FEDERAL COURT OF AUSTRALIA Micallef v Donnelly [2002] FCA 221 INDUSTRIAL LAW – rules of an organisation – enforcement – obligation to give lawful directions under rules – whether unreasonable directions are lawful – obligations of members – whether fiduciary – interim relief –discretion – failure to co-operate – ground for refusal of interim relief. Workplace Relations Act 1996 (Cth) s 209 Allen v Townsend (1977) 31 FLR 431 – referred to Associated Provincial Picture House Ltd v Wednesbury Corporation [1948] 1 KB 223 – referred to Australian Postal & Telecommunications Union (NSW), Re; ex parte Wilson (1979) 28 ALR 330– referred to Cameron v Hogan (1934) 51 CLR 358– referred to Carling v Platt (1953) 80 CAR 283 – referred to Carlton Football Club v Australian Football League [1998] 2 VR 546 – referred to Dawkins v Antrobus (1881) 17 Ch D 615 – referred to Dickason v Edwards (1910) 10 CLR 243 – referred to Hayman v Governors of Rugby School (1874) LR 18 Eq 28 – referred to Lee v Showmen's Guild of Great Britain [1952] 2 QB 329 – referred to Maclean v Workers' Union [1929] 1 Ch 602– referred to Macqueen v Frackelton (1909) 8 CLR 673 – referred to Malone v Marr [1981] 2 NSWLR 894 – referred to Scott v Jess (1984) 3 FCR 263 – referred to Shepherd v South Australian Amateur Football League Inc (1987) 44 SASR 579 – referred to Stoelwinder v Southern Health [2001] FCA 115– referred to Weinberger v Inglis [1919] AC 606 – referred to FRANCIS MICALLEF v CHARLES DONNELLY V 84 of 2002 FINKELSTEIN J 12 MARCH 2002 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 84 of 2002 BETWEEN: FRANCIS MICALLEF Applicant AND: CHARLES DONNELLY Respondent JUDGE: FINKELSTEIN J DATE OF ORDER: 12 MARCH 2002 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: The application for interim relief be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 84 of 2002 BETWEEN: FRANCIS MICALLEF Applicant AND: CHARLES DONNELLY Respondent JUDGE: FINKELSTEIN J DATE: 12 MARCH 2002 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The National Union of Workers is a registered organisation. Its rules must satisfy certain statutory requirements and, in contrast to the rights of members of a voluntary organisation under the general law (as to which see Cameron v Hogan (1934) 51 CLR 358, 370-373), s 209 of the Workplace Relations Act 1996 (Cth) enables a member to obtain directions for their enforcement. That is the nature of the present proceeding. Mr Micallef, an elected organiser with the union, has obtained an order nisi calling upon Mr Donnelly, the secretary of the Victorian Branch, to show cause why he should not be directed to withdraw the instruction he has given to Mr Micallef about the manner in which he should perform his duties. There will be a trial in a few weeks. In the meantime Mr Micallef seeks interim relief under s 209(4) requiring Mr Donnelly to withdraw his instruction. Although I am satisfied that Mr Micallef has made out a strong case for breach of the rules, he is not entitled to interim relief. To explain why I must first briefly set out the facts which, for the most part, are uncontroversial. 2 Mr Micallef had worked for South Pacific Tyres for many years. In 1994 he was made redundant. Each employee who became redundant was entitled to a redundancy payment. Mr Micallef received such a payment. But, in addition, he also received what has been described as an ex gratia payment of $105,000. Mr Micallef says that he did not personally request this amount, but it was paid by South Pacific Tyres following negotiations with Mr Illic, the former branch secretary. Several months after leaving South Pacific Tyres, Mr Micallef became a recruiting officer for the union. He held that position until he was elected as a branch organiser in 1998. Mr Micallef's responsibilities as an organiser included visiting work sites, attending to industrial disputes, negotiating enterprise agreements, recruiting members and other duties. To assist him in the performance of these duties Mr Micallef was provided with a motor vehicle and mobile telephone, as were all other organisers. In mid December 2001 Mr Donnelly learnt about the ex gratia payment. This caused him to be "seriously concerned". Mr Donnelly said that the payment suggested the possibility that Mr Micallef may have misused his position as a site delegate by obtaining a benefit that was not available to other workers who were made redundant. Through his counsel Mr Donnelly said that Mr Micallef may have breached the fiduciary duties he owed to the union, or placed himself in a position of conflict. Counsel went so far as to suggest that Mr Micallef may be charged with misconduct under the union's rules. 3 I should say at once that on the material before me, which is all that Mr Donnelly has, there is no evidence of any misconduct on the part of Mr Micallef. Perhaps there is some misunderstanding about the nature of the fiduciary obligations, if any, a member owes to his union, or as to the effect of the so-called conflicts rule. There are cases which hold that an officer of a union owes fiduciary duties to the members: Carling v Platt (1953) 80 CAR 283, 292-3, 306-7; Re Australian Postal & Telecommunications Union (NSW); ex parte Wilson (1979) 28 ALR 330. The precise ambit of the duty is not clear. However, two things are clear. The first is that when he received the ex gratia payment, Mr Micallef was not an officer of the union. The second thing is that equity will not impose fiduciary obligations on a member, who does not have the same responsibilities as an officer, and perhaps not even on an officer who is negotiating his redundancy entitlements, at least when that officer is not also involved in negotiations for the entitlements to be paid to other employees: Stoelwinder v Southern Health [2001] FCA 115. So far as the conflicts rule is concerned, it is necessary to show that a person having fiduciary duties to discharge has entered into a transaction on his own account which may possibly conflict with the interests of those to whom he owes the fiduciary duties. Merely to state the rule is to show that it has no application to Mr Micallef. 4 Returning to the facts, upon learning of the ex gratia payment Mr Donnelly tried to force Mr Micallef to resign from the union. He instructed him to take leave, and relieved him of all duties. When Mr Micallef refused to resign, Mr Donnelly wrote to the members informing them of this fact and that he had taken steps to relieve him of his duties. 5 Mr Micallef took the matter to the Federal Court and obtained an order requiring Mr Donnelly to permit him to return to work. He then returned to work on 14 January 2002. However he was not permitted to carry out some of his previous duties, namely those relating to his role of organiser. Mr Donnelly directed Mr Micallef not to attend at any sites without permission (and refused to grant such permission when Mr Micallef requested it). He confined Mr Micallef's duties to dealing with workers' compensation claims and attending workers' compensation conciliation conferences. Mr Micallef was also denied the use of his vehicle and mobile telephone. 6 Under the rules an organiser is subject to the control and direction of the branch committee of management, as are all other officers and employees of the branch. In addition, the branch secretary, who is the chief executive officer of the branch, has power to allocate duties to organisers. Mr Micallef says that by confining his duties to dealing with workers' compensation claims and attending at the conciliation conferences, thereby altering his previous duties, Mr Donnelly has acted contrary to the rules. He relies on cases such as Scott v Jess (1984) 3 FCR 263, 269 and Allen v Townsend (1977) 31 FLR 431, 483, for the proposition that powers conferred by a union's rules must be exercised bona fide and for the purpose for which they were conferred, and says that Mr Donnelly is abusing his power under the rules by acting in bad faith. Perhaps this is not the only applicable principle that should govern Mr Micallef's complaint. There is another general principle that can be applied to the rules of a voluntary association, namely that action taken under them must not be "absurd" or "unreasonable" (Dickason v Edwards (1910) 10 CLR 243, 254 per O'Connor J) or action that "no reasonable man could come to" (Dickason at 254 per O'Connor J) or action that is contrary to "fundamental principles of common justice" (Dickason at 255 per O'Connor J) or action "at which no reasonable man could honestly arrive" (Dickason at 258 per Isaacs J) or action for which there is "no evidence" (Lee v Showmen's Guild of Great Britain [1952] 2 QB 329, 340 per Somervell LJ) or action that is affected by "Wednesbury unreasonableness" (Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223). 7 Let me come back to Mr Donnelly's instruction. He said that he relieved Mr Micallef of responsibility for certain of his duties as an interim arrangement. He explained that he needed an opportunity to determine how best to deal with Mr Micallef's situation. He went on to say that because Mr Micallef had received an ex gratia payment of $105,000 Mr Donnelly was "seriously concerned that the ability of [Mr Micallef] to act solely in the best interests of the [union] and the members employed by [South Pacific Tyres] had been compromised". Mr Donnelly's conduct has been sanctioned by the branch committee of management which has instructed Mr Donnelly to carry out an investigation into the affair and take whatever action is permitted by the rules to resolve the matter. 8 As things presently stand, the exclusion of Mr Micallef from his usual duties is "unreasonable", a decision to which "no reasonable man could come to", and a decision that is based on "no evidence" of any wrongdoing. Neither Mr Donnelly nor the committee of management has any evidence to suggest that Mr Micallef acted improperly in accepting the ex gratia payment. Therefore there is no foundation for their view (which it seems is genuinely held) that Mr Micallef has misconducted himself in some way, or has breached the conflicts rule. Yet I have said that Mr Micallef should be denied interim relief. Why is that just? Is it not fair that he be returned to his former duties? 9 There is a long line of authorities in which the court has declined to interfere with decisions of domestic tribunals to which there has been a consensual submission. The kinds of organisations with whose internal decisions the courts have declined to meddle include social clubs (Dawkins v Antrobus (1881) 17 Ch D 615), sporting clubs (Malone v Marr [1981] 2 NSWLR 894), sporting associations (Shepherd v South Australian Amateur Football League Inc (1987) 44 SASR 579), trade unions (Maclean v Workers' Union [1929] 1 Ch 602), professional associations (Weinberger v Inglis [1919] AC 606), political parties (Cameron v Hogan (1934) 51 CLR 358), friendly societies (Dickason v Edwards), parochial councils and other church bodies (Macqueen v Frackelton (1909) 8 CLR 673) and schools (Hayman v Governors of Rugby School (1874) LR 18 Eq 28). Various reasons have been put forward to explain why courts have declined to interfere. One is that not every aspect of community life should be conducted under the auspices of the State. Sometimes it is best that judges stay out of disputes of certain kinds: see generally Carlton Football Club v Australian Football League [1998] 2 VR 546, 549-550. However, where the court is given statutory jurisdiction to entertain a complaint about the conduct of a voluntary association, it must exercise that jurisdiction. On the other hand, in recognition of the general undesirability of the court interfering with the internal workings of a voluntary association, under s 209(3) the court may withhold relief "unless it is satisfied that the applicant has taken all reasonable steps to try to have the matter the subject of the application resolved within the organisation". For this reason, the court should be seen as an arbiter of last resort, and the parties should attempt to resolve their differences before they embark upon litigation. The reasons for this approach are too obvious to mention. 10 I can now identify why there should be no interim relief on this application. It will be remembered that Mr Donnelly was directed to investigate the payment to Mr Micallef, presumably to decide whether any disciplinary action should be taken. His first step in the investigation was to write to Mr Micallef requesting information. So far as is material the letter reads: "In order to commence the investigation, I ask you to submit a statutory declaration that sets out all the circumstances surrounding the ex-gratia payment of $105,000 made to you by South Pacific Tyres. I also want you to explain the circumstances under which you became an official of the National Union of Workers. I ask that you submit the statutory declaration to myself by end of the week commencing the 4th of March 2002." 11 I will put to one side the request that the information be provided in the form of a statutory declaration, which seems to be an unreasonable demand. It seems tolerably clear that if he were minded to do so Mr Donnelly could quickly complete his investigation. During argument I suggested to Mr Donnelly's counsel, that his client could probably deal with the matter in a few days, but there was some opposition to this. It is interesting to see the variety of circumstances to which a "go slow" can be applied. In any event, whether the investigation will take a few days, or a week or so, it would be assisted by Mr Micallef's co-operation. So I enquired whether Mr Micallef would respond to the letter, even if not by statutory declaration. To my surprise Mr Micallef said that he would wish to take advice on the matter, though both his solicitor and counsel were available for immediate consultation. I was left with the impression that Mr Micallef did not intend to provide much assistance. This is not a reasonable position to take, even if there is some ill-will between Mr Donnelly and Mr Micallef. If Mr Micallef assisted, the matter would be resolved in a matter of days, and probably in his favour. His refusal to cooperate does him no credit. More importantly, it indicates that it would be inappropriate to grant him interim relief. If Mr Micallef will not take reasonable steps to resolve the dispute, the court should continue with its traditional reluctance to intervene in the affairs of a voluntary association. 12 There is one final point I must make so my refusal to grant relief will be seen in its proper context. Mr Micallef will not suffer any financial hardship if the direction remains in force. Nor will he suffer any other harm, except of a transient kind. Mr Micallef's main complaint is that he will lose contact with union members if he is unable to visit the sites where the members are employed. He is concerned that this will affect his prospects of re-election as an organiser. I am satisfied that no such harm will befall Mr Micallef. The current dispute will be resolved well before Mr Micallef's term of office expires in September 2002 and certainly in sufficient time to enable Mr Micallef to canvas for votes at the work sites. 13 The formal order of the Court will be to dismiss the application for interim relief. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. Associate: Dated: 12 March 2002 Counsel for the Applicant: Mr D Langmead Solicitor for the Applicant: Howie & Maher Counsel for the Respondent: Mr S Moore Solicitor for the Respondent: Holding Redlich Date of Hearing: 21 February 2002 Date of Judgment: 12 March 2002