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Conquo v Jackson (Corrigendum dated 5 February 2009) [2009] FCA 45 (5 February 2009)

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Conquo v Jackson (Corrigendum dated 5 February 2009) [2009] FCA 45 (5 February 2009)

Last Updated: 6 February 2009

FEDERAL COURT OF AUSTRALIA


Conquo v Jackson [2009] FCA 45


CORRIGENDUM


DONNA MARGUERITE CONQUO v JEFF JACKSON
VID 33 of 2009


SUNDBERG J
5 FEBRUARY 2009 (CORRIGENDUM 5 FEBRUARY 2009)
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 33 of 2009

BETWEEN:
DONNA MARGUERITE CONQUO
Applicant
AND:
JEFF JACKSON
Respondent

JUDGE:
SUNDBERG J
DATE OF ORDER:
5 FEBRUARY 2009
WHERE MADE:
MELBOURNE

CORRIGENDUM


  1. On page 6 paragraph 20 of the Reasons for Judgment, delete the words “present at the meeting” in the second sentence.
I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Sundberg.

Associate:


Dated: 5 February 2009

FEDERAL COURT OF AUSTRALIA


Conquo v Jackson [2009] FCA 45


DONNA MARGUERITE CONQUO v JEFF JACKSON
VID 33 of 2009


SUNDBERG J
5 FEBRUARY 2009
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 33 of 2009

BETWEEN:
DONNA MARGUERITE CONQUO
Applicant
AND:
JEFF JACKSON
Respondent

JUDGE:
SUNDBERG J
DATE OF ORDER:
5 FEBRUARY 2009
WHERE MADE:
MELBOURNE

THE COURT ORDERS THAT:


Until the final determination of the proceeding or further order the respondent perform and observe the rules of the Health Services Union (the rules):


(a) by ceasing and refraining, by himself, his servants or agents, from obstructing, hindering or in any other way preventing Pitcher Partners, auditors, from carrying out an examination and preparing a report on any irregularities in the financial affairs of the Victoria No 1 Branch (the Branch) of the Health Services Union in accordance with the resolutions of the Branch Committee of the Branch made on 7 January 2009 (the resolutions), and
(b) by providing to Pitcher Partners full access to the records of the Branch in accordance with the resolutions.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

BETWEEN:
AND:

DATE:
PLACE:

REASONS FOR JUDGMENT

BACKGROUND

  1. On 20 January 2009 the applicant obtained an order that the respondent show cause why orders under s 164 of Schedule 1 of the Workplace Relations Act 1996 (the Act) should not be made for the performance by him of the rules of the Health Services Union (Union). The proceeding relates to resolutions passed by the Branch Committee of the Victoria No 1 Branch that there be an independent investigation into allegations regarding misuse of Branch funds. The respondent, who is Secretary of the Branch, has declined to co-operate with the investigation. The applicant is the Junior Vice-President of the Branch.
  2. The central events leading up to the proceeding are as follows. On 19 December 2008, Sonya McCormack, the Senior Vice-President of the Branch, acting as President because of the suspension of the President, Pauline Fegan, called a meeting of the Branch Committee for 23 December. The purpose of the meeting was stated to be to appoint independent auditors to investigate the Branch’s finances. Ms McCormack and the applicant were concerned about the truth of charges that had been laid by Shaun Hudson, Branch Assistant Secretary, against Ms Fegan, and more broadly about stories they had heard that unauthorised payments had been made by the Branch to Alex Hicks, the respondent and Mr Hudson.
  3. The respondent refused to call a meeting of the Branch Committee for 23 December, but proposed to call one for 7 January 2009. In the meantime he procured a meeting of the National Executive of the Union to take place on 5 January 2009. That meeting resolved to have its own investigation carried out by an appropriate forensic accounting firm. The Executive also resolved that until that report was delivered, “there be no access to the relevant records ... by any office holder or employee of any Branch [of] the Union”, and that the Branch permit full access by the National Office to “those parts of the premises that they are entitled to have access to”.
  4. The resolutions recorded at [3] were the subject of other proceedings in the Court, which were settled on the basis that the resolutions were to be rescinded. This took place.
  5. At the 7 January 2009 meeting the Branch Committee resolved that it:

The Committee also resolved to authorise payment of Pitcher Partners’ reasonable fees and to direct the respondent to co-operate with and assist Pitcher Partners in the preparation of the report, including providing full access to the records of the Branch.

  1. On 8 January Mr Whitchurch attended at the Branch premises. The respondent was not there, and a security guard arranged with the respondent that he or Mr Hudson would call Mr Whitchurch “when they came in”. Mr Whitchurch then left the premises. He was not telephoned by the respondent or Mr Hudson.
  2. On 9 January the respondent’s solicitors agreed that the respondent would meet Mr Whitchurch to discuss the investigation on 15 January. At that meeting the respondent and the National Secretary of the Union, Kathy Jackson, asked Mr Whitchurch about several matters, including how he came to be appointed, but refused to permit him to commence his investigations “today”. The respondent claimed that the 7 January resolutions were invalid. He did not say why they were invalid.
  3. Pursuant to an enquiry by the applicant’s solicitor, Antonia Sakkas, as to the ground upon which the respondent contended that the resolutions were invalid, on 19 January the respondent’s solicitors informed her that there was no quorum present at the 7 January meeting.

RULES OF UNION

  1. Rule 44 of the Rules of the Union, dealing with the Rights of Branches, is in part as follows:
  2. By Rule 49 – “Branch Management” – the government, management and control of the affairs of a Branch is, subject to the Rules and any proper direction of the National Council or National Executive, vested in the Branch Committee. The powers of a Branch Committee are contained in Rule 52. They include power to transact all the business of the Branch, generally watch the interests of the Union in the area in which the Branch is established, direct the Branch Secretary and Branch Assistant Secretary in the performance of their duties, appoint a Branch Auditor and take any action which in its opinion is in the interests of the Branch. See pars (a), (d), (g), (k) and (l) respectively.
  3. The powers and duties of the Branch Secretary are found in Rule 56. The Secretary is the chief executive officer of the Branch, and subject to the Rules has charge of the general conduct, administration and business of the Branch. He or she is the investigating and organising officer of the Branch, and is the officer to sue and be sued on its behalf. The Secretary’s duties include calling and attending all meetings of the Branch and the Branch Committee, keeping minutes of the business transacted at meetings, having charge of the financial books and statements of the Branch, and carrying out such other duties as the Branch Committee may from time to time assign to him or her. See pars (a), (c) and (n) respectively.
  4. Rule 64 provides that a quorum at Branch Committee meetings is “a majority of members of the Branch Committee or ten members thereof, whichever is the lesser”.

SECTION 164

  1. Section 164(1) of Schedule 1 enables a member of an organisation to apply to the Court for an order under the section in relation to the organisation. Subsection (9) defines “order under this section” as:
an order giving directions for the performance or observance of any of the rules of an organisation by any person who is under an obligation to perform or observe those rules.

Subsection (3) provides:

The Court may refuse to deal with an application for an order under this section unless it is satisfied that the applicant has taken all reasonable steps to try to have the matter that is the subject of the application resolved within the organisation.

Subsection (4) provides:

At any time after the making of an order under this section, the Court may make any interim orders that it considers appropriate and, in particular, orders intended to further the resolution within the organisation concerned of the matter that is the subject of the application.

  1. The powers given by s 164 and its precursors are wide, and enable the Court to go beyond the precise form of the rules and give directions calculated to ensure they are carried out. In R v Joske; Ex parte Shop Distributive and Allied Employees Association [1976] HCA 48; (1976) 135 CLR 194 at 212 Mason and Murphy JJ said:
The judgments of this Court in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett make it perfectly clear that sub-s (1) of s 141 is not confined to the making of orders directing the performance or observance of a particular rule or particular rules of the organization, as the prosecutors would have it, and that it extends, as its words explicitly state, to the giving of directions for the performance or observance of any of the rules of an organization, that is, for the doing of acts which will conduce to the performance or observance of such rules.

Their Honours went on to say that the power to make interim orders is not limited to the giving of directions to perform or observe rules. See also Magner v Fowler (1979) 26 ALR 671 at 700-703.

  1. In McGee v Sanders (No 2) [1991] FCA 554; (1991) 32 FCR 397 at 402-403 Gray J expressed the view that applications for interim relief under s 164(4) are not necessarily to be approached in the same way as applications for interlocutory injunctions: serious issue to be tried, and balance of convenience. His Honour noted that the power to make interim orders is given in broad terms. The word “injunction” is not used, and it is rare for an applicant for an interim order under s 164(4) to be required to give an undertaking as to damages. His Honour thought that under s 164(4) the Court’s duty was “to do justice as best it can”.
  2. Counsel drew my attention to Gray J’s observations, but for the most part dealt with the application on the conventional interlocutory injunction basis of serious question and balance of convenience. Without in any way disagreeing with Gray J’s remarks, it is convenient to deal with this application in the way it was put to me by counsel.

SERIOUS QUESTION

  1. The interim relief sought by the applicant is:
    1. An order that until the final determination of this matter or further order, the Respondent perform and observe the rules of the Health Services Union (the rules) by ceasing and refraining, by himself, his servants or agents, from obstructing, hindering or in any other way preventing Pitcher Partners, auditors, from carrying out an examination and preparing a report on any irregularities in the financial affairs of the Victoria No 1 Branch (the Branch) of the Health Services Union in accordance with the resolutions of the Branch Committee of [the] Branch on 7 January 2009.
    2. An order that until the final determination of this matter or until further order, the Respondent perform and observe the rules ... by providing to Pitcher Partners, auditors, full access to the records of the Branch in accordance with the resolutions of the Branch Committee of the Branch on 7 January 2009.
  2. The applicant contends that it has a strong case for relief, which is very likely to succeed at trial. It submits that the Branch Committee is authorised to initiate the investigation, and is the appropriate body within the Union to do so. Under the Rules the respondent is obliged to assist in the investigation, having had that duty assigned to him under Rule 56(n). In failing to do so, he has failed to perform and observe the rules for the purposes of s 164. Further, the applicant contends that the respondent is not entitled to hinder or obstruct the carrying out of the resolutions of the Committee, which he has done by refusing Mr Whitchurch access to the Branch accounts. This refusal is again a failure to perform and observe the rules.
  3. The respondent contends that on the proper construction of Rule 64(a)(ii) there was no quorum at the meeting. It was common ground that on 7 January:

On those facts the respondent claims that at the time of the vote a majority of members was nine (based on a potential membership of 16), and there were then only eight members present. Accordingly the business transacted at the meeting was invalid: Joske’s Law and Procedure at Meetings (10th ed, 2007) at 33.

  1. In my view the respondent’s calculations proceed on an erroneous construction of Rule 64(a)(ii). A “majority of members” means a majority of the persons present at the meeting who are in fact members. It is not possible to include as “members” the three casual vacancies. There are no “people” to count. The respondent sought to derive assistance for his construction of Rule 64(a)(ii) from Rule 51 and Rule 29(j)(i). Rule 51 provides that a Branch Committee shall consist of the officers of the Branch and not less than five and not more than fifteen ordinary members as the Branch may from time to time determine. That Rule deals with potential membership. In my view it provides no support for treating “members” in Rule 64(a)(ii) as including the three casual vacancies.
  2. Rule 29(j)(i) provides in part that:
Where [there is] an extraordinary or casual vacancy (howsoever occurring) in the office of any ... ordinary member of a Branch Committee of Management ... the Branch Committee shall take immediate action to have such vacancy filled by secret postal ballot of all financial members of the branch ....

In my view that provides no assistance to the respondent’s construction of Rule 64(a)(ii).

  1. The Rules should be accorded a sensible practical construction. The applicant’s construction accords with the plain meaning of the words of Rule 64(a)(ii). It produces, on the facts here, a sensible, expected outcome. The respondent’s construction does not accord with the plain words, and does not produce a sensible result. In my view there is no reasonable prospect of that construction prevailing at trial.
  2. The respondent’s second attack on the resolutions asserts that they were passed in bad faith and for an improper purpose. Reliance was placed on ss 286 and 287 of Schedule 1. Section 286(1) provides:
An officer of an organisation or branch must exercise his or her powers and discharge his or her duties:
(a) in good faith in what he or she believes to be the best interests of the organisation; and
(b) for a proper purpose.

Section 287(1) provides:

An officer or employee of an organisation or a branch must not improperly use his or her position to:
(a) gain an advantage for himself or herself or someone else; or
(b) cause detriment to the organisation or to another person.
  1. The respondent urged me to infer that the resolutions were actuated by bad faith, in order to gain a political advantage over, and cause detriment to, the respondent and Mr Hudson. It was also said that I should infer that the resolutions were designed to create a diversion from Mr Hudson’s charges against Ms Fegan or as a retaliation for those charges.
  2. Allegations of bad faith, improper purposes and improper use of an office to cause detriment to another or advance one’s own position, are serious allegations. They are not made out, even on an interlocutory or interim basis, in the absence of persuasive material. Especially is that so when the Court is invited to infer bad faith and the other improprieties in the absence of any direct evidence. Further, while the evidence discloses some information about Ms McCormack and the applicant, it discloses nothing about the other members who were present at the meeting: Jenni Banks, Anastasia Hondros, Bill Ricketts, Stuart Marshall, Tonia Joyce and Maria Toro.
  3. So far as concern the respondent and Mr Hudson, the resolutions are even handed and non-discriminatory. The investigation is into any irregularities in the financial affairs of the Branch since 1 January 2005. The respondent and Mr Hudson are not named. Nor is Ms Fegan, though anyone involved in the Branch Committee would know that “the dealings between the business Urban Giftware and the Branch” is a reference to Ms Fegan’s dealings with the Branch. However Ms Fegan is a special case. Specific charges have been laid against her. So there is nothing in the resolutions themselves that supports the claim of bad faith and the other alleged improprieties.
  4. The final attack on the resolutions is based on Rule 59 which requires a Branch Committee to appoint a Branch Auditor annually. The Branch Auditor is to perform the functions and duties prescribed by the Act and the regulations “and such other functions and duties not inconsistent with the Act and the regulations as are required by the Branch Committee”. The powers and duties of auditors of a reporting unit, which includes a branch of an organisation, are found in s 257 of Schedule 1 of the Act. The auditor, who has to be an approved auditor, must audit the financial report of the unit for each financial year and make a report to the unit: subs (1). The report must state whether the general purpose financial report is presented fairly in accordance with Australian Accounting Standards: subs (5)(a). It must describe any defect or irregularity in the general purpose financial report: subs (7)(a), and must be in accordance with the Australian Auditing Standards: subs (8).
  5. The respondent contends that Rule 59 is a code which specifies functions which cannot be given to anyone else, such as Pitcher Partners. It is said that Rule 52 (dealing with the powers of the Branch Committee) must be read down so as to accommodate Rule 59.
  6. Rule 59 adds nothing to the audit provisions of the Act. My attention was not drawn to any regulations or any “requirements” of the Branch Committee. The audit provisions of the Act deal with a conventional audit. So does Rule 59. The resolutions of 7 January are not concerned with such an audit. They authorise an investigation into financial irregularities. Mr Whitchurch is commissioned to report on any irregularities in the financial affairs of the Branch over a four year period. In no way does this task infringe upon what may, for present purposes, be assumed to be the preserve of the Branch Auditor. In my view this attack on the resolution has no prospect of succeeding at trial.

BALANCE OF CONVENIENCE

  1. On the balance of convenience the respondent contended that because what is sought by the applicant is in effect final relief, the applicant had to establish a stronger than usual case. In Bradto Pty Ltd v State of Victoria (2006) 15 VR 65 the Court of Appeal rejected a submission that because part of an interlocutory injunction required positive action, it was mandatory and not prohibitory, so that it should not have been granted unless there was a high degree of assurance that at trial it would appear that the injunction was rightly granted. Maxwell P and Charles JA said at [33]:
In our view, it is desirable that a single test be applied in all cases where an interlocutory injunction is sought. There is nothing in the body of authority to which we have referred, nor any consideration of principle, which requires a special test to be applied to one subcategory of such injunction applications, namely, those where mandatory relief is sought. On the contrary, as pointed out convincingly by Hoffman J in Films Rover, the grant of a mandatory injunction may be justified in a particular case notwithstanding that the court does not feel the requisite “high degree of assurance”.

The correct approach, according to their Honours, whether the relief sought is prohibitory or mandatory, is to take whatever course appears to carry the lower risk of injustice if it should turn out to have been “wrong”, in the sense of granting an injunction to a party who fails to establish his right at trial, or in failing to grant an injunction to a party who succeeds at trial: at [35].

  1. The Court of Appeal also rejected a contention that where an interlocutory injunction is tantamount to awarding final relief, it should be granted only if the court feels a high degree of assurance that at trial it will appear that the interlocutory injunction was rightly granted. The Court said at [39]:
Once again, we see no necessity for the recognition of a special “rule” for this – different – subcategory of interlocutory injunctions. On the contrary, we think that it must be relevant on every application for an interlocutory injunction to consider the likelihood of the plaintiff succeeding at trial. Not only is such consideration a necessary part of deciding whether there is a serious question to be tried, but the plaintiff’s prospects of success will almost certainly be a factor in the evaluation of the balance of convenience.

  1. In view of the observations of Gray J in McGee v Sanders (No 2), recorded at [15], the two “special” rules rejected by the Court of Appeal in Bradto are even less appropriate in relation to interim orders under s 164 than they are in the conventional interlocutory injunction context. It is to be remembered that an order under s 164 is defined so as to include “directions for the performance” of any rules of an organisation by a person who is under an obligation to perform them. This will often be a mandatory order that results in the giving of final relief. An interim order under s 164(4) can plainly be an order of the same type as that granted at trial under subs (1).
  2. Accordingly I adopt the approach in Bradto in the passages quoted at [30] and [31] of considering the likelihood of the applicant succeeding at trial rather than concentrating on the fact that the second order sought is of a mandatory character and may itself amount to final relief.
  3. The respondent contended that there was no evidence, but only mere assertion, that there was any damage to the good order of the Branch as a result of the allegations of financial irregularities. In my view it can readily be inferred from the charges against Ms Fegan, the allegations against the respondent and Mr Hudson, and the court proceedings involving them, that the continuation of the current controversy is not conducive to the proper functioning of the Branch.
  4. The respondent contested Ms Sakka’s statement that it is in the best interests of the Branch and the members that Mr Whitchurch’s report be available at a meeting of the Branch scheduled for 11 February 2009. He said first that although Ms Fegan’s conduct may be raised at the meeting, there was nothing to suggest that the general issue of financial irregularities would be considered. The material before me does not disclose what issues will or may arise at the meeting. But whether the more general allegations are or are not considered, those present would surely benefit from whatever Mr Whitchurch may have uncovered before the meeting about Ms Fegan’s conduct, and the allegations that are claimed by the respondent to have been made by way of revenge for the charges against her.
  5. The respondent’s second submission in relation to the 11 February meeting is that it is unlikely that Mr Whitchurch will have completed his report before then. If Mr Whitchurch is to be permitted to begin his investigation, I doubt whether a final report will be ready in time for the meeting. However, he may be able before then to prepare a preliminary report about the whole range of alleged financial irregularities or at least about those affecting Ms Fegan. The meeting would doubtless be assisted by such a preliminary report.
  6. The respondent claimed that there was no evidence of prejudice to the applicant or the Union if interim relief is not granted. The material discloses that the National Executive has become involved, and wants an investigation of the alleged irregularities. The Branch wants an investigation. Since both bodies want an investigation to resolve the matter, I do not accept the submission that there is no prejudice to the applicant or the Union if relief is refused. The opposing contentions will fester on, to the detriment of the Branch and its members.
  7. The respondent claimed that there is “no capacity for procedural fairness to be afforded” to him and Mr Hudson in the investigation process. I am not prepared to assume that Mr Whitchurch will not accord natural justice to those against whom allegations have been made. He is charged with carrying out an investigation into any financial irregularities and presenting a report. It seems to me unlikely that Mr Whitchurch could properly carry out his task of investigating irregularities alleged against the respondent without putting to him any concern he might have about his conduct, so as to enable him to deal with or dispel that concern. I do not go into the question whether Mr Whitchurch will be obliged to accord natural justice to those against whom allegations have been made, or if he is, what is the content of that obligation. That may well be a matter upon which Mr Whitchurch will seek legal advice.
  8. The respondent complained of a lack of precision in the orders sought and that they contain a mandatory element. As to the latter, I refer to what I have said at [30] to [33]. Section 164 contemplates mandatory orders, both final and interim. Although the second order sought is mandatory, it amounts to no more than that the respondent allow Mr Whitchurch access to the Branch records. In a s 164 context, I reject the respondent’s contention that the fact that the second order sought “does not involve a preservation of the status quo”, but requires the respondent “to do something new”, is a reason for not granting relief. Counsel did not identify any particular respect in which the orders suffered from a lack of precision. I do not think they do.
  9. I do not accept that the grant of relief will unnecessarily distract the respondent from his duties as Secretary. This complaint was not developed, and I think it has no substance. The respondent will be able to go about his normal tasks. As Mr Borenstein SC for the applicant put it, all the respondent will be required to do is “get out of the doorway and let Mr Whitchurch in”. Cf Bradto at [19]-[22].
  10. In reliance on s 164(3), the respondent said there was no evidence that the applicant has taken any steps to have the validity of the 7 January resolutions resolved internally. He drew attention to Rule 21(l) which confers power on the National Council “to interpret these Rules”. I would not refuse to deal with the present application merely because the applicant has not sought to have the validity of the resolutions resolved by an interpretation of the Rules by the National Council. Section 164(3) speaks of “all reasonable steps”. In Anderson v Taylor (1990) 22 FCR 326 at 335 speaking of what was “reasonable” in a precursor of s 164(3), Gray J said:
An applicant is not to be denied relief simply because there was open to him or her some steps under the rules which might conceivably have led to a resolution of the issue which he or she seeks to raise before the Court. An applicant is not required by s 209(3) to engage in conduct the result of which is purely speculative.

His Honour went on to say that a suggestion that the applicant there should have sought to persuade the national executive to reverse its earlier decisions was not reasonable because “the applicant would have had every right to regard himself as attempting to appeal from Caesar to Caesar if he had asked the national executive to reconsider”.

  1. In the present case the National Council is supporting the respondent. Mr Langmead, who appeared for the national body, intervened with leave in support of the respondent. It would not in my view be reasonable for the applicant to expect the National Council to interpret the rules in a way that would defeat the side with which it is aligned. In any event, whatever the Council’s ruling on the meaning of the rules, the matter would return to the Court. An interpretation of the rules made by the Council cannot exclude the jurisdiction of the Court. To require the applicant to approach the Council would, in my view, simply consume time to no avail.
  2. It is then said that the making of the investigation may prejudice the respondent. I accept the applicant’s answer to this. It will only prejudice the respondent if he has done something wrong, which is not a reason for not making the orders sought. The investigation may exonerate him, in which case it will assist in the resolution of the conflict within the Branch.
  3. Another balance of convenience factor relied on by the respondent is the likely cost of carrying out the investigation. The respondent’s solicitor obtained estimates of the likely cost of carrying out the investigation entrusted to Mr Whitchurch. One accountant was unable to estimate the fee because the Union’s financial statements did not give any indication of the number of transactions that had occurred over the period of the investigation. She estimated a standard annual audit fee for a second tier firm at around $11,200. Another accountant said that his fee for an annual audit for a union with 16,000 members and about 40 staff would be between $20,000 and $50,000 “but without further detailed instructions the costs related to a broad ranging enquiry would be impossible to provide”. I do not derive much assistance from this material. I accept, however, that the cost of the investigation is likely to be considerable. As I have said at [37], it is common ground that there should be an investigation. It is also common ground that the investigation must be carried out by a qualified professional, and will cost real money. The dispute is about who is to give the instructions for the investigation and who is to be appointed to carry it out. The applicant has satisfied me, for the reasons I have given, that a strong case exists for upholding the validity of the Branch Committee resolutions of 7 January. The Committee directed itself to the cost of the investigation, committing the Branch to pay Pitcher Partners’ reasonable costs. The investigator’s fee is an obligation of the Branch, and not, as the respondent (and the Union) contended, a cost of the Union. See Rule 60(b). The Branch has initiated the process and appointed Mr Whitchurch. No attack has been made on his qualifications to undertake the task. He is ready to proceed.
  4. On 27 January the National Executive passed resolutions dealing with the Branch. Resolutions 2 to 4 are as follows:
    1. National Executive requests the National Secretary to obtain three quotations from audit firms for undertaking the function of National Auditor and report back to National Executive as soon as possible.
    2. National Executive resolves that the National Auditor, when appointed, be required to make enquiries and come to a view as to whether the allegations in the letter from the Branch Secretary of the Victoria No 1 Branch of 24 December 2008, and the allegations in paragraph 11 and Exhibit SM-8 of the affidavit of Ms McCormack of 7 January 2009 in relation to Messrs Jackson and Hudson, should be investigated. If he or she is satisfied there is a need for further investigation, he/she is to report to National Executive about the extent and likely cost of such investigation. The National Auditor is required to report to the National Executive as soon as possible.
    3. National Executive resolves that in relation to any allegations of financial impropriety in the affairs of the Vic No 1 Branch, any person wishing to make such allegations shall put those allegations to the newly-appointed National Auditor and that in relation to any such allegations the National Auditor is required to report to the National Executive as to whether the allegations should be investigated and the likely cost of such investigation. National Executive resolves that unless claims of financial impropriety in relation to No 1 branch are dealt with in accordance with resolution 3 (regarding enquiries by the National Auditor) no funds of the HSU shall be expended to investigate any such claims.
  5. In my view the validity of resolution 4 is attended by serious doubt. Mr Langmead relied on Rule 27(a), which gives the National Executive power to conduct and manage the affairs of the Union, and Rule 21, which entrusts to the National Council the management and control of the affairs of the Union.
  6. The respondent also relied on Rule 35(d) which requires the National Auditor to be appointed annually by the National Council or National Executive. Subrule (d) empowers the Auditor to examine all accounts and documents of, amongst other things, each branch, and to ask questions of any officer or employee of any branch.
  7. Rules 21(l) and 27(a) are expressed to be “subject to these Rules”. Rule 35(d) is not. However, all Rules are subject to the effect of other Rules even if that is not expressly stated. The applicant contends that the National Executive’s resolutions are an intrusion into the autonomy of the Branch. Rule 44(a) makes all branches “completely and absolutely autonomous within the ambit of these Rules”. They are “responsible for their own Government and administration”. By Rule 49(a) the government, management and control of the affairs of each branch are vested in a Branch Committee. This vesting is expressed to be subject to “these rules and any proper direction of the National Council or the National Executive”.
  8. In Armstrong v Elliott [1997] IRCA 252 a Full Court of the Industrial Relations Court (Wilcox CJ, Moore and Madgwick JJ) considered the respective rule making powers of the National Council and the Branches of the Union in relation to branch elections. Because of provisions such as Rule 44 and what is now Rule 49, together with the limitation on the Council’s rule making power precluding it from derogating from the power of a branch to make rules for its own internal management, the Court drew a distinction between a Council-made rule applying to all branches, and a rule singling out a particular branch. The former was within power and the latter without. The Council’s rules were of both varieties, and only those that applied generally to elections of all branches were valid.
  9. The present case does not concern the rule making power of the National Council. However, if the National Council cannot make a rule which singles out a particular branch, it ought to follow that the National Executive cannot make binding resolutions to that effect. Resolution 4 deals exclusively with the Branch. It is expressed to forbid the use of “funds of the HSU” to investigate the claims other than an investigation under resolution 3. The words “funds of the HSU” are doubtless intended to cover funds of the Branch, because there is no need for union funds alone to be mentioned since they are under union control anyway. Resolution 4 is thus antithetical to Rule 60(b) which vests the funds of a branch in the Branch trustees who must deal with them as directed by the Branch Committee.
  10. Further, the National Executive’s resolutions lack any time frame for an investigation. They do not appoint an auditor, but just require the obtaining of quotations as to the cost of an appointment. The enquiries that are authorised by resolution 3 are conditional on an appointment. Until an auditor is appointed, there can be no enquiry. On appointment, the enquiry is limited to the preliminary question whether the allegations should be investigated. If the auditor thinks there should be an investigation, he or she must report to the National Executive about the likely cost. The resolution takes the matter no further. It is silent as to the next step. Resolution 4 requires any allegations to be put to the auditor, when appointed. The auditor is to report to the Executive as to whether the allegations should be investigated and the likely cost. Again the resolution takes the matter no further. Altogether, the resolutions have the hallmarks of a process which is not designed to get anywhere.
  11. It is not appropriate on this application for interim relief to rule on the validity of resolution 4. All I say is that there is a serious question as to its validity. That, together with the form of resolutions 3 and 4 (see [51]), and their potential for the encouragement of further litigation and attendant delay in undertaking an investigation, causes me to attach little significance to the resolutions on the balance of convenience or for any other purpose. It follows that there is serious doubt as to whether resolution 4 is a “proper direction” for the purposes of Rule 49(a).
  12. In my view the balance of convenience favours the grant of interim relief. Not only does the applicant have a strong case, which is relevant to the balance (see Bradto at [39]), but it is in the interests of the members of the Branch, and thus the Union as a whole, that the various allegations are investigated promptly, so that the Branch Committee can resume functioning properly and efficiently. The relief will thus further the resolution within the Branch of the matter the subject of the application. Cf s 164(4). The balance of convenience matters relied on by the respondent, canvassed at [30] to [52] come nowhere near outweighing those referred to above.

UNDERTAKING AS TO DAMAGES

  1. It remains to deal with the respondent’s submission that if relief is to be granted, it should be upon the usual undertaking by the applicant. I have referred at [15] to Gray J’s observation that it is rare for an undertaking to be required in relation to interim orders under s 164. Mr Hatcher, for the respondent, said it was not usual for an applicant to have to give an undertaking. Neither he nor Mr Borenstein SC knew of any case in which one had been required. The applicant seeks to derive no economic profit from the proceeding. She is but one member of the Branch Committee who, in the interests of the Branch, wants an investigation to take place into unsettling allegations of financial malpractice. In the circumstances I do not require her to give an undertaking. I will make the orders sought.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.

Associate:


Dated: 5 February 2009


Counsel for the Applicant:
H Borenstein SC and WL Friend


Solicitors for the Applicant:
Macpherson & Kelley


Counsel for the Respondent:
A Hatcher


Solicitors for the Respondent:
Pearce Webster Dugdales


Counsel for the Intervener:
D Langmead


Solicitors for the Intervener:
Slater & Gordon

Date of Hearing:
28 January 2009


Date of Judgment:
5 February 2009

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