IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION Nos. WA 22 of 1983 WA 23 of 1983 BETWEEN: VALERIE POWER Prosecutor and CITY OF BELMONT Defendant JILL MARGARET LONG Prosecutor and CITY OF BELMONT Defendant CORAM: TOOHEY J. 23 February 1984 REASONS FOR JUDGMENT There are before the Court two summonses upon information, each alleging an offence against s.5(1) of the Conciliation and Arbitration Act 1904. By consent both summonses were heard together. In each case the prosecutor is a former employee of the defendant, the City of Belmont. Mrs. Power was a library clerk and Mrs. Long a clerical officer. Both were summarily dismissed on 18 October 1983 by Mr. Burton, the defendant's town clerk. Both claim to have been dismissed by reason of their membership of, and what I may loosely describe as their association with, the Municipal Officers' Association of Australia, an organisation under the Act. In March 1983 the defendant received from Michael Downing (Management Consultants) Pty. Ltd. a report which it had commissioned concerning the organisation of the City of Belmont. It was a report aimed at improving the efficiency of the defendant's operations and undoubtedly had implications for the defendant's staff, a number of whom were members of the Municipal Officers Association. The defendant regarded the report as confidential. The consultant delivered one copy to Councillor Rae, the Mayor of the City of Belmont. In the interests of security, he had twelve photocopies taken at his own business premises and arranged for a copy to be delivered to each councillor in an envelope marked "confidential". There were 13. councillors in all including the Mayor. There was some discrepancy between the evidence of Councillor Rae and Mr. Burton regarding the circumstances in which a copy was held by the town clerk. Nothing turns on this and I accept the Mayor's evidence that ata later stage, when two councillors retired from office and two were elected in their place, he had two more photocopies made for the incoming councillors. Councillor Rae was able to recover a photocopy from one of the outgoing councillors. This together with an additional copy was held by the Town Clerk. The receipt of the report was placed on the agenda for a council meeting to be held on 12 April 1983. The agenda made it clear that the report was to be discussed on a confidential basis. At the meeting there was a resolution that the report be implemented and I am satisfied that, in the circumstances, all this meant was that the council proposed to give the report its consideration with a view to deciding which, if any, of its recommendations would be followed. Iam also satisfied that the defendant, at all relevant times, regarded the report as confidential in the sense that it did not wish its contents known until it had made some decisions regarding its implementation. Nevertheless, in May Mr. Court, the secretary of the West Australian branch of the Municipal Officers' Association, received a copy of the report. He gave that copy or another to Mr. Slee who was the proprietor of the Belmont Times and the South Perth Times, two local newspapers. Early in October each of those newspapers published a fairly detailed, though by no means comprehensive, account of the report with a number of extracts relating to staff and what the report infelicitously described as the possibility of "de-hiring". On 22 April 1983 Mr. Court had written to Mr. Burton expressing the hope that the defendant's staff would be made aware of the consultant's recommendations and be given a chance to discuss them. The letter concluded: "Further, we would also trust that officers of the Association will be given the opportunity of discussing the report with Council in the near future". On 13 May Mr. Burton replied with advice of a decision made by the council in these terms: "That the Municipal Officers' Association be advised that their letter has been considered in conjunction with a number of statements made by Mr. Court in the local and daily press and the MOA Journal over the past 18 months concerning the City of Belmont. Further Council has resolved that where it is considered necessary in the interests of effective management, its decisions will be conveyed to staff in line with Council's policy". When the union came into possession of a copy of the report, Mr. Court gave it to members of the organisation's industrial staff including Mrs. Long one of the prosecutors. I accept Mrs. lLong's evidence that she was given the report about the end of September or early October with instructions from Mr. Court that: ".,.» I should show it around to the municipal officers members at the City of Belmont and generally get their ideas on what was contained in the report and report back to him". It is not disputed that at the time of their dismissal Mrs. Long and Mrs. Power was each a member of the Municipal Officers' Association. Mrs. Long also contends that at the time of her dismissal she was a delegate of that organisation. The defendant challenges that assertion. I shall deal with that aspect later in these reasons; at this stage I continue with the history of the matter. According to Mrs. Long, she gave the report to Mrs. Power at about 4.50 pm on 17 October. That is consistent with the evidence generally though there is some issue as to the precise circumstances in which it was handed to Mrs. Power. Iam satisfied that at about 4.50 pm Mrs. Long walked across to the library and gave the report to Mrs. Power who took it into the staff room and put it behind her bag. The report was in an envelope. Not long after, Mrs. Power was asked by the librarian to go to the staff room where she found Mr. Burton and Councillor Rae. Mr. Burton asked her if she had received a document which she said she had. He asked her where it was and she pointed to it. At Mr. Burton's request she got the document and gave it to him. Mr. Burton asked Mrs. Power from whom she had received the document and rather reluctantly she said that it was from Mrs. Long. Mr. Burton asked Mrs. Power to be in his office at 9 o''clock the next morning. Nothing was said by Mr. Burton to Mrs. Long that evening. I accept Mrs. Power's evidence that she did not seek a copy of the report, that she was passing by Mrs. Long's desk when Mrs. Long asked her "Would you like to read the Downing report?", that she was quite surprised to be asked but that she replied "Yes", Mr. Burton's approach to Mrs. Power was the result of a telephone call from the librarian though it did not emerge how the librarian knew what was in the envelope. It is apparent that from the moment he was contacted by the librarian Mr. Burton took the matter seriously. He excused himself from a meeting (at which Councillor Rae and the Deputy Mayor Councillor Parkin were present) to take the call and, having taken it, asked Councillor Rae to accompany him. On their return, they acquainted Councillor Parkin with what they had learned. I accept that all three were quite genuinely concerned to learn that a copy of the report was in the hands of council staff even though they must have been aware that the report had been "leaked" some time earlier. The next morning, 18 October, Mrs. Power attended at Mr. Burton's office. The Mayor and Deputy Mayor were present as well. Not surprisingly, the recollection of the witnesses as to what was said differed in some respects. But it is clear enough that Mr. Burton asked Mrs. Power why she should not be dismissed and that he accused her of having broken faith with and having been disloyal to the City of Belmont. Mrs. Power pointed out that she had not read the document. According to her, Mr. Burton said that he did not believe her though Mr. Burton denied having said this. I am satisfied that Mr. Burton made it clear that his allegation of misconduct was based on Mrs. Power's willingness to receive what, inhis view, was a confidential document and to retain it in her possession. Mrs. Power pointed out that she had been employed by the defendant for a number of years but Mr. Burton was adamant that she was to be dismissed. He thereupon dismissed her and called in the librarian to escort Mrs. Power from the building. Mr. Burton then asked the Deputy Town Clerk, who was Mrs. Long's immediate superior, to ask Mrs. Long to come to his office. There was some delay because Mrs. Long rang through to ask whether a union representative could attend with her. Mr. Burton told Mrs. Long she could bring two members of staff with her and she was accompanied by Mr. McClements, the deputy town clerk and Mr. O'Mara, the administrative officer. The interview with Mrs. Long was quite short. Mr. Burton told her that she had passed a confidential document to Mrs. Power, that he considered her conduct to be disloyal to her employer and that she was to be dismissed unless she could show cause why this action should not be taken. Mrs. Long said that she had been acting on Mr. Court's instructions as a steward of the Municipal Officers' Association. Mr. Burton reiterated that her responsibility was to the council, that she knew the document was confidential, and that she was dismissed. Mrs. Long was escorted from the premises. Section 5(1) of the Conciliation and Arbitration Act provides that an employer shall not dismiss an employee, by reason of the circumstances that the employee: "(a) is ... an officer, delegate or member of an organisation ... or (f) being an officer, delegate or member of an organisation, has done ... an act or thing which is lawful for the purpose of furthering or protecting the industrial interests of the organisation or its members, being an actor thing done within the limits of authority expressly conferred on hin by the organisation in accordance with the rules of the organisation". Section 5 creates an offence for which there is a monetary penalty. In those circumstances the onus of proof would ordinarily lie on the prosecutor to establish each and every element of the offence. Because of the particular difficulties in establishing what was in the mind of the employer, sub-s.(4) provides: "In any proceedings for an offence against this section, if ail the relevant facts and circumstances, other than the reason or intent set out in the charge as being the reason or intent of an action alleged in the charge, are proved, it lies upon the person charged to prove that that action was not actuated by that reason or taken with that intent". It is apparent from the decision of the High Court in General Motors Holden Pty. Ltd. v. Bowling (1976) 12 ALR 605 that if all other relevant facts and circumstances are established by the prosecutor, it is for the employer to show on the evidence that he was not actuated by such of the considerations in s.5(1) as are alleged against hin. Tt is also apparent from that decision, in particular from the judgment of Mason J. with which Gibbs, Stephen, and Jacobs JJ. concurred: -.. that an employer is actuated bya particular reason or circumstance, if that reason or circumstance was 'a substantial and operative factor' influencing him to take that action". (at p.616) Borrowing the language of Gibbs J. (as he then was) at p.612, the onus of proving that in dismissing an employee an employer was not actuated by the fact that the employee was a 10. member or delegate of an organisation is to be discharged according to the balance of probabilities. In the case of Mrs. Power, the information alleges dismissal by reason of the circumstance that she was a member of the Municipal Officers' Association and further, that being a member of the organisation, she did an act or thing which was lawful for the purpose of furthering or protecting the industrial interests of the organisation or its members, being an act or thing done within the limits of authority expressly conferred on her by the organisation in accordance with its rules. Asked to particularise this latter allegation, she replied that she received a report, the contents of which it was in the industrial interests of the Municipal Officers' Association and its members employed by the defendant to know. It is further said that the organisation expressly conferred upon Mrs. Power "by direct oral instruction through its secretary to Mrs. Long" authority to receive, possess, read and consider the report. In the case of Mrs. Long, the allegation is that she was dismissed by reason of the circumstances that she was a member of the Municipal Officers Association, that she was a delegate of that organisation, and that being a delegate and member she did an act or thing within the terms of para. (f) of s.5(1). ll. Asked for particulars of the latter allegation, Mrs. Long asserted that it was in the industrial interests of the organisation and its members employed by the defendant to know the contents of the consultant's report, that she was at all material times a shop steward appointed pursuant to the rules of the organisation, and that authority had been expressly conferred upon her by the organisation through its steward's manual "to communicate to the Association the problems of members, to monitor any changes and developments at the place of employment, to organise workplace meetings of members if required and to ensure that members were properly informed of all developments relevant to their industrial interest". To establish these charges, the Prosecutors must establish beyond reasonable doubt all elements of the offence other than the reason or intent of the employer in dismissing them. Their membership of the organisation having been admitted, it was incumbent on Mrs. Long to prove that she was a delegate of the organisation and that otherwise her conduct fell within para.(f£) of s.5(1). It was for Mrs. Power to establish that her conduct fell within para. (f). I should make it clear that I am not suggesting that there was an onus of proof on the prosecutors to establish all the particulars alleged against the defendant. It is enough that each can bring herself within para.(a) oar para.(f£) of s.5(1). 12. At the time of her dismissal, was Mrs. Long a delegate of the organisation? The term "delegate" is not defined in the Act; it is usually treated as synonymous with steward or shop steward and the defendant did not argue against this meaning. See Cuevas v. Freeman Motors Ltd. (1975) 25 FIR 67. However the defendant did argue that there was no evidence or insufficient evidence that Mrs. Long had been appointed in accordance with rule 18 of the organisation's rules. That rule reads: "A majority of members employed in any area of membership or part thereof may with the approval of the Branch Committee of Management appoint from amongst their number a person or persons to act as Steward or Stewards and advice of such appointment shall be given to the Branch Secretary and approved by the Committee of Management. Failing such appointment the Branch Committee of Management shall have power to appoint a Steward or Stewards and the Branch Committee of Management may at any time terminate the appointment of a Steward however appointed. Stewards shall have such rights and duties as determined by the Branch Committee of Management and subject to endorsement by Federal Executive". There was direct evidence from Mr. Owens, as returning officer, that Mrs. Long was elected to the position of steward on 1 August 1983. There was no direct evidence that her election was with the approval of the branch committee of management. It seems to me that what rule 18 calls for is not the approval of the 13. committee of management to the election of a particular person but rather that, before an election is held, the approval of the committee must be obtained. Indeed, the reference to "approved by the Committee of Management" suggests an obligation on the part of the committee to approve a person elected once the committee has authorised the holding of an election. Presumably the requirement of approval by the committee to the holding of an election is to ensure some control over the number of stewards. However, whatever construction rule 18 should bear, the point still remains that there was no direct evidence of approval of the committee of management to Mrs. Long's appointment as steward. Nevertheless there was tendered in evidence a letter from the Municipal Officers' Association to the City of Belmont, dated 3 August 1983, certifying that Mrs. Long: "... is an accredited Steward of the Western Australian Branch of the Municipal Officers' Association of Australia and, as such, is authorised for the purpose of the Conciliation and Arbitration Act and the rules of the Association". There was evidence that from August 1983 until her dismissal in October 1983 Mrs. Long acted as steward. The rules do not require formal approval. In the circumstances, appreciating the standard of proof involved, I am satisfied beyond reasonable doubt that Mrs. Long was appointed as steward in accordance with the rules of the organisation. 14. A question remains however whether, in the case of each prosecutor, conduct was established falling within para. (f) of s.5(1). In his final address, counsei for the prosecutors spoke as if "lawful for the purpose ..." was a composite phrase. But in my view para. (f) requires that what is done be lawful and that it be for the purpose of furthering or protecting the industrial interests of the organisation or its members. If the act is not lawful, it cannot fall within para. (f)}, whatever its purpose. The word "lawful" is not one of precision and will take its meaning from the context in which it is used. As Napier J. pointed out in Crafter v. Kelly (1941) SASR 237 at p.243: "It may mean, simply, 'permitted'. In this sense an act is lawful, when it can be done without any infraction of the law... Another use is in the sense of supported by the law, e.g. lawful authority, excuse or impediment". In my view, "lawful" in para. (f) means permitted in the sense of not being contrary to law. In a contract of employment an employee has an implied duty to serve his employer "with fidelity and in good faith" (Thomas Marshall v. Guinle (1979) Ch. 227 at p.244). 15. The defendant argues that each of the prosecutors was in breach of that duty, that each was guilty of misconduct and that hence their actions could not be described as lawful. The submission is one of mixed fact and law. The obligation of an employee to an employer would ordinarily extend to non-disclosure of confidential information gained in the course of employment. But I am not persuaded that it necessarily precludes an employee from coming into possession of information from some external source, at any rate where there is no evidence of an intention on the part of the employee to use the information to harm the employer. Mrs. Long was given the report by Mr. Court for the purpose of informing members of the organisation employed by the defendant of its contents so that they might protect their interests. She passed it on to Mrs. Power for that purpose. This is a prosecution, not an action for wrongful dismissal, and I am reluctant to make an express finding on a matter which may be at the heart of other proceedings. But I am prepared to assume that in each case the conduct of the prosecutors was lawful in terms of para. (f£). Iam satisfied that, in receiving a copy of the report from Mr. Court, in reading it and handing it on to Mrs. Power as a member of the Municipal Officers' Association, Mrs. Long was doing an act for the purpose of furthering or protecting the industrial ee 16. interests of the organisation to which she belonged or its members. Equally I am satisfied that, in receiving the document, Mrs. Power did an act for the purpose of furthering or protecting the industrial interests of the organisation to which she belonged or its members. She may not have sought the document but she did not receive it out of idle curiousity. It was a document in which she had a real interest by reason of her employment. The question still remains - in each case, was the act done within the limits of authority expressly conferred on the prosecutor by the Municipal Officers' Association in accordance with its rules? It is not necessary to find in the rules an express authority to do the act in question. But it is necessary to find some authority expressly conferred on officers, delegates or members by the organisation in accordance with the rules, within the limits of which authority it may be said the act was done. In the case of Mrs. Power, the prosecutor pointed to rule 4(a) of the organisation's rules. That rule is concerned with the objects of the organisation, one of which is: "(a) To uphold, protect and advance the interests of the Association and its members". 17. In my view, a rule concerned only with the objects of an organisation is a tenuous source of authority. By reason of rule 42(c), Mr. Court was the "chief executive officer of the Branch" with authority to "conduct and manage the affairs of the Branch". He was thereby empowered to instruct Mrs. Long to do what she did with the report but I am not satisfied that any authority was expressly conferred on Mrs. Power. In the case of Mrs. Long, rule 18 does not specify the authority of stewards save to say that they shall "have such yvights and duties as determined by the Branch Committee of Management and subject to endorsement by Federal Executive". There was tendered in evidence a steward's manual prepared by the Municipal Officer's Association, in which the functions of a steward are listed. There was also tendered in evidence a federal policy document, dealing with the appointment of stewards and their duties. From these documents it is possible to infer the limits of authority of stewards as determined by the branch committee of management and endorsed by the federal executive. The limits of that authority are wide enough to include the receipt of the report by Mrs. Long from Mr. Court and the delivery of it to Mrs. Power in accordance with the union secretary's instructions, But in any event, as appears from the preceding paragraph of these reasons, Mr. Court's instructions to Mrs. Long were a conferment of power and were in accordance with its rules. 18. It follows then that while I am not satisfied that Mrs. Power's actions fell within para. (f), I am satisfied that Mrs. Long's actions did. The difference in result flows from the rather precise language used in para. (f). In those circumstances Mrs. Power's case against the defendant fails. Nevertheless I propose to consider, in the case of each prosecution, whether the defendant has satisfied the onus of proof cast upon it by s.5(4) of the Act. That question is to be resolved by asking whether the defendant has satisfied the Court, on the balance of probabilities, that in dismissing each of the prosecutors her position as amember or delegate of the organisation and her conduct in furthering or protecting the industrial interests of the organisation or its members was not a substantial and operative factor influencing the defendant to take the action it did. The decision to dismiss the prosecutors was made by Mr. Burton. Mr. Burton gave evidence that in his opinion the consuitant's report was a confidential document, that in receiving a copy of the report each of the prosecutors was guilty of a breach of good faith to their employer and that this was the reason for their dismissal. He did not know that Mrs. Power was a member of the organisation. He testified positively that the prosecutors' membership of the Municipal Officers' Association, Mrs. Long's position as delegate and the fact that they may have 19. been doing something to further the interests of the organisation were not factors in making his decision. Mr. Burton was cross-examined on these matters but his evidence was not shaken and I accept it. In so far as his decision was made in the context of discussions with Councillor Rae and Councillor Parkin, their evidence corroborated his. It is important to appreciate, as the courts have pointed out on more than one occasion, that a proceeding under s.5(1) of the Act is a proceeding for an offence. As stated earlier, it is not an action for wrongful dismissal and it is not for the court to determine whether the employer's actions were reasonable in the circumstances. That aspect can have relevance only in the sense that if an employer offers a reason for dismissal, which is patently unreasonable, a court may be more likely to conclude that the true reason fell within s.5(1). Whatever views I may have about the harshness of the defendant's conduct, this is not the forum in which to express then. I am satisfied that the defendant was anxious to keep the management consultant's report confidential, at least until it had made some decisions regarding that report and even though it knew that the report had falien into the hands of Local newspapers. I am satisfied that the reason for the dismissal of Mrs. Power and Mrs. Long was their possession of that report and, 20. in the case of Mrs. Long, the additional act of handing it over to an employee. The act for which an employer dismisses an employee may, as it happens, be one which is lawful for the purpose of furthering or protecting the industrial interests of the organisation or its members. But if the employer can establish that in dismissing the employee he was not actuated by that reason, he may rely on the defence in sub-s.(4). That is what the defendant has done in the case of Mrs. Long and what it has done in the case of Mrs. Power, even if I am wrong in my view that her conduct did not fall within para. (f). It follows that each information must be dismissed. I certify that this and the nineteen preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Toohey fo. Associate Dated: 23 February 1984