TBE IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) No. Q 3 of 1986 ) INDUSTRIAL DIVISION ) IN THE MATTER of an application by Patrick James Brophy for an inquiry into an election in the Federated Clerks Union of Australia (R No. 107 of 1986) AND IN THE MATTER of a reference such application Oty the Industrial Registrar to the Federal Court of Australia 5 JUNE, 1987 KEELY J. REASONS FOR JUDGMENT This is an application by Patrick James Brophy (the applicant) for an inquiry under Part IX of the Conciliation and Arbitration Act 1904 (the Act) into alleged irregularities which he claims occurred in or in connexion with the 1985 Branch triennial election, the results of which were declared on 20 November 1985, (the election) for various offices (set out on page 1 of the application) including,-, - iy those of the President, Vice-President and Secretary of the wv Central and Southern Queensland Branch (the Bra Federated Clerks' Union of Australia. The retur for the election, which was conducted under s. 170 of the Act, was Mr. K. J. Fitzgerald, a member of the staff of the Australian Electoral Commission. Mr. Tracey appeared for the applicant and Mr. Crooke Q.C. appeared with Mr. Amerena for twenty-three persons, named in a list filed in the court on5S May 1987, which included Bernadette Callaghan, the Branch Secretary. On 16 December 1986, Spender J. granted leave to Mr. Fitzgerald to withdraw from these proceedings. The case was heard immediately after an application by Barry Trevor Linsket for an election inquiry into the election in respect of different offices (matter number Q 2 of 1986). By consent the material admitted in evidence in each matter was treated as being also evidence in the other matter. The application claimed that a very large proportion of the members of the Branch were not financial in accordance with the requirements of the Branch rules and were therefore not eligible to vote in the election in accordance with Branch Rule 21. It also contained a claim that some (unnamed) persons who were nominated for election were unfinancial and accordingly not eligible for nomination; however, no evidence was led in the course of proceedings in support of the latter claim and no argument was advanced in support of it. Accordingly, the question for determination is limited to the financiality of possible voters and does not extend to the financiality of the candidates. Financiality is determined in accordance with Branch Rule 15 which provides (in sub-rules 1 and 3) as follows:- "15 - Contributions (1) The annual contributions payable to the Union, in advance, from the first day of January, 1978 shall be - (a) Senior Males and Females (21 years of age and over) .80% of the annual rate of salary prescribed for a clerk at 21 years of age by the Clerks and Switchboard Attendants' Award - State, as applicable on the first day of November in the preceding year. (b) Junior males and females (Under 21 years of age) 50% of contributins determined from year to year in accordance with the provisions of sub-clause l(a) of this Rule. (3). The annual contribution shall be due and payable on the first day of January each year. Provided that Branch Council each year may determine that there should be a Moratorium period of not more than three calendar months for the payment of contributions during which period members shall be deemed to be financial for the purposes of these Rules. Provided further that all members in arrears of payment of contributions upon the expiration of this Moratorium Period, if any, shall cease to be deemed financial members and shall thereupon forfeit all membership rights and privileges until all such arrears of contributions, or other outstanding fines or levies are paid. Provided further that only those members who pay all arrears of contributions, or other outstanding fines or levies, within the Moratorium Period, if any, or who do soon or before the first day of January each year, shall be deemed to retain an unbroken continuity of financial membership for the purposes of these Rules." Branch Rule 21 provides:- "Only members of the Union who are financial on the 30th September in the year in which the triennial ballot is to be held shall be entitled to vote in such triennial election." The claim that potential voters were unfinancial was based upon the giving of a 20% "rebate" in 1985 toa very large proportion of the Branch members. A Branch Council Meeting carried the following resolution:- "That a rebate of 20% be given to ali persons who pay their Union dues prior to 3lst March, 1985 and to all persons on a payroll deduction scheme operated by their employer for the entire year." The application set out the terms of that resolution, stated to have been carried on 8 December 1984; the application was supported by a statutory declaration by the applicant and the terms of the resolution were confirmed by an exhibit to an affidavit sworn by Bernadette Callaghan. There was evidence in her affidavit that, out of "some 16,929" financial members at the time of the election, "some 15,724" had received a rebate and that the number who did not receive a_ rebate totalled only 1,205. The affidavit also contained material intended to demonstrate the rationale for the granting of rebates. Mr. Tracey submitted that the Branch Council had no power to grant a rebate. In support of that submission he relied upon three rules. (a) Federal Rule 7(2) which provides that: "Contributions payable to the Union by any member shall be such sum as is provided by the Rules of the Branch of which he is for the time being a member ..." (b) Federal Rule 12(3), which states that a Branch Rule shall, to the extent of any inconsistency witha Federal Rule, be void. (c) Branch Rule 15 - the relevant provisions of which have been set out above - which fixes the amount of the "annual contributions payable to the Union in advance". It is clear that there is no express power to grant a "rebate". Mr. Tracey submitted that a power to grant rebates cannot be implied if it would be contrary to an express power. He relied upon the express provision, contained in Federal Rule 7(2), requiring that the amount of the contributions shall be provided by the Branch Rules. On that basis, the purported granting of a rebate by simple resolution of the Branch Council - as distinct from an amendment of the Branch Rules - was contrary to the express requirement that the amount of contributions. shall be "provided by the Rules of the Branch". He submitted that the amount of the contributions "payable ... by any member" could' not be "provided" (or amended) by a simple resolution carried by the Branch Council. In this connexion it may be noted that Branch Rule 60, which gives the Branch Council power to amend the Branch Rules, specifically requires (subject to one exception not presently material) "twenty-eight (28) days' notice of motion in writing, of the specific amendment", given to the Branch Secretary. Mr. Crooke submitted that there was an implied power in the Branch Council to grant a rebate, as being incidental to its powers of management, and sought to rely on Branch Rule 20(a) and Branch Rule 4(j). Branch Rule 20(a) vests "supreme control and management of the Branch" in Branch Council. In my opinion that general power cannot override the express provisions in Federal Rules 7(2) and 12(3) and in Branch Rule 15(1) and (3). Branch Rule 4(j) is a statement of one of the objects of the Branch, namely, to "assist members by financial or other means in such circumstances as the Branch Council may deem proper". Again, that general statement cannot, in my opinion, override or contradict the express provisions in the rules cited. Further, even if there were a rule conferring an express power to "assist members by financial ... means in such circumstances as the Branch Council may deem proper »--", in my opinion it would not authorize the resolution purporting to give the rebate of 20%. Mr. Crooke also relied on ss. 2(e) and (f) of the Act and the material in the affidavit of Bernadette Callaghan. Given this material it was argued that the granting of a rebate was properly within the powers of the Branch in the ordinary conduct of its affairs for the benefit of the members of the Branch. He sought to gain support from the statement by Fullagar J. in Williams v Hursey (1959) 103 CLR 30 at 57 that: --. any action which can fairly and reasonably be regarded as likely to further the interests of the organization and its members is within the objects stated in the rules, and therefore within the powers of the federation acting directly or through the branch." Although the Branch Council has certain powers in order to further the objects of the Branch, in my opinion there cannot be an implied power to act in a manner contrary to any express provision in either the Federal Rules or the Branch Rules; that proposition does not in any way conflict with any of the statements by Fullagar J. relied upon by Mr. Crooke. It may be added that Williams v Hursey is clearly distinguishable on the facts because in that case there was an express power (in rule 3(1) of the Hobart Branch Rules of the Waterside Workers' Federation of Australia) to impose a levy. When the rules in the present case are read as a whole, in my opinion they did not confer upon the Branch Council a power to give a rebate. I therefore find that an irregularity has occurred in the election in that, on the material before the court, the members (more than 6,400) who voted in the election must have included members who had received a rebate and were therefore unfinancial and not entitled to vote by reason of the provisions of Branch Rule 21. I have formed the opinion that, on the basis of the figures contained in Paragraph 8 of Ms. Callaghan''s affidavit, "the result of the election may have been affected" (s. 165(4)). In Re Vehicle Builders Employees' Federation of Australia, South Australian Branch; Ex parte Noack (unreported - delivered 23 April 1987) I agreed with the opinion expressed by Toohey J. in Re Australasian Meat Industry Employees Union, Western Australian Branch; Ex parte Ferguson (unreported - delivered 5 November 1986) that, when performing its statutory duty under s. 165(4), the court is to look "at real not merely theoretical possibilities". When the figures are such that the irregularity, found to have occurred in the election, affected approximately 15,724 members of 16,929 members who were potential voters in the election, and more than 6,400 of the 16,929 members voted, in my opinion it is clear that there is a "real possibility Cthat] the result of the election may have been affected ..." by the irregularity. Section 165(3) provides that, "if the Court finds that an irregularity has occurred, the Court may ... make one or more of the following orders ...". Mr. Tracey submitted that the use of the word "may" in that sub-section does not confer upon the court a discretion to refuse to make any order under the sub-section. In his submission the court is under a duty, upon finding in the present case that an irregularity has occurred, to make at least one of the orders authorized by s. 165(3). He relied upon the principles discussed by the High Court in Ward v Williams (1955) 92 CLR 496 at 505-508, which, in his submission, applied to the court's function under s. 165(3). An argument to the same effect was considered in Kelly v Amalgamated Metalworkers' and Shipwrights' Union (1981) 56 FLR 124. In that case Sheppard J., at 149-150, recognised the strength of the submission but nonetheless "reached the conclusion that there is a residual discretion vested in the court to refuse to act if in all the circumstances that is what the public interest or the interest of members or particular groups of members requires". In Noack's 10. case (supra), after hearing argument on that question, I expressed my agreement with Sheppard J. as to the existence of a residual discretion to refuse to make any orders, saying that the court "could decline to declare the election invalid if there were cogent reasons favouring that course in all the circumstances of the case". In the present matter Mr. Tracey has, very properly, referred the court to the decision of a Full Court of this court in Cook and Others v Crawford and Others (1982) 62 FLR 34. In that case all members of the Court expressed the view that the court has a discretion to refuse to make the orders sought in an application under s. 141 of the Act - see pp. 66, 81 and 116-120. In Allshorn v Stapleton and Others (1984) 4 FCR 236 at 241 a Full Court held that "in the exercise of its discretion under s. 141(1G) the court has power to make no order". On the other hand, Mr. Tracey pointed out that, in relation to an application under s. 140 of the Act, Fullagar J. in R. v Commonwealth Industrial Court; Ex parte The Amalgamated Engineering Union, Australian Section (Shearer's case) (1960) 103 CLR 368 at 378 expressed the opinion that "if the conditions of jurisdiction exist, the jurisdiction must be exercised and the appropriate order made" (see Cook v Crawford supra at 117-119 per Sheppard J.). Having considered the authorities, and the section in its context with a view to ascertaining "the real intention ll. of the legislature" (Ward v Williams at 505), I adhere to the opinion expressed by me in Noack's case that the court has a discretion to refrain from making any of the orders' sought under s. 165(3) of the Act, but that the discretion to refuse to make orders should only be exercised where "cogent reasons favouring that course" exist. Towards the end of the hearing fairly brief submissions were heard as to whether the court should, in the exercise of its discretion, refuse to make orders. Reference was made to the length of time during which there had been a practice of "giving rebates" and the possibility of action being taken under Federal Rule 9(5) to cancel those arrears of contributions (possibly extending over a number of years) which have resulted from the "rebate"; however, that sub-rule on its face appears to require the making of "a proper case", and would possibly require an application by a member who had been given a rebate before the power could be exercised "to cancel the whole or any part of Ethat) member's arrears". It may be possible for the rules to be amended by the Branch Council in such a way that members who had paid the full contributions payable except for the "rebates" given over a period of years by the Branch Council, would not be unfinancial by reason of taking advantage of those rebates. It is not appropriate for the court in this proceeding to express any opinion as to whether that course - or any other 12. course of action - should be followed, nor as to whether such an amendment to the Branch Rules would provide an effective solution as a matter of law. If the Branch Council decided to amend the rules, then any such amendment to the Branch Rules would be subject "to the approval of the National Executive" (Federal Rule 12(2)(a)); further, it would "not have effect until »-. the CiIndustrial] Registrar has certified ..." under s. 139(4) of the Act. In all the circumstances, including in particular the length of time during which there has been a practice of "giving rebates" and the large number of branch members affected by that practice, the further hearing of this inquiry will be adjourned until 2.15 p.m. om Thursday, 25 June 1987 in Melbourne; that is the time and place already fixed for the further hearing of matter Q 2 of 1986. That adjournment is to enable the parties, and any other bodies within the Union or the branch, to consider the situation resulting from the finding, made by the court in this proceeding, in relation to the "rebates". The parties shall have liberty to apply. They may file - and serve upon any opposing party - on or before 2.15 p.m. on Monday 22 June 1987 any further material upon which they may wish to rely on 25 June 1987; on that date the court will hear submissions as to whether the court should, in the exercise of its 13. discretion, refuse to make any orders under s. 165(3) of the Act. I certify this and the preceding twelve pages to be a true copy of the Reasons for Judgment of his Honour Mr. Justice Keely Associate: rT Date: S Jona soy 14. Dates of Hearing Counsel for the Applicant ery Solicitors for the Applicant Counsel for the Respondent oo Solicitors for the Respondent 7 May, 1987 Mr. R. Tracey Messrs. Mullins & Mullins Mr. Crooke Q.C. and Mr. Amerena Messrs. Callaghan & Reidy