JUDGMENT No. 240 7.83 IN THE FEDERAL COURT OF AUSTRALIA) VICTORIA DISTRICT REGISTRY V No. 27 of 1988 ) ) INDUSTRIAL DIVISION ) BETWEEN: BARBARA LEE LEWIS, SYLVIA PEARL BROOKS, MICHAEL DAVID GIDDINGS, RUSSELL WILLIAM COLE, LINDSAY JAMES TANNER AND EMMANUEL LAMBROU Applicants and J.P. MAYNES Respondent COURT: NORTHROP J. DATE: 30 JUNE 1988 PLACE: MELBOURNE EX-TEMPORE REASONS FOR JUDGMENT ae By a rule to show cause issued yesterday, 29 June 1988, the applicants, Barbara Lee Lewis, Sylvia Pearl Brooks, Michael David Giddings, Russell William Cole, Lindsay James Tanner and Emmanuel Lambrou are seeking orders against the respondent, J.P. Maynes. The orders sought include both a final order and an interim order in the same form, the relevant order being as follows: "An order that the respondent perform and observe the rules of the Federated Clerks Union of Australia by authorising the applicants as President, Deputy Vice-President, Senior Vice-President, Junior Vice-President, State Secretary or First Assistant State Secretary respectively of the Victorian Branch of the Organisation to sign orders for withdrawals of monies from the bank at which the accounts of the Branch are maintained." Pursuant to the rule to show cause, the rule and other documentation were served on the respondent yesterday afternoon. When the matter was called on this morning for the first directions hearing, an objection to competentcy was raised by the respondent in substance saying that the claim for the order was misconceived and that there was no jurisdiction or power in this Court to make the order sought either in the final form or by way of interim order, and that if the Court found that there was jurisdiction or power to so make an interim order, counsel foreshadowed an application to have the further hearing adjourned to enable evidence to be presented on behalf of the respondent. It should be noted that any interim order made would have the effect of a final order. This morning's submissions were directed to the preliminary issue only and not to questions of whether the order should be made, and if need be I will come back to that matter later. There is no doubt that the Clerks Union is an organization under the Conciliation and Arbitration Act 1904 ("the Act") and that the applicants and the respondent are members of that union. Section 141 of the Act, by sub-section (1) enables a member of an organization to apply to the Court for an order under s.141 and sub-section (1G) provides as follows: "An order under this section may give 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." Sub-section (1H) provides: "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." Sub-section 2 provides: "At any time after proceedings under this section have been instituted ....., the Court may make such interim orders as it thinks fit in relation to the matters to which the proceedings relate." It should be noted at this stage that the authorities show that a very wide discretion is conferred upon the Court as to the form of the directions that may be given under s.141 and that the Court is empowered to mould its directions to suit any particular set of facts and to ensure compliance with the rules of an organization. As I said before, all the parties to these proceedings, being members of the Union, are under obligations to perform and observe the rules of the Union. Recently there has been an election within the Victorian Branch of the Union and the results of that election were declared by the Electoral Commission on Friday, 24 June 1988 when the Commission gave a certificate as to the results of that election. For present purposes it is sufficient to say that the five applicants were elected to the offices of President, Deputy President, Senior Vice-President, Junior Vice-President, Secretary and First Assistant Secretary respectively. Under rule 29 (r) of the rules of the Victorian Branch it is clear that these officers assumed the office to which they had been elected upon the certificate being given by the Electoral Commission. Therefore, since 24 June 1988 they have held the office to which they had been elected as indicated above. These officers also constitute the State Executive and Committee of Management of the Victorian Branch of the union; see rule 21, and their powers and duties as such Committee of Management are set out in rule 22. It is fair to say that under those powers they have the management and day-to-day running of the affairs gf the branch. Reference is made in particular to sub-rule (6) of rule 22 which sets out one of the responsibilities of the State Executive as follows: "It shall be responsible for all expenditure of the Union - (and for present purposes in these rules the word "Union" includes the Victorian Branch of the organization itself) and may incur all necessary expenditure for the proper upkeep and_ the furtherance of the objects of the Union and it may Pay all sums so incurred." In relation to this power to incur expenditure and make payments, reference is made to rule 33 which relates to application of funds. Under sub-rule (a) of rule 33 all monies received shall be dispersed only in furthering the objects of the Union as laid down in rule 3 of the rules and sub-rule (b) is as follows: "All orders for the withdrawal of moneys from the bank shall be signed by the President or Deputy Vice-President or Senior Vice-President or Junior Vice-President together with the State Secretary or First Assistant State Secretary." —— That means that each withdrawal must be signed by two persons one of whom is either the State Secretary or First Assistant State Secretary and the other one of which is one of the President, Deputy Vice-President or Senior Vice-President or Junior Vice-President . There is no doubt that those are the persons who have the authority and power under the rules of the Victorian Branch of the Union to sign withdrawals from the bank of moneys held in credit at that bank on behalf of the Victorian Branch of the Union. It appears also that there are in existence accounts for the benefit of the Branch kept at the Commonwealth Bank and it is in relation to withdrawals from those accounts that the present problems arise. Prior to 24 June 1988 the relevant officers of the Victorian Branch, and presumably the Committee of Management, consisted essentially of J.P. Maynes, M. O'Sullivan, K. Y. Harvey and H.J. Darroch, who were the President, Deputy President, Vice President and Secretary respectively of the Victorian Branch. Apparently some time before the last election the rules of the Victorian Branch were altered to create new offices which were to be filled by the election just completed. There is in the rules, at the present time, a special rule, rule 47, which reads: "47 SPECIAL 1988 RULE Until members have been validly elected to the offices of Senior Vice-President and Junior Vice-President and First Assistant State Secretary and Second Assistant State Secretary in the election -> to be held under these Rules in 1988 the occupants of the offices of Vice-President and Assistant State Secretary as at the date of certification of this Rule shall continue in those offices, and the provisions of Rules ... 33(b) ..., as they stand immediately prior to the certification of this Rule, shall continue to operate." The provision of rule 33(b) as it stood immediately prior to rule 47 coming into operation is not before the Court, but, from experience of the affairs of organizations and from the facts of this case, I am prepared to infer that, under the earlier rule 33(b), either.or any two of Mr Maynes, Mr O'Sullivan, Mr Harvey or Mr Darroch had power under that rule 33(b) to sign for withdrawals from the bank. Implict in what I have said is that it is most unlikely, and I do not infer, that any one of those persons had the power to sign withdrawals from the bank without the withdrawal being signed by another person also. Any power they had would depend upon the terms of the then rule 33(b). In these circumstances, one would have expected that, upon the Commonwealth Bank being notified of the result of the election, if by no other way than by presentation of the certificate of the returning officer from the Electoral Commission, together with the relevant rules of the Victorian Branch of the union, rule 29 and rule 33(b), the bank would have accepted those facts, and would have acted on them and treated the power residing in the applicants as being sufficient authority to withdraw the funds of the victorian Branch from the bank. The bank 1s not a party to these proceedings, and no order can be made against the bank in these proceedings, but I should say that I find it difficult to understand why the bank does not accede to the request of the applicants. What is to be stressed, however, is that, at the present time, there is no evidence to suggest that Mr Maynes is claiming any right or power to sign withdrawal documents to enable withdrawal of money from the Commonwealth Bank account in the name of the Victorian Branch. It is also noted that, on the material before me, the position of Mr Maynes is no different from that of any other member of the organization attached to the Victorian Branch. Nothing has been pointed to which suggests that he has any special power to direct the bank to do anything whatsoever. It may well be that, if he tried to do so, he would be in breach of the rules of the organization. What in fact happened was that, first, by an undated letter written on 27 June, that is, Monday this week, Mr Tanner wrote to Mr Maynes as follows: "In accordance with Rule 33{b) of the Federated Clerks Union (Victorian Branch) Rules I hereby request that you sign the enclosed authority to conduct transactions on the branch's bank account in your capacity as the retiring President of the Victorian Branch. I enclose a copy of the Returning Officer's declaration of the poll, which was delivered to the Secretary of the Branch at 1.00p.m. on June 24th for your assistance." In view of what I have said, it is very difficult to see from that letter what power rule 33(b) of the rules of the Victorian Branch confers upon Mr Maynes to do anything. He is not one of the officers mentioned in that rule. He has no power under the rules to do anything of the kind referred--to-- in the letter. Apparently nothing was done by Mr Maynes pursuant to that letter. By a letter dated 27 June, Mr Tanner wrote again to Mr Maynes as follows: "I refer to my previous letter with respect to the signing of the authority to transfer title in the union's bank accounts into the names of the new State Executive members other than the Second Assistant Secretary in accordance with the rules. I refer also to a conversation between ourselves in the Victorian Branch office at approximately 3.45p.m. today, during which you refused to say when you would be signing the said authority and delivering it to me. Accordingly, I hereby request that you sign and deliver the said authority to me by 10.00a.m. on Tuesday June 28, failing which I will be taking steps to enforce the Rules." Mr Tanner exhibits to his affidavit a copy of the form which he wanted Mr Maynes to sign and also letters received by him from Mr Maynes. One dated 27 June 1988 was as follows: "I have yours of 27th inst. in which you refer to a conversation "between ourselves," and go on to allege I refused to say certain matters." He then disputes that conversation took place, and makes other allegations to which I need not refer. The other letter is dated 28 June, and is as follows: "your undated letter with attachment and yours of the 27th inst. seek objectives and impose demands which are contrary to the rules of the -*" organization." There then appear some other comments which are not relevant for present purposes. The document which was sought to be _ signed, apparently, is a document prepared by the bank, and is headed "Authority For Clubs, Lodges, Societies, etc.". It is undated. It refers to "Commonwealth Bank of Australia" and "Commonwealth Savings Bank of Austrg#lia"" with a note "Delete aS appropriate," and then continues: "L. Authority has been duly given by resolution passed at a legally constituted meeting of Federated Clerks Union (Victorian Branch) for - (blank) on behalf of the said body to ~-" There are then set out a number of matters, basically related to the operation of the bank accounts. There are a number of other authorisations. It is signed, Barbara Lewis, Chairman. There then appears the words: "This authority supersedes the previous authority - 10 - signed by me on behalf of the said body. Signature of Chief Officer or Chairman who signed previous authority. (Signature not required if there has been no change in Chief Officer or Chairman). There is attached to that form another form which appears to identify four accounts in the name of the Federated Clerks Union of Australia, the names of officers authorized to operate the accounts and their official positions and specimen signatures, and there are set out the names, positions and signatures of Mr Tanner, Mr Cole, Sylvia Brooks, Barbara Lewis, Emanual Lambro, and Mr Giddings. An address is given in Queens Street, Melbourne. On the face of it, there may well be very good reasons why Mr Maynes does not want to sign that authority. On the face of it, it is misleading. On the face of it, it purports to say the authority to sign comes from the Federated Clerks Union, Victoriaf Branch at a legally constituted meeting. The authority given to the present officers is given pursuant to the rules, and not pursuant to any meeting, but I need not pursue that question any further. It appears also that.the solicitor for the Victorian Branch of the Union has written to the Manager of the Commonwealth Bank, forwarding a copy of the declaration by the returning officer, a copy of the relevant rules, 29(n) and 30(a), and also a copy of sub-rule 33(b) and requests as follows: -11- "Could you please confirm to the undersigned in writing as a matter of the utmost urgency precisely what the bank requires in order to give effect to the abovementioned provisions of the Rules of the Branch." In an affidavit by the solicitor, it appears that, on the 28th, he rang Mr Moffatt, the manager, who acknowledged receipt of the letter and the attachments to it, and in which Mr Moffatt advised him that the bank required the signature of Mr Maynes as a chief officer or. chairman who signed the previous authority on the form headed "Authority for Clubs, Lodges, Societies, etc.". This was required for the purpose of ensuring, to the satisfaction of the bank, continuity of authority with the bank. Mr Moffatt confirmed that, without the signature of Mr Maynes, the bank would not recognize or acknowledge the signatures of the applicants for the purpose of operating branch accounts at the bank. It is on these facts that the question of jurisdiction or power tq make the orders sought must be decided. The way the matter was put in submission was that, from all the evidence, it should be clear that Mr Maynes has refused to sign the authority sought to be signed by the bank before it recognizes the signatures of the new officers of the Branch. For present purposes I am prepared to make that inference but at the same time I express no view on whether Mr Maynes was justified in refusing to sign. From what I have already said there appear to be strong arguments why he — -12- should refuse to sign. The argument was then put that from that refusal there should be an inference drawn that by refusing to sign Mr Maynes has refused to recognize the applicants as the present officers constituting the State Executive of the Victorian Branch. That failure to recognize those persons as officers carries with it, by necessary implication, it was contended, the fact that Mr Maynes has refused to sign the authority. That under s.141 he is under an obligation té do all things necessary to enable the organization to perform its functions including doing mandatory things to enable the present office bearers to operate the accounts at the bank and that he has refused to do this by refusing to sign the authority. Reference has been made to a number of authorities relating to the nature of the power of the Court to make orders under s.141. For present purposes I refer to Darroch v Tanner (1987) 74 ALR 559 and to a passage from the joint judgment of the Court pp.564 to 566. As I said earlier, the power is very wide but in that passage, and I do not propose reading it now, but quotations are taken from judgments in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 where Sir John Latham cu said, after referring to the equivalent of s.141: "In my opinion, these words contemplate the giving of detailed directions for the doing of acts or observance of forbearances which will constitute performance or observance of the rules". ~ 13- In the same case Dixon J. said: "The directions are 'for', that is, 'for the purpose of securing', the performance, which is active, or the observance, which is passive, of the rules of the organisation. The performance or observance is to be by someone under an obligation to perform or observe them". Likewise in the same passage reference is made to what was said by the High Court in the case of R v Joske; Ex parte Shop Distributive and Allied Employees' Association (1976) 135 CLR 194 and an extract was quoted from the judgment of Mason J and Murphy J as follows: "The judgments of this Court in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 make it perfectly clear that sub-s (1) of s 141 is not confined to the making of orders directing the performance or observance of a particular rule or particular rules of the organisation, as the prosecutors would have it, and that it extends, as its words explicitly state, to the giving of directions for the performance or observance of any of the rules of an organisation, that is, for the 'doing of acts which will conduce to the performance or observance of such rules." Counsel for the applicants argued that in having regard to that last passage which I have read, it is conducive to the performance or observance of the rules of the Victorian Branch of the Union that Mr Maynes be directed to sign the authority since without it the applicants cannot perform their duties under the rules of the organization. In support of the submission, counsel referred to a - 14+ judgment of this Court constituted by Fitzgerald J. given on 15 December 1982 in Mapstone v Thornton where, upon certain undertakings being given by the applicants as to the non-dismissal of certain persons, orders were made directing persons to observe the rules of the Central and Southern Queensland Branch of the Clerks Union by signing all documents necessary to give effect to rule 41 of the rules of that Branch for the purposes of assigning the authority to operate the account kept in the bank in the name of that Branch. The reasons for judgment for that order make no reference to the nature of the powers conferred by s.141 of the Act and I do not find the actual order of any assistance in this case having regard to the objection being taken by counsel for the respondent as to the nature of the power and jurisdiction of this Court. It appears this point was not raised before Fitzgerald J. and in those circumstances I am not prepared to act on the formal order when I am not satisfied that there had been a full discussion or consideration of the matters raised before me. As I said earlier, this case really involves a dispute between the Victorian Branch and its officers and the bank. There are ways in which that dispute can be resolved and in my opinion, on the material before me, one way of doing it is not by bringing proceedings of this kind. An order of the type sought is one which requires Mr Maynes to do something, which, under the rules, he is not permitted to do so. He has got no power to direct the bank to do anything whatsoever. If he did so he may well be in breach of the ~15 - rules, as I said before. I am not satisfied that where you have what might be said to be a negative stipulation that there is to be implied a positive obligation to do something. In other words, a negative stipulation not to hinder the officers of the Branch in performing their duties carries with it a positive obligation to do something which the rules do not enable that person to do but which, if done, might assist the officers in the performance of their duties. In my opinion that does not follow. In reality the officers should be looking to the bank itself. The bank may well be in breach of its contractual duties with the Branch in refusing to accept the signatures of the officers of the Branch. That is something which I do not know anything about at the moment but for present purposes I am satisfied that on the material before me the applicants have not shown that this Court has jurisdiction or power to make the orders sought. a In those circumstances I will hear submissions as to what orders should be made today, whether the matter should be adjoured to enable an opportunity for an amendment of the rule nisi, or for further directions to be given at a later stage or directions to be given at this stage. Itisa matter for submissions. For the reasons given earlier, I propose to discharge the rule nisi on the basis that there is no jurisdiction or power in this Court to make the order sought. - 16 - In those circumstances, counsel for the respondent has submitted that the Court should make an order that the applicants pay the respondents costs. Section 43 of the Federal Court of Australia Act 1976 provides that the Court has jurisdiction to award costs in all proceedings before the Court, including proceedings dismissed for want of jurisdiction, other than proceedings in respect of which any other Act provides that costs shall not be awarded. Section 197A of the Conciliation and Arbitration Act provides that - and I will read the relevant parts: "A party to a proceeding before the Court (and, for the purposes. of that Act, the Court is Australian Industrial Court, but I will not go into that discussion at the moment, but treat it as the Federal Court) in a matter arising out of this Act shall not be ordered to pay any costs incurred by any other party to that proceeding except where the party against whom the order is made instituted the proceeding vexatiously or without reasonable cause." Counsel for the responden# has argued that the rule to show cause here was obtained by the applicants in a proceeding which was vexatious or without reasonable cause. The principles to be applied in deciding whether to apply 197A have been discussed by me as a Judge of the Australian Industrial Court in the case of Heidt v Chrysler Australia Limited (1976) 26 271. It is quite clear that an order will be made in these circumstances only where it can be said, for example, that the proceeding instituted was "bad beyond argument", "which no sensible man would have brought", various other expressions of equal strength. It is a very or -1i7- heavy onus to establish, and only rarely succeeds. The purposes of the section is to prevent people bringing proceedings which are vexatious or unreasonable. As pointed out in Heidt's case, it is also important to remember that, in deciding this question, one must keep in mind that often, at a later stage after hearing the full argument, views are much clearer than they were when proceedings are commenced. One can always be wise after the event, and one must guard against that. In the present case, we have a position where a Judge of this Court, on the same material as before me, granted the rule to show cause. If I make an order for costs, I am saying that the Judge who made that order made a bad mistake in that he gave a rule to show cause in circumstances which were bad beyond argument. Likewise, I have already referred in my main reasons to the reasons for judgment given and order made by Fitzgerald J in December 1982 in the case in Mapstone v Thornton. True it is that it appears no question was raised before him as to the nature of the power of s.141 of the Act. It appears from the reasons that the only basis upon which he could have made such an order was under s.141, there not having been commenced any proceedings under Part IX of the Conciliation and Arbitration Act, although they were pending in the sense that it was indicated to him that they would be commenced shortly thereafter. But, in any event, the fact of there being such an order on the record is a factor to be taken into account. -~ 18 - It was argued that subsequent decisions of the Full Court of this Court have clarified the position as to the nature of the power and jurisdiction conferred by s.141 of the Conciliation and Arbitration Act and that having regard to those decisions it should have been obvious that the judgment of Mr Justice Fitzgerald had been made per incuriam. Having considered all those submissions, in my opinion it cannot be said that these proceedings were instituted vexatiously or without reasonable cause. The request for costs is refused. Accordingly the only order made is that the rule to show cause be discharged. 1 OWA DUI TST 1 certify that this and the seventeen G7) preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice R WM Nertnro> ' Deas "Berle ss Associate Dated: 20 Qme IAs? wt OSE CCCI NT