely J. agreed with the reasons for judgment given by Sheppard J. for holding that an unfettered power in the Federal Council to alter the rules of the Plumbers' Union "infringed s140(1)(c) of the Act in that it imposed upon members conditions which, having regard to the objects of the Act and the purposes of the registration of organizations, are unreasonable"; see pp.119-20. His Honour at pp.120-121 expressed brief views on the matter generally.
Sheppard J. considered the matter at pp.146-8. His Honour accepted the
contention that under sub-rule 28(5), subsequently renumbered
27(5), the
Federal Council had power, of its own motion, to alter the rules of that
Union. He held that for that reason the sub-rule
infringed paragraph 140(1)(c)
of the Act. Apart from a reference by Keely J. to a passage in Boland v. Munro
(1980) 48 F.L.R. 66, which was not directly referable to the present issue,
neither Keely J. nor Sheppard J. made any express reference to any of the
principles referred to in the cases cited earlier in these reasons which made
reference to the principles to be applied in considering
the application of
paragraph 140(1)(c). The substance of the view expressed by Sheppard J. in
this regard is contained in the following
passages. First, at p.146, his
Honour said:
"It was the appellants' submission that r28.5 as so amended infringed
s140(1)(c) because it imposed upon members conditions or
restrictions which,
having regard to the objects of the Act stated in s2(f), were unreasonable, if
not also oppressive and unjust.
That was because the new rule failed to
encourage the democratic control of the organization and the full
participation by members
in its affairs. The rule dealt with the fundamental
question of the amendment of the rules, and thus the constitution, of the
organization.
As it stood until the time of the amendment, the rule at least
provided for approval of the proposed amendment by one branch and
knowledge by
each other branch before there could be an amendment except in the limited
area provided for in the old r28.5. Once
power was vested in the Council to
amend the rules without reference to the branches or the general membership,
wholesale and fundamental
amendments could be made by the Council which
consisted of no more than 14 members (three each from New South Wales and
Victoria
and two from the remaing States). Not all these needed to be present
at a meeting at which rules might be amended. By r25 a majority
of the
representatives - eight persons - constituted a quorum. The evidence discloses
that the membership of the organization comprises
several thousand persons."
Secondly, at pp.147-8, his Honour said:
"Having taken the matters relied upon by counsel for the respondents into
account I do not think they overcome the force of the
appellants' arguments on
this question. It is true that delegates, members of council, dissatisfied
with a decision to amend rules
could take the matter back to their branches
and trigger the referendum procedure provided for. But that presupposes that
the delegates
are reasonably in tune with the views of the membership. The
procedure which it was purported to change ensured that at least all
the
members of one branch received notice of the proposal. At least the committees
of management of all other branches also received
notice of it. Under the
present proposal rules might be amended without any notice to any but the
members of Council. It is true
that they would report to their respective
branches the results of the meeting of Council and it is also true that if
fundamental
amendments to rules were made the word would soon get around. But
by then the amendments would be made. The apathy of members of
organizations,
no less than of other associations in many walks of life in this community, is
well known. It is all too easy for
people these days to have things done for
them. They accept the situation because they prefer it that way, or because
they cannot
be bothered doing otherwise or because they feel it is useless to
attempt to do so.
The linchpin of the respondents' submission that the amendment does not
contravene s140(1)(c) is the plebiscite provisions of
r27. But that, like any
other rule, is capable of amendment. If the Council were able to amend the
rules, an amendment deleting this
provision could be passed. Council would
then have full and unfettered control over the entire process of rule
amendment.
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. This organization, until the amendment, had, in
relation to the
amendment of rules, a degree of participation by members. That
degree of participation has been seriously reduced by what the South
Australian amendment purported to achieve. The amendment, in my opinion,
discourages full participation by members in an important
affair of the
organization, namely the amendment of its constitution. I have no hesitation
in saying that, in my opinion, the rule
as purportedly amended infringes
s140(1)(c). I do not need to decide whether the new provisions are oppressive
or unjust; I am clearly
of opinion that, having regard to the matters to be
taken into account in the paragraph, they impose upon members conditions and
restrictions which are unreasonable. I am fortified in that view by the
strength of the dicta earlier quoted from the judgments of
this court in Roots
v. Mutton and Morris's case. The court was there concerned with the question
of whether the steps provided for
in the rules of the organizations for the
amendment of those rules were mandatory or directory. But in a general way the
considerations
mentioned by the various judges apply with equal force to this
question also."
In judgments given in Squires v. Stephenson on 14 February 1983 and 22 April
1983 respectively, Sheppard J. applied principles extending
those which he had
expressed in Cook v. Crawford.
It should be noted also that in the passages quoted from Cook v. Crawford, Sheppard J. made no reference to that part of paragraph 140(1)(c) which requires the Court to have regard to the purposes of the registration of organizations under the Act. Much of what his Honour says seems to be directed to whether the rules of the Plumbers' Union failed to make provision for the control of the committees of that Union (see sub-reg. 115(1)(d)(v)) and not to the methods by which the legislature gave effect to the object of the Act as set out in paragraph 2(f) of the Act. His Honour at pp.148-154 discussed the consequences of the failure of rules to comply with sub-section 140(1) of the Act but, in the absence of any orders or declarations being made by the Full Court, it is not clear what orders would have been made. With all respect, his Honour's opinion seems to be based on the fact that, in his opinion, having regard to the history of the rules of the Plumbers' Union, it is desirable that the rules should contain provisions requiring consultation with and participation by branches and members before a rule alteration can be made. That is the very approach which the Court should not adopt. By adopting such an approach the Court is interfering unnecessarily with discretionary matters which should be left to the Union itself. The opinions expressed by Smithers J. and Evatt J. should be preferred.
The question under immediate consideration is whether rules 19(b), 23(a) and (b) and 57 contravene paragraph 140(1)(c) of the Act. The attack is based on that part of paragraph 140(1)(c) which requires a decision to be made, having regard to the objects of the Act, whether those rules impose conditions on members of the Union which are oppressive, unreasonable or unjust. The only object relied upon is that contained in paragraph 2(f). In these proceedings no attack has been made on the grounds that the rules of the Union providing for the election of the members of the Federal Council contravene the conditions prescribed by s.133 and 133AA of the Act. Nor is it suggested that the rules of the Union contravene sub-reg. 115(1)(d)(i). Rule 19(b) does not contravene paragraph 140(1)(a). Applying the principles discussed above, rule 19(b) does not contravene paragraph 140(1)(c). If the Court made a declaration under the first limb of sub-section 140(5D) that sub-rule (b) of rule 19 contravened sub-section 140(1), that sub-rule would be deemed to be void as from the date of the declaration; see sub-section 140(5G). As a result, the rules of the Union would thereupon contravene s.140(1) in a specified respect in that they failed to make a provision required by the regulations, namely sub-reg. 115(1)(d)(xiv), unless it could be held that under rule 57 the Federal Council had an implied power to alter rules; cf. Roots v. Mutton, supra, but it must be remembered that rule 57 is under attack also.
In reality, an analysis of the claims made and the remedies sought by the applicants illustrates that the true nature of the attack on the rules of the Union is that they do not make provision for the control of the Federal Council; sub-reg. 115(1)(d)(v). This matter will be discussed later.
Rule 57 of the rules of the Union specifies procedural matters to be followed before a rule alteration is made. The provisions of that rule are mandatory. The wording of the rule gives rise to difficulties in construction, but it cannot be suggested seriously that rule 57 contravenes paragraph 140(1)(c), even if on its true construction two-thirds of the members voting have power to alter the rules of the Union. The better view, however, is that even at a meeting of the Federal Council, a majority of two-thirds of the total membership of the Council is required before a rule amendment is made. If the Court made a declaration under the first limb of sub-section 140(5D) that rule 57 contravened sub-section 140(1), that rule would be deemed to be void as from the date of the declaration; see sub-section 140(5G). That result, by itself, would not assist the applicants. The procedural requirements specified in rule 57 would cease to have effect.
Applying the principles discussed above, rule 57 does not contravene paragraph 140(1)(c).
Rule 23 of the rules of the Union enables matters to be determined between the biennial meetings of the Federal Council by postal ballot. That procedure is in lieu of calling a special meeting of Federal Council, a very expensive procedure. Insofar as sub-rules 23(a) and (b) and rule 57 prescribe procedures to be followed, they are mandatory whenever a rule alteration is made. It may well be that the procedures prescribed in rule 23 are mandatory in any event. Rule 23 has general application and is not limited to rule alterations. A postal vote of members of a committee of an organization is not unusual. In fact, having regard to the purposes of registration of organizations under the Act, there is much to be said in favour of such a procedure. That procedure, in its application under rule 57, may be applied to rule alterations, particularly if the rule alterations are made necessary by reason of amendments to the Act. But even if the wider construction of rule 57 is accepted, which appears to be the better view, namely that the procedure can be applied to any rule alteration, that procedure can be so applied only after action is taken by a committee of the Union, the Federal Executive, the members of which are elected in accordance with rules which comply with the conditions specified in ss.133 and 133AA. Even then before the rule alteration can be made, it must be agreed to by a two-thirds majority of the members of the Federal Council.
If the Court made a declaration under the first limb of sub-section 140(5D) that sub-rules (a) and (b) of rule 23 contravene sub-section 140(1), those sub-rules would be deemed to be void as from the date of the declaration; see sub-section 140(5G). As a result thereof, those two sub-rules could not be used for resolving any matter requiring a decision between biennial meetings of Federal Council. Further, the practical effect would be that the whole of rule 23 in all probability would cease to have any application.
Applying the principles discussed above, sub-rules 23(a) and (b) do not contravene paragraph 140(1)(c) of the Act.
The remaining matter to be considered is whether the rules of the Union fail
to make provision for the control of a committee, namely
the Federal Council,
of the Union. This attack depends upon the prescribed condition that the rules
of an organization must provide
for the control of committees of an
organization; see sub-reg. 115(1)(d)(v). In that sub-regulation, the word
"control" is to be
construed in the sense of "the fact of checking and
directing action, a method of restraint"; see Boland v. Munro, supra, per
Evatt
and Northrop JJ. at pp.77-80, and Keely J. at pp.89-90. Evatt and
Northrop JJ. at pp.80-1 said:
"Whenever a question arises whether the rules of an organization fail to
provide for the control of the committees of the organization
by the members
of the organiztion it is necessary to consider the whole of the rules of the
organization, the method of electing
the committees, the term of office of the
members of the committee and the powers of members in general meeting. The
absence of a
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 a 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
reg.115(1)(d)(v), which rules otherwise
would not comply with that
regulation.' Each case must depend upon its own particular facts and the
particular rules of the organization
involved. As far as the word 'control' is
concerned we would with respect agree with the opinion expressed by Joske J.
in Mackenzie
v. Administrative and Clerical Officers' Association,
Commonwealth Public Service ((1962) 5 F.L.R. 342, AT pp.364-365). As an
illustration of the application of the principles expressed we refer to what
was said with respect to the
Vehicle Builders Employees' Federation of
Australia in Sherriff v. Townsend ((1980) [1980] FCA 35; 48 F.L.R. 20) by Northrop J.: 'Under
the rules of the federation, general meetings of members within a branch of
the federation are held regularly.
Delegates to federal council are elected
every two years. Federal council meets at least once in each year, and special
meetings
may be convened upon the written request of any two or more branches
or by resolution of the federal executive committee. That committee,
which
comprises the president, vice-president, two trustees, federal secretary and
assistant federal secretary, are held at least
once every four months. In
addition, under r15, any two or more branches may, at special meetings
convened for the purpose, demand
a ballot of all members of the federation
upon any question, and the result of the ballot is binding on all members of
the federation.
In all these circumstances the rules of the federation make
provision for the control of committees of the federation by the members
of
the federation. This control will become even stronger when the rules of the
federation are altered to overcome the imbalance
of representation and voting
value presently existing in the federal council as between members of the
federation in different branches'
((1980) 48 F.L.R., at p.57)."
In Cook v. Crawford, Evatt J., 52 F.L.R. at pp.23-4 and Smithers J., 43 A.L.R. at pp.99-101, adopted that approach. That approach should be adopted in the present case.
The rules of the Union providing for the election of members of the Federal
Council comply with the conditions specified in ss.133
and 133AA of the Act.
The last part of rule 19 provides:
"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."
The members of Federal Council, apart from the Federal Secretary and Assistant
Federal Secretary, hold office for two years. The two
named officers hold
office for four years.
The Union has approximately 23,100 members throughout Australia. Its internal structure is based on branches. There are six branches based on the six Australian States. The number of members in branches varies from approximately 550 in Tasmania, 1,400 in Western Australia and 2,050 in South Australia with a maximum of approximately 9,630 in New South Wales. The government, management and control of the affairs of the Union in each State is, subject to the rules of the Union and any proper direction of Federal Council or Federal Executive, vested in branch committees of management elected in accordance with the rules. Under those rules within each branch the officers and members of the committee are elected by rules which conform with the conditions prescribed by sections 133 and 133AA of the Act and sub-reg. 115(1)(d)(i). Members of branch committees hold office for a period of two years. Each committee of management is required to meet at least once every two months and may meet at other times at the direction of the branch president upon a request by not less than one third of the members of the committee. A full report of the business of the branch is presented to the annual meeting of members of the branch. Each branch is able to have any item placed on the agenda for the biennial meeting of Federal Council. Any three branches are empowered to require that a special meeting of Federal Council be convened. The president and secretary of each branch are delegates to Federal Council. Each president is a member of the Federal Executive. A special meeting of Federal Council must be convened on a resolution of Federal Executive. A copy of the minutes of each Federal Council and Federal Executive meeting must be forwarded to each branch and sub-branch and must be available to all members for inspection.
The rules make provision for an annual meeting of members in each branch. At the written request of not less than 200 financial members, or 10% of the membership of the branch, whichever is the less, a special meeting of the branch must be held. In Tasmania such a request must be signed by 55 members, in Western Australia by 140 members and in the other branches by 200 members. The quorum for any meeting of a branch is 30 financial members of 5% of the financial membership of the branch whichever is the less. In Tasmania, a quorum thus is 27, while the other branches it is 30. It is possible that in all the circumstances, that part of rule 48(3) which requires the written request of not less than 200 financial members of the branch or 10% of the members, whichever is the less for a meeting at which the quorum is 30, may be contrary to paragraph 140(1)(c) of the Act. This is a matter which should be considered by the Union. In all the circumstances, however, the requirements of rule 48(3) do not affect adversely the final conclusion reached in these reasons. A plebiscite of members may be held at the discretion of Federal Council or Federal Executive and shall be held if required by resolution of the committees of management of three branches or by a requisition in writing signed by not less than 15% of the financial members of the Union, in the present case, by some 3,465 members. Plebiscites at the branch level must be held if required by at least 200 members or 10% of the branch membership, whichever is the less. It follows that, at the very least, 395 members spread between the Tasmanian, Western Australian and one other branch or, at the most, 600 members spread between three of the larger branches, are able to initiate branch plebiscites which could result in a plebiscite of all members of the Union. A similar power to the plebiscite rule is contained in rule 65, Power to Review.
Applying the principles expressed in Boland v. Munro, supra, to the rules of the Union, it becomes apparent that the rules of the Union make provision for the control of committees of the Union by the members of the Union. This is done both by the election procedures to elect committees of management and the other powers by which members are able to exercise a power of checking and directing action and a power of restraint. In the result, the rules do not contravene sub-section 140(1) of the Act in the specified respect, namely failing to comply with the requirements of sub-reg. 115(1)(d)(v).
The power of the Federal Council to alter the rules of the Union is not absolute. The rules of the Union, the provisions of the Act and the requirements of law each impose restrictions on the exercise of that power. Members of Federal Council know or should know of those restrictions. That knowledge of itself operates as a constraint on the exercise of the power. The restrictions and constraints imposed by the rules of the Union result from those rules which provide for the control of committees of the Union, including the Federal Council, by the members of the Union as required by sub-reg. 115(1)(d)(v), as well as for the method by which members fully participate in the election of the Federal Council. Under the Act, any rule alteration does not have effect until the Industrial Registrar has certified that in his opinion the alteration complies with and is not contrary to the provisions of the 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 Union. Thus, before he is empowered to give the requisite consent, the Industrial Registrar must form the opinion that the alteration does not result in a contravention of, among other things, the provisions of sub-section 140(1) of the Act. The Industrial Registrar has power to refer a question of law arising in a matter before him for the opinion of the Court, sections 112 and 118A(1) of the Act. The Airline Hostesses' Association case, supra, came before the Court on such a reference in relation to a matter before the Industrial Registrar under sub-section 139(4) of the Act. Any member of the Union may commence proceedings under section 140 of the Act seeking an order directing that an altered rule contravenes sub-section 140(1). In those proceedings, the member may be able to receive financial assistance under s.141A of the Act. If in any legal proceedings at all, including proceedings under s.141 of the Act, the Union or a member seeks to rely upon a rule alteration, the validity of that altered rule may be challenged including the issue of whether the altered rule contravenes sub-section 140(1) of the Act; see Egan v. Maher (No. 1) [1978] FCA 18; (1978) 35 F.L.R. 197 per Northrop J. at pp.242-251. The members of Federal Council, in exercising the powers conferred upon the Federal Council, including the power to alter rules, must exercise those powers bona fide for the purpose of those powers. If this is not done, the exercise of the power is void and of no effect, and if a rule alteration is made mala fide, that rule alteration is ineffective; generally see Allen v. Townsend [1977] FCA 10; (1977) 31 F.L.R. 431 per Evatt and Northrop JJ. at pp.483-488.
Having regard to all these matters, there is no warrant for the Court to impose its will to determine the form of the internal structures of the Union. That is a matter for the Union itself. Parliament could, if it thought desirable, legislate with respect to procedures to be followed by organizations before a rule alteration could be made. Parliaments have done so with respect to companies incorporated under the various Companies Acts. Parliament has not done so with respect to organizations. The Court should not do so under the guise of exercising the judicial power conferred by s.140 of the Act.
In conclusion, it is salutary to note what was said by Deane J. in the
Municipal Officers' Association case at pp.164-5:
"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 (Watson v. Australian Workers' Union
((1967) 10 F.L.R. 347, at p.361); Cassidy v. Amalgamated Postal Workers' Union
of Australia ((1967) 11 F.L.R. 124, at pp.126-127); Wiseman v. Professional
Radio and Electronics Institute of Australasia ((1978) [1978] FCA 31; 35 F.L.R. 24); Re
Airline Hostesses' Association ((1980) [1980] FCA 110; 48 F.L.R. 214)). 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. 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."
The rule nisi should be discharged.
On 15 June, 1983, Evatt J. ordered, pursuant to s.118C of the Conciliation and Arbitration Act 1904 ("the Act"), that this matter be heard and determined by a Full Court. The Rule to Show Cause was made by Evatt J. on 11 February, 1983. On that day his Honour reserved his decision in two matters (Nos.40 and 42 of 1982) in which the validity of certain of the Rules of The Australian Insurance Employees' Union ("the Union") was challenged. It was agreed by the parties that it would be preferable for judgment to be given in this matter before his Honour delivered judgment in the earlier matters. His Honour was also of that view so that no judgment in those matters has been given.
The claimants are both members of the Union. The first claimant is the Treasurer of the New South Wales Branch and also a member both of its Federal Council and Federal Executive. The second claimant is the Secretary of the New South Wales Branch. She too is a member both of the Federal Council and the Federal Executive. The personal respondents are 27 of the remaining members of the Federal Council. At the hearing before us the Union itself was added as a respondent.
Before coming to the matters which arise for determination it is necessary to refer to a number of the Rules of the Union. Rule 36 provides for the setting up by the Union of branches in any State or Territory. The Rule confirms the existence of branches in each of six States. The government, management and control of the affairs of the Union in each State is, subject to the Rules and any proper direction of the Federal Council or Federal Executive vested in a Branch Committee of Management. Each such committee has such powers as are vested in it by the Rules or delegated to it by the Council or the Executive. Rule 38 provides for the constitution of committees of management and Rule 39 for those committees' powers and duties. By Rule 39, and also by Rule 48, a Branch Committee of Management is to meet at least once every two months. By Rule 48 there is to be an annual general meeting of each Branch. Meetings of a Branch may also be called at the written request of not less than 200 financial members or 10 per cent of the membership of the Branch whichever is the less.
At the time of the hearing before us the New South Wales Branch had 9,623 members, the Victorian Branch 7,098, the Queensland Branch 2,254, the South Australian Branch 2,047, the Western Australian Branch 1,403 and the Tasmanian Branch 549. Some qualification of these numbers may be necessary, but for present purposes they provide a sufficient indication of the current membership of each Branch.
Rule 19 provides for the powers and duties of Federal Council. The Rule opens with the usual words, "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 . . . .". There follow 20 lettered paragraphs. Paragraph (b) is, "subject to Rule 57 to make, add to, amend and rescind these Rules".
Rule 57 is in the following terms: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."
"Amendments may be made to these Rules or new Rules made or any Rule may
Rule 23 referred to in Rule 57 is headed, "Matters requiring decision
between Federal Council meetings". Rule 20 provides in paragraph
(a) that the
Federal Council shall meet biennially at such time during the month of October
and at such place in Australia as may
be determined by the Council, or in
default of such determination, by the Executive. Rule 23 is as follows:
"(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.
(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."
In addition to providing for biennial meetings of Council, Rule 20 also provides that upon the written request of any three Branches, or by resolution of the Executive, there shall be called a special meeting of the Council. Biennial meetings of Council are to be held on two month's notice and special meetings on 14 days' notice.
Rule 18(a) of the Rules presently provides as follows:Secretary, the Assistant Federal Secretary, and the Federal Treasurer of the Union;
"(a) The Federal Council of the Union shall consist of:-
(i) the Federal President, the Federal Vice-President, the Federal
(iii) additional delegates from the Branches on the following basis:-provides for the Federal Executive which is to consist of the Federal President, the Federal Vice-President, the Federal Secretary, the Assistant Federal Secretary, the Federal Treasurer, the President of each Branch and one additional delegate from each Branch. Rule 26 provides for the powers and duties of the Executive. When the Council is not in session, the Executive has all the powers of the Council except those referred to in five provisions of the Rules including Rule 19(b). Thus it does not have power to amend the Rules.
1-999 financial members - one (1) delegate.
1000-2999 financial members - two (2) delegates.
3000-6999 financial members - three (3) delegates.
7000 financial members and thereafter - four (4) delegates."
Rule 24 provides for the officers of the Union and their election. Rule 25
Rule 58 provides for plebiscites of members. Paragraphs (a) and (d) of the
Rule are as follows:
"(a) Plebiscites of members may be held for any purpose at the discretion
of Federal Council or Federal Executive and shall 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 per cent of the financial
members of the Union. Such resolutions and requisitions shall specify the
matter or matters and
copies of such resolutions and the original requisition
shall be posted addressed to the Federal Secretary of the Union at its
registered
address."
"(d) Any decision of members of the Union taken by plebiscite shall be
binding on the Union, its Federal Council, its Federal
Executive and its
Officers and members, and any decision of the members of a Branch taken by
plebiscite shall be binding on the Branch,
its Committee of Management
officers and members."
Rule 59 provides for voting at general or special meetings of Branch committees of management or meetings of the Council or the Executive. Votes may be cast personally or by proxy in accordance with Rule 60. Voting at meetings of the Council is to be by show of hands except in such cases as Federal Council decides otherwise.
Rule 60 provides that, in the event of the absence of any member of the Council from a meeting, in the case of an officer of the Union, he may appoint in writing another Federal Councillor or financial member of the Union his proxy to exercise his vote at such meeting. Provisions are also made for proxies to be appointed by members of the Federal Executive and by members of Branch Committees of Management absent from meetings. Rule 61 contains provisions concerning quorums for meetins of various kinds. At any meeting of the Council or the Executive, half the persons eligible to be present constitute a quorum, provided that no less than three Branches are represented either by a Councillor or by proxy.
The only other rule which need be mentioned is Rule 65 which contains a power to review. It is comparable to the plebiscite provisions of Rule 58 and it is unnecessary to set out the detail of it.
The matter which has led the claimants to seek the relief here in question
is a proposal to amend the rules of the Union, particularly
Rule 18(a). The
proposal is that Rule 18(a)(ii) be deleted and replaced by a provision in the
following terms:-
"(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 -provision of this Act, the regulations or an award or otherwise be contrary to a law;
(a) shall not be contrary to, or fail to make a provision required by, a
. . . . . . . . .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;
(c) shall not impose upon applicants for membership, or members, of the
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 -the full participation by members of such an organisation in the affairs of the organisation."
. . . . . . . . . . .
(f) to encourage the democratic control of organisations so registered and
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.
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] HCA 60; (1981) 37 A.L.R. 317 (pp.335- 336) and
Federal Commissioner of Taxation v. Whitfords Beach Pty. Limited [1982] HCA 8; (1982) 39
A.L.R. 521. In the latter case, his Honour said (p.533):
"As I said in Wacando v. Commonwealth [1981] HCA 60; (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] FCA 169; (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.
. . . . . . . . .ensure a system of democratic control of all unions, allowing fullest participation by members in their affairs.
The platform of the Australian Labor Party calls upon the Government to
. . . . . . . . .election for office bearers and in plebiscites touching rules or policy.
Financial members are to be given an absolute right to vote in any
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] FCA 35; (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.
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.
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/1983/319.html