| OO CATCHWORDS Industrial Law - Registered Organization - Rules - Election of officers - commencement of elections ~ under what rules elections conducted ~ interpretation of rules ~ implie'd resignation from office by subsequent nomination for office - Conciliation and Arbitration Act 1904 ~ ss.141 and 133(1) (db) NOEL COX -v- G.A. ROBERTSON & ORS (No.17 of 1980) Coram: Evatt J. ', 2S July 1980 Sydney IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY INDUSTRIAL DIVISION No.17 of 1980 eee ws BETWEEN: NOEL COX Applicant AND: G.A. ROBERTSON, B.J. WILLINGALE, JOHN MILLER, W.J. PATTERSON, W.J. STANNARD, A.5. HURRELL, P. FOWLER, M.F. MATTHEWS, D.V. COMBER, D. MCCLURE, A. DENT, G. GRIFFITHS, H. DENGATE, . A.G. SCHURR, J.C. EASTMAN, R. DALLEMOLLE, R.H. SINCLAIR, E. SULLIVAN, K.J. STAPLETON, K. HOPKINS, A.J. WHITE AND The Australian Federated Union of Locomotive Enginemen Respondents ORDER JUDGE MAKING ORDER: EVATT J. DATE OF ORDER: 4 July 1980 WHERE MADE: SYDNEY THE THE COURT ORDERS THAT:(1)The personal respondents and each of them perform and observe the rules of the Australian Federated Union of Locomotive Enginemen by taking steps to call for nominations for the offices of New South Wales Divisional Secretary and New South Wales Assistant Divisional Secretary of the Australian Federated Union of Locomotive Enginemen, and by conducting a ballot for those two offices so that the said ballot can be declared at or about the expiration of the three year term of office of the present occupants of the respective offices. COURT DIRECTS: (2)The first named respondent Mr Robertson the New South Wales Divisional returning officer to advertise in accordance with the rules of the organization the calling of nominations for the two offices, nominations to be accepted from 9 a.m. 11 July 1980 and closing at 4 p.m. 13 October 1980 and that should a ballot be required for the filling of either office such ballot be conducted with the current election for the filling of the other offices and positions within the Division. we/2e- -2- THE COURT ORDERS THAT:(3) The application filed by the first named respondent dated 2 July 1980 and filed herein be dismissed. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. 17 of 1980 INDUSTRIAL DIVISION IN THE MATTER of the Conciliation and Arbitration Act, 1904 IN THE MATTER of an application under Section 141 of the said Act. BETWEEN: NOEL COX . Applicant AND: G.A. ROBERTSON, B.J. WILLINGALE, JOHN MILLER, W.J. PATTERSON, W.J. STANNARD, A.S. HURRELL, BP. FOWLER, M.F. MATTHEWS, D.V. COMBER, D. MCCLURE, A. DENT, G. GRIFFITHS, H. DENGATE, A.G. SCHURR, J.C. EASTMAN, R. DALLEMOLLE, R.H. SINCLAIR, E. SULLIVAN, K.J. STAPLETON, K. HOPKINS AND A.J. WHITE Respondents CORAM: EVATT J. 15 July 1980 REASONS FOR JUDGMENT This 1s the return of a rule to show cause(18 June 1980) granted to Noel Cox a member of the Australian Federated Union of Locomotive Enginemen (the organization), an organization of employees registered under the Conciliation and Arbitration Act 1904 (the Act) seeking orders pursuant to s.141 of the Act that the personal respondents perform and observe the rules of the organization by taking steps to call for nominations for the filling of the offices of the New South Wales Divisional Secretary and the New South --/2.. Wales Assistant Divisional Secretary of the organization and by conducting a ballot for those offices so that the said ballot can be declared at the expiration of the three year term of office of the present occupants of those offices. The second named respondent Mr B.J. Willingale and the third named respondent John Miller are the occupants of the respective offices. Both were declared elected to their respective offices in late November 1977. The first named respondent G.A. Robertson 1s the returning officer of the New South Wales Division of the organization. He is presently conducting elections pursuant to the rules of the organization for the filling of all offices of that division oth®r than the offices of Divisional Secretary and Assistant Divisional Secretary. The remaining personal respondents are the remaining officers of the Division, the members of the New South Wales Executive Council and Divisional Councillors. As it was possible that the validity of certain rules of the organization at certain relevant times could be challenged during the hearing of the matter the Court, at a directions hearing, had ordered that the organization be added as a respondent to the proceedings. The Court has had the advantage of hearing submissions by Mr D. Ryan counsel for the organization. It was the applicant's contention that the term of office for both the Divisional Secretary and Assistant Divisional Secretary elected 1n November 1977 was three years and that an election for such offices should be conducted in accordance with the rules of the organization so that the result of such election would be known about the end of November 1980. It was clear however that the returning officer, Mr Robertson, was of the opinion when calling for nominations for the filling of the offices and positions within the Division that the respective offices held by Mr Willingale and Mr Miller did not become vacant in 1980. The chronology of amendments to the Act and to the rules of the organization requires consideration. Prior to 1972 r.23(1) and r.25(1) of the federal rules of the organization provided for the appointment of Divisional Managers and Assistant Divisional Managers during the pleasure of Divisional bodies of the organization. In June 1965 Mr Willingale, as the claimant in matters B. No.16, 17 and 18 of 1965 was granted orders nisi by a Judge of the Commonwealth Industrial Court against the organization and its officials both under s.140 and s.141 of the Act in which challenges were made to various federal rules of the organization including the said federal rr.23(1) and 25(1) together with challenges to the New South Wales Divisional rules as then registered under the Act. A perusal of the papers in those matters shows that 1t was then claimed ~/4.. that the registered Divisional rules had not been amended since 1929 although amendments had been adopted over the years by the Divisional Council or Conference. Apparently such amendments had been registered only with the State Industrial Commission and not with the Commonwealth Industrial Registrar. Subsequently the three matters were stood over generally with liberty to restore on seven days notice, the parties indicating that they had entered into an agreement whereby (inter alia) an election was to be held for all positions in the New South Wales Division and that such election was to be declared on the twenty-seventh day of November 1965. Mr Willingale was the successful candidate for the office of New South Wales Divisional Manager and was declared elected thereto on that date. In December 1965 the Commonwealth Industrial Court in Porter -v- Federated Union of Locomotive Enginemen(B No.261 of 1965)(1965) 7 F.L.R. 396 determined (inter alia) that r.23(1) under which Mr Willingale was then elected was not contrary to the Act or Regulations made thereunder. Sometime prior to September 1972 the offices of Divisional Manager and Assistant Divisional Manager became known as Divisional Secretary and Assistant Divisional Secretary. In or about September 1972 amendments to federal rr.23(1) and 24(1)(formerly r.25(1)) were adopted by the then rule making body of the organization. The relevant amendment to r.23(1) was 3: "(1)(a) The Divisional Secretary shall be elected by a ballot of the financial members of the Division in manner prescribed by these rules. He shall be and remain a member of the Union. e/Dee The person elected shall hold office for a period of 3 years in his first term of office and thereafter if immediately re-elected to the position of Divisional Secretary for a period of 5 years and shall hold office until his successor is elected in accordance with these rules provided that a Divisional Secretary elected to the position shall be subject to the provisions of the rules as at the time of his election. (b) Candidates for the position of Divisional Secretary must have been a financial member of the Union for the previous 3 years and be financial at the time of his nomination and election. The candidate shall have attended at least 50% of the meetings of his Branch held during the 2 years immediately preceding the closing date for nomination for the position, provided that absence from his branch meeting or meetings due to attendance at other meetings of the Union or otherwise engaged on Union duties, shall be held to have complied with the requirements of this provision. A candidate for the position of Divisional Secretary must have served at least one term of office as an office bearer of the Union. Provided that the provisions of this sub clause shall not have effect until three years from the date of registration of this Rule. (Co) . (A) cece ccc nvcccae bid Rule 24(1) dealing with the Assistant Divisional Secretary was also amended mutatis mutandis. The above rule amendments were lodged for certification by the Registrar in accordance with the Act on or about 27 September 1972. The Registrar's letter indicating that he had certified such amendment in accordance with s.139(4) of the Act was not before the Court but it was agreed between the parties that certification was granted by him on 6 October 1972 and that federal rr.23 and 24 remained unaltered thereafter until 21 July 1977 when certain amendments which are set out later herein were certified. ../6.. In December 1973 the New South Wales Divisional Conference the supreme Divisional governing body carried the following resolution. "Resolution No. 30 1. That the positions of Divisional Secretary and Assistant Divisional Secretary be subject to re-election in conjunction with the next Divisional Council election. 2. That the present officers holding the positions of Divisional Secretary and Assistant Divisional Secretary of the New South Wales Division are to continue to hold office until the result of the baIlot is declared. 3. In the event of any legal challenge or other delay to any ballot connected with the re-election the present officers are to continue to hold office until the challenge is dismissed or until the result of any further ballot is declared. Be cece ee eeee u The "next Divisional Council election" referred to in the first paragraph of the resolution was due to be held in 1974, The 1974 elections for the filling of the offices of Divisional Secretary and Assistant Divisional Secretary resulted in Mr Willingale and the applicant Mr Cox being elected to the respective offices. In 1977 elections were again held for the filling of those two offices. Mr Willingale was re-elected Divisional Secretary whilst Mr Miller was elected Assistant Divisional Secretary. Details of the steps in that election are referred to later herein. By s.12 of Act No.64 of 1976,s.133 of the Act was amended by 1nserting(inter alia) a new paragraph (db) -+/7.- to sub-section (1) of the section which reads: "(db) shall not permit a person to be elected to hold an office within the association er organization for a period exceeding 4 years without being re-elected; " Such amending Act inserted a new sub-section (4c) into the section whereby an organization was allowed a period of 12 months after the commencement of s.12 of the amending Act to bring its rules into conformity with the requirements of paragraph (db) of s.133(1). By Proclamation printed in Australian Government Gazette numbered S121 dated 8 July 1976 that date was fixed as the day on which s.12 was tecome into operation. Accordingly organizations had a period expiring 8 July 1977 within which to bring the1r rules into conformity with the requirements of s.133(1)(db). On 30 May 1977 the organization filed in the office of the Industrial Registrar particulars of an alteration to certain of its rules including federal rr.23 and 24 together with a statutory declaration dated 30 May 1977 by Mr Moorhead as General Secretary of the organization. Such declaration discloses that such rule amendments lodged on 30 May 1977 were adopted by a duly constituted Federal Council meeting of the organization held on 20 May 1977. On 21 July 1977 the Industrial Registrar issued his certificate pursuant to s.139(4) in respect of such amendments. Accordingly the amendments to federal rr.23 and 24 became effective on 21 July 1977 and have remained so up until the present time. Federal r.23(1)(a) reads: "Rule 23 (1) (a) The Divisional Secretary shall be elected by a ballot of the financial members of the Division in manner prescribed by these rules. He shall be and remain a member of the Union. The person elected shall hold office for a period of four years or until his successor is elected 1n accordance with --/8.. -8- these rules, provided that a Divisional Secretary elected to the position shall be subject to the provisions of the rules as at the time of his election. " Federal r.24(1)(a) dealing with the Assistant Divisional Secretary was also then amended mutatis mutandis. Divisional Rules For Many years prior to May 1977 the Federal rules of the organization, which were called the "Uniform" rules of the organization provided by r.5 that the organization may divide itself into Divisions for the Commonwealth railway system and each State railway system together with any further Division created by the Australian Council, the supreme governing body of the organization. Further, such rule provided that the business of each Division shall be ruled and conducted by a Divisional Conference and a Divisional Council. By federal r.5(3) Divisions may extend themselves into branches and sub-branches. Federal r.18 which deals with government of Divisions at all relevant times has provided that: "(1) Any Divisional Council subject to the Rules of the Union and resolutions and decisions of the Australian Council and/or Committee of Management and of ats Divisional Conference, shall manage and superintend the affairs of its Division and shall perform all duties allotted to it by the Rules of the Australian Council and shall protect all funds. ........ (3) Each Division shall make schedules to these Rules, to regulate and control the working and management of itself and its members and of its local branches and/or sub-branches as such Divisions may deem expedient, such schedules being not inconsistent with the Riles of the Union. and (5)Every Divisional Council or Divisional Conference shall, subject to the rules of the Union and resolutions and decisions of the Australian Convention and/or Council and/or Committee of Management, have the following powers in Divisional, Branch or Sub-Branch matters: /9 (c) The election or removal of any officer or employee. " On 15 April 1977 the organization by its then General-Secretary Mr Moorhead filed in the office of the Industrial Registrar particulars of an alteration to the New South Wales Divisional Schedule to its Federal Uniform rules being the deletion of the existing schedule and the insertion of a new schedule together with a statutory declaration by Mr Moorhead. The Industrial Registrar certified the said amendments pursuant to s.139(4) of the Act on 4 May 1977. All relevant Divisional rules have since then remained the same up to the present time. New South Wales Divisional r.4 as certified by the Industrial Registrar on 4 May 1977 provides that the officers of the Division are the Divisional President, Divisional Secretary, Assistant Divisional Secretary, Divisional Vice-President, Divisional Treasurer and three Executive Councillors. These officers form the Divisional Committee of Management. The composition of the Divisional Council is provided for in Davisional r.6(1). It consists of the named officers and twelve other members. The sub- rule then provides that the Divisional Officers shall be elected triennially. Sub-rule 6(4) provides that all Officers and members of the Divisional Council shall be elected for a term of three years to commence from the Divisional returning officer's official declaration of each Divisional ballot. Further sub-rule (1) of r.7, which deals with the mode of election of the Divisional Council, provides that the officers of the Division together with the Division's Australian Councillors shall be elected --/10.. ~10- tr1ennially by ballot of financial members and shall hold office following the official declaration of each ballot for a term of three years. Nominations for the 1977 New South Wales Divisional elections were first called by notice dated 9 May 1977. Such notice indicated that nominations for the filling of the various Divisional offices and positions including the office of Divisional Secretary and Assistant Divisional Secretary would be accepted commencing at 8 a.m. on Wednesday 1 June 1977 and closing at 5 p.m. on 22 July 1977 and that the election would be by"ballot of the financial members of the New South Wales Division of the organization subject to and in accordance with the existing registered Federal Uniform rules and the New South Wales Divisional Schedule thereto." On 4 July 1980 the Court ordered that the personal respondents and each of them perform and observe the rules of the Australian Federated Union of Locomotive Enginemen by taking steps to call for nominations for the offices of New South Wales Divisional Secretary and New South Wales Assistant Divisional Secretary of the Australian Federated Union of Locomotive Enginemen, and by conducting a ballot for those two offices so that the said ballot can be declared at or about the expiration of the three year term of office of the present occupants of the respective offices. The Court then directed the first named respondent Mr Robertson the New South Wales Divisional returning officer to advertise an accordance with the rules of the organization the calling ) .-/1l.. -~ill- of nominations for the two offices, nominations to be accepted from 9 a.m. 11 July 1980 and closing at 4 p.m. 13 October 1980 and that should a ballot be required for the filling of either office such ballot be conducted with the current election for the filling of the other offices and positions within the Division. The Court then indicated that it would publish its reasons for judgment at a later date. Both Mr J. Shaw Counsel for the claimant and Mr Ryan submitted that the material date governing the 1977 New South Wales Divisional elections was 9 May 1977, the date when nominations for the various positions were first called. Accordingly the election was to be conducted in accordance with the relevant rules of the organization ancluding relevant Divisional rules as certified at that date (see Egan -v- Maher & Ors. (No.1)(1978) 35 F.L.R. 197 @ 229-230, Beeson -v- Blayney (1966) 8 F.L.R. 292, Friend -v- Barnes (1969) 15 F.L.R. 184 @ 201. Consequently the terms of office for the persons then elected as the Divisional Secretary and Assistant Divisional Secretary were not four years as provided in rr.23(1) and 24(1) as certified on 21 July 1977 but would be the terms as provided by the earlier federal rules read with the New South Wales Divisional rules. Mr McCarthy who appeared for the respondents other than the organization submitted to the contrary, namely that, ../12.. -~12- as the organization had prior to 8 July 1977 done all it could to bring its federal rr.23 and 24 into conformity with s.133(1)(db), then the Court should in all the circum- stances determine that the terms of office of both the Divisional Secretary and the Assistant Divisional Secretary elected in 1977 should be a term of four years even though those amendments were certified after 9 May 1977. In my view the material date is 9 May 1977 and it was the certified rules of the organization and of the New South Wales Division as at that date which governed the election assuming such certified rules were then not in disconformity with the Act or the Regulations made thereunder and remained valid rules during the currency of the election. The then certified federal rules provided for what may be conveniently termed a three year first term and a five year second term with a proviso whilst certified Divisional rules provided for a three year term only. This being so, 1t 1s clear that the third named respondent Mr Miller who was elected for his first term as the Divisional Assistant Secretary in 1977 was then elected for a period of three years and the claimant is entitled to an order as asked in regard to that office. This leaves for determination the question whether Mr Willingale who was undoubtedly re-elected as the Divisional Secretary in 1977 for an immediate second term within the --/13.. -13- meaning of the then federal r.23(1) is entitled to the five year term of office as provided by that rule or whether, on a proper reading of the rules, his term of office was three years as provided for in the then certified Divisional rules. Further, if the proper construction of r.23(1) is that he is prima facie entitled to the five year term, then a determination will be required to be made as to whether in the circumstances then prevailing such five year period was in conformity with the Act and the Regulations. Mr Shaw in support of his argument that Mr Willingale's then term of office was three years submitted that on a proper reading of the rules there was no inconsistency between federal rr.23(1) and the Divisional rules. He argued that the concluding words of federal r.23(1) which read "provided that a Divisional Secretary elected to the position shall be subject to the provisions of the rules as at the time of his election" ought to be read as meaning "provided that a Divisional Secretary elected to the position shall be subject to the provisions of his Divisional rules as at the time of his election." He argued that the proviso expressly contemplates the possibility of a different term being provided for by the rules of a particular Divzsion and that what federal r.23(1) was essentially doing was to provide a basic position only, allowing the Divisions to go their own way consistent with the Act and the Regulations and provide a term of office which best suited the particular Division. The federal rules granted power to the Divisions to make their ewn rules including rules providing for the election or ~-/14.. -~14- removal of any officer and rules regulating and controlling the working and management of the Division and its members. In my view this is the purpose of the proviso in question. The Court in McLeish -v- Kane(1978) 36 F.L.R. 80 @ 86 said of the particular rules which were being considered in that case "The rules are not easy to interpret and no doubt have grown over the years with changing emphasis on particular provisions. We think, however, that if such an interpretation 1s fairly open they should be construed to give a rule a meaning rather than holding it meaningless with no effect at all." In my view the same reasoning also applies to part of a rule. The particular rule provides a prescription but with a proviso which allows some other and quite different situation to prevail. If there were no provision in the New South Wales Divisional rules providing a term of office for that office the position would be clear enough. A Divisional Secretary being re-elected would then be elected for a five year term. But where the certified rules of that Division in at least three of its Divisional rules stipulate that the term of office is to be a three year term then the proviso can properly be applied and ought properly be applied in order to achieve the result that the New South Wales Divisional rules in regard to that offive have operation. Further federal r.18(3) uses the double negative. It provides that the rules in Divisional Schedules are to be "not inconsistent with the rules of the union". This, in my view, permits Divisional rules which are in a general sense compatible with federal rules ~-/15.. -15- to operate. It must be remembered that the relevant Divisional rules were adopted on 13 April 1977 and two days later lodged by Mr Moorhead the General Secretary of the organization with the Industrial Registrar for certification. Mr Moorhead on that day filed a statutory declaration in the usual form as required by the Regulations. Some five weeks later the federal rule-making body adopted amendments to the federal rules so as to conform with s.133(1)(db) by providing for a four year period+:in r.23(1) but with a proviso in exactly the same terms as the proviso under consideration. These amendments to the federal and Divisional rules were of course adopted by different bodies within the organization but the two rule-making bodies are inter-connected(see federal rr.7 and 54(2)) and it was the General Secretary of the organization who filed the Divisional rule amendments. The organization should have been aware shortly after 8 July 1976 that its then federal rr.23(1) and 24(1) did not conform with s.133(1)(db) even though such disconformity was then permitted to continue for a period of twelve months. Any rule providing for a period of office in excess of four years would after 8 July 1977 be contrary to s.140(1) of the Act (cf. The Queen -v- Dunphy & Ors. Ex parte Maynes & Ors. (1977-78) 139 C.L.R. 482 @ 491). Accordingly it is to be anferred that the amendment made to federal rr.23(1) and 24(1) providing for a term of office of four years made by the organization in May 1977 would not have been made without due consideration. The organization at that time had had months during which to consider the problem and -./16.. - 16 - its effect upon the elections for the filling of offices and poSitions in the New South Wales Division which were known to be due to be held during 1977, and with the knowledge that the likelihood was that nominations in that election were to be called before 8 July 1977, the last day on which the rules could be brought into conformity with the Act. "'urther, the construction of the proviso to federal r.23(1) Which the Court favours is supported in my view when one compares federal rr.23(1) and 12 as certified immediately before 21 July 1977. Sub-rule (1) of federal r.12 which provided for the election of the General Secretary of the organization contains no proviso and then read: "Rule 12 (1) The General Secretary shall be elected by ballot of the financial members of the Union in manner prescribed by these Rules every three years, and shall hold office until his successor is elected in accordance with these Rules. He shall be and remain a member of the Union." When the federal organization adopted amendments to federal rr.23(1) and 24(1) in May 1977 in order for such rules to conform with s.133(1)(db) it also amended r.12 by deleting sub-r(1) and substituting a new r.12(1)(a) as follows :- "Rule 12 (1)(a) The General Secretary shall be elected by ballot of the financial members of the Union in manner prescribed by these Rules. The person elected shall hold office for a period of 4 years or until his successor is elected in accordance with these Rules. He shall be and remain a member of the Union. " --17/.. 2. cross-undertahing as to damages. The undertaking was given and the court made the follcwing order : "upaYr the Defendant by its Counsel undertaking to the Court that pendina the hearing and determsnation of this action or until further order the Defendant will not by itself its servents or aqents or otherwise howsoever manufactuce distribute offer for sale supply or sell or cause to be manufactured distributed offered for sale supplied or sold in Australia any items of apparel or othus goods under or bearing or 1n relation to representations of the Marlboro red cigarette packet includina the Marlboro label trade mark either or both of the red rooftop desi3n and the trade mark 'Marlboro' and the trade name 'The Marlboro Company' variously referred to in the Statement of Claim herein or any one or more of them or any other nare or mark deceptively similar to them or any of them AMD UPON the secondnamed Plaintiff by its Counsel undertaking to abide by an order the Court may make as to damages in case the Court shall hereafter be of opinion that the Defendant shall have sustained any damade by reason of this Order that the Plaintiffs ought to pay THIS COURT DOTH ORDER:- ~~ l. THAT the Plaintiffs' Summons for injunctions then datéd the 6th June 1979 be otherwise adjourned sine die. 2. THAT the costs of all parties of and incidental to this Application shall be costs in the cause, 3. THAT each party hereto shall have liberty to appiy generally and further herein as it may be advised. 4, THAT the Defendants Cunmons for Directions dated the 10th September 1979 be adjourned sine die with lrberty to any party to bring the same on upon 48 hours prior notice to the other party." After the trial of the action had been April that it woule move on 10 April for an or@er that t undertaking qiven by 2t be varied by the adjition of the flxe to commence on 5 say 1960, the defendant aave necice dated 2 he following proviso (hereinafter referred to as "the provisc') Qu "tPPOVIDED ALMAYS that concauct cf a professia public opinion surves t aid of the defenee tc ° herein the ae fordent : ie sell ian Australie items of at ot goeds uncer or bearing to representations of the Marlbore read cisare*te packet anclydine the Marlbore labet: trace rer either or beth of the red rooetton desica arc the trade mark 'Marltore' and the trade name "The Marlbcro Comnany' variously referrea to in the Statement of Cliam herein or ary ore or more of them or any cther mark or rark deceptively similar to them or any of ther. The defendant's moticn was based upon the receipt by it of an opinion from a market rescarch conan, with which its legal advisers agreed, that it was essential to its defence that a survey be carried out involving the display and sale at retail outlets of wearing apparel bearing the marks and name which the plaintiffs' action was designed to protect and which the defendant had undertaken not to use, After counsel for the plaintiffs had submatted that the court had no jurisdiction to make an order varying the defendant's undertaking, the latter was given leave to ct S amend its motion to seek a release from its undertaking ar¢ offer a new undertaking, subject to the provise. The court released the defendant from its cerlier undertaking and in its place accepted an undertaking subject to the proviso, birt limited to the offer for sale in Australia at any ore time of not more than 240 units of the apparel or goods and to the sale an Australia in total of not more than 120 units, 2*n applaic2tiorn by the plaintiff for a stay of this orcer pendiny appeal vas refused. ft We are dealing here with the exercise cf a udicicl discretion. The principles governing the consideration by a court of appeal of such an exercise of discretion are vell settled. As was said in the judgment of the Hagh Court in Mace v. Murray (1955) 92 C.L.R. 370 at p. 378 :- "The pranciples to bo appiyed in sven a case are not an doubt. 'the order af the learned pramazs judge was made in the exercise of a Ciscreticnary judgment; and it has keer repeacedly laid don by this Court, following decisions of the highest authority in England, that in such a case a court cf appeal is rot justified in anterfering with the decision aprealed from unless 1t reaches a clear conclusion that by reason of some error, whether of fact or of law, the primary judge not only has taken a view different from that which the judges of the court of appeal would have taken if they had been in his place, but has failed properly to exercise the discretion committed to him : House v. The King (1936) 55 C.L.R. 499, at pp. 504, 505; Lovell v. Lovell (1950) 81 C.L.R. 513, at pp. 518, 520, 526, 528, 532-534; Pearlow v. Pearlcew (1953) 90 C.L.R. 70, at pp. 76, 77; Paterson v. Paterson (1953) 89 C.L.R. 212, at pp. 216-224." In House v. The King (1936) 55 C.L.R. 499 at pp. 504-5 Pixon, Evatt and McTiernan JJ. saac :- "The manner 1n which an appeal against an exercise of discretion should be determined is governed Ey establishei principles. It is not enough that the Judges composing the appellate court consider that, if they had been in the position of the primary juege, they would have taken a ditferent course.It Inust appear that some error has been rade in exercising the discretion. If the judge acts upon a wrong principle, if he allows extranecus or irrelevant matters to guide or affect him, 1f he mistakes the fasts, 1£ he does not take into account some material consideration, then his determinatio:. should be reviewec and tue appellate court nay . exercise its orn discretion in substitution for his if it has the materials for doing so." 2/5 uw The Jearned primary judee, 7 an ex'empore judgment, said that 1t seemed to him that "ir the circumscercee oe Oo un which this undertaking was civen and having regard to + terms of the order in which 1t wes incorporated, the ceu vt remains 1n control of the continuence er otherwise of the undertaking that was given. the balance of convenience and expressed the opinion thai - ".,...the defendant should be enabled to take reasonable sters to obtain for itself such evidence as it thinks is necessary for its protection, previded tnat havird regard again to the balance of convenience, bY so doing it 1s not likely to do damage to the plaintiff out of all proportion to the benefits to be obtained by obtaining tli. best evidence and evidence optained :n circumstances which will best display tho reaction of the members of the public whose reactions it 1S understood are important in the issues in this case. I have to remember that although Mr. Gillard pressed on me that considerable damave right be done to the plaintiffs' goodwill, there 1s no evidence to that effect. There 15 no affidavit which in@icates to me the class of injury to goodwill which is likely to follow from the class of conductvhich 1s foreshadowed in the affidavit of Mr. Lew. Looking at the matter for myself, again with such knowledge as 1 have from the previous proceedings and the notorious tact that the plaintiff is a very well established organization, unlikely to sutfer severely in its goodwill by three or four weeks activity in selling the defendant's goods in tire Manner which 1s indicated in the affidavir, I think on the balance of convenience tnat I should vary the uncertaking and, if necyssarv, do so by permitting an arendment of the motion to seek a release of the uncertakine wd tale a new undertaking in tne form of the old undertaking as varied. The var1ition will be a very lzmitede var inasmuch as 1t will net go past 5 May. trial coes not come on, if it is desire more after that Gate, sove otner procee will have to ve taken to seck sarctio.. therefor, -./6 His Honour then went cn .o consider 6. In my respectful opinion, his Honour failed properly to exercise the discretion committed to him. It is true that the original undertaking was clothed in the customary language of an interlocutory undertaking or injunction, in that it was expressed to be "pending the hearing and determination of this action or until further order", but that did not reduce the weight proper to be given to the fact that on the fifth day of the hearing, before the case for the plaintiffs had been completed, the defendant proffered an undertaking in the terms of the plaintiff's motion. The defendant by its own undertaking thus precluded itself from taking what his Honour later held to be reasonable steps to obtain evidence. In my respectful opinion, his Honour acted on a wrong principle, in approacning the question whether a defendant in such a case should be released from its undertaking on the balance of convenience, starting with the proposition that the defendant should be enabled to take such steps to obtain evidence for itself as it thought necessary for its protection, provided that by sa doing it is not likely to do damage to the plaintiffs out of all proportion to the benefits to be obtained by it, The proper starting point, in my opinion, was that the defendant, at a late stage of a long hearing, with counsel's advice, had chosen to give the undertaking, and that the parties had proceeded on the faith of that undertaking from September 1979 to April 1980, in respect of a matter fixed for trial on 5 May, 1980. In my opinion, it was for the defendant to show cause for being released from its undertaking. The mere receipt of advice from a market research company, however much it commended itself to the defendant's legal advisers, did not amount to such cause. There were NO circumstances shown tc Justify the overturning of the basis upon which the defendanc had conceded that it was fitting for the parties to proceed, and to permit it to do the acts which were relied upon as the basis of the plaintiff's claim. There had been no judicial pronouncement on the prima facie strength of the plaintiffs' claims in retation to those acts, but 1t was the action of & .f7 7. defendant in proffering the original undertaking which effectively cut shert the proceedings launched by the laintiffs to obtain such a pronouncement. P In my opinion, this 1S a case in which the appcllate court may exercise its own discretion in substitution for that of the learned primary Judge. For the reasons earlier given, T am of opinion that the defendant's motion should have been dismissed. JI would propose the following orde1s 1. that the judament and order appealed from be set aside and in lieu thereof it be ordered that the respondent's motion be dismissed; 2. that the stay of proceedings aranted on 28 April 1980 ain respect of the order appealed from cease to operate upon the pronouncement of the judgment of the Court on this appeal; 3. that the defendant pay the plaintiffs' costs of the defendant's motion and of this appeal. poeetehoe CD parermn od ber IN THE FEDERAL COURT OF AUSTRALIA VG No. 14 of 1980 VICTORIA DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PHILIP MORRIS INCORPORATED Appellants and PHILIP MORRIS LIMITED (Plaintiffs) and ADAM P. BROWN MALE FASHIONS PTY. LTD. Respondent (Defendant) NORTHROP J. REASONS FOR JUDGMENT 15 JULY 1980. The action in which this appeal is taken was commenced by the plaintiffs by writ dated 6 June 1979 and under the Federal Court of Australia Rules then in operation was instituted in accordance with the High Court Rules. On 1 August 1979 the Federal Court Rules came into operation but no order or direction having been made under Order 64 of those Rules, the action is to be continued under the High Court Rules. The plaintiffs' claims, as appearing from the statement of claim endorsed on the writ, are that the defendant - l. Being a corporation under the Trade Practices Act 1974, as amended, hereinafter called "the Act", in trade or commerce has engaged and is continuing to engage in conduct that 1s misleading or deceptive or is likely to mislead or deceive in contravention of s.52 of the Act. 2. Being a corporation in trade or commerce in connection with the supply of goods has represented and is representing falsely - (a) that the goods have the sponsorship or approval of the plaintiffs; (b) that the defendant has the sponsorship, approval or 1s affiliated with the plaintiffs in contravention of s.53(c) and (d) of the Act. 3. By engaging in the conduct referred to has committed the tort of passing off. The goods concerned comprise various items of wearing apparel which have attached to them labels and badges being marks alleged to be identical with or deceptively similar to the name and trade mark "Marlboro" and the red roof-top design, being marks and labels of which the first-named plaintiff 1s the registered proprietor under the Trade Marks Act 1955 (Commonwealth) in respect of cigarettes and in respect of men's and boys' dressSing gowns, pyjamas and other clothing. The second-named plaintiff, which carries on business under the trade name "The Marlboro Company" is a licensed user of the trade mark in respect of cigarettes. The action is for damages, injunctions and other relief and is brought in the Federal Court by virtue of sections 80, 82 and 86 of the Act, and sections 19, 22 and 32 of the Federal Court of Australia Act 1976, as amended. The injunctions as sought in the statement of claim are - "A. Injunctions (including interim and inter- locutory injunctions) restraining the Defendant by itself its servants or agents or otherwise howsoever - (1) from manufacturing distributing offering for sale supplying or selling or causing to be manufactured distributed offered for sale supplied or sold in Australia any items of apparel or other goods under or bearing or in relation to the trade " marks (as defined 1n paragraph 9 hereof) or any one or more of them or any other name or mark deceptively similar to the said trade marks or any of them; (2) from engaging in the course of the business of the manufacture distribution supply or sale of any items of apparel in conduct that 1s misleading or deceptive or likely to mislead or deceive; (3) from representing in the course of the aforesaid business and in connection with the supply or possible supply of any items of apparel that any such apparel] has the sponsor- ship or approval of the Plaintiffs or either of them and from representing that the Defendant has the sponsorship or approval of or 1s affiliated with the Plaintiffs or either of them; (4) from passing off or enabling to be passed off any items of apparel or other goods not of the manufacture or merchandise of or connected in the course of trade with the Plaintiffs or either of them as and for goods of or connected in the course of trade with the Plaintiffs or either of them; (5) from passing off or enabling to be passed off the business or any business of the Defendant as and for a business connected or associated with or approved by the Plaintiffs or either of them." By summons dated 6 June 1979 the plaintiffs sought interlocutory injunctions restraining the defendant until the hearing and determination of the action or further order from engaging in any of the conduct described in paragraphs A(1) to (5), as set out above. The application for the interlocutory injunctions came on for hearing before the Federal Court constituted by a single judge on 11 September 1979. At the hearing the plaintiffs and the defendant were each represented by senior counsel. The hearing extended over four days during which evidence was given both orally and by affidavit. The plaintiffs' case had not been completed when, on the fifth day of the hearing, senior counsel for the defendant, after explaining the commercial situation as the defendant saw 1t, said - "These are the commercial considerations which have ultimately been decided to be very relevant on the question of the future conduct of this action and which are relevant in relation to "the matter of convenience. It is, with the matter to which I have referred, being considered that it seemed to us that the best way to resolve this matter now and to try and get the matter on as soon as possible so that a final hearing could be reached, so that we can have the matter resolved without necessarily having a forestalling of the commercial course of conduct which could well start now if we succeed at this stage, would be to say to the court that at this stage in the laght of the issues which have been raised and for the reasons which I have given, and in an attempt to resolve the matter speedily, the defendant 1s prepared, if there be an appropriate cross undertaking as to damages, to give an undertaking to the court in the terms of paragraph 1 of the summons dated 6 June 1979." Subsequently he said - "We submit on that basis what should now happen is if my learned friends are disposed to give the undertakings as to damages, and my learned friends stated in the evidence they were prepared to do that, we would give that open undertaking to the court, and the managing director of the defendant 1s in court. It could be made a matter of court record and we would then submit the appropriate order to be made is that the costs of the application be reserved or, alternatively, made costs in the cause. We would seek within the next week or so, if my learned friends are not in a position to proceed today, to bring on our summons for directions on notice to expedite the final trial of the matter." In response, senior counsel for the plaintiffs said - "As far as the plaintiffs are concerned, they would prefer an injunction, but subject to the question of costs we would be prepared to accept an under- taking to the court embodied into the court order and to give a cross-undertaking as to damages by the company in this jurisdiction of the second Plaintiff. The plaintiffs are prepared to accept an undertaking in the precise terms of paragraph 1({1) of the summons, emobdied of course in the court order, an undertaking to the court, and that the summons for injunction be otherwise adjourned sine die with liberty to apply, but in the circumstances of this matter it 1s our submission that the proper order as to costs is that the plaintiffs costs be made costs in the cause." The court then heard submissions limited to the 1ssue of costs, Senior counsel for the defendant gave to the court an undertaking on behalf of his client in the form of paragraph A({l). An order as follows was made on 17 September 1979 - "UPON the Defendant by its Counsel undertaking to the Court that pending the hearing and determination of this action or until further order the Defendant will not by itself its servants or agents or otherwise howsoever manufacture distribute offer for sale supply or sell or cause to be manufactured distributed offered for sale supplied or sold in Australia any items of apparel or other goods under or bearing or in relation to representations of the Marlboro red cigarette packet including the Marlboro label trade mark either or both of the red rooftop design and the trade mark 'Marlboro' and the trade name 'The Marlboro Company' variously referred to in the Statement of Claim herein or any one or more of them or any other name or mark deceptively similar to them or any of them AND UPON the second-named Plaintiff by its Counsel undertaking to abide by any Order the Court may make as to damages in case the Court shall hereafter be of opinion that the Defendant shall have sustained any damage by reason of this Order that the Plaintiffs ought to pay THIS COURT DOTH ORDER:- 1. THAT the Plaintiffs' Summons for Injunctions dated 6th June 1979 be otherwise adjourned sine die. 2. THAT the costs of all parties of and incidental to this Application shall be costs in the cause. 3. THAT each party hereto shall have liberty to apply generally and further herein as 1t may be advised. 4. THAT the Defendants Summons for Directions dated the 10th September 1979 be adjourned sine die with liberty to any party to bring the same on upon 48 hours prior notice to the other party." By order made on 12 November 1979, the Federal Court constituted by another single judge, gave directions for the future conduct of the action. The trial of the action was fixed to commence on 31 March 1980 and directions were given that evidence of certain matters relating to the opinion, expression or state of mind of members of the public in Australia in relation to the use of the ~17- This amendment to r.12 was also certified by the Industrial Registrar on 21 July 1977 and is still in force. The absence of the proviso in r.12(1) in either of its forms is in my view explained by reason of the fact that the proviso would be quite unnecessary and redundant in respect of a purely federal office where there could be no Divisional rules having application. If, as was submitted by Mr Ryan, the proviso in rr.23(1) and 24(1) was merely to prevent a term of office being cut down or expanded by some rule change occuring during its currency one would have expected the draftsman to have used the same proviso in r.12. Accordingly it follows that for the reasons given the Court has rejected first, the submissions of Mr Ryan that the only function of the proviso was to prevent a term of office being cut down or expanded by some rule change occuring during its currency and secondly, the submissions of Mr McCarthy that the effect of the proviso was that both Mr Willingale and Mr Cox having been elected to their respective offices in 1965 when the rule provided that they were to hold office during the pleasure of the Divisional Council or Conference were in fact still the holders of such offices. This, 1t was submitted, was because neither had resigned nor had their terms of office been terminated by the Divisional Council or Conference. .-/18.. ' x ay AUSTRALIA UF Ma _Sfustice Northrop 4 Onthr Chiatehato ae Agee fterten Cat for a Yrrovate JUDGES' CHAMBERS FEDERAL COURT OF AUSTRALIA 450 LITTLE BOURKE STREET, MELBOURNE 3000 - 18 - In regard to Mr McCarthy's submission it 1s clear in my opinion that the resolution passed by the Divisional Conference in December 1973 was a decision by that body that terms fp1 both offices were to be terminated in 1974. Further the fact that both Mr Willingale and Mr Cox nominated as candidates for the fillang of the respective offices in 1974 meant that they had then both impliedly resigned from their respective offices (cf. Egan -v- Maher & Ors. (No.2) (1978) 35 F.L.R.- 252). Having determined that there was no inconsistency between the then federal r.21 and New South Wales Divisional rules it 1s unnecessary for a determination to be made, assuming such inconsistency,as to whether the then five year second term proviso was contrary to the provisions of s.140(1) of the Act. Mr Shaw had submitted that such proviso was invalid on two counts. First, that it provided for a term of office which was infinite and lacking in any clear obligation for the office holder to face the electorate at regular interals (cf. Amalgamated Engineering Union (Australian Section) Vol.98 C.A.R. 283, Watson -v- Australian Workers Union 10 F.L.R. 357 @ 361) and secondly, that, on 8 July 1977 when the provisions of s.133(1)(db) became operative, the five year second term proviso, then being in disconformity with the Act became invalid. If such invalidity resulted then federal r.23(1) provided only for a three year term which was not inconsistent with the New South Wales Divisional rules. --/19.. -19 - Finally reference is made to an application dated 2 July 1980 filed by the first named respondent, the Divisional returning officer. Such application asked for four orders upon grounds set out in an affidavit of Mr Robertson sworn 1] July 1980. The application purports to be made under s.141 of the Act. Order 4 r.15(2), (3) and (5) of the Federal Court rules provide that an application under s.141 of the Act shall be by rule to show cause. No such rule was granted to the returning officer. Orders 1 and 2 have been otherwise dealt with in the reasons for judgment herein. Order 4 is not applicable. Order 3 as asked for An the following terms: "Order as to the validity or otherwise of rr.23 and 24 of the federal uniform rules as registered on 21 July 1977" The order nisi granted herein on 18 June 1980 had asked for orders in respect of the invalidity of the current federal rr.23 and 24. At the hearing no challenge was made to these rules by the claimant. The returning officer who was then conducting an election for the filling of offices and positions in the New South Wales Division of the organization other than the offices of Divisional Secretary and Assistant Divisional Secretary was by such application seeking advice as to what would be the terms of office for persons elected to fill the two latter offices at elections held at the end of 1980. On 4 July the Court refused to make orders as asked. The returning officer's notice dated 2 April 1980 calling for nominations for the filling of Divisional offices and positions simply stated that the same were called 1n accordance with the rules of ../20.. ~ 20 - the organization including the Divisional rules. No terms of office were indicated in such notification in respect of any of the offices or positions. Nor is such required under the rules. Similarly, the returning officer can call for nominations for the filling of the two offices in question without having to state the terms of office. Should any member of the organization at some future time wish to challenge the term of office claimed by either future encumbent then that member will be able so to do. Accordingly, the application of Mr Robertson dated 2 July 1980 is dismissed. Tcertity th 4 ¢hoserd +h1e menbh.e.! Narre Apy ews 7 rae - ~~ n 7 LTS Mee et Ge tar a: wef the heatone ioe, ments vustlo? £ YAS ve elu er his Nonour Kole MT bollive -V2ate vated: /S/ 7/9)