Ww CATCHWORDS ' y Industrial Law - Conciliation and Arbitration - Rules of Registered Organizations - Provision for .amendment by Federal Council - Postal ballot of Council members - Relevance of plebiscite provisions - Whether rule - amending provisions oppressive, unreasonable or unjust - Objects of the Conciliation and Arbitration Act - Balance between democratic control and viability of organization - Whether rules provide for control of Federal Council by members of organization - Effect of orders under s.140 of Conciliation and Arbitration Act. Conciliation and Arbitration Act 1904, ss. 2, 132, 139(4), 140, 141. Conciliation and Arbitration Regulations, sub-reg. 115(1) (da) (v) ang (xiv). STEPHEN WRIGHT AND ANOR. v K. McLEOD AND ORS. NSW No. 4 of 1983 CORAM: Bowen C.J., Smithers, Evatt, Northrop and Sheppard JJ. 28 November 1983 Sydney "IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NSW No. 4 of 1983 ) INDUSTRIAL DIVISION ) BETWEEN: STEPHEN WRIGHT and JUDITH MARY WALKER Applicants AND: K. McLEOD, J. ANGUS, P.K. REYNOLDS, V. WINNEY, B. PENDERGAST, R. THOMAS, K. DAVERN, I. GRANT, J. EASTON, I. WEST, J. BOOKER, G. DUNCAN, J. DWYER, J. CONVERY, I. LARCOMBE, M. CLARK, J. WILSON, G. CHRISTIE, R. PURVIS, L. ASPINAL, J. TROUSDALE, I. THOMAS, K. HALLAM, B. DUNN, P. BRENT, P. THOMPSON and THE AUSTRALIAN INSURANCE EMPLOYEES UNION Respondents ORDER JUDGES MAKING ORDER: Bowen C.J., Smithers, Evatt, Northrop and Sheppard JJ. WHERE MADE: Sydney DATE: 28 November 1983 THE COURT ORDERS THAT:- 1. 2. The Interim Order of 11 February 1983 be vacated. The Rule to Show Cause be discharged. e. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSW No. 4 of 1983 INDUSTRIAL DIVISION BETWEEN: STEPHEN WRIGHT and JUDITH MARY WALKER Applicants AND: XK. McLEOD, J. ANGUS, P.K. REYNOLDS, V. WINNEY, B. PENDERGAST, R. THOMAS, K. DAVERN, I. GRANT, J. EASTON, I. WEST, J. BOOKER, G. DUNCAN, J. DWYER, J. CONVERY, I. LARCOMBE, , ' M. CLARK, J. WILSON, G. CHRISTIE, R. PURVIS, L. ASPINAL, J. TROUSDALE, I. THOMAS, K. HALLAM, B. DUNN, P. BRENT, P. THOMPSON and THE AUSTRALIAN INSURANCE EMPLOYEES UNION Respondents CORAM: Bowen C.J., Smithers, Evatt, Northrop and Sheppard J.J. DATE: 28 November 1983 REASONS FOR JUDGMENT BOWEN C.J. This is the return of a rule to show cause granted by Evatt J. on 11 February 1983. The applicants are members of the Australian Insurance Employees Union (the "Union"), an organization registered under the Conciliation and Arbitration Act 1904 (the "Act"). Stephen Wright is the Treasurer and Judith Mary Walker 1s the Secretary of the New South Wales branch of the Union and both are members of the Federal Council and the Federal Executive. The respondents are the Union itself and the remaining members of the Federal Council. The applicants seek several orders pursuant to s.141 of the Act. These are specified in the rule nisi, as amended. They are as follows:- "1. That the Respondents (other than the lastnamed Respondent) and each of them perform and 'observe 'the Rules of the Australian Insurance Employees' Union by treating the postal ballot of members of the Federal Council in relation to amendments to Rule 18(a),(b),(e) and Rule 26 of the certified Rules of the Union, scheduled for completion at 4.00pm on Friday 11 February, 1983 as null and void. 2. That the Respondents (other than the lastnamed Respondent) and each of them perform and observe the Rules of the Australian Insurance Employees' Union by taking no further step towards obtaining the certificate of the Federal Industrial Registrar in respect of amendments to Rule 18(a),(b),(e) and Rule 26 made pursuant to the postal ballot of members of the Federal Council concerning amendments of the said Rules, scheduled for completion at 4pm on Friday llth February, 1983. 3. That Rule 57 of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(a) of the Conciliation and Arbitration Act, 1904 as amended. 4. That Rule 57 of the Rules of the Australian Insurance Employees Union contravenes Section 140(1)(c) of the Conciliation and Arbitration Act, 1904, as amended. 5. That the Rules of the Australian Insurance Employees Union contravene Section 140(1)(a) of ~3+ the Conciliation and Arbitration Act, 1904 as amended in that the said Rules fail, and in particular Rules 19(b), 23(a) and (b) and 57 fail to make a provision required by the Act and by the Regulations made pursuant thereto. 6. That Rule 23(a) and (b) of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1) (a) of the Conciliation and Arbitration Act, 1904 as amended. 7. Rule 23(a) and (b) of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(c) of the Conciliation and Arbitration Act, 1904, as amended. 8. Rule 19(b) of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(a) of the Conciliation and Arbitration Act, 1904 as amended. 9. Rule 19(b) of the Rules of the Australian Insurance Employees' Union contravenes Section 140(1)(c) of the Conciliation and Arbitration Act, 1904 as amended." The relevant parts of s.140(1) are: "The rules of an organization - (a) shall not be contrary to, or fail to make a provision required by, a provision of this Act, the regulations or an award or otherwise be contrary to a law;.... (c) shall not tmpose upon applicants for membership, or members, of the organization, conditions, obligations or restrictions which, having regard to the objects of this Act and the purposes of the registration of organizations under this Act, are oppressive, unreasonable or unjust; " Interim orders in the form of paragraphs 1 and 2 were made on 11 February 1983. Order 1 was vacated by consent on 18 February 1983. Two other matters (being proceedings 40 and 42 of 1982) between the parties to these proceedings were heard together by Evatt J. in February this year. The matters involve a challenge to the validity of the rules constituting the Federal Council and Executive, and the validity of certain actions proposed to be taken by the Executive. At the request of the parties, judgment has not been delivered in these matters and it was agreed that the present hearing would be conducted on the footing that both the Council and the Executive were validly constituted. Pursuant 'to s.118C, Evatt J. ordered that the present proceedings be heard by a Full Court. This Court has granted leave to appear as amicus curiae to Mr. Boulton, solicitor for the Australian Council of Trade Unions (the "ACTU") representing 1ts members. He has supported the submissions of the respondents. Counsel for the applicants characterised the basis of his submissions as being that the rules of the Union providing for the amendment of its rules were invalid either in themselves or against the background of the rules as a_ whole. The rule amendment procedure of the Union is governed by an interaction of rules 19(b), 23 and 57 which I set out in full: "19. - POWERS AND DUTY OF FEDERAL COUNCIL The Federal Council shall, subject to control by the members as hereinafter mentioned, be the -5- supreme governing body of the Union and have the management and control of the affairs of the Union and, without limiting the generality of the foregoing, shall in particular have power:- (a) woe (b) subject to Rule 57 to make, add to, amend and rescind these Rules. (c) ~ (bt) ... All decisions of the Federal Council shall be final and shall remain in force unless and until varied, amended or annulled at a subsequent meeting or ballot of the Federal Council or by a plebiscite of members of the Union. 23. - MATTERS REQUIRING DECISION BETWEEN FEDERAL COUNCIL MEETINGS (a) On a motion passed by the Federal Executive that any matter requires a decision of the Federal Council between biennial meetings that matter shall he submitted to the Council for decision. Such matters may be forwarded by post, lettergram or telegram to each of the members of the Federal Council in such form as is determined by the Federal Executive. (b) The members of Federal Council shall record their vote on the matter so submitted by post, lettergram or telegram addressed to the Federal Secretary and the decision of the majority shall be binding as if such decision were obtained by vote at a regularly constituted meeting of the Federal Council. (c) All votes of their confirmation shall be signed by members of Federal Council recording the same. If any vote he recorded by means other than letter then such vote shall be confirmed by letter signed by the Federal Councillor. (da) If amajority of the members of Federal Council notify the Federal Secretary that the matter so submitted to them 1s of such -~6- importance that a meeting of the Federal Council should be convened to deal with it, then such Federal Council shall be forthwith convened by the Federal Secretary to meet at such time and place as the Federal Executive shall determine. (e) If a special Federal Council meeting be held for the purposes cof the immediately preceding clause such other matters as the Federal Executive or Federal Council shall determine may be submitted to the meeting. 57. - ALTERATION TO RULES Amendments may be made to these Rules or new Rules made or any Rule may be deleted or deleted and replaced by a new Rule by a resolution of Federal Council carried by a two-thirds majority of members voting. On a motion to alter any rule or to make a new Rule or to delete a Rule all Councillors present shall vote; provided that where an alteration to any Rule is rendered necessary by an amendment to the Conciliation and Arbitration Act, a requirement of the Industrial Registrar or an order of the Industrial Court and such alteration 1s submitted to a postal ballot of members of the Federal Council pursuant to Rule 23 of these Rules, the fact that not all members of the Federal Council cast a vote in such ballot shall not invalidate such ballot and any alteration so submitted shall be deemed to have been approved by the Federal Council if approved by a two-thirds majority of members voting." To determine the validity of the rule changing mechanism in this case, it will be necessary to consider the rules of the organization as a whole. The Union is divided into six branches, one in each State. Under the present rule 18(a), the Council consists of the President and Secretary of each branch, additional delegates from each branch according to its size, and the five officers of the Council ex officio. The Executive consists of the same ex officio officers, plus the President and one other delegate from each branch (rule 25). As well as providing for a biennial meeting in October (rule 20(a)), the rules provide that a special meeting of the Council is to be called on the written request of three branches or by an Executive resolution (rule 20(c)). Rule 20(d) requires that two months' notice of the biennial meeting and fourteen days' notice of a special meeting is to be given to each branch and sub-branch. ' Rule 22(a) provides that a branch may notify the Federal Secretary of any business it desires the Council to consider at the biennial meeting and rule 22(b) states that upon receipt of such notifications, a Council agenda is to be forwarded to each branch and = sub-branch. The members can therefore bring business before the Council meetings. If members cannot persuade their branch to make such a request, they can at a general meeting or branch plebiscite direct the branch committee to do so. A member can request the Federal Executive to list any matter for discussion by the Council (which power is granted to the Executive by rule 22(d)) but could not compel the Executive to do so. At a Council meeting the Council may deal with any matter whether or not it appears on the agenda (rule 22(c)). A copy of the minutes of each Council and Executive meeting is to be forwarded to each branch and sub-branch (rule 27{a)). Rule 61 provides that a quorum of the Council shall be one-half of those eligible to be present, provided that no less than three branches are represented. Rule 60 provides for voting by proxy at, inter alia, Council meetings. Finally, there are provisions in rules 58(a) and 65 for a plebiscite of all members to be held. The facts that led to the present proceedings can be stated shortly. At the commencement of the hearing of the other two matters before Evatt J., a postal hallot of the Council was in progress relating to amendments of certain rules including rule 18. This is the postal ballot referred to in proposed orders 1 and 2. His Honour was informed on February 9 that the rule changes had been adopted. The applicants allege that one result of the purported amendment to rule 18 would be, by abolishing some ex officio positions on the Council, the removal of Judith Mary Walker from Council membership. The applicants claim that the rule changes are to be treated as null and void because the rule amending procedures of the Union are contrary to the Act. The general principle that this Court was asked to consider was contained in paragraph 13 of the Affidavit of Stephen Wright. This Affidavit was treated as the applicants' points of claim. Paragraph 13 reads: "I submit that the rules of the organization, and in particular Rules 23(a) and (b) and 957, insofar as they permit the Federal Council of the organization to alter the Rules of the organization without recourse to the branches of the organization or the membership as a whole contravene s.140(1) (a) or, alternatively s.140(1)(c) of the Act. In the alternative, I submit that the Rules of the organization and in particular Rules 23(a) and (b) and 57 fail to make a provision required by the Act or the regulations made pursuant thereto." The interaction of Rules 57 and 23 present some ambiguity. Rule 57 refers to the need for all members "present" to vote when voting on rule amendments (which term [I shall use for present purposes to include deletion, replacement or insertion of rules). However, it later speaks of such a vote taking place pursuant to Rule 23. Although the word "present" could be taken to imply the necessity of a meeting, with the use of the Rule 23 procedure only available in the certain limited circumstances outlined in the proviso in Rule 57, both parties agreed that the preferable interpretation was that any rule amendments could be made pursuant to the Rule 23 procedure. The aifference was therefore that for rule amendments within the Rule 57 proviso, not every member need vote - a resolution would pass 1f two-thirds of those returning their votes were in favour of -10- it. Otherwise, as all must vote, any non-vote would be treated as a no vote. I will proceed on the basis of this interpretation, although it is not crucial for these proceedings. In considering whether the rule amending procedures are "oppressive, unreasonable or unjust" umder s.140(1)(c), it has to be borne in mind that it is the organization itself which has the right to decide on the format and content of the rules that govern it. Deane J. in Municipal Officers Association v Lancaster (1981) 37 A.L.R. 559 at-p.589 said: "It cannot however, be too strongly stressed that, subject to those constraints and restrictions, the content of the rules of a registered organization is primarily a matter for the members, Watson v Australian Workers' Union (1967) 10 F.L.R. 347 at 361; Cassidy v Amalgamated Postal Workers' Union (1967) 11 F.L.R. 124 at 126/7; Wiseman v Professional Radio and Electronics Institute of Australasia (1978) 20 A.L.R. 545 at 561; Re Airline Hostesses' Association (1980) 37 A.L.R. 110 at 148, per J.B. Sweeney J. This Court has no authority generally to supervise the contents of the rules or to require that the rules comply with what those constituting the Court might see as preferable, desirable or ideal. To put the matter differently, it is for the members, or those entrusted by the members in that regard, to decide the content of the rules. The function of this Court is to determine, in accordance with ordinary judicial procedure, whether some provision or provisions of the rules adopted by, or on behalf of, the members can properly be described not merely as undesirable but as oppressive, unreasonable or unjust." (See also the judgment of Evatt and Northrop J.J. at p.577). -ll- As both judgments in Lancaster's Case proceed to explain, however, in following this approach the Court is directed by the section to have "regard to the objects of this Act and the purposes of registration of organizations under the Act." (See also Allen v Townsend (1977) 31 F.L.R. 431 at p.467; Wiseman's case (1978) 35 F.L.R. 24 at p.34; Lovell v Federated Liquor and Allied Industries Employees' Union of Australia (1978) 35 F.L.R. 72). The "chief objects" of the Act are listed in s.2 and include: Y "(f£) to encourage the democratic control of organizations so registered and the full participation by members of such an erganization in the affairs of the organization." The chief objects are not the only objects of the Act. Further, to clarify the Act's objects, including the chief objects, the Court needs to make close reference to the provisions of the legislation, and to the method by which the legislature has implemented its objects (see Lancaster's Case supra at p.579). The word "democratic" is capable of a number of meanings ranging from total delegation of all power to elected representatives through to full participation by all members in every decision. Importantly, object 2(f) itself speaks of "the full participation by members of such an organization". In -12- Lovell's Case (supra), Smithers and Evatt JJ emphasised the participatory aspect (at p.83): "Tt would seem that the democratic concept underlying the provisions of the Act 1s that of substantial participation by the whole of the membership, in the management of the organization. Democracy according to its ordinary current meaning may exist in various forms and in varying degrees. Government of the members, by the members, and for the members in some pure and undiluted form may be an ideal." Again, (at p.84) their Honours stated that: "It is an object of Parliament to encourage full participation." (See also Cook v Crawford (1982) 43 A.L.R. 83 at p.147). In my opinion, one of the objects of the Act 15 to encourage participatory democracy - it seeks to achieve more than members merely voting for representatives and then not participating in Union affairs. However, the Court's approach in deciding the validity of certain rules is not simply to measure them against all the objects of the Act and determine whether they comply with each. As Deane J stated in Lancaster's Case supra at p.590: "This does not, however, impose a requirement that every provision in the rules of an organization should either serve or be consistent with those objects or purposes. Nor does 1t alter the fact that the operative test is whether, having regard to those objects and purposes, the relevant condition, obligation or -13- restriction can properly be described as oppressive, unreasonable or unjust. It does, however, mean that in answering that question it is necessary to take into account relevant objects of the Act and relevant purposes of the registration of organizations under the Act." Evatt and Northrop J.J. (at pp.578-9) adopted the words of Mason J. and those of Murphy J in R_ v Hunt Ex Parte Sean Investments Pty. Limited (1979) 25 A.L.R. 497 in also deciding that, "having regard to" means taking into account, considering and giving due weight to. In having regard to the purposes of the registration of the organization, as well as to the objects of the Act, the Court must take notice of the fact that these include allowing the organization to function efficiently. As Sweeney, Evatt and Northrop J.J. said in McLeish v Kane (1978) 36 F.L.R. 80 at p.90: "The Court in exercising its present jurisdiction is concerned with all the objects of the Act and clearly 1t is fundamental to these objects that there be not only democratically controlled organizations but that these organizations should be viable. In other words, we must take care to ensure not only that democratic control is encouraged but also that the organization remains viable. This means that questions of balance must arise." See also Deane J in Lancaster's Case supra at p.590. The balance between full participation in the democratic process and organizational efficiency 1s a difficult -14- and recurring one which can only be decided according to the circumstances of each case. In fact, Counsel for the applicants conceded that these rules were not bad merely because they allowed the Council to alter the Union's rules. Iam of the opinion that this concession was well made. In many organizations, it would not be workable or efficient to submit every rule change to a general meeting or plebiscite. Some changes need to be made swiftly, some may be minor procedural matters. In some organizations plebiscites will of necessity be slow and costly. Furthermore, the respondents expressed concern that members' participation may in fact diminish if members have to vote on each rule change, and members may tend to avoid meetings if they know that there will be considerable time taken up discussing legal niceties of rule amendments. This reasoning is further strengthened by the Act itself. The definition of office in s.4 includes: "(Ce) the office of a member of any conference, council, committee or other body within the organization or branch which, under the rules of the organization or of the branch is empowered to make, alter or rescind rules...." The Act therefore contemplates that the rules can empower, inter alia, a council to amend the rules. This is not qualified in any way. Nor is reg.115(1)(d)(xiv) qualified. It may be said that the Act and regulations treat it as a matter for the organization itself to decide whether it wishes to give its council this power, ~15- However, Counsel for the applicants submitted that the present rules were contrary to the Act in allowing the whole of the rule amending process to take place at Council level without any participation by members or branches being required. It was submitted that the rules allowed rule changes to be made by Council: (a) without the organization having any notice of such proposals (Rule 22(c)); (b) by postal ballot thus preventing debate and exchange of ideas as at a meeting; (c) by only a small number of Council members, if the subject matter fell within the proviso aspect of Rule 57. I find considerable force in these submissions. A Full Court of this Court held, by majority, in Cook v Crawford (supra) that a new rule amending procedure which stated that: ",..the Council may at any time make or amend any Rules....." contravened s.140(1)(c). Applying the majority view, two decisions of Sheppard J. in Squires v Stephenson (unreported, -16- delivered 14 February and 22 April 1983) emphasised the need for members' participation in rule changing procedures. The rules of the organization concerned allowed the Council to alter the rules by, inter alia, postal vote. His Honour held that this contravened $.140(1)(c) and further suggested that rule amendments ought not be made "otherwise than by reference to the membership of an organization." In the second judgment, his Honour held that a proposed rule allowing the Council to amend the rules but requiring such decisions to be ratified by a general meeting contravened the section as it "took out of the hands of the membership all power to amend the rules." His Honour stated that such amendments should only be effected by plebiscite. It must be remembered that each of the above decisions was based on its own individual circumstances. It is to be noted that in Cook v Crawford the rule amending procedure had previously required such proposals to be approved at a special branch meeting and then be considered by all other branches. In Squires v Stephenson, his Honour stated that it had been the Association's practice to make major rule alterations by plebiscite only. Iam unable, however, to agree with the suggestion that the law requires, as a general rule, that it is necessary for members to participate in every rule change for the rule amending procedures to comply with the Act. Rule amending -17- procedures must be considered against the background of the rules of the particular organization. It is important that the Council here 15 a democratically elected body. The rules provide for elections pursuant to ss.133 and 133AA and, as stated, i1t 15 assumed that the Council is validly constituted and satisfies the standard outlined in McLeish v Kane (supra). There are further safeguards expressed in the rules as outlined, especially with respect to quorum, proxies, notice .and requirement of a two-thirds majority to pass a rule amendment. Such provisions go a long way towards indicating that the rule amending procedures of this organization, even though concentrating such important power in the hands of the Council alone, do not contravene s.140(1)(c). On the other hand, it is argued that, if the Union has decided that it is desirable to grant to the Council the power to alter the rules without the necessity of any recourse to members, this restriction on the members' rights will be contrary to s.140(1)(c) unless the rules as a whole make sufficient provision for review of any such Council decision. This differs from the requirement of control contained in Regulation 115(1)(d)(v), which deals with the general control of committees by members in all respects. -18- The rules require that notice of Council resolutions be distributed to branches and sub-branches and be made available to members. If a member is dissatisfied with a decision he could, through his branch or the Executive, seek review of the Council's decision by the Council itself (Rule 19). Any rule amendments must be certified by the Industrial Registrar and a member can seek redress in this Court if he believes that they are contrary to the Act, although the Court cannot of course consider the desirability of any amendments. Members always have the ultimate right to vote out the Council at the next election. However, the only direct control over a particular decision open to the members as a body is through the plebiscite provisions of the rules. Council decisions are expressly made subject to the results of plebiscites. This supremacy of a plebiscite is, however, of little practical benefit if it is too difficult for members to call one. A plebiscite of members of this Union can be held at the instigation of the Executive or three branches. Given the geographical situation of the branches it may at times be difficult for even a large body of members to be able to employ this latter procedure. A plebiscite is also to be held on receipt of a petition signed by 15% of members. On present membership figures, this would require 3446 signatures. -19- I am mindful of the respondents' submissions that members of the Union are concentrated in particular areas and that it may be easier here than in some other Unions to collect such signatures. It is also undeniable that referenda are expensive, cumbersome and time consuming, and that to make them too easily available would not be in the best interests of the organization. Keely J. in Cook v Crawford supra at p.120 refers to the shortcomings of referenda. However, a plebiscite in circumstances such as the present remains the major area of ultimate direct review of rule amendments. It is the means by which participation is possible for members after important rule changes have occcurred. This is especially important if the Union has decided that it is desirable that the Council has the power to implement rule changes without giving notice to the members. A requirement that a written requisition from 15% of members must be received before a plebiscite is held may be difficult to comply with in practice. It is to be noted that the requirement to hold a branch plebiscite 1s only 10% of members. Even this percentage may be seen as too high in certain circumstances. In Squires v Stephenson, for example, Sheppard J. held that a requirement of 10% to call a plebiscite contravened s.140(1)(c) ain the circumstances before him. -20- The potential importance of amendments to rules of an organization must be remembered. The rights of an individual member may be seriously affected by amendments to the rules of the organization to which he belongs. In considering whether rule amending procedures are mandatory or directory, Sweeney, Evatt and Northrop dg.d. ain Australian Transport Officers' Federation v State Public Services Federation (1981) 50 F.L.R. 438 at p.443 said: "It is difficult to think of any subject matter more important in the affairs of an organization than its own legislative power. In Cook v Crawford supra (at p.97) Smithers J. expressed the view that: "Changes in rules go to the heart of the fundamental rights and duties of members..." It would seem to be desirable that the present rules should have a provision making 1t easier for members to call a plebiscite which concerns a decision of the Council to amend the rules. However, it must be emphasised that rules with a high percentage required to call a plebiscite, or even those lacking a plebiscite provision at all, are not simply for that reason contrary to s.140(1)(c). It "is useful to compare the application of reg.115(1)(d)(v) to plebiscite provisions. Evatt and Northrop J.J. in Boland v Munro (1980) 37 A.L.R. 263 at 0.277 said: -21- "The absence of the power to call for a referendum on the decisions of a committee will not necessarily mean that the rules fail to provide for the control of committees of the organization by the members. The presence of the power to call for a referendum on the decisions of a committee may, having regard to the other rules of the organization, ensure that the rules comply with Regulation 115(1)(d)(v), which rules otherwise would not comply with that regulation. Each case must depend upon its own facts and the particular rules of the organization involved." Their Honours were speaking of "control" but the same idea is relevant to the present case. The mere fact that a Council is given power to amend rules without the existence in the rules of a liberal plebiscite provision will not automatically mean that the rules contravene s.140(1)(c). Each situation must be considered individually with particular regard to the mode of election of the Council, the rules relating to Council meetings, the position of branches in relation to the Council, the extent of the power of the Council to amend rules, any requirements for members' participation 1n the process and any other means of review of the Council's decision. The question for this Court is not whether it would be desirable to have in the rules a provision for a plebiscite which, at all events, in respect of rule amendments might be more easily invoked than the provision in rule 58. The question raised by paragraphs 3 to 9 inclusive in the orders sought is whether rules 19(b), 23(a) and (b) and 57 which lay down the rule amending procedure, are contrary to s.140(1)(a) or (c). -22- In my opinion, these particular rules are not contrary to and do not fail to make a provision required by a provision of the Act or regulations and are not otherwise contrary to law, unless it be held they contravene s.140(1)(c). Notwithstanding that the power to amend the rules 1s concentrated in the hands of the Council, reg.115(1)(d)(v) is not, in my view, contravened. The whole of the organization's rules, the method of electing committees, the committee members' term of office and the power of a general meeting must all be considered (see Boland v Munro, supra). Taking these matters into consideration, it is my conclusion that lack of control is not demonstrated in the present circumstances. Thus the rules do not contravene s.140(1)(a); s.140(1)(c) takes effect in its own right. The question, therefore, comes down to this: Do these rules impose conditions, obligations or restrictions which, having regard to the objects of the Act and the purposes of the registration of organizations under the Act, are oppressive, unreasonable or unjust? It does not appear to me they impose conditions, obligations or restrictions which are oppressive or unjust. Do they impose conditions, obligations or restrictions which are unreasonable? In determining this question, reqard is to be had to the objects of the Act, which as we have seen, include as a chief object to encourage the democratic control of the Union and the full participation of members in the affairs of -23- the Union (s.2(f)) and regard 1s to be had also to the purposes of the registration of organizations under the Act. Could a reasonable Union member, having regard to those considerations, wish to have such provisions in the rules of his Union? There is full representative democracy under the rules as a whole; what is somewhat deficient is provision for the participation of members. Is the deficiency such as to require a decision that these particular provisions in the rules impose restrictions which are unreasonable? The matter has caused me some difficulty. However, having regard to the rules as a whole, I have come to the conclusion that rules 19(b), 23(a) and (b) and 57 do not contravene s.140(1)(a) or (c). The interim order in paragraph 2 made on 11 February 1983 should be vacated and the rule nisi should he discharged. | I certify that this oud the Pent two C33) | proceeding pares are a wm. cory of the | Reasons for Ive 2 vse. ul Lis Sonour i she Chief cucg., ber Pig Lou ent i PF) eos fe flees, ; . 7 Be eICL Le a var tersarem i IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY INDUSTRIAL DIVISION BETWEEN : le ORDER JUDGES MAKING ORDER: and Sheppard JJ. WHERE MADE: Sydney DATE: THE COURT ORDERS THAT:~ 1. 2. NSW No. 4 of 1983 STEPHEN WRIGHT and JUDITH MARY WALKER Applicants K. McLEOD, J. ANGUS, P.K. REYNOLDS, V. WINNEY, PENDERGAST, R. THOMAS, DAVERN, I. GRANT, B. K. J. EASTON, I. WEST, J. BOOKER, DUNCAN, J. DWYER, J. CONVERY, LARCOMBE, M. CLARK, J. WILSON, CHRISTIE, R. PURVIS, L. ASPINAL, TROUSDALE, I. THOMAS, K. HALLAM, DUNN, P. BRENT, P. THOMPSON and THE AUSTRALIAN INSURANCE EMPLOYEES UNION Respondents 28 November 1983 Bowen C.J., Smithers, Evatt, Northrop The Interim Order of 11 February 1983 be vacated. The Rule to Show Cause be discharged. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY INDUSTRIAL DIVISION Coram: Bowen C.J., 28 November 1983 NSW NO. 4 OF 1983 IN THE MATTER OF the Conciliation & Arbitration Act Between: STEPHEN WRIGHT and JUDITH MARY WALKER (Applicants) And: K. McLEOD, J. ANGUS, P.K. REYNOLDS, V. WINNEY, B. PENDERGAST, R. THOMAS, K. DAVERN, I. GRANT, J. EASTON, 1. WEST, J. BOOKER, G. DUNCAN, J. DWYER, J. CONVERY, 1. LARCOMBE, M. CUARK, J. WILSON, G. CHRISTIE, R. PURVIS, L. ASPINAL, a. TROUSDALE, I. THOMAS, K. HALLAM, B. DUNN, P. BRENT, P. THOMPSON and THE AUSTRALIAN INSURANCE EMPLOYEES UNION (Respondents) Smithers, Evatt, Northrop and Sheppard JJ. REASONS FOR JUDGMENT SMITHERS J.: By an order nisi dated 11 February 1983 as amended on 26 July 1983 the applicants seeks an order pursuant to s.141 of the Conciliation & Arbitration Act 1904 (the Act) requiring the respondents to perform and observe the rules of the Australian Insurance Employees' Union (the organization) by treating a postal ballot of members of the Federal Council of the organization with respect to a proposed amendment of the rules of the organization as null and void, on the ground that the rules under which the ballot was instituted contravene one or other of the provisions of s.140(1)(c) of the Act, or alternatively, on the ground that, contrary to the provisions of s.140(1)(a) of the Act, the rules of the organization fail to make a provision required by the Act and regulations thereunder. The immediate aim of the applicants is to prevent the taking of a postal ballot of members of the Federal Council of the organization pursuant to r.23(a) of the rules of the organization (the rules) in relation to proposed amendments to r.18(a), (b) and (e) and r.26. That ballot if carried by the required majority would alter the composition of the Federal Council. It would abolish the membership of Federal Council of the President and Branch Secretary of each branch, which under the existing rules is automatic. The 3. proposed amendments would also change the composition of the Federal Executive. The matter comes before this Full Court on a reference by Evatt J. pursuant to s.118¢ of the the Act for a determination by this Court of an issue said to raise a matter of principle concerning provisions of rules of organizations of employees registered under the Act which provide for the amendment of such rules. The 1ssue is posed in paragraph 13 of the affidavit herein of the claimant Stephen Wright where it is said: "I submit that the rules of the organization and in particular Rules 23(a) and (b) and 57, insofar as they permit the Federal Council of the Organization to alter the Rules of the Organization without recourse to the branches of the Organization or the membership as a whole contravene section 140(1)(a) or alternatively section 140(1)(c) of the Act. In the alternative I submit that the Rules of the Organization and in particular Rules 23(a) and (b) and 57 fail to make a provision required by the Act or the regulations made pursuant thereto." This submission is based on the decision of the majority of the Court in Cook v. Crawford (1982) 43 ALR 83, and the observations of Sheppard J. in Squires v. Stephenson & Ors No. V6 of 1981 of 14 February 1983 (unreported). According former to the /decision a rule conferring on the Federal Council of the Plumbers & Gasfitters Employees Union of Australia of power to make or amend any rule of the organization without 4. reference to the branches of the organization or to its members contravened s.140(1)(c) of the Act notwithstanding certain provisions of the rules providing for review of decisions of Federal Council by itself and for the taking of a plebiscite to set aside or alter decisions of Federal Council. It was pointed out that the rule making power would extend to the repeal of the existing review and plebiscite provisions. In Squires v. Stephenson (supra) at p.37 it was observed by the learned Judge, "It seems to me vital that any amendment of the rules is carried out after due notice, proper discussion and adequate consideration. ... In my opinion it is quite undesirable that amendments to rules be made otherwise than by reference to the membership of an organization." The decision in Cook v. Crawford (supra) was one in which I participated but as a dissentient so far as concerns the part of the decision referred to above. What I said appears at pp.98-101 of the report mentioned above and is relevant to the issues now before the Court. The proposed amendment of the rules of the organization was initiated by the Federal Executive of the organization and pursued in the Federal Council pursuant to the provisions of rr.23(a) and (b) and r.57 of the rules. Rule 19 of the rules provides that the Federal Council shall, subject to control by the members as mentioned thereafter, 5. be the supreme governing body of the Union and have the management and control of the affairs of the Union and shall in particular have power, subject to r.57, to make, add to, amend and rescind these rules. Rule 57 provides as follows:- "57. - ALTERATION TO RULES Amendments may be made to these rules or new Rules made or any Rule may be deleted or deleted and replaced by a new Rule by a resolution of Federal Council carried by a two-thirds majority of members voting. On a motion to alter any rule or to make a new Rule or to delete a Rule all Councillors present shall vote; provided that where an alteration to any Rule is rendered necessary by an amendment to the Concilzation and Arbitration Act, a requirement of the Industrial Registrar or an order of the Industrial Court and such alteration is submitted to a postal ballot of members of the Federal Council pursuant to Rule 23 of these Rules, the fact that not all members of the Federal Council cast a vote in such ballot shall not invalidate such ballot and any alteration so submitted shall be deemed to have been approved by the Federal Council if approved by a two-thirds majority of members voting." Rules 23(a) and (b) provide as follows:- "23. - MATTERS REQUIRING DECISION BETWEEN FEDERAL COUNCIL MEETINGS (a) On a motion passed by the Federal Executive that any matter requires a decision of the Federal Council between biennial meetings that matter shall be submitted to the Council for decision. Such matters may be forwarded by post, lettergram or telegram to each of the members of the Federal Council in such form as is determined by the Federal Executive. (b) The members of Federal Council shall record their vote of the matter so submitted by post, lettergram or telegram addressed to the Federal Secretary and the decision of the majority shall be binding as if such decision were obtained by vote at a regularly constituted meeting of the Federal Council." It is contended that upon the proper construction of these rules any amendment of a rule or any new rule may be made by the Federal Council on the initiative of the Federal Executive or on its own initiative by a two-thirds majority of members of Federal Council who vote on the question in meeting or by post, and without reference to the branches or the membership or any section of the organization. For present purposes I accept this contention in full. But if it were necessary to decide the matter I would, as at present advised, favour the view that an amendment or new rule can only be made at a meeting of Federal Council. By r.19 the power to make rules is conferred on Federal Council. Although Federal Executive has very wide powers the alteration of rules is not one of them. Rule 57, according to its heading and content, relates specifically to the making of amendments to rules. Rule 23 is a procedural rule which speaks generally, and under which any matter which in the opinion of the Federal Executive "requires a decision of the Federal Council between biennial meetings" may be referred to members of Federal Council for decision by postal vote. Were it not for the proviso to r.57 it would, to my mind, be quite clear that it 1s contemplated that the making 7. of new rules and amendments to rules should occur only at a meeting of the Federal Council. Rule 57 deals specifically with a matter peculiarly within the authority of Federal Council. Rule 23 deals generally with any matter which, presumably, the Federal Executive might deal with itself, had it not formed an opinion with respect to the matter, that it required a decision of Federal Council. Such an opinion would be irrelevant to the matter of altering a rule. That matter must be dealt with by Federal Council. As a matter of construction an alteration of rules, which is not within the power of the Federal Executive, might possibly fall within the range of matters which in the opinion of the Federal Executive might require the decision of the Federal Council, but does not do so comfortably. It would take little indication to establish that the rule dealing with the particular takes precedence to the rule dealing with the general. In r.57 there are to my mind two indications. The first is the presence in r.57 of the reference to "all councillor's present". In literal construction this is incompatible with a postal ballot. The next is that whereas r.23(b) provides that on a postal ballot the decision of the majority shall be binding upon the organization, r.57 provides that a two-thirds majority of Members voting is required. It 1s said, however, that the terms of the proviso 8. assume that in relation all amendments to rules or new rules the terms of r.23 are applicable, with the consequence that a postal ballot vote may be effective. It appears to me however, that the proviso in r.57 tends in the opposite direction, namely, that it prescribes a procedure with respect to a restricted class of amendments to rules and new rules, and that it only applies in connection with that class. According to its terms it applies only to cases where an alteration is rendered necessary by an amendment of the Act, by a requirement of the Industrial Registrar, or an order of the Industrial Court. It_goes on to say that where those circumstances exist "and such alteration is submitted to a postal ballot pursuant to r.23 of these rules" the fact that not all members of the Federal Council cast a vote shall not invalidate the ballot, and any alteration so submitted shall be deemed to have been approved by Federal Council if approved by a two-thirds majority of members voting. There is much to be said for the view that the reference to r.23 in the proviso is intended to authorise the use of the procedure provided for therein in relation to the special class of the amendments to rules mentioned, which have an administrative rather than a policy significance, to which the proviso relates. And indeed, the relaxation, in respect of that class of rule amendments, of the more strict provisions in the primary provisions of r.57 is easily understoood. Generally, on amendments to rules and new rules, all members present must vote; on the restricted class of amendments 9. dealt with by the proviso it is sufficient even if only two people vote or at least three. However, my ultimate conclusion in this case is the same whether or not the procedure of postal voting by members of Federal Council on a reference from Federal Executive pursuant to r.23 is applicable to any proposed amendment to rules or new rule. The question of principle must be considered as arising in respect of a rule which confers on Federal Council the power to make any rule amendment or new rule by a two- thirds majority of members upon a postal reference to the members requiring their vote by post or to make rules of the special class by a two thirds majority of those voting on such a reference. The immediate question is whether there is anything incompatible with the provisions of the Act or the regulations thereunder in a rule which confers on a collective body of an organization such as a Federal Council a power so to make and amend rules without reference to the branches or membership of the organization. It is said that such a rule inevitably imposes upon members conditions which, having regard to the object of the Act and of registration of organizations are unreasonable, oppressive or unjust. It must first be noticed that it is a mandatory requirement of reg.115(1)(d) (xiv) that the rules of an organization shall provide for the alteration of its rules. Also in considering the matter as one of principle it 10. is necessary to assume that but for the rule in question, the rules of the relevant organization do comply with the provisions of the Act and the regulations. It must be assumed, therefore, that those rules provide:- (a) for the election of the Federal Council and every other Committee or body which is empowered to determine policy or to exercise functions of Management in the organization and its branches; (reg.115(1)(d)(i)) (b) for the election of such bodies by secret postal ballot as required by s.133 of the Act; (c) for a degree of control of such bodies sufficient to meet the requirements of reg.115(1)(d)(v); (d) that in the composition of the Federal Council there is branch representation so balanced as to comply with the standard defined in McLeish v. Kane (1978/79) 22 ALR 547 at 556-559 The problem is whether having regard to the provisions of s.140(l)of the Act, it is permissible for a rule to provide that rules introducing new rules or amending existing rules may be made by the rule making authority other than, after what is called, reference to the branches ll. or membership of an organization. Whether the reference might be merely by notification in some way of an intention to make or amend a rule, or would involve the seeking of branch or membership opinion in some form is not specified. Nor does it appear whether opinions so expressed should have effect as a veto or in some other way. But it is clearly contemplated that as a condition precedent to the making of an amendment to a rule or a new rule there shall be a reference to membership sufficient to meet the requirements of s.140(1)(c) in relation to the statutory objects of encouragement of democratic control and the participation of members in the affairs of the organization: see s.2(b) of the Act. It might be thought to be a real question whether a rule conferring a rule making power does impose upon members any conditions, obligations and restrictions within the meaning of s.140(1)(c) of the Act. Some support for this doubt might be found in Morris v. Federated Liquor and Allied Industrial Employees' Union (1978) 35 FLR 60 at p.70. However I do not think the doubt is soundly based. It is unnecessary to express a concluded view on the matter. Section 140 of the Act is concerned with what is enacted by the rules of the organization looked at as a whole. It provides, not what any particular rule may not do or must do but what "the rules" shall or shall not do or be. Clearly the section contemplates that in a case where the rules contravene the provisions of sub-section (1) of s.140 12. it may be possible to identify a particular rule or even a part thereof which itself contains the offending provision see sub-sections 5D and 5G of the Act. But it is the existence of a contravention by the rules as a whole which is the first critical consideration. Accordingly it is impossible to determine the validity of a rule which, in its own terms, confers an unfettered rule making power without looking at the rules as a whole. And in relation to the current problem the provisions of reg.115(1)(d)(v) are important. That regulation states in imperative tones that the rules shall provide for the control of committees of the organization by the membership. Clearly if there be adequate control the fact that a particular body is empowered to make and amend rules would not offend s.140(1)(c). Control as envisaged by the regulation is directed to the protection of the members against excess or abuse of authority by governing bodies. Such bodies may be controlled by imposing conditions precedent to the exercise of their powers or by conferring on members or groups of members the capacity to institute a review of, or set aside, their decisions. According to the principle as submitted to this Court no control is adequate unless it provides as a condition precedent to the amending or making of rules some degree of membership participation at least through their branches. But reg.115(1)(d)({v) does not specify the type or degree of control required. It leaves these matters to the membership operating according to the constitution of the organization. It does not specify that 13. the control should operate manifestly through conditions precedent to action, or as remedies after action or otherwise. To require, therefore, that in relation to the rule making power control must be manifested in the provision of some condition precedent to the exercise of the rule making power, goes further than the regulations or the Act. In The Queen _v. Dunphy & Ors Ex parte Maynes & Ors (1977/78) 139 c.L.R. 482 at p.492 his Honour Mason J. touched upon the question as to whether reg.115(1)(d)(v) is directed to the control of the members of the composition of managing committees or of the activities of committees or of both. He did not find it necessary to decide. However, it would seem a sound view that the regulation certainly applies to the activities of committees. Regulation 115(1)(d)(1) already provides for their election. And to speak of rules providing for the control of committees would not be an apt way of referring to rules requiring an elective process. Accordingly, to my mind the validity of the rule in issue in this case really depends upon the answer to the question whether the presence of the general rule making power of the Federal Council causes the rules, as a whole, to impose upon members conditions which having regard to the objects of the Act and the purposes of registration of organizations under the Act are oppressive, unreasonable or 14. unjust. Important relevant elements of the rules are the provisions for the election of the members of the relevant managing bodies of the Union, and the various avenues of reference and control available to the membership. Relevant features of the rules are as follows:- (a) they make provision for the election of members of the Federal Council in accordance with the provisions of s.133 of the Act. The members of the Federal Council are elected either by direct secret ballot vote of the members of the organization or as branch delegates to Federal Council by secret ballot of members of the branches; (b) the members of the Federal Council save the Federal Secretary and Assistant Federal Secretary hold office for only two years. The Federal Secretary and Assistant Federal Secretary hold office for four years; (c) the Federal Executive consists of the Federal President, Federal Vice President, Federal Secretary, Assistant Federal Secretary, Federal Treasurer, the President of each branch and one additional delegate from each branch; (d) membership of branch committees of management hold (e) (f£) (g) (i) 15. office for two years. They are elected directly by secret ballot of members of the branch; the Federal Council must meet once in each two years and also on the written request of any three branches or upon a resolution of the Federal Executive or the request of the Federal Secretary or another officer; each Branch Secretary may require any business which his branch desires to have dealt with to be placed on the agenda of the biennial Federal Council meeting and the Federal Secretary must forward to each branch a copy of the agenda 21 days before the meeting; Federal Executive may direct the Federal Secretary to place any matter on the agenda for the biennial meeting of Federal Council; between Federal Council Meetings, Federal Executive may submit any matter to Federal Council for decision forthwith by postal vote of its members; a branch committee of management may instruct the branch representative to Federal Council or Federal Executive how they shall vote on any matter; (3) (k) (1) (m) (n) (o) 16. rule alterations shall be made only in accordance with r.57; plebiscites of members may be held if required by resolution of the Committee of Management of three branches or by a requisition in writing signed by not less than 15% of the financial members of the organization; on the petition of three branches a plebiscite of all financial members to review a decision of Federal Council or Federal Executive and the result thereof shall be binding on all sections of the organization; Branch plebiscites may be held for any branch purpose at the discretion of the Committee of Management and shall be held if at least two hundred members or 10% of the Branch by written notice so require; Federal Executive must meet once each month and if requested by any two branches shall meet specially; There is to be an annual branch general meeting and a special general meeting shall be held at the 17. request of 200 members or 10% of the membership. (p) Branch Committees of Management meet bi-monthly. Although reg.115(1)(d)(v) may not be directed to control of committees through the electoral process the regular accountability of officers including members of Federal Council and Federal Executive at elections is, from a practical point of view, an important aspect of membership control. It is important also that the provisions of s.133, introduced in 1973 provides for electoral procedures which, so far as seems possible, create in Committees of Management the quality of being truly representative of the electorate. The question before this Court arises therefore with respect to an organization governed by representative bodies and subject to various controls. In addition there are many avenues by which members by themselves and through the branches can bring before Federal Council and Federal Executive proposals which seem appropriate to them. The Management of the Organization through monthly Federal Executive meetings and two monthly branch meetings is ongoing and provides frequent opportunities for the conduct of union business. Ultimately, therefore, the question is whether in the light of the structure and opportunity for membership action 18. provided by the rules of this organization, the Court, "to determine [the matter] in accordance with ordinary judicial procedure" (see per Deane J. in Municipal Officers' Association of Australia v. Lancaster & Anor (1981) 37 A.L.R. 559 at 589) ought to determine that the general rule making power of the Federal Council is not only undesirable but is oppressive, unreasonable or unjust within the meaning of s.140(1)(c). On the one side the fundamental changes in the structure of an organization and in the rights and duties of members which may be achieved by rule changes is emphasised. It is acknowledged that by reason of s.140(1) the only rules which might be made and validly affect the affairs of the organization or members are rules which are not oppressive, unreasonable or unjust. But it is truly said that this leaves wide scope for the making of rules which will affect the organization and the members in a multitude of ways in respect of management matters of great importance. It is said that the conditions of obtaining a plebiscite discount their effectiveness and that there is little else in the way of direct control. It is also said that the control exercised through branches is too indirect and inconclusive. On the other hand it is said that the organization must retain a certain viability, meaning, I take it, that the capacity of the Federal Council to act effectively and 19. swiftly in its role as the governing body of so large an organization must be assured. It must be sufficiently free to act as it sees fit in the industrial, business and internal relationships of considerable magnitude with which it is concerned. To restrict the governing body of the Union by introducing conditions precedent to the making and amending of rules would introduce unnecessary delay, uncertainty and expense. The same would be true if plebiscite provisions gave too ready access to that procedure. Clearly enough a general rule making power is a potent instrument for gaqod or ill,._ in the management of the affairs of the Union. But of course whether an exercise of the power is for good or ill in any particular case depends upon what are, in truth, the best interests of the organization. There is no criterion by which those interests are to be recognized other than the view of the membership, and how best to get this than through genuinely elected bodies? It is apparent that at this stage the two sides are debating what each sees as desirable. To my mind one 1s in that area in which the observations of Deane J. in Municipal Officers Association of Australia v. Lancaster & Anor (supra) at p. 589 are applicable, namely, "The constraints and restrictions imposed, by positive and negative requirements of the Act and Regulations, upon the freedom of the members of an organization to select, for themselves, the 20. rules which they consider appropriate for their particular organization, are real and significant. It cannot, however, be too strongly stressed that, subject to those constraints and restrictions, the content of the rules of a registered organization. is primarily a matter for the members. ... This Court has no authority generally to supervise the content of the rules or to require that the rules comply with what those constituting the Court might see as preferable, desirable or ideal." In my opinion it is fair to say that in all the debate it has not been demonstrated that there is absent from the total situation established by the rules of the organization, some quality, regarded as so essential to representative or participating democracy that the situation can be said to be one lacking regard to the ideal of democracy and membership participation, in the context of the conduct of the affairs of the organization in accordance with the purposes of registration of the organization under the Act. Compare the observations of Stephen J. in McKinlay v. The Commonwealth 135 C.L.R. 1 at 57; (1975) 7 A.L.R. 393 at 632. The vital consideration in democracy is the degree of electoral accountability of the government to the membership. Other controls are but instruments for use when accountability has failed to achieve its objective. Where the electoral system is soundly devised, as in the case of this organization, the norm is that representative government will adequately reflect the will of the electorate. Controls such as plebiscites which are onerous and expensive exercises are appropriate only where there is a body of the membership sufficiently moved to challenge the government. In this 21. organization, with available avenues, through the branches, and the Federal Executive, for the application of pressure to the Federal Council, and the plebiscite provisions in reserve, there are controls of significance. Also, despite the width of subject matter with respect to which rules may be made by the Federal Council it is an important consideration that, in a practical sense, the problem before the Court concerns only those rules which might be made, which, although unacceptable to some members, are not unreasonable, oppressive or unjust. Those which are offend s.140(1) and are invalid: see R. v. Judges of the Engineering Union (Shearer's Case) (1960) 103 CLR 368; Cook v. Crawford (supra) per Sheppard J. at p.149. All the rules which are made reflect the view of a representative body and are thus the product of a system in which there is a significant element of democracy. Accordingly it is difficult to make a judicial finding that, in the absence of conditions precedent to the exercise of the authority of Federal Council to amend rules and make new rules, the rules of the organization contravene the provisions of s.140(1)(c). In my opinion no such finding could or ought to be made. Accordingly I would reject the contention that rr.23(a) and (b) or 57 impose upon members conditions, obligations or restrictions which having regard to the objects of the Act and the purposes of registration of 22. organizations under the Act are oppressive, unreasonable or unjust or that such rules fail to make a provision required by a provision of this Act. This reference should be determined accordingly. Deh, en a YN wee et ee OR ye thy aE PS, i Ye le "soe ; PAD Bea . , IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSW No. 4 of 1983 INDUSTRIAL DIVISION BETWEEN: STEPHEN WRIGHT and JUDITH MARY WALKER Applicants and K. McLEOD, J. ANGUS, P. K. REYNOLDS V. WINNEY, B. PENDERGAST, R. THOMAS, K. DAVERN, I. GRANT, J. EASTON, I. WEST, J. BOOKER, G. DUNCAN, J. DWYER, J. CONVERY, I. LARCOMBE, M. CLARK, J. WLUSON, G. CHRISTIE, R. PURVIS, L. ASPINAL, J. TROUSDALE, I. THOMAS, K. HALLAM, B. DUNN, P. BRENT, P. THOMPSON and THE AUSTRALIAN INSURANCE EMPLOYEES UNICN Respondents CORAM: Bowen C.J., Smithers, Evatt, Northrop and Sheppard Jd+ DATE: 28 November 1983 PLACE: Sydney EVATT and NORTHROP Jd. REASONS FOR JUDGMENT The applicants are members of the Australian Insurance Employees' Union, "the Union", an organization under the Conciliation and Arbitration Act 1904, "the Act". The respondents, other than the Union, are members of the Union and are members of a committee of the Union, namely the Federal Council. The applicants bring these proceedings under s.14l of the Act. The Union was added as a party during the hearing of the application before this Court. Because of the orders sought under sub-section 141(8A) of the Act, it was necessary that the Union have the opportunity of being heard by the Court; see sub-section 140(5F). Two main issues are raised by the proceedings; first, whether a rule of the Union which empowers the Federal Council of the Union to make an alteration to the rules of the Union without direct consultation with or participation by branches or members of the Union contravenes sub-section 140({1) of the Act; secondly, whether the rules of the Union contravene sub-section 140(1) of the Act in a specified respect, namely that they fail to provide for the control of committees of the Union by the members of the Union. These two l1ssues raise principles which have application generally to organizations. For that reason, the Court, constituted by a single Judge, ordered, pursuant to s.118C of the Act, that the proceedings be heard and determined by a Full Court. The proceedings came on for hearing before a Full Court constituted by five Judges. Counsel appeared on behalf of the applicants and the respondents respectively. The Court gave leave to the solicitor for the Australian Council of Trade Unions, "the A.C.T.U.", to appear aS amicus curiae on behalf of the members of the A.C.T.U. The solicitor for the A.C.T.U. made submissions supporting the view that a rule of an organization which empowered a committee of the organization to make an alteration to the rules of the organization without direct consultation with or participation by branches or members of the organization did not contravene sub-section 140(1) of the Act. The Court has received much assistance from the submissions of counsel and » from the submissions of the solicitor for the A.C.T.U. Reference is made to the relevant statutory provisions. Part V1lil, comprising ss.132-158 inclusive, of the Act, is headed "Registered Organizations". In the Act, the word "organization", except where otherwise clearly intended, means any organization registered pursuant to the Act? sub-section 4(1). Under s.132, specified types of associations may, on compliance with the prescribed conditions, be registered as organizations. Sub-sections 132(2) and (3) are set out: "(2) The conditions to be complied with by associations so applying for registration and by organizations shall be as prescribed. (3) Upon registration, the association shall become and be an organization." Sub-regulation 115(1) ef the Conciliation and Arbitration Regulations prescribes conditions to be complied with by an association applying for registration and those conditions apply in relation to organizations; sub-reg. 115(2). relevant parts of sub-reg. 115(1) are set out, but for sake of clarity, the word "association": the word "organization" is substituted "REGULATION 115 - Conditions of registration (1) The following conditions are prescribed conditions to be complied with by an organization ... (d) The affairs of the organization shall be regulated by rules ... providing, in relation to the organization, for: (i) (ii) (v) the election of - (a) a committee of management of the organization and of each branch of the organization; (b) officers of the organization and of each ~branch of the organization; (ea) any conference, council, panel or other body {additional to the committee of management), which is empowered to determine policy or to exercise functions of management in the organization or branch; the powers and duties of the committees and of officers; the control of committees of the organization and its branches by the members of the organization and the members of the branches, respectively; The the for (xiv) the alteration of its rules." In addition to the conditions referred to in sub-section 132(2), the rules of an organization must comply with the detailed conditions specified in sections 133 and 133A of the Act. Section 133AA provides that elections for specified offices within an organization shall be made by secret postal ballot. Under sub-sections 139(1), (2) and (3) of the Act, a change of the name of an organization or an alteration to its rules insofar as they relate to conditions of eligibility of membership of the organization or another specified matter do not have effect unless the Industrial Registrar consents to the change or alteration. Sub-section 139(4) is set out: "(4) An alteration of the rules of an organization to. which the consent of the Registrar under this section is not required does not have effect until particulars of the alteration have been filed in the office of the Registrar and the Registrar has certified that, in his opinion, the alteration complies with and is not contrary to the provisions of this Act, of the regulations or of an award and is not otherwise contrary to law and has been made in accordance with the relevant procedures laid down by the rules of the organization." It should be noted that the words "and has been made in accordance with the relevant procedures laid down by the rules of the organization" were inserted into the sub-section in 1977. The relevant parts of sections 140 and 141 of the Act are set out: "140(1) The rules of an organization ~- (a) shall not be contrary to, or fail to make a provision required by, a provision of this Act, the regulations or an award or otherwise be contrary to a law; (c) shall, not impose upon applicants for membership, or members, of the organization, conditions, obligations or restrictions which, having regard to the objects of this Act and the purposes of the registration of organizations under this Act, are oppressive, unreasonable or unjust; and (2) A member of an organization may apply to the Court for an order under this section in respect of the organization. (5D) An order under this section may declare that the whole or a part of a rule of an organization contravenes sub-section (1) or that the rules of an organization contravene sub-section (1) in a specified respect. (5E) Subject to sub-section (5F), the Court has jurisdiction to hear and determine an application under sub-section (2). (5F) An organization in respect of which an application is made under this section shall be given an opportunity of being heard by the Court. (5G) Where an order under this section declares that the whole or a part of a rule contravenes sub-section (1), the rule or that part of the rule, as the case may be, shall be deemed to be void from the date of the order." "141.(1) A member of an organization may apply to the Court for an order under this section in respect of the organization. eee (1G) An order under this section may qive directions for the performance or observance of any of the rules of an organization by any person' who is under an obligation to perform or observe those rules. (1H) The Court has jurisdiction to hear and determine an application under sub-section (1) ++. but, before making an order under this section, the Court shall give any person against whom the order is sought an opportunity of being heard. (8A ) Where the Court, in considering an application under this section, finds that the whole or a part of a rule of the organization concerned contravenes sub-section (1) of section 140 or that the rules of the organization concerned contravene that sub-section in a particular respect, the Court may make an order setting out that finding and section 140 applies in relation to that order as if - - (a) that order had been made in proceedings relating to an application under that section; and (b) the finding set out in that order were a declaration of the Court." For the sake reference to two further provisions of the Act. provides: "2. (a) (b) (c) (d) (e) (£) of completeness, it is necessary to The chief objects of this Act are - to promote goodwill in industry; to encourage, and provide means for, conciliation with a view to amicable agreement, thereby preventing and settling industrial disputes; to provide means for preventing and settling industrial disputes not resolved by amicable agreement, including threatened, impending and probable industrial disputes, with the maximum of expedition and the minimum of legal form and technicality; to provide for the observance and enforcement of agreements and awards made for the prevention or settlement of industrial disputes; to encourage the organization of representative bodies of employers and employees and their registration under this Act; and to encourage the democratic control of organizations so registered and the full participation by members of such an organization in the affairs of the organization." make Section 2 By sub-section 4(1) of the Act, in the Act, except where otherwise clearly intended, the word "office" in relation to an organization, means, inter alia: "(a) the office of a member of the committee of management of the organization or branch; {c) the office of a member of any conference, council, committee, panel or other body within the organization or branch which, under the rules of the organization or of the branch, is empowered to make, alter or rescind rules or to enforce, or perform functions in relation to the enforcement of, rules or to exercise any of the functions of management; ..." Turning then to the first issue raised in these proceedings. Among the orders sought by the applicants are orders that each of rules 19(b), 23(a}) and (b) and 57 contravene: (a) paragraph 140(1)(a) of the Act; and (b) paragraph 140(1)(c) of the Act. Although the proceedings were brought under s.141 of the Act, these orders can be made under sub-section 141(8A). For the purposes of determining the first issue, it is not necessary to make a detailed reference to the rules of the Union. It is sufficient to say that the rules provide for the election of committees and of officers (see sub-reg. 115(1)(d)(i)(a), (b) and (c)), and that for present purposes the relevant committee is the Federal Council which is constituted by rule 18. In the present case, the issues raised do not entail an attack upon the composition of the - 10 - Federal Council, and thus it is not necessary to consider the matters discussed in cases such as McLeish v. Kane (1978) 36 F.L.R. 80, particularly per J. B. Sweeney, Evatt and Northrop JJ. at pp.88-94. Rule 19 specifies the powers of the Federal Council and the relevant power is set out: "19. - POWERS AND DUTY OF FEDERAL COUNCIL The Federal Council shall, subject to control by the members as hereinafter mentioned, be the supreme governing body of the Union and have the management and control of the affairs of the Union and, without limiting the generality of the foregoing, shall in particular have power:- oee (b) subject to Rule 57 to make, add to, amend and rescind these Rules." Rule 20 contains provisions relating to meetings of Federal Council and rule 22 makes provisions relating to the agenda for Federal Council meetings. Normally each branch secretary is empowered to notify the Federal Secretary of all business his branch desires to have placed upon the agenda paper for biennial meetings of Council and notes of those items must be given to each branch before the meeting. Nevertheless, under rule 22 Federal Council is empowered to deal with any matter, whether it appears on the agenda paper or not. For the purpose of these proceedings it will be assumed that under ~ll- rule 22 Federal Council is empowered to make a rule alteration without prior direct consultation with or participation by branches or members of the Union. The position need not be so extreme with respect to the exercise of the power to alter rules at special meetings of Federal Council, but for general purposes rule 19(b) is the rule which is being challenged and for the purposes of that e challenge the extreme position is taken in favour of the applicants. Rule 23 contains provisions enabling Federal Council to deal with matters between Federal Council meetings by what can be described as a postal vote. Sub-rules (a) and (b) are being attacked and they are set out: "23. - MATTERS REQUIRING DECISION BETWEEN FEDERAL COUNCIL MEETINGS (a) On a motion passed by the Federal Executive that any matter requires a decision of the Federal Council between biennial meetings that matter shall be submitted to the Council for decision. Such matters may be forwarded by post, lettergram or telegram to each of the members of the Federal Council in such form as is determined by the Federal Executive. (b) The members of Federal Council shall record their vote of the matter so submitted by post, lettergram or telegram addressed to the Federal Secretary and the decision of the majority shall be binding as if such decision were obtained by vote at a regularly constituted meeting of the Federal Council." Rule 57 provides: "57. - ALTERATION TO RULES Amendments may be made to these Rules or new Rules made or any Rule may be deleted or deleted and replaced by a new Rule by a resolution of Federal Council carried by a two-thirds majority of members voting. Ona motion to alter any rule or to make a new Rule or to delete a Rule all Councillors present shall vote; provided that where an alteration to any Rule is rendered necessary by an amendment to the Conciliation and Arbitration Act, a requirement of the Industrial Registrar er an order of the Industrial Court and such alteration is submitted to a postal ballot of members of the Federal Council pursuant to Rule 23 of these Rules, the fact that not all members of the Federal Council cast a vote in such ballot shall not invalidate such ballot and any alteration so submitted shall be deemed to have been approved by the Federal Council 1f£ approved by a two-thirds majority of members voting." Sub-section 140(1)(a) has been set out. The rules of the Union contain a provision for the alteration of its rules (sub-reg. 115(1)(a) (viv)), namely rule 19(b). It is difficult to see how the applicants can make out a case under paragraph 140(1)(a). It was suggested, that if the specified rules contravened paragraph 140(1)(c) of the Act, those rules would be contrary to a provision of the Act under paragraph 140(1)(a). This is self-evident, but paragraph 140(1)({c) takes effect in its own right. It does not depend for its efficacy upon the application of paragraph 140(1)(a). If in any proceedings, the question arises whether a rule of an organization contravenes paragraph 140(1)(c), the Court has -13- power to consider that matter without reference to paragraph 140(1)(a). The true position is illustrated by the following passage in McLeish v. Faure (1979) 40 F.L.R. 462 per J.B. Sweeney, Evatt and Northrop JJ. at pp.472-3: "There is no doubt that where in proceedings brought under s.14l1 of the Act, a question arises whether a rule of an organization contravenes s.140 of the Act, the court has power to decide that issue, see Allen v. Townsend ((1977) 31 F.L.R. 431) per Evatt and Northrop J.J.: 'On these facts, it is necessary to consider whether the order sought under s.14l1 of the Act relying upon the invalidity of federal r.17(n) should be made. It is open to a party in proceedings under s.141 of the Act, or for that matter in any proceedings in any court where the matter may be an issue, to claim that a rule of an organization contravenes the provisions of s.140(1) of the Act and if upheld a party to those proceedings cannot rely upon facts dependent upon the validity of that rule. In legal proceedings of this kind, the invalidity arising from a non-compliance with the requirements of s.140(1) of the Act results from the operation of that subsection itself and the invalidity does not depend upon an order having been made in proceedings instituted under the provisions of s.140 of the Act." The reference in that passage to sub-section 140(1) is a reference disjunctively to each paragraph of that sub-section. Each paragraph has effect in its own right and paragraphs (b), (c) and (d) do not need to rely upon the effect of paragraph (a). - 14 - Rule 19(b) is a rule of the Union which provides for the alteration of the Union's rules. Sub-rules 23(a) and (b) and rule 57 contain procedural provisions and of themselves do not confer powers which contravene paragraph 140(1)(a) of the Act. Sub-rules 23(a) and (b) have general application and are not limited in their application to rule alterations. It follows that the applicants fail in their attack on rules 19(b), 23(a) and (b) and 57 insofar as that attack is based on paragraph 140(1)(a) of the Act. Turning to the applicants' attack on rules 19(b), 23(a) and (b) and 57, based on paragraph 140(1)(c) of the Act, an initial question must be dealt with. Under paragraph 140(5D) the Court may declare that the whole or a part of a rule of an organization contravenes sub-section 140(1) of the Act or, aS an alternative, the Court may declare that the rules of an organization contravene sub-section 140(1) in a specified respect. The order made is of importance since the consequences flowing from the order are different depending upon which order is made. If the former order is made, then as from the date of the order, the whole or that part of the rule shall be deemed to be void from the date of the order. If the second order is made, no rule is deemed to be void, but under sub-section 140(7) the organization has three months within which to bring its rules into conformity with the requirements of sub-section 140(1). If it fails to do so, the Industrial Registrar 1s required to bring the rules into conformity with the Act. The nature of the different forms of orders that can be made and the different consequences flowing therefrom are discussed in Linehan v. Transport Workers' Union of Australia, Federal Court of Australia, Northrop J., 27 July 1981, presently reported in (1981) L.B.Co's. Indus. Arb. Service, Current Review 570 only. In that judgment Northrop J. said: "The third matter to be considered is the consequences which in law result where a rule or the rules of an organization are contrary to s.140(1) of the Act. A summary of the history of s.140 of the Act is given in Wiseman v. Professional Radio & Electronics Institute of Australia (1978) 35 F.L.R. 24, per Evatt and Northrop JJ. at pp.32-4 and a consideration of the principles arising from that section appears at pp.38-42. See also Egan v. Maher (No. 1), (1978) 35 F.L.R. 197, per Northrop J. at pp.242-9, For present purposes, while the general principles must be kept in mind, it 1s necessary to give detailed consideration to proceedings brought under s.140 of the Act. In doing this, it is to be remembered that s.141(8A) inserted into the Act by s.17 of Act No. 108 of 1977, empowers the Court to make orders in matters brought under s.141 which have an effect similar to orders made in matters brought under s.140 of the Act. Proceedings under s.140 of the Act may be commenced in the Court by a member of an organization or by the Bureau, s.140(2) and (5B), and subject to giving the organization concerned an opportunity of being heard, the Court has jurisdiction to hear and determine the application in those proceedings. Sub-section (5D) is of crucial importance. It confers powers on the Court as follows: '(5D) An order under this section may declare that the whole or a part of a rule of an organization contravenes sub-section (1) or that -16- the rules of an organization contravene sub-section (1) in a specified respect.' The sub-section contains two limbs which are true alternatives. The words 'in a specified respect! are limited in their application and apply only to the words 'the rules of an organization contravene sub-section (1)'. They form part of the second limb only. They do not refer to the words contained in the first limb of the sub-section. The first limb makes provision for a declaration being made that the whole or a part of the rule contravenes s.140(1). Where such a declaration is made, sub-section (5G) operates of its own effect and as a result the rule or the part of the rule, as the case may be, 1s deemed void from the date of the order. The Act itself has the effect of making the rule void as against all persons whether those persons were parties to the proceedings in Court or not. One effect of this is that any declaration must be directed to particular words being all or part of the words in a rule. The Court cannot substitute new words nor, under the first limb of sub-section (5D), can it declare that a rule or a part of a rule contravenes sub-section (1) in a _ specified respect. The Act is specific and explicit. Upon a declaration being made under the first limb of s.140(5D), sub-section (5G) has the effect of making that rule void for ail purposes. Even if subsequently the cause of the contravention is removed, for example by an amendment of the Act, the rule or part which has been deemed void remains void. It needs to be re-enacted by the organization before it can have any legal effect. The second limb of s.140(5D) makes provision for a declaration being made that the rules of an organization contravene s.140(1) in a specified respect. Where such a declaration is made, sub-section (7) operates of its own effect. The organization has a period of three months from the date of the declaration in which to amend its rules to bring them into conformity with the requirements of s.140(1) as regards the matters that gave rise to the declaration. If the organization has not done that within that period, the Industrial Registrar has a duty imposed upon him to -~17- determine such alterations of the rules as will, in his opinion, bring them into conformity with those requirements as regards those matters. It is to be noticed that under sub-section (7) none of the rules nor any part of them are deemed to be void. It is true that in other legal proceedings persons may not be able to rely upon those rules insofar as they are contrary to s.140(1) of the Act, but nevertheless, the rules are not void. In particular, in the present case, if a declaration 1s made under the second limb of *~ s.140(5D), the disentitled members of the Union gain no rights or benefits additional to those they may have in the absence of any declaration being made. The power to make a declaration under the first limb of s.140(5D) is based upon a case being made, out that the whole or a part of a rule contravenes s.140(1). If such a finding is made, instead of making the declaration the Court may adjourn the proceedings under sub-section (6) for the purpose of giving the organization an opportunity of altering its rules. The effect of such an adjournment is similar in many respects to a declaration made under the second limb, but in the absence of the organization amending its rules, the Industrial Registrar has no power to amend the rules. This distinction may be of importance where the rules can be amended only by a body which under the existing rules 1s invalidly constituted. In those circumstances an alteration of the rules made by the Industrial Registrar could avoid many legal and practical difficulties. Power to make a declaration under the second limb of s.140(5D) is based upon a case being made out that the rules of the organization contravene s.140(1) in a specified respect. As has been said in a number of cases, often it is a nice question to determine what case has been made out." See also R. v. Dunphy; Ex parte Maynes (1978) 139 C.L.R. 482 per Mason Js at p.489-90. -18- The applicants' attack on rules 19(b), 23(a) and (b) and 57 of the rules of the Union, insofar as it is based on paragraph 140(1)(c) of the Act, 1s not that those rules in themselves impose cn members of the Union conditions, obligations or restrictions which, having regard to the objects of the Act and the purposes of the registration of organizations under the Act, are oppressive, unreasonable or unjust, but that because of the absence from the rules as a whole of provisions which require direct consultation with or participation by branches or members of the Union before the Federal Council makes a rule alteration, the specified rules contravene paragraph 140(1)(c) of the Act. It is doubted that this is a valid approach. In reality, the attack, if successful, would lead to a declaration under the second limb of sub-section 140(5D) of the Act. That question, however, need not be decided at present. It is sufficient to say that the difficulties facing the applicants are illustrated by the fact that their counsel was not able to formulate any principles of general application to support the contentions made. The nature and effect of the provisions of paragraph 140(1)(c) of the Act have been discussed at length in many recent cases. A number of those authorities are referred to by Northrop Jd. in Re Airline Hostesses' Association (1980) 48 F.L.R. 214 at p.26l. The passages there referred to contain lengthy discussions concerning the ~19 - concepts involved. More recently, in Linehan's case, supra, Northrop J. stated the purposes of the registration of organizations under the Act as follows: "In Wiseman v. Professional Radio & Electronics Institute of Australasia (1978) 35 F.L.R. 24 Evatt and Northrop Jd. said at pp. 38-9: 'The purposes of the registration of * organizations under the Act, stated broadly, are to facilitate the creation and settlement of disputes arising from industrial relationships between groups or classes of persons ascertained by reference to the conditions of eligibility prescribed by the rules of organizations which, upon registration, become corporate bodies separate and distinct from their members: generally see Jumbunna Coal Mine, No Liability v. Victorian Coal Miners' Association (1908) 6 C.L.R. 309); The Queen v. Dunlop Rubber Australia Ltd.; EX parte Federated Miscellaneous Workers' Union of Australia ((1957) 97 C.L.R. 1)? Williams v. Hursey ((1959) 103 C.L.R. 30); and The Queen Vv. Clarkson; Ex parte Victorian Employers' Federation ((i973) 131 C.LVR. 100)." That principle was elaborated upon in those reasons for judgment, but for present purposes it is sufficient to stress the concept that the essential purposes of registration of an organization of employees is to permit the organization to act as a party principal in presenting and maintaining the industrial interests of industrial groups of employees identified by reference to the eligibility rule of the organization, in the present case Rule 4 of the Union. In the present case, any order which had the effect of affecting adversely those persons who presently are validly eligible for membership of the Union but who would cease to come within Rule 4 if paragraphs (2) and (3) became void, would - 20 ~ offend the concept behind the purposes of the registration of organizations under the Act. If possible, such a result should be avoided." In considering the application of paragraph 140(1)(c), regard must be had to the purposes of the registration of organizations under the Act. It is important to remember that organizations should be financially viable in order to enable them to fulfill that purpose effectively. It is equally important to remember that an organization is free to choose its own internal structures including the procedures to be adopted in making a rule alteration and that the Court is not free to impose its modes of thought upon organizations because it considers certain structures to be more desirable than those chosen by the organization. It is equally important to remember that the Act itself attempts to give effect to the chief objects of the Act, as contained in s.2. Thus, the Act contains many sections providing the means for conciliation with a view to amicable agreement thereby preventing and settling industrial disputes. The Act contains many sections providing means for preventing and settling industrial disputes. The Act contains sections providing for the observation and enforcement of awards made for the prevention or settlement of industrial disputes. The Act contains many sections designed to encourage the organization of associations of employees and associations of employers and the registration of those associations under the Act. Those sections provide for the incorporation of -21- organizations, the unique position of organizations within the industrial structures in Australia, the granting of monopoly powers of representation of industrial groups defined by reference to the conditions of eligibility of organizations, the benefits flowing from awards made in the settlement of industrial disputes and the facilitation of legal process to determine issues arising between members of organizations. Paragraph 2(f£) of the Act was first inserted in 1973. At the same time new provisions implementing that new ' - chief object were inserted into the Act. The history of the legislation has been referred to in a number of cases referred to in Re Airline Hostesses' Association, supra, at p-261 and need not be repeated in detail. The position, however, is summarized in Municipal Officers' Association of Australia v. Lancaster (1981) 54 F.L.R. 129 by Evatt and Northrop JJ. at pp.152-3: "It is necessary also to make reference to what is meant by the words 'objects of this Act' appearing in s-.140(1)(c) of the Act. It is not sufficient to take those words as referring only to the paragraphs appearing in s.-2 of the Act. It is true that those paragraphs are said to be 'the chief objects of the Act', but it 1s necessary to consider the method by which the legislature has implemented those objects. In Lovell v. Federated Liquor and Allied Industries Employees' Union of Austraiia ((1978) 35 F.L.R. 72), Northrop d. said: 'In 1973, object (£) was inserted in s.2 of the Act, s.3 of Act - 22 - No. 138 of 1973. The same Act substantially amended s.133 of the 1904-1972 Act, s.52 of Act No. 138 of 1973. As a result of those amendments, thereafter the rules of organizations had to include provisions which ensured that all financial members of an organization were enabled to participate in the effective control of the organization. Putting the matter another way, the amendments to s.133 of the 1904-1973 Act were designed to give effect to the new object inserted in s.2 of the Act namely: "to encourage the democratic control of organizations so registered and the full participation by members of such an organization in the affairs of the organization'. Since 1973, s.133 of the 1904-1973 Act has been amended further, but those amendments do not detract from the object first inserted into the Act in 1973' ((1978) 35 F.L.R., at p.92). (Emphasis added.)" ' ' That history is elaborated upon at pp.153-8. Section 133AA. inserted into the Act in 1977, is a further illustration of the Legislature giving effect to the same object. The nature of paragraph 2(f) of the Act and the sections of the Act giving effect to that object can be illustrated by a consideration of organizations and their development. History shows that in the early guilds, the forerunners of associations of employees and of craftsmen, all decisions were made at general meetings at which all members were entitled to be present and vote. As the membership of guilds grew, it became impracticable for that practice to continue. Rules were adopted under which power was conferred upon committees of a guild to make decisions binding upon all members. From the commencement of the Act - 23 - in 1904 it was necessary that the affairs of organizations be regulated by rules providing for the appointment of committees of management and the powers and duties of those committees. It is interesting to note that in 1904 the word "appointment" was used. The use of the word ""election" developed much later and as time passed Parliament laid greater and greater stress upon the need for elections to be conducted by means of secret ballots and by means ensuring that every financial member had the opportunity to cast a vote. The requirement that committees of management be elected pursuant to the rules of an organization and that those committees have powers, to some extent is the very antithesis of full participation by members in the affairs of the organization as illustrated by reference to the practices of the early guilds. The position is illustrated clearly by Deane J. in the Municipal Officers' Association case, supra, at p.166: "In the present matter, the applicants placed particular reliance upon the fact that among the 'chief objects' of the Act specified in s.-2 is the object of encouraging 'the democratic control' of registered organizations and the 'full participation' by members of such an organization in its affairs. These, are, of course, ideals. Lf it were possible fully to attain them, it would be unnecessary to have any committee of management or council in an organization. The members, fully participating, would decide all questions by democratic decision. In practice, one must be satisfied with less than perfect democracy and less than full participation of members. Much must be left to office holders and to council or committee. Here, one encounters different levels at which - 24 - the nominated objects of democratic control and full participation may be relevant. At one level, democratic control and full participation could be said to be best served by allowing the members to decide for themselves the manner of election of members of council (or committee) and of holders of office to which or to whom authority to make decisions or to perform acts is delegated. At another level, democratic control and full participation are most likely to be served by provisions which maximize the participation of members of the organization or of the relevant branch or section in the election process." Under the Act, the affairs of an organization must be regulated by rules providing for the election of committees which are empowered to determine policy or to exercise functions of management of the organization; sub-reg. 115(1)(d) (i). Over the years the Legislature perceived apparent abuses as a result of which some committees did not reflect the wishes of the members of the organization. The Legislature sought to resolve those abuses by inserting into the Act special provisions to ensure that all members were able to participate fully in the affairs of their organization. This was done by providing procedures by which all financial members were able to vote for officers, including members of committees, by secret ballot and all the other means specified in the Act. At the same time, paragraph 2(f) was inserted into the Act. In that paragraph the reference to "democratic control" is used in the sense of control by ballot as democracy is known in Australia, where the relevant electorate participates in the affairs of the community by voting by secret ballot to elect the members of ~ 25 - the governing bodies of the community, whether at the Federal level, the State level or the Local Government level. The persons elected to those bodies then govern those communities until the following election when the members of the relevant electorate have another opportunity to elect those or other persons to office. Under this system of democracy, the electorate exercises democratic control through the ballot box, and in so doing participates in the affairs of the community. It is in this sense that in cases such as McLeish v. Kane, supra, the Court has had to consider whether, having regard among other things to paragraph 2(f) of the Act, a rule of an organization contravenes paragraph 140(1)(c) of the Act. Quite often the issue in that type of case is whether rules which create an imbalance between the value of votes of members of an organization are oppressive, unreasonable or unjust. The position is illustrated by Deane J. in the Muncipal Officers' Association case, supra, at p.166: ™ "Section 140(1)(c) provides that the question whether a condition, obligation or restriction is oppressive, unreasonable or unjust is to be determined 'having regard to' the objects of the Act and the purposes of the registration of organizations under the Act. This does not, however, impose a requirement that every provision in the rules of an organization should either serve or be consistent with those objects or purposes. Nor does it alter the fact that the operative test is whether, having regard to those objects and purposes, the relevant condition, obligation or restriction can properly be described as 'oppressive, unreasonable or unjust'. It does, however, mean that in answering that ~ 26 - question it is necessary to take into account relevant objects of the Act and relevant purposes of the registration of organizations under the Act (see generally Wiseman v. Professional Radio and Electronics Institute of Australasia 1978 35 F.L.R. 24 and Lovell ve Federated Liquor and Allied Industries Employees' Union of Australia (1878) "35 F.DUR:, at p.84)." In many respects, s.15AA of the Acts Interpretation Act 1901 (inserted in 1981) is a latter-day provision similar e to the principle behind paragraph 140(1)(c) of the Act. At this stage, it is important to remember that the only prescribed condition relating to the alteration of rules of an organization 1s that the rules must make provision for the alteration of the rules. The Act contains no provisions specifying conditions relating to how those alterations are to be effected. The provisions of paragraph (c) of the definition of "office" contained in sub-section 4(1) of the Act make it clear that the legislature contemplates that a committee of an organization may have power conferred upon it to alter the rules of an organization. It is true that if the rules do prescribe procedures to be followed before a rule is altered, those procedures are mandatory; see Roots v. Mutton (1978) 32 F.L.R. £5. Rule 57 of the rules of the Union is such a provision. The rules of an organization are vitally important. Any alteration to the rules of an organization involves matters of importance, but that fact, by itself, does not distinguish rules from other matters -~ 27 - involving organizations. Matters of policy may be of equal umportance as alterations to rules, but that of itself does not justify a requirement that before any decision on a policy matter is taken by a committee of an organization, the rules should provide that the committee consult with or allow participation by the branches or members of the organization. Further, the mere fact that members directly participate in the affairs of an organization, apart from participating in the ballot for the election of members of a committee, does not ensure that actions taken by an organization will not be contrary to the Act; see for example Dugmore v. Porter, (1982) 3 I.R. 418. In the present proceedings, no attack is made based on any imbalance in the weighting of votes for the election of members of the Federal Council. That issue arises in other proceedings before the Court constituted differently from this Full Court. The attack in the proceedings before this Court is directed to the absence of provisions in the rules relating to consultation with and participation by branches and members of the Union before a rule alteration is made under rule 19(b). The attack is based upon comments appearing in Cook vy. Crawford (1982) 43 A.L.R. 83. Thus, it is necessary to consider those comments. ~ 28 - In Cook v. Crawford certain members of the Plumbers and Gasfitters Employees' Union of Australia, "the Plumbers' Union", an organization under the Act, sought orders under s.141 of the Act requiring other members to comply with the rules of the Plumbers' Union. For many years the rules of the Plumbers' Union contained procedural provisions that had to be followed before a rule alteration could be made. Those procedures were mandatory and were discussed in Roots v. Mutton, supra. The Federal Council of the Plumbers' Union, after such procedural provisions had purportedly been followed, amended the relevant rule, rule 28, to confer an unfettered power: on the Federal Council to alter its rules. The trial Judge, Evatt J., having found that the procedural provisions had been complied with, held that the new rule was not contrary to sub-section 140(1) of the Act; see Cook v. Crawford, (1981) 52 F.L.R. 1, at pp.22-24. On appeal, the Full Court was constituted by Smithers, Keely and Sheppard JJ., (1982) 43 A.L.R. 83. On this aspect of the appeal, Smithers J. at pp.98-101, expressing the same opinion as Evatt J., said at pp.98-99; "However, 1t is pointed out that the new r28(5) purports to confer on Federal Council complete and unfettered authority to make and amend rules as it thinks fit and it is said that such a rule necessarily conflicts with s140(1). To confer so much power in such a fundamental area of the government of an organization must, it 1s suggested, impose upon members conditions, obligations or restrictions which having regard to the objects of the Act and the purposes of registration of organizations under the Act, - 29 - are oppressive, unreasonable or unjust. But to my mind it is not clear that this rule amendment does of itself operate to impose upon applicants for membership or members of the organization conditions, obligations or restrictions within the meaning of those words in s.140(1). There is no express provision in the Act or regulations pursuant thereto that rules not offending any of the provisions of the Act or regulations can only be made by a rule making authority if certain conditions are observed. If one were to attempt to find such provision by implication the only source of such an implication would be s140 itself. In Morris ve Federated Liquor and Allied Industries Employees' Union of Australia ((1978) 21 ALR 425) it was argued that a rule making power which was expressed in terms making no provision for the autonomy of branches and wide enough to authorize the making of a rule which invaded the autonomy of a branch in contravention of s.140(1)(d), was contrary to the provisions of that section. The Full Court of the Federal Court held that the rule, although conferring a rule making power in such wide terms, did not contravene the section. If the power were used to make a rule which contravened s140(1){d), that rule would, of course, be invalid." Keely J. agreed with the reasons for judgment given by Sheppard J. for holding that an unfettered power in the Federal Council to alter the rules of the Plumbers' Union "infringed s140(1)(c) of the Act in that it imposed upon members conditions which, having regard to the objects of the Act and the purposes of the registration of organizations, are unreasonable"; see pp.119-20. His Honour at pp.120-121 expressed brief views on the matter generally. ~ 30 - Sheppard J. considered the matter at pp.146-8. His Honour accepted the contention that under sub-rule 28(5), subsequently renumbered 27(5), the Federal Council had power, of its own motion, to alter the rules of that Union. He held that for that reason the sub-rule infringed paragraph 140(1){c) of the Act. Apart from a reference by Keely J. to a passage in Boland v. Munro (1980) 48 F.L.R. 66, which was not directly referable to the present issue, neither Keely J. nor Sheppard J. made any express reference to any of the principles referred to in the cases cited earlier in these reasons which made reference to the principles to be applied in considering the application of paragraph 140(1)(c). The substance of the view expressed by Sheppard J. in this regard is contained in the following passages. First, at p.146, his Honour said: "It was the appellants' submission that r28.5 as so amended infringed s140(1)(c) because it imposed upon members conditions or restrictions which, having regard to the objects of the Act stated in s2(f), were unreasonable, if not also oppressive and unjust. That was because the new rule failed to encourage the democratic control of the organization and the full participation by members in its affairs. The rule dealt with the fundamental question of the amendment of the rules, and thus the constitution, of the organization. As it stood until the time of the amendment, the rule at least provided for approval of the proposed amendment by one branch and knowledge by each other branch before there could be an amendment except in the limited area provided for in the old r28.5. Once power was vested in the Council to amend the rules without reference to the branches or the general membership, wholesale and fundamental amendments could be made by - 35 - In reality, an analysis of the claims made and the remedies sought by the applicants illustrates that the true nature of the attack on the rules of the Union is that they do not make provision for the control of the Federal Council; sub-reg. 115(1)(d)(v). Thas matter will be discussed later. Rule 57 of the rules of the Union specifies procedural matters to be followed before a rule alteration is made. The provisions of that rule are mandatory. The wording of the rule gives rise to difficulties in construction, but it cannot be suggested seriously that rule 57 contravenes paragraph 140(1)(c), even if on its true construction two-thirds of the members voting have power to alter the rules of the Union. The better view, however, is that even at a meeting of the Federal Council, a majority of two-thirds of the total membership of the Council is required before a rule amendment is made. If the Court made a declaration under the first limb of sub-section 140(5D) that rule 57 contravened sub-section 140(1), that rule would be deemed to be void as from the date of the declaration; see sub-section 140(5G). That result, by itself, would not assist the applicants. The procedural requirements specified in rule 57 would cease to have effect. Applying the principles discussed above, rule 57 does not contravene paragraph 140(1)(c). - 36 —- Rule 23 of the rules of the Union enables matters to be determined between the biennial meetings of the Federal Council by postal ballot. That procedure is in lieu of calling a special meeting of Federal Council, a very expensive procedure. Insofar as sub-rules 23(a) and (b) and rule 57 prescribe procedures to be followed, they are mandatory whenever a rule alteration is made. It may well be that the procedures prescribed in rule 23 are mandatory in any event. Rule 23 has general application and is not limited to rule alterations. A postal vote of members of a committee of an organization is not unusual. In fact, having regard to the purposes of registration of organizations under the Act, there is much to be said in favour of such a procedure. That procedure, in its application under rule 57, may be applied to rule alterations, particularly if the rule alterations are made necessary by reason of amendments to the Act. But even if the wider construction of rule 57 is accepted, which appears to be the better view, namely that the procedure can be applied to any rule alteration, that procedure can be so applied only after action is taken by a committee of the Union, the Federal Executive, the members of which are elected in accordance with rules which comply with the conditions specified in ss.133 and 133AA. Even then before the rule alteration can be made, it must be agreed to by a two-thirds majority of the members of the Federal Council. - 37 - If the Court made a declaration under the first limb of sub-section 140(5D) that sub-rules (a) and (b) of rule 23 contravene sub-section 140(1), those sub-rules would be deemed to be void as from the date of the declaration; see sub-section 140(5G). As a result thereof, those two sub-rules could not be used for resolving any matter requiring a decision between biennial meetings of Federal Council. Further, the practical effect would be that the whole of rule 23 in all probability would cease to have any application. Applying the principles discussed above, sub-rules 23(a) and (b) do not contravene paragraph 140(1)(c) of the Act. The remaining matter to be considered is whether the rules of the Union fail to make provision for the control of a committee, namely the Federal Council, of the Union. This attack depends upon the prescribed condition that the rules of an organization must provide for the control of committees of an organization; see sub-reg. 115(1)(d)(v). In that sub-regulation, the word "control" is to be construed in the sense of "the fact of checking and directing action, a method of restraint"; see Boland v. Munro, supra, per Evatt and Northrop JJ. at pp.77-80, and Keely J. at pp.89-90. Evatt and Northrop JJ. at pp.80-l said: "Whenever a question arises whether the rules of an organization fail to provide for the control of the committees of the organization by the members of the organization it is necessary to consider the whole of the rules of the organization, the method of electing the committees, the term of office of the members of the committee and the powers of members in general meeting. The absence of a power to call for a referendum on the decisions of a committee will not necessarily mean that the rules fail to provide for the control of committees of the organization by the members. The presence of a power to call for a referendum on the decisions of a committee may, having regard to the other rules of the organization, ensure that the rules comply with reg.115(1)(d)(v), which rules otherwise would not comply with that regulation. Each case must depend upon its own particular facts and the particular rules of the organization involved. As far as the word 'control' is concerned we would with respect agree with the opinion expressed by Joske J. in Mackenzie v. Administrative and Clerical Officers" Association, Commonwealth Public Service ((1962) 5 F.L.R. 342, at pp.364-365). As an illustration of the application of the principles expressed we refer to what was said with respect to the Vehicle Builders Employees' Federation of Australia in Sherriff v. Townsend ((1980) 48 F.L.R. 20) by Northrop J.: 'Under the rules of the federation, general meetings of members within a branch of the federation are held regularly. Delegates to federal council are elected every two years. Federal council meets at least once in each year, and special meetings may be convened upon the written request of any two or more branches or by resolution of the federal executive committee. That committee, which comprises the president, vice-president, two trustees, federal secretary and assistant federal secretary, are held at least once every four months. In addition, under r15, any two or more branches may, at special meetings convened for the purpose, demand a ballot of all members of the federation upon any question, and the result of the ballot 1s binding on all members of the federation. In all these circumstances the rules of the federation make provision for the - 39 - control of committees of the federation by the members of the federation. This control will become even stronger when the rules of the federation are altered to overcome the imbalance of representation and voting value presently existing in the federal council as between members of the federation in different branches' ((1980) 48 F.L.R., at p.57)." In Cook v. Crawford, Evatt J., 52 F.L.R. at pp.23-4 and Smithers J., 43 A.L.R. at pp.99-101, adopted that approach. That approach should be adopted in the present case. The rules of the Union providing for the election of members of the Federal Council 'comply with the conditions specified in ss.133 and 133AA of the Act. The last part of rule 19 provides: "All decisions of the Federal Council shall be final and shall remain in force unless and until varied, "amended or annulled at a subsequent meeting or ballot of the Federal Council or by a plebiscite of members of the Union." The members of Federal Council, apart from the Federal Secretary and Assistant Federal Secretary, hold office for two years. The two named officers hold office for four years. -~ 40 - The Union has approximately 23,100 members throughout Australia. Its internal structure is based on branches. There are six branches based on the six Australian States. The number of members in branches varies from approximately 550 in Tasmania, 1,400 in Western Australia and 2,050 in South Australia with a maximum of approximately 9,630 in New South Wales. The government, management and control of the affairs of the Union in each State is, subject to the rules of the Union and any proper direction of Federal Council or Federal Executive, vested in branch committees of management elected in accordance with the rules. Under those rules within each branch-~the officers and members of the committee are elected by rules which conform with the conditions prescribed by sections 133 and 133AA of the Act and sub-reg. 115(1)(d)(i). Members of branch committees hold office for a period of two years. Each committee of management is required to meet at least once every two months and may meet at other times at the direction of the branch president upon a request by not less than one third of the members of the committee. A full report of the business of the branch is presented to the annual meeting of members of the branch. Each branch is able to have any item placed on the agenda for the biennial meeting of Federal Council. Any three branches are empowered to require that a special meeting of Federal Council be convened. The president and secretary of each branch are delegates to Federal Council. Each president 1s a member of the Federal Executive. A - 41 + special meeting of Federal Council must be convened on a resolution of Federal Executive. A copy of the minutes of each Federal Council and Federal Executive meeting must be forwarded to each branch and sub-branch and must be available to all members for inspection. The rules make provision for an annual meeting of members in each branch. At the written request of not less than 200 financial members, or 10% of the membership of the branch, whichever is the less, a special meeting of the branch must be held. In Tasmania such a request must be signed by 55 members, in Western Australia by 140 members and in the other branches by 200 members. The quorum for any meeting of a branch is 30 financial members or 5% of the financial membership of the branch whichever is the less. In Tasmania, a quorum thus is 27, while the other branches it is 30. It is possible that in all the circumstances, that part of rule 48(3) which requires the written request of not less than 200 financial members of the branch or 10% of the members, whichever is the less for a meeting at which the quorum is 30, may be contrary to paragraph 140(1)(c) of the Act. This is a matter which should be considered by the Union. In all the circumstances, however, the requirements of rule 48(3) do not affect adversely the final conclusion reached in these reasons. A plebiscite of members may be held at the discretion of Federal Council or Federal Executive and shall be held if required by resolution of the - 42 - committees of management of three branches or by a requisition in writing signed by not less than 15% of the financial members of the Union, in the present case, by some 3,465 members. Plebiscites at the branch level must be hel¢ 1£ required by at least 200 members or 10% of the branch membership, whichever 1s the less. It follows that, at the very least, 395 members spread between the Tasmanian, Western Australian and one other branch or, at the most, 600 members spread between three of the larger branches, are able to initiate branch plebiscites which could result in a plebiscite of all members of the Union. A similar power to the plebiscite rule is contained in rule 65, Power to Review. Applying the principles expressed in Boland v. Munro, supra, to the rules of the Union, 1t becomes apparent that the rules of the Union make provision for the control of committees of the Union by the members of the Union. This is done both by the election procedures to elect committees of management and the other powers by which members are able to exercise a power of checking and directing action and a power of restraint. In the result, the rules do not contravene sub-section 140(1) of the Act in the specified respect, namely failing to comply with the requirements of sub-reg. 115(1) (da) (v). The power of the Federal Council to alter the rules of the Union is not absolute. The rules of the Union, the ~ 43 - provisions of the Act and the requirements of law each impose restrictions on the exercise of that power. Members of Federal Council know or should know of those restrictions. That knowledge of itself operates as a constraint on the exercise of the power. The restrictions and constraints imposed by the rules of the Union result from those rules which provide for the control of committees of the Union, inckuding the Federal Council, by the members of the Union as required by sub-reg. 115(1)(d)(v), as well as for the metnced by which members fully participate in the election of the Federal Council. | Under the Act, any rule alteration does not have effect until the Industrial Registrar has certified that in his opinion the alteration complies with and is not contrary to the provisions of the Act, of the regulations, or of an award, and is not otherwise contrary to law and has been made in accordance with the relevant procedures laid down by the rules of the Union. Thus, before he is empowered to give the requisite consent, the Industrial Registrar must form the opinion that the alteration does not result in a contravention of, among other things, the provisions of sub-section 140(1) of the Act. The Industrial Registrar has power to refer a question of law arising in a matter before him for the opinion of the Court, sections 112 and 118A(1) of the Act. The Airline Hostesses' Association case, supra, came before the Court on such a reference in relation to a matter before the Industrial Registrar under sub-section 139(4) of the Act. Any member of the Union may commence -~44.- proceedings under section 140 of the Act seeking an order directing that an altered rule contravenes sub-section 140(1). In those proceedings, the member may be able to receive financial assistance under s.141A of the Act. If in any legal proceedings at all, including proceedings under s.141 of the Act, the Union or a member seeks to rely upon a rule alteration, the validity of that altered rule may be challenged including the issue of whether the altered rule contravenes sub-section 140(1) of the Act; see Egan v. Maher (No. 1) (1978) 35 P.L.R. 197 per Northrop J. at pp.242-251. The members of Federal Council, in exercising the powers conferred upon the Federal Council, including the power to alter rules, must exercise those powers bona fide for the purpose of those powers. If this is not done, the exercise of the power is void and of no effect, and if a rule alteration is made mala fide, that rule alteration is ineffective; generally see Allen v. Townsend (1977) 31 F.L.R. 431 per Evatt and Northrop JJ. at pp.483-488. Having regard to all these matters, there is no warrant for the Court to impose its will to determine the form of the internal structures of the Union. That is a matter for the Union itself. Parliament could, if it thought desirable, legislate with respect to procedures to be followed by organizations before a rule alteration could be made. Parliaments have done so with respect to companies incorporated under the various Companies Acts. Parliament - 45 - hes not done so with respect to organizations. The Court should not do so under the guise of exercising the judicial power conferred by s.140 of the Act. In conclusion, it is salutary to note what was said by Deane J. in the Municipal Officers' Association case at pp.164-5: "The constraints and restrictions imposed, by positive and negative requirements of the Act and regulations, upon the freedom of the members of an organization to select, for themselves, the rules which they consider appropriate for their particular organization, are real and significant. It cannot, however, be too strongly stressed that, subject to those constraints and restrictions, the content of the rules of a registered organization is primarily a matter for the members (Watson v. Australian Workers' Union [(1967) 10 F.L.R. 347, at p.361]; Cassidy v. Amalgamated Postal Workers' Union of Australia 1967) lil F.L.R. 124, at pp.126-127]; Wiseman v. Professional Radio and Electronics Institute of Australasia ((1978) 35 F.L.R. 247; Re Airline HYostesses' Association [(1980) 48 F.L.R. 214]). This Court has no authority generally to supervise the content of the rules or to require that the rules comply with what those constituting the court might see as preferable, desirable or ideal. To put the matter differently, it us for the members, or those entrusted by the members in that regard, to decide the content of the rules. The function of this Court ius to determine, in accordance with ordinary judicial procedure, whether some provision or provisions of the rules adopted by, or on behalf of, the members can properly be described not merely as undesirable but as oppressive, unreasonable or unjust." The rule nisi should be discharged. Mr Jusiee N, Phablip. Fuath and lus Homo mE iol. M blag 2.8.4(.83 ae Sia wings eye ST bey Le ied, a 4 IN THE PEDRERAL COURT OF AUSTRALIA NEw SOUTE WALES DISTRICT REGISTRY rere Zz oO > [o) >) I Ne] ep) WW INDUSTRIsSL DIVISION IN THE MATTER GF THE CONCILIATICN AND aRoITRACICN SCT 1904 as amenaed BetVaEN STEPHEN «RIGHT and enor. Cleimants K. McL=CD and ors. respondents CCRa¥: Bowen C.J., Smithers, Evatt, Nortarop and Sheppard JJ. SHEPP2RD J. 23 Vem (48 3 REASOMS FOR JULGMENT On 15 June, 1983, Evatt J. ordered, pursuant to s.118C of the Conciliation and Arcitration ect 2°04 ("che Act"), tnat tnis natter be heard and determined by 2 Full Court. The Rule to Show Cause was made oy Evatz J. on 1l February, 1983. On that dey his Honour reserved hig decision in two matters (Nos.4G ana 42 of 1982) in which the validity of certein of the Rules of The sustrelien Insurance Employees! Union ("tne Union") wes cnellenged. it was agreed ty the parties tnat it woula be prefaracrle E t i for jurgment to be given in this matter cefore his Honour delivered judgment in the earlier matters, His Honour was aiso of that view so that no jguagment in those matters has been given. The claimants are both members of the Union. The first claimant is the Treasurer of the New South wales Branch and also a member botn of its Fedérel Council and Federal Exscutive. The second claimant is the Secretary of tne New Soutn wales Branch. She too 1s a member both of the Federal Council and tne Federal Executive. The personal respondents are 27 of the remaining members of tne Federal Council. At the hearing before us the Union itself was added as a respondent. Before coming to the matters wnich arise for deter- mination it 1s necessary to refer to a number of the Rules of the Union. Rule 36 provides for the setting up by the Union of branches in any State or Territory. The Rule confirms the existence of branches in each of six States. The government, management and control of the affairs of the Union in each State 1s, subject to the Rules and any proper direction of the Fedrral Council or Federal Executive vested in a Branch Committee of Management. Each such committee has such powers as are vested in it by the Rules or delegated to it by the Council or the Executive. Rule 38 provides for the constitution of committees of management and Rule 39 for those committees' powers and duties. By Rule 39, and also by Rule 48, a Branch Committee of Management 1s to meet at least once every two months. By Rule 48 there,1s to be an annual general meeting of each Branch. Meetings of a Branch may also be called at the written request of not less than 200 financial members or 10 per cent of the membersnip of the Branch whichever 1s the less. At the time of tne hearing tefore us the New South Wales Brancn had 9,623 members, the Victorian Eranch 7,098, the Zueensland Branch 2,254, the South Australian Branch 2,047, the vestern australian Branch 1,403 and the Tasmanian Branch 549. Some qualification of these numbers may be necessary, but for present purposes they provide a sufficient indication of the current membersnip of each Branch. Rule 19 provides for the powers and cuties of Federal Council. The Rule opens with the usual words, "The Federal Council shall, subject to control by the members "as hereinafter mentioned, be the supreme governing body of the Union and have the management end control of the affairs of the Union and, without limiting the generality of the foregoing, shall in particular have power ....". There follow 20 lettered para- graphs. Paragraph (b) is, "subject to Rule 57 to make, add to, amend and rescind tnese Rules". Rule 57 is in tne following terms: "Amendments may be made to these Rules or new Rules made or any Rule may be deleted or deleted and replaced by a new Rule by a resolution of Federal Council carried by a two-tairds majority of members voting. On a motion to alter any rule or to make a new Rule or to delete a Rule all Councillors present shall vote; provided that where an alteration to any Rule is rendered necessary by an amendment to the Conciliation and Arbitration Act, a rejuirement of the Industrial Registrar or an order of the Industrial Court and such alteration 1s submitted to a postal callot of members of the Federal Council pursuant to Rule 23 of these Rules, the fact that not all members of the Federal Council cast a vote in such ballot shall not invalidate such ballot and eny alteration so submitted shall be deemed to have been approved by the Federal Council if apnroved by a two~tnirds majority of members voting." Rule 23 referred to in Rule 57 1s headed, "Matters requiring decision between Federal Council meetings". Rule 20 provides in paragraph (a) that tne Feaeral Council shall meet biennially at such time during the month of October and at such place in Australia as may be determined by the Council, or in default of such determination, by the Executive. Rule 23 1s as follows: "(a) On a motion passed by the Federal Executive that any matter requires a decision of the Federal Council between biennial meet- ings that matter snall be submiuted to the Council for decision. Such matters may be forwarded by post, lettergram or telegram to each of the members of the Federal Council in such form as is determined by the Federal Executive. (bd) The members of Federal Council shall record their vote of the matter so submitted by post, lettergram or telegram addressed to the Federal Secretary :and the decision of the majority shall be binding as if such decision were obtained by vote at a regularly constituted meeting of the Federal Council. (c) All votes of their confirmation shall be Slgned by members of Federal Council recording the same. If any vote be recorded oy means other than letter then such vote shall be confirmed by letter signed by the Federal Councillor. (d) If a magority of tae members of Federal Council notify the Federal Secretary that the matter so submitted to them is of such importance tnat a meeting of the Federal Council should be convened to deal with it, then sucn Federal Council shall be forthwith convened by the Federal Secretary to meet at such time and place as the Federal Executive snall determine. (e) If a special Federal Council meeting te held for the purposes of the immediately preceding clause such other matters as the Federal Executive or Federal Council shall determine may ve submitted to the meeting." In addition to providing for biennial meetings of Council, Rule 20 also provides tnat upon the written request of any three Branches, or by resolution of the Executive, there shall be called a special meeting of the Council. Biennial meetings of Council are to be held on two months' notice and special meetings on 14 days' notice. Rule 18(a) of the Rules presently provides as follows: "(a) The Federal Council of the Union shall consist of:- (i) the Federal President, the Federal Vice-President, the Federal Secretary, the Assistant Federal Secretary, and the Federal Treasurer of the Union; (ii) the Fresident and Secretary of eacn Branch of the Union (who shall be and act as delegates of their respective Branches); and (i2i) additional delegates from the Branches on the following basis:- 1-$99 financial members - one (1) delegate. 1000-2999 financial members - two (2) delegates. 3000-6999 financial members - three (3) delegates. 70CO financial members anu thereafter ~ four (4) delegates." Rule 24 provides for the officers of the Union and tneir election. Rule 25 provides for the Federal Executive which 1s to consist of the Federal President, the Federal Vice-President, the Feaeral Secretary, the Assistant Federal Secretary, the Federal Treasurer, the President of each Branch and one additional delegate from each Branch. Rule 26 provides for the powers and duties of the Executive. When the Council is not in session, the Executive has all the powers of the Council except those referred to in five provisions of the Rules ancluding Rule 19(b). Thus it does not have power to amend the Rules. Rule 58 provides for plebiscites of members. Paragraphs (a) and (d) of the Rule are as follows: "(a) Plebiscites of members may be neld for any purpose at the discretion of Federal Council or Federal Executive and shall be held if required by resolution of the Committee of Management of three Branches or oy a requisition in writing Signed by not less than 15 per cent of the finan- cial members of the Union. Such resolutions and requisitions shall specify the matter or matters and copies of such resolutions ana the original requisition shall be posted adaressed to the Federal Secretary cf the Union at its registered address." "(d) Any decision of members of the Union taken by plebiscite shall be binaing on the Union, its Federal Council, its Federal Executive and 1ts Officers and members, and any decision of the members of a Branch taken by plebiscite shall ke binding on tne Branch, its Committee of Management officers and members." Rule 59 provides for voting at gen:ral or special meetings of Branch committees of managenent or meetings of the Council or the Executive. Votes may be cast person- ally or by proxy 1n accoraance with Rule 60. Voting at meetings o£ the Council is to be by show of nands except in such cases as Federal Council decides otherwise. Rule 60 provides that, in the event of the absence of any member of the Council from a meeting, in the case of an officer of the Union, he may appoint in writing another Federal Councillor or financial member of the Union his proxy to exercise his vote at such meeting. Provisions are also made for proxies to be appointed by members of the Federal Executive and by members of Branch Committees of Management absent from meetings. Rule 61 contains provisions concerning quorums for meetings of various kinds. At any meeting of the Council or the Executive, half the persons eligible to be present constitute a quorum, provided that no less than three Branches are represented either by a Councillor or by proxy. The only other rule which need be mentioned is Rule 65 which contains a power to review. It is com- parable to the plebiscite provisions of Rule 58 and 1t 1s unnecessary to set out the detail of it. Ihe matter which has led the claimants to seek the relief here in question 1S a proposal to amend the rules of the Union, particularly Rule 18(a). The proposal is that Rule 18(a)(11) be deleted and replaced by a provision in the tollowing terms:- "(2i) Delegates from Brancnes on the basis of one Delegate for each 1,00U finan- cial members or part thereof." It is also proposed to delete sub-paragraph (121i) of the Rule. The effect of this amendment, if passed, would be to take away membership of the Council from the rresident and Secretary of each Branch. The sliding scale in sub-paragraph (111) would also go and be replaced by the new sub-paragraph (1i) which simply provides for one delegate for each 1,U00 financial members or part thereof. If this were to occur, the second claimant would lose her position on Federal Council, she being a member thereof by reason of the fact that she 1s the Secretary of the New South wales Branch. The representation of the various Branches would change. On the figures earlier given, New South wales would have ten representatives on Council, Victoria seven (or perhaps six, in the Light of what we were told at the hearing), wueensland three, South Australia three, Western Australia two and ''asmania one. l have excluded from this statement the tederal office bearers who are members of the Council by reason of the provisions of sub-paragraph (1) which is not altered by tke proposal. there are other amendments proposed. 'there 1s an amendment proposed adaing a new paragraph (e) to Rule 18. Amongst other things, 1t provides that, where a person holds oftice as a President or Secretary of a Branch, he shall cease to be entitled to be a member of Council and/or a Delegate of that Branch to Council by virtue only of the tact thet he holds such ottice as a President or Secretary of a Hranch. Lt also provides that, where a Branch becomes entitled to more Delegates to Council than it had immediately prior to the certification of the new sub-paragraph (ii) of paragraph (a), the Branch shall be entitled to elect such extra number of Delegetes to which 1t becomes entitled in accoraance with Rule 40 wnich provides for Branch elections. The only other amendment wnich 1t is necessary to mention 1s the addition of a new paragraph (c) to Rule 26, in the following terms: "(c) where, at a meeting of the Federal Executive, the delegates representing not less tnan three branches so request, a decision of that meeting shall be forthwith referred to the Committees of Management of the Branches for consideration and should the Committees of Management of not less than three Branches request the Federal Secretary 1n writing or by telegram within fourteen days of such Federal Executive meeting that the decision of the Federal Executive not be implemented, 10. "then no action shall be taken on the decision until and unless ratified by the Federal Council either at a meeting of the Federal Council or pursuant to Rule 23 of these Rules as if a motion nad been passed by Federal Executive that tne matter recuired a decision of Federal Council." In order that the amendments might be passed, the Federal Executive, on 24 January, 1983, authorised a postal ballot of Federal Council members pursuant to Rule 23(a). The Executive determined that the close of the ballot should be at 4 p.m. on 11 February, 1583, tne day upon which his Honour granted tne Rule in this case and reserved his judgments in tne other cases, The ballot paper was despatched to members of Feceral Council along with an explanatory letter dated 26 January, 1983. By 9 February, 1983, ballot papers had been received from 21 members of the Council. All 21 ballot papers contained votes in favour of all of the proposed Rule changes. In evidence given in tne other proceedings, the respondent, K. McLeod, who 1s the Federal Secretary of the Union, referred to the result of tne ballot. He regarded the amendment as passed and said thet 1t would be submitted to the Industrial Registrar for certification li. pursuant to s.139 of the Act upon the conclusion of the ballot. The application 1s made pursuant to s.141 of the Act. Reliance is placed on tne provisions of paras. 140(1)(a) and (c) thereof. Those provisions are as follows: "140(1) The Rules of an organisation - (a) shall not be contrary to, or fail to make a provision required by, a provision of this Act, the regul- ations or an award or otherwise be contrary to a law; (c) shall not impose upon applicants for membership, or members, of the organis- ation, conditions, obligations or restrictions which, having regard to the objects of this Act and the purposes of registration of organisations under this Act, are oppressive, unreasonable or ungust; Reference needs also to be made to sub-para.115(1)(@)(v) of the Regulations. It provides that certain conditions are prescribed conditions to be complied with by an association applying for registration. These include a condition that its Rules provide for the control of committees of the association and its branches by the 12. members of the association and the members of the branches, respectively. Central to the submissions made on behalf of the claimants are the provisions of vara.(2)(f) of the Act. That paragraph is as follows: "(2) The chief objects of this Act are - eee eee coeee (f) to encourage the democratic control of organisations so registered and the full participation by members of such an organ- isation in the affairs of the organisation." The specific submissions which are made on behalf of the claimants are: (a) The Rules of the Union, and in particular Rules 23(a) and (b) and 57, insofar as they permit the Federal Council of the Union to alter the Rules thereof without recourse to the Branches or the membership as a whole, contravene para.140(1)(a) and/or para.140(1)(c) of the Act. (b) Alternatively, that the Rules of tne organis- ation, and in particular Rules 23(a) and (bd) and 57, fail to make a provision recuired by the Act or tne Regulations made pursuant thereto, 13. A principal submission made on behalf of the claimants concerns tne proper construction of and place in the Act of para. 2 (f) earlier set out. That 1s the matter to which I propose first of all to come. Paragraph (f) was added to s.2 of the Act by the Conciliation and Arbitration Act 1973 (No.138 of 1973). The amendment came into operation on 13 November, 1973. Although the matter may not have been finally resolved, the prevailing view in this Court is that, in order to determine the mischief at which a statute, or an amendment thereof, 1S directed, it is permissible to have regard to what is said by a Minister in a second reading speech. That was the view of Mason J. both in Wacando v. The Commonwealth (1981) 37 A.L.R. 317 (pp.335- 336) and Federal Commissioner of Taxation v. Whitfords Beach Pty. Limited (1982) 39 4.L.R. 521. In the latter case, his Honour said (p.533): "As I said in Wacando v. Commonwealth (1981) 37 ALR 317 at 535-336, generally speaning, refer- ence cannot be made to what is said in Parliament for the purpose of interpreting a statute. But in my opinion there are grounds for making an exception for the case where a bill is introcuced to remedy a mischief. Then, to have regard to the purpose for wnich the legislation was enacted as stated by the Minister in charge of the bill would conform to the rule that extrinsic material is admissible to show 14. "tne mischief which the statute 1s designed to remedy. I acknowledge that the inadmissibility of Parliamentary debates, as an aid to the con- struction of statutes 1s supported by powerful authority. ......-.. But there 1s a case for treating the Minister's statement, particularly wnen it 1s not contested, as cogent evidence of the mischief aimed at, evidence certainly as cogent as the extrinsic materials from which the court would draw an inference in many cases." In T.C.N. Channel Nine Pty. Limited v. Australian Mutual Provident Society (1982) 42 a.L.R. 496 a Full Court of this Court applied what Mason J. had said. In the course of their reasons, their Honours referred to the passage which I have quoted from his judgment in the Wnitfords Beach case. They also referred (p.508) to the fact that no other members of the High Court who sat in either that case or in the Wacando case dealt with this question. They considerea what Gibbs C.J. had said in the Whitfords Beach case as to the admissibility of Parliamentary debates not to be directea to the question of whether or not it was permissible to look at a Minister's second reading speech for the purpose of determining the mischief which the statute was intended to remedy. They concluded that the Hansard report of 15. the second reading speeches of the relevant Ministers and the explanatory memorandum circulated to members of Parliament should be taken into account in order to determine the mischief at which the legislation under consideration was directed (p.508). ln my opinion it 1s helpful, in endeavouring to ascertain the mischief at which para. 2 (f) of the Act was directed, to consider what was said in the second reading speech made when the amendment was introduced. The Bill which became the Amending Act of 19735 was the Conciliation and Arbitration Bill 1973 (No.2) which was introduced into the House of Representatives by the then Minister for Labour, Mr. Clyde Cameron, on 30 August, 1973. The Bill replaced an earlier Bill which had been introduced anto the House by Mr. Cameron on 12 April, 1973. In his second reading speech in support of the second 31ll, Mr, Cameron incorporated wnat he had said when introducing the earlier Bill. He said (referring to the earlier B111) (Hansard p.659): "The third major change was provision for democratic control of unions and the fullest participation by union members in the affairs of their organisation. That 1s a principle which was clearly stated by the Australian Labor Party before it was elected to govern this country and it is a principle which has the wholehearted endorsement of the trace union move- ment and, I suggest, of the public at large." lo. In his earlier speech of 12 April, 1973, Mr. Cameron, under the heading "Participatory Democracy" had said (Hansard p.1431): "Participatory democracy will be an essential ingredient for the proper functioning of the amalgamated unions. As unions become larger, and their govern- ing bodies become more remote from the membership, it will be important to safeguard against the development of bureaucratic relations between the Leadership ana the rank and file. This Government will encourage the elimination of tendencies that prejudice demo- cratic comtrol of trade unions by assisting rank and file members to bring their grievances over alleged defects in rules and in abuse of rules, to the Commonwealth Industrial Court for examination and, where called for, correction. The platform of the Australian Labor Party calls upon the Government to ensure a system of demo- cratic controi of all unions, allowing fuliest participation by members in their affairs. een eee eee Financial members are to be given an ebsolute right to vote in any election for office bearers and in plebiscites touching rules or policy. wt The matters wnich moved those responsible tor the 19/35 amendment were not then new nor peculiar to Australia. The opening chapter ot "Union Democracy" (ly¥d6) by Lipset, ''trow and Coleman (an American work) is entitled "Democracy and Oligarchy in Trade Unions". The second paragraph of the chapter is as tollows (p.5 "In tew areas of political life 1s the dis- crepancy between the formal juridical guarantees of democratic procedure and the actual practice of oligarchic rule so marked as in private or voluntary organizations such as trade unions, proressional and business associations, veterans' groups, and cooperatives. In fact, as many observers have noted, almost all such organiz- ations are characterized internally by the rule of one-party oligarchy. That 1s, one group which controls the administration, usually retains power indefinitely, rarely faces organized opposition, and when faced with such opposition often resorts to undemocratic procedures to eliminate 1t. This 1s especially true for national organizations." In the same vein are chapters 7 and 9 of a work, "The Industrial Democrats" by Radice (1978). In the second of these chapters, under the heading "The Iron Law of Cligarchy?", the autnor says (pp.165-166): "in a previous chapter, it was pointed out tnat one of the current criticisms of trade unions 1s for their 'lack of democracy'. There is notning particularly novel in this; indeed the most formiaable critique of trade union democracy ever made was put forward by tne Germén academic, Robert Michels, at the beginning of tne twentieth century. Michels' famous work was mainly concerned with political parties; but he also concluded that 'in the trade union movement, the authoritarian character of tne leaders and their tendency to rule democratic organisations on oligarchic lines, are even more pronounced than in the political organ- isations'. He gave a number of reasons why the 'aron law of oligarchy' was applicable to trade unions: i1t was impossible, because of the need for a permanent organisation and for organisers to conduct negotiations and arrange strikes for trade unions, to operate on the basis of direct democracy; officials stuck like limrets to tneir jobs for mainly economic and social reasons; ard, because 18. "of their exvertise and prestige, the membership acquiesced in their virtual permanence in office, Oligarchic control was also reinforced by mass apathy: 'The majority of members are as indifferent to the organisation as the majority of the electors are to parliament', Michels pointed out that institutional needs could supplement and even displace the original goals of an organisation: 'The ... doctrines are, when- ever requisite, attenuated ana deformed in accordance with the external needs of the organisation, Organisation becomes the vital essence ... More and more invincible becomes its aversion to all aggressive action ... Thus, from a means, organisation becomes an end'." Australian writings on the subject include "Trade Unions in Australia (1980) second edition, Martin, especially at pp.87-S$4, "Industrial Democracy in Australia" (1980) edited by Pritchara and "Democracy in Trade Unions" (1982), Dickenson, especially chapter 2 on "Theory and Practice of Democracy in Unions". In the second of the works cited under the heading "Trends in Democracy", the author deals with political democracy ana organisational democracy. The latter 1s divided into two sub-neadings "Shareholder Democracy" and "Trade Union Democracy"; see pp.101-107. I do not quote from these works. The discussion in them is along the lines of tnat in the overseas works to which I have referred. 19. Upon the basis of what was said in the second reading speeches to which I have referred, I conclude that the mischief at which para. 2 (f) was directed was the increasing tendency of trade unions to become undemocratic, not in the sense that their officials and council were not periodically elected, but in the sense that there was developing an undesirable tendency towards executives and councils becoming remote from the membership. ' There was inadequate consultation by them with the membership and a lack of participation by the membership in union affairs. The ascertainment of the mischief at which a statute 1s dzurected 1s only one of the aids to its interpretation. One basic concern will always be with the language which 1s used. Although the proposition ought not to be stated too positively, it will usually only be in cases of ambiguity that the taking into account of the mischief a statute was intended to remedy will be of substantial assistance; Craies on Statute Law, 7th edition at pp. 85-86 and 96-98. In my opinion there is a degree of ambiguity in para. 2 (f) of the Act. What 1S meant oy the expression "democratic control of organisations"? As some of the 20. writings earlier referred to point out, there are many types of democracy. An institution may be democratic but it may nevertheless not involve its members in any of 1ts decision making. This may be done for them by a council or an exeeutive. An anstitution is democratic because its governing body 1s elected, It will still be described as democratic notwithstanding that its governing body may make decisions of the most fundamental importance with respect to, for example, its policy and the basic structure of the organisation itself. Parliaments, particularly in countries wnich do not have written constitutions, provide an example of such an institution. Plainly 1t is correctly described as democratic. Of course the democratic control of organisations 1s only one of the two matters which are to be encouraged by the operation of para. 2 (f). The other is "the full partisipation by members ... 1n the affairs" of the organisation. But a question arises as to whether the content of these two concepts 1s different or whether they either mean the same thing or overlap to a substantial degree. Indeed one construction wnich is open is that tne notion of full participation by al. members is but the spelling out of what 1s meant by democratic control. If this be right what the legislature has intended to encourage by including para. 2 (f) as a chief obgect of the Act ais "partici- patory democracy" - a sub-heading 1n one of Mr. Cameron's speeches earlier referred to. Having given the matter due consideration, that is, in my opinion, the meaning the paragraph was intended to have. I would not go so far as to say that the two concepts were intended to have precisely the same meaning; there may be shades of difference between them. But I think the better view 1s that by the paragraph the legislature has manifested an intention to encourage participatory democracy in the affairs of organisations. The emphasis 1s on the word "participatory". The participation is to be in "the affairs of the organisation", that is all its affairs, not just the election of officials. In passing there are two matters which snould be noticed. Firstly, participatory democracy 1s to be encouraged in all organisations whether of emplcyers or employees. This case concerns a trade union and 22. so the emphasis 1S upon an organisation of that kind. But organisations of employers are affected equally. Some of what I am about to say will have relevance for trade unions only, but most of it 1s of equal application to an organisation of employers. Secondly, it ought to be clear that I am not con- cerned to express any personal opinion on the desirability or otherwise of participatory democracy in organisations registered under the Act, Whether 1t 1s good or bad is not for the Court; i1t 1s a matter for Parliament. The Court's task 1s to give effect, as best 1t can, to Parliament's intention. In the writings of students of organisational behaviour the balancing point of view 1s certainly found. It 1s that over-participation by members of a large, national organisation only tends to weaken 1t, with the result that it does not fulfil its intended role. Divisiveness and apathy amongst the membership result in it becoming inefficient and indecisive; participation by the members, instead of benefiting tnem, works to the1r disadvantage. It will 23. later be seen that I think these considerations must be taken into account in the overall tesk of statutory interpretation which 1s involved. But they are not relevant to the cuestion of what was the mischief to which para. 2 (f) of the Act was directed. The meaning of para. 2 (f) having been determined, 1t 1s next appropriate to go to paras.140(1)(a) and (c). The second of these 1s of more relevance to tne sub- mission based on para. 2 (f), but I think one ought also to have regard to so much of para.140(1)(a) as provides that tne rules of an organisation shall not be contrary to a provision of the Act. However, for the purpose of dealing with the submission, I do not think they add anything to what 1s provided for in para.140(1j(c). The question whicn arises for consideration 18 whether Rule 57, vroviding as 1t does for the amendment of the Rules by the Federal Council without consultation of or participation by the members, imposes upon members conditions or restrictions which, having regard to the object of tne act stated in para. 2 (f), 18 oppressive, unreasonable or unjust. A connected cut really indepen- dent question 1s whether that is so if one takes into 24, account also the provisions of Rule 23 which enables decisions to be made by postal ballots if the Federal Council is not meeting. A possible result is that 1t would not be oppressive or unreasonable for amend- ments to be dealt with by a meeting of Federal Council where discussion can take place; it may be guite another to empower the makins of amendments by postal ballot where no discussion (except of the most informal and incomplete kind) can occur. In coming to grips with the claimants' submission 1U 1S necessary to reach a conclusion on the significance para. 2 (f) was intended to have as an object of the Act in tne context of the operation of para.140(1)(c). In Cook v. Crawford (1982) 43 A.L.R. 83 I said (p.147): "The Act speaks of the encouragement, not only of democratic control, but also of full partici- pation by members in the affairs of an organization. Its use of the word 'encourage' coes not suggest that any absolute standard 1s to be applied. Rather it 1s concerned to see the progressive attainment of the objects which it mentions." I would adhere to what I there said. In Municipal Officers' Association of Australia v. Lancaster (1981) 37 4.L.R. 559 Deane J. (when a judge of this Court) said (p.59C): 25. "In the present matter, the applicants placed particular reliance upon the fact that among the 'chief objects' of the Act specified in s.2 1s the object of encouraging 'the democratic control' of registered organizations and the 'full particivation' by members of such an organization in its affairs. These, are, of course, ideals. If 1t were possible fully to attain them, 1t would be unnecessary to have any committee of management or council in an organization. The members, fully participating, would decide all questions by derocratic decision, In practice, one must be satisfied with less tnan perfect democracy and less than full participation of members. Mucn must be left to office holders and to council or committee. Here, one encounters different levels at which the nominated objects of democratic control and full participation may be relevant. At one level, democratic control and full participation could be said to be best served by allowing the members to decide for themselves the manner of election of members of council (or committee) and of holders of office to which or to whom authority to make decisions or to perform acts 1s delegated. At another level, democratic control and full participation are most likely to be served by provisions wnich maximize the participation of members of the organization or of the relevant branch or section in the election process." I would respectfully agree witn those remarks and, an passing, I would add that I eo not consider tnat they run counter to anything which I said in Cook v. Crawford (supra) or to the decision of the majority therein. I would reject submissions to the contrary whicn were made in the course of argument in this case. The remarks of Deane J. were made in the course of a case where rules providing for the election of office bearers were in 26. question, He was not concerned with the procedure for amending rules. But the general purport of his remarks have a relevance for this case which I shall endeavour to explain a little later. The next matter I wish to stress is the matter gust mentioned, namely that what is in question here is the rule amending power. The question is whether the procedure provided for in Rule 57 (and Rule 23) operates unreasonably or oppressively from the point of view of the general membership of the Union. There has never been any question in this Court or in the Industrial Court that rule amenament is a fundamental matter. This 1S seen most clearly 1n decisions which have held that compliance with rule making or amending provisions in rules of organisations 1s mandatory and not airectory. Substantial compliance 1S not enough; strict compliance is insisted upon. In Cook v. Crawford (supra) I quoted passages from the judgments in Roots v. Mutton (1978) 32 F.L.R. 15 and Morris v. Federated Liquor and Allied Industries Employees tnion of Australia (1978) 35 F.L.R. 60 (43 A.L.R. at p.141). I regard tnem as so important that I quote agaizn tne passage cited from 27. Roots v. Mutton and part of that cited from Morris' case. In Roots v. Mutton the Court said (p.19): "Quite apart from the above considerations, there 1s a more fundamental reason for con- struing the procedural requirements contained in sub-cll (2), (3) and (4) of r 28 as mandatory rather than directory. Underlying these provisions is the obvious philosophy thet, apart from the case where amendment is necessary to comply with legislative requirements, amendments to the rules of the union should nave a basis in the membership itself. The initial promoter of an amendment to the rules 1s seen as acting in his capacity as a member of the union ratner than as an officer or as a member of the Federal Council or of the committee of a branch of tne union. The proposed amendment must, 1f it is to be submitted to the Federal Council, be approved by a magority of the members of the branch to which the relevant member belongs at a meeting specially convened for the purpose of considering it. It cannot be dealt with by the Federal Council unless notice that it is proposed to con- sider 1t has been forwarded to all branches of the union not less then six weeks prior to the relevant meeting of the Federal Council. The requirement of notice to all branches is clearly designed to ensure that except where the proposed amendment is to meet legislative requirements, no amendment will be made to the rules of the union without the members of the union being, at branch level, given the opportunity of consicering the proposed amendment and making their views known in relation to 1t. Since brancnes meet monthly, six weeks! notice is designed to ensure that each branch will meet after 1% gets notice of the proposed amendment and pvefore the council meets." It 1s perhaps unnecessary to say tnat wnen their Honours said that underlying the rules to wnich they referred was the obvious philosophy that amendments to the rules of 28. the union should have a basis in the membership itself, they were referring to the philosophy which prevailed in the union with which they were dealing. In Morris' case the Court said after referring to the reasons of the Court in Roots v. Mutton (p.64): "Those reasons reflect the view that amend- ment of the rules of an organization is a matter going so fundamentally to the relation- ship between members and between branches that in the absence of clear provision to the con- trary, there must be strict compliance with specified amendment procedures." I wish next to make plain the relevance that I think the dicta in Roots v. Mutton and Morris! case have for tnis case. This 1s not a case of a challenge to tne procedure invoked for the amendment of rules. It 1s not suggested tnat the procedure which the rules themselves lay down for amendment of rules has not been followed. No question of whether such procedure 1s mandatory or directory arises. Theat was the question in Roots v. Mutton and Morris' case and was the matter to which the Courts in those cases were addressing themselves wnen they said what they did in the passages I nave quoted from their reasons for judgment. 29. Notwithstanding that to be the case, the dicta serve to emphasise the fundamental importance of rule amendment procedures, The reason they are important is that they enable the constitution of an organisation - the compact which governs the relationship of members with each other and the way their organisation 1s to be run and managed - to be changed. Some changes, 1t is true, will be of a minor, even insignificant, kind; others will need to be made ' as of course in order to comply with provisions of the Act or orders of the Court. But others will be of far reaching importance. The amendments here in question are in that category. They will, if brought into effect, change the composition of the Federal Council. I do not say tnat these will be a bad tning or a good thing. That has nothing to do with the question. Nor 1S 1t to the point that, if the amendments come into force, the second claimant will verforce lose her position on the Federal Council. What is important 1s that quite fundamental changes to the composition and balance of the Federal Council wili be made by a decision in which the membership will not participate. Moreover the decision will have been made vy members of the 30. Federal Council in the isolation of a postal ballot without the benefit of the discussion which a meet~ ing would provide. My conclusions thus far are:- i. A chief object of the Act is to encourage participatory democracy. 2. A rule will be invalid if 1t imposes upon members of an organisation a condition wnich, having regard to that amongst other objects of the Act, is, inter alia, unreasonable. 3. Alterations to the rules of an organisation are fundamental going as they do to the root of the compact which binds the members. 4, The only part which the membership may play in the alteration of the rules of the organisation here 1s by the election of officials or members of the Federal Council. That is subject to the plebiscite provisions provided for in Rules 58 and 65. What follows from these conclusions? It would be absurd to suggest that the membership should play a direct part in the day to day conduct of the Union's affairs or in much of its decision making. It must be 31. able to act througn an executive and a council as it does. No one could reasonably suggest that the presence of para. 2 (f) in the Act required otherwise. So much is implicit in what Deane J. said in the passage earlier quoted from his judgment in the Lancaster case (see 37 A.L.R. at p.590). But in my opinion some matters are of such funda- mental importance that when decisions are to be made in relation to them, the membership must be involved. I use that expression broadly; tne involvement may well vary depending on circumstances and depending upon the nature of the amendments to be made. If that is not so, I fail to see what effect can ever be given to the presence of para. 2 (f) in the Act. It is treated as no more than a platitude wnich may be con- veniently ignored. The mischief which I believe para. 2 (f) was intended to overcome remains. All tne evils which those responsible for the amendment in 1973 perceived continue to exist, It is no answer, in Opinion, to draw attention to the other objects of the Act, to the fact that organisations act through elected representatives or that to require involvement of the membership 1n some matters will cause 32. my difficulties in having decisions meade expeditiously. Nor is 1t an answer to refer to the plebiscite pro- visions in Rules 58 and 65 or to the fact that there 1s no express provision in the Act requiring amend- ments of rules to be carried out an a particular way. It 1s the object of tne Act stated in para. 2 (f) which requires our attention 1n this case. Is it being given effect to or 1s it tne case that it is not even receiving lip service? Elections are elsewhere provided for in tne Act and the Reguletions. The fact that a body acts through elected representatives does not mean that it engages in participatory democracy. Parliament does not. Tne fact that tne involvement of the members may meke difficulties for the executive provides no answer. One has to do tne best one can. Tne Plumbers and Gasfitters Employees' Union of Australia, the union with which tne cases of Roots v. Mutton (supra) and Cook v. Crawford (supra) were concerned, had in the opinion of the majority in the latter case a provision in its rules which sufficiently involved the membership in rule changing procedures. In the words of the Court in Roots v. Mutton uncerlying the relevant rules was tne philosophy that, apart from the case where amendment was necessary to comply with legislative requirements, 33. amendments to the rules should have a basis in the membership itself. The fact tnat that was so did not seem to provide any difficulty in that case, notwithstanding that the organisation is a national one with a substantial membership in each State, I do not regard the position as overcome by the presence of the plebiscite provisions. I rejected a similar argument in Cook v. Crawford (43 A.L.R. at p.147). I would ahere tc what I there said. It seems to me that plebiscite provisions enable matters to be rectified at too late a stage. Often the damage will be done and the position made irrevocable before they can be invoked. Furthermore, the plebiscite provision here requires a requisition signed by not less than 15 per cent of the financial members oz the Unzon, That really does require an enormous number of signatures. It is true that a branch plebiscite can be requisitioned by as few as 200 members but even that 1S a considerable number and che holding of a brench plebiscite would not itself? lead to the re-amendment of rules. Similar difficulties apply in the case of tne power to review proviced for an Rule 65, 34, Finally I do not think that the fact that there is no specific provision dealing with the question of rule amendment 1s to the point. The Act gives to organisations a great deal of flexibility in relation to the rules they may have. This 18 desirable because of the vast differences which there are in tneir nature, their size, their geographio location and the industries with which they are con- cerned, What it comes down to is giving effect to a clear provision of the act. I repeat that in relation to such 2. fundamental matter effect is not given if rule amendments may simply be made by Council. Still less will that be the case if the amend- ment is effected pursuant to a postal ballot held in accordance with Rule 23. There was discussion during the argument as to wnether Rule 23 could apply except in cases wnere the amendment was rendered necessary by an amendment to the Act, a requirement of the Registrar or an order of the Court; see the proviso to Rule 57 earlier set out. In my opinion the intention of tne draftsman of the rule was that the provisions of Rule 23 35. were to apply in all cases of amendment. The only effect of the proviso is to make it unnecessary, in the cases specified in 1t, for all members of tne Council to cast a vote in such cases. In the view that I take of the matter it 1s unnecessary for me to develop reasons why I consider the amendment of rules by postal ballot conducted by members of the Council to be contrary to para.140(1)(c) of tne Act. All I would say 1s that the rules insofar as tney per- mit this to be done plainly impose upon members conditions which are unreasonable. It follows that I would make the orders which the Claimants seek. That mekes 1t unnecessery to deal with the other matter relied upon by counsel for the claimants, namely thet there was insufficient control of the committees ana branches of the union by the members; see sub-para.115(1)(d)(v) of the Regulations earlier referred to. But that is a submission which I would also upnold. The Federal Council meets every two years unless special meetings are called. Branches meet annually. Special meetings may be celled at the written request of not less than 200 financial members or 10 per cent of the membership; otherwise the branch's effairs during the year are conducted by a 36. committee of management. This Union's affairs are conducted by its officials, its Executive its Council and its branch committees of management. There is little place for participation, let alone control by the membership in its affairs. It has the nallmarks of an organisation of the kind whicn 1s likely to be run by officials increasingly remote from the member- ship. The plebiscite provisions do not in my opinion overcome that criticism. I appreciate that a national organisation such as this is has difficulty in ascertaining directly the wishes or views of its membership. The membershiv 18 scattered throughout the whole of Australia although no doubt tending to be concentrated in or near capital cities. Counsel for the respondents said that the union movement as a whole had a suspicion of proxies except in limited situations such as are provided for in rules like Rule 60 of the Rules of this Union. Proxies are in regular use by shareholders in companies. To the uninformed there may be something strange in chairmen of meetings being able to produce proxies for overwhelming numbers of votes. But this will usually be because the proxies are giver by large shareholders 37. who are entitled to more votes than shareholders who hold few shares. Proxies would not work this way in a union such as this, Each member could only provide one. Proxies may be general or special and may be given either to the chairman of a meeting or to enyone else who will be present. By special I mean that they may indicate how the votes which they confer are to be exercised. There have been many revisions of the companies legislation in Australia and elsewhere in the last 30 years. 'I speak subject to correction but I have never neard it suggested that the system should be given up because of possible abuse. I would express the strong view that unions will eventually nave to come to the use of proxies for the purpose of enabling them to ascertain the views of their members on fundamental proposals. For the reasons I have given I would, as I have said, make orders in terms of those sought by the claimants. | cer tity that roared 237 P 2.ecing wt ahreasons for heise aoe re ye 1 ,or7 Satish cts 2o07 judgment wie" Ui Vie wonourable Ly rt oo ar Justice Sheppard. <2 \ MEAT 'Assoclate Daicd 2X Weoeudes , i983 38. Secondly, - 31 - the Council which consisted of no more than 14 members (three each from New South Wales and Victoria and two from the remaining States). Not all these needed to be present at a meeting at which rules might be amended. By x25 a majority of the representatives - eight persons - constituted a quorum. The evidence discloses that the membership of the organization comprises several thousand persons." at pp.147-8, his Honour said: "Having taken the matters relied upon by counsel for the respondents into account I do not think they overcome the force of the appellants' arguments on this question. It is true that, delegates, members of council, dissatisfied with a decision to amend rules could take the matter back to their branches and trigger the referendum procedure provided for. But that presupposes that the delegates are reasonably in tune with the views of the membership. The procedure which it was purported to change ensured that at least all the members of one branch received notice of the proposal. At least the committees of management of all other branches also received notice of it. Under the present proposal rules might be amended without any notice to any but the members of Council. It is true that they would report to their respective branches the results of the meeting of Council and it is also true that if fundamental amendments to rules were made the word would soon get around. But by then the amendments would be made. The apathy of members of organizations, no less than of other associations in many walks of life in this community, is well known. It is all too easy for people these days to have things done for them. They accept the situation because they prefer it that way, or because they cannot be bothered doing otherwise or because they feel it is useless to attempt to do so. The linchpin of the respondents' submission that the amendment does not contravene s140(1)(c) ais the plebiscite provisions of r27. But that, like any other rule, is - 32 - capable of amendment. If the Council were able to amend the rules, an amendment deleting this provision could be passed. Council would then have full and unfettered control over the entire process of rule amendment. The Act speaks of the encouragement, not only of democratic control, but also of full participation by members in the affairs of an organization. Its use of the word 'encourage' does not suggest that any absolute standard is to be applied. Rather it is concerned to see the progressive attainment of the objects which it mentions. This organization, until the amendment, had, in relation to the amendment of rules, a degree of participation by members. That degree of participation has been seriously reduced by what the South Australian amendment purported to achieve. The amendment, in my opinion, discourages full participation by members in an important affair of the organization, namely the amendment of its constitution. I have no hesitation in saying that, in my opinion, the rule as purportedly amended infringes s140(1)(c). I do not need to decide whether the new provisions are oppressive or unjust; I am clearly of opinion that, having regard to the matters to be taken into account in the paragraph, they impose upon members conditions and restrictions which are unreasonable. I am fortified in that view by the strength of the dicta earlier quoted from the judgments of this court in Roots v. Mutton and Morris's case. The court was there concerned with the question of whether the steps provided for in the rules of the organizations for the amendment of those rules were mandatory or directory. But in a general way the considerations mentioned by the various judges apply with equal force to this question also." In judgments given in Squires v. Stephenson on 14 February 1983 and 22 April 1983 respectively, Sheppard J. applied principles extending those which he had expressed in Cook v. Crawford. -~ 33 - It should be noted also that in the passages quoted from Cook v. Crawford, Sheppard J. made no reference to that part of paragraph 140(1)(c) which requires the Court to have regard to the purposes of the registration of organizations under the Act. Much of what his Honour says seems to be directed to whether the rules of the Plumbers' Union failed to make provision for the control of the committees of that Union (see sub-reg. 115(1)(d)(v)) and not to the methods by which the legislature gave effect to the object of the Act as set out in paragraph 2(f) of the Act. His Honour at pp.148-154 discussed the consequences of the failure of rules to comply with sub-section 140(1) of the Act but, in the absence of any orders or declarations being made by the Full Court, it is not clear what orders would have been made. With all respect, his Honour's opinion seems to be based on the fact that, in his opinion, having regard to the history of the rules of the Plumbers' Union, it is desirable that the rules should contain provisions requiring consultation with and participation by branches and members before a rule alteration can be made. That is the very approach which the Court should not adopt. By adopting such an approach the Court is interfering unnecessarily with discretionary matters which should be left to the Union itself. The opinions expressed by Smithers J. and Evatt J. should be preferred. -~ 34 = The question under immediate consideration is whether rules 19(b), 23(a) and (b) and 57 contravene paragraph 140(1)(c) of the Act. The attack is based on that part of paragraph 140(1)(c) which requires a decision to be made, having regard to the objects of the Act, whether those rules impose conditions on members of the Union which are oppressive, unreasonable or unjust. The only object relied upon is that contained in paragraph 2(f). In these proceedings no attack has been made on the grounds that the rules of the Union providing for the election of the members of the Federal Council contravene the conditions prescribed by s-133 and 133AA of the Act. Nor is it suggested that the rules of the Union contravene sub-reg. 115(1)(d){i). Rule 19(b) does not contravene paragraph 140(1)(a). Applying the principles discussed above, rule 19({b) does not contravene paragraph 140(1)(c). If the Court made a declaration under the first limb of sub-section 140(5D) that sub-rule (b) of rule 19 contravened sub-section 140(1), that sub-rule would be deemed to be void as from the date of the declaration; see sub-section 140(5G). As a result, the rules of the Union would thereupon contravene s.140(1) in a specified respect in that they failed to make a provision required by the regulations, namely sub-reg- 115(1)(d) (xiv), unless it could be held that under rule 57 the Federal Council had an implied power to alter rules; cf. Roots v- Mutton, supra, but it must be remembered that rule 57 1s under attack also.