SPAUTZ v UNIVERSITY OF NEWCASTLE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, HANDLEY and POWELL JJA 16 December 1993, 5 May 1994 [1994] NSWCA 292 Spautz was appointed as a Senior Lecturer in the Department of Commerce, the Faculty of Economics and Commerce, of the University of Newcastle ("the respondent") in 1973. Between August 1973 and mid 1976 the respondent advertised on three occasions an appointment to the Chair of Commerce. The appellant applied, unsuccessfully, on the first two occasions and Dr Williams was appointed to the Chair in mid 1976. He started his duties on 1 January 1977. Shortly after Dr William's appointment, the appellant and Dr Williams had a dispute. The Council of the respondent eventually passed a resolution on 2 May 1980 dismissing the appellant from its academic staff. The issue is whether the resolution is invalid and of no effect: "Was resolution 80/80 of the Council of the University of Newcastle as set out in the statement of agreed facts dated 6th September, 1982 carried by the vote of two thirds of the members of Council within of by law 3.6.1.6(4)?" Held: Yes, upon construction of the University of Newcastle Act, 1964 and the relevant By laws, a vote of no less than two thirds of the subsisting member was sufficient to pass the resolution of 20 May. ORDERS Appeal dismissed with costs. Clarke JA Michael Edward Spautz ("the appellant") was appointed as a Senior Lecturer in the Department of Commerce, the Faculty of Economics and Commerce, of the University of Newcastle ("the respondent") in 1973. His academic training, experience in industry and academic appointment prior to his appointment by the respondent, were undertaken in America. He obtained a Degree of Bachelor of Arts in Psychology at the University of California, Los Angeles in 1956 and then, after some five years interruption to his studies, the Degree of Master of Arts in Psychology at the same university. He was awarded a Doctorate of Philosophy in Industrial Psychology in 1965 He then worked in industry until his appointment as Assistant Professor in the College of Business Administration at the University of San Francisco in 1968. He held this position until 1973 when he was appointed as a Senior Lecturer with the respondent. Between August 1973 and mid 1976 the respondent advertised on three occasions an appointment to the Chair of Commerce. The appellant applied, unsuccessfully, on the first two occasions and Dr AJ Williams, who had obtained his Doctorate of Philosophy from the University of Western Australia prior to 1976, was appointed to the Chair in mid 1976. He commenced his duties on 1 January 1977. Shortly after the appointment of Professor Williams a dispute broke out between the appellant and him. A chronicle of the dispute leading to the institution of the proceedings the subject of the present appeal appears in the comprehensive and careful judgment of Rolfe J and, for reasons which will 2 UNREPORTED JUDGMENTS become apparent, it is unnecessary to do more in this judgment than note that the dispute eventually culminated in a resolution of the Council of the respondent on 20 May 1980 dismissing the appellant from its academic staff. Following his dismissal the appellant instituted proceedings in which he claimed a declaration that the resolution to which I have just referred was invalid and of no effect. During the course of the interlocutory proceedings which followed the institution of the action Rath J ordered, pursuant to Pt31 R2 of the Supreme Court Rules, that the following question in the proceedings be decided separately: "Was resolution 80/80 of the Council of the University of Newcastle as set out in the statement of agreed facts dated 6th September, 1982 carried by the vote of two thirds of the members of Council within the meaning of by law 3.6.1.6(4)?" His Honour answered that question in the affirmative and following that determination there were a great number of interlocutory proceedings between the parties before the balance of the issues came on for hearing before Rolfe J on 11 March 1991. In his judgment Rolfe J concluded that the decision of the respondent to dismiss the appellant from its academic staff was made in accordance with the relevant legislation and By laws and was in no way vitiated by any breach of the rules of natural justice or other procedural irregularity. His Honour also made a particular point of saying that he was "not in any way satisfied that there was actual or presumed bias on the part of the members of the Council of the defendant" and proceeded to dismiss the proceedings with costs. Notwithstanding his dismissal of the proceedings his Honour, in deference to the submissions put by counsel, assessed damages in the sum of $24,758.14 (at the most). Following publication of the judgment a notice of appeal was filed in which the appellant challenged the decisions of Rath J and Rolfe J. The first ground of appeal asserted that Rath J had misconstrued the meaning of the phrase "two thirds of the members of the Council" in By law 3.6.1.6(4) of the respondent's by laws In the second ground the appellant challenged a number of Rolfe J's conclusions but, insofar as the appellant has not pressed those particular contentions, it is unnecessary to identify the particular complaints which he made in his notice of appeal. The appellant has, however, coupled a submission that Rolfe J erred in his assessment of damages with the challenge to the judgment of Rath J which has been pressed. Obviously enough it will not be necessary to deal with the question of damages if Rath J's judgment is upheld and it is to that judgment which I now turn. The hearing of the separate issue proceeded upon the basis of a statement of agreed facts which read as follows: "1. The University of Newcastle is a body corporate established and incorporated by that name under s4 of the University of Newcastle Act, 1964. 2. The Council of the University at all material times had the powers conferred and imposed upon it by or under the Act (s8). It had the power to make by laws (s24) and had the power subject to the Act and the by laws, to appoint and terminate the appointment of academic and other staff of the University (s22(1)(b)). 3. At all material times after 1973 the plaintiff was a Senior Lecturer in the Department of Commerce in the University and a member of the academic staff of the University. 4. On 20 May 1980 the following resolutions were passed at a special meeting of the Council: URJ SPAUTZ v UNIVERSITY OF NEWCASTLE (Clarke JA) 3 '79/80 That having considered the Report of the Committee of Enquiry established by Council and having before it the transcript of and the exhibits before that committee, and having received further exhibits from and heard Dr ME Spautz, the Council resolves that 'good cause' has been shown in accordance with By law 3.7.2.5, in that the Council considered that the conduct of Dr Spautz has been such as to render him unfit to continue to hold his office. 80/80 That Dr ME Spautz be dismissed from the academic staff of the University. 81/80 That the dismissal be with effect from 12 noon on Friday 23 May 1980, unless in the meantime Dr Spautz has tendered to the Vice Chancellor in writing his resignation to be effective from not later than 12 noon on Friday 23 May 1980. 82/80 That without admissions and without prejudice an ex gratia payment equivalent to one months salary be paid to Dr Spautz in addition to any monies lawfully due to him.' 5. As at 20 May 1980 the Act provided for the Council to be constituted in the manner set out in s10 thereof as it stood prior to subCL1 of the University of Newcastle (Amendment) Act, 1980 commencing (23 May 1980) namely: Appointed by Minister Elected by Legislative Council Elected by Legislative Assembly Professors elected by academic staff Academic staff (not professors elected by academic staff) Elected by non academic staff 1 Elected by students 2 Appointed or elected by Convocation 5 Elected by members of Council 4 PN EO Plus Vice Chancellor and Chancellor ex officio 6. On 20 May 1980 there were three casual vacancies in the membership of the Council namely one of the appointees of the Minister, one of the persons appointed or elected by Convocation, one of the persons elected by members of Council; and the Chancellor was an appointee of the Minister and thus not an additional ex officio member. 7. When resolution 80/80 was passed there were present at the meeting the Chancellor and 16 other members of Council. The resolution was carried by the votes of 15 Members 'for' and two 'against'. Two members of Council were present at an early part of the meeting but not when resolution 80/80 was passed. 8. The question raised for determination as a separate decision pursuant to Pt31 R2 is whether resolution 80/80 was 'carried by the votes of two thirds of the members of Council'." By law 3.6.1.6 is as follows: "6. (1) The Council may after proper enquiry censure, suspend, ask for the resignation of or dismiss any Professor for good cause. (2) 'Proper enquiry' in this By law means a formal enquiry instituted by the Council, the Professor concerned being given twenty eight days notice of the nature of the enquiry and the time and place appointed for it. (3) 'Good cause' in this By-law means 4 UNREPORTED JUDGMENTS (a) negligence or inefficiency in the performance of his duties as Professor; (b) conduct which the Council shall consider to be such as to render the Professor unfit to continue to hold his office. (4) No motion of censure, suspension, request for resignation or dismissal shall be valid unless carried by the votes of two thirds of the members of the Council, but if so carried it shall be final. " Further, By law 3.6.1.6 applied mutatis mutandis to other academic and teaching staff including the appellant (see By law 3.7.2 5) At the time of the relevant resolution the University of Newcastle Act, 1964 provided (where the Chancellor was an appointee of the Minister) for a Council of 24 members. If a valid resolution under By law 3.6.1.6(4) required votes of no less than two thirds of that number then the resolution which was passed would be ineffective. If, however, a vote of no less than two thirds of the subsisting members (who numbered 21 at the relevant time) was sufficient then the resolution of 20 May was valid and effective. The issue which confronted Rath J was whether the by law should be understood as referring to subsisting members or the total number of members stipulated in s10 of the University of Newcastle Act, 1964 (as amended) ("the Act"). Rath J found that the Act drew a clear distinction between a member of the Council and the office of a member and, having considered a number of submissions by the appellant's counsel and authorities to which he had been referred, concluded that that distinction supported the construction of By law 3.6.1.6(4) pressed by the respondent, that is that the votes of two thirds of the subsisting members were required. His Honour's conclusion that the Act draws the clear distinction to which he referred has not been, and in my opinion could not be, challenged The sections to which his Honour referred (s10 (12); s12 and s20(1)) express the distinction in the clearest possible terms. In addition, the by laws, where they use the expression 'member' are clearly referring to the person who actually occupies a position in the University structure and not to a mere position in that structure A similar observation can be made in relation to various sections of the Act and in both the Act and the by laws the phrase "Member of the Council" appears in a context in which it could not apply to an empty space in the Council Chamber For instance, a "Member of the Council": (a) cannot continue to be a member if bankrupt, convicted or mentally incapable (s11); (b) is deemed to have vacated his office in the various circumstances listed in s12; (c) may have a personal or pecuniary interest in a matter to be discussed at the Council meeting (BL 1.2.3); (d) can vote in an election for those members of Council who are elected by the other members of Council (BL 8.7). All these provisions make good the distinction to which his Honour referred and provide strong support for his ultimate conclusion. S20(1) of the Act is of particular relevance and reads: "No act or proceeding of the Council or any committee of the Council, or of the Vice Chancellor or any person acting pursuant to the direction of the Council shall be invalidated or prejudiced by reason only of the fact that at the time when such act or proceeding was done, taken or commenced there was a vacancy or vacancies in the office or offices of any member or members of the Council. " URJ SPAUTZ v UNIVERSITY OF NEWCASTLE (Clarke JA) 5 This sub section provides for the Council to continue to act despite the existence of casual vacancies and s18 states that a quorum will exist where there are at least one half of the total number of members for the time being of the Council present. The appellant's counsel submitted that the distinction between a member and his or her office and the provisions of s20(1) do not support his Honour's conclusion because the purpose and only function of a provision such as s20(1) is simply to overcome the common law rule that when a vacancy in the office of a member of a statutory body comprised of a definite number occurs the body is not extinguished but its powers and authorities become dormant and remain in abeyance until the vacancy is filled. Although the submission refers to a common law rule the words used in it are taken directly from the judgment of Starke J in Magrath and Anor v Goldsborough, Mort and Co Ltd (1931 and 1932) 47 CLR 121, at 130, which was a decision upon the construction of s6(1) of the Industrial Arbitration (Amendment) Act 1926 to 1930. That Act provided that there should be an Industrial Commission of New South Wales constituted by the appointment by the Governor of three members and that the Commission should be a superior court of record. S6(7) provided that at the sittings of the Commission all members should be present and any question should be decided according to the decision of the majority. As Dixon J pointed out, at 132 and 133: "Although the Commission as a statutory tribunal may be considered in contemplation of law to possess an existence which is independent of the members who compose it and continues in spite of their going out of office, yet it must be 'constituted' by the appointment of three members, and at its sittings all three must be present." Neither this authority, nor a later one, GJ Coles and Co Ltd v Retail Trade Independent Tribunal [1987] 7 NSWLR 503, at 527, support the existence of the common law rule relied on by the appellant. However, counsel for the appellant submitted that such support was to be found in an old decision R v Bellringer ([1792] 4 TR 810; 100 ER 1315, at 1321). This case was concerned with the charter of incorporation of a borough and in particular with the question whether the power of election could be exercised by the majority of members present at the one time rather than by a majority of the membership which consisted of a definite number of persons. It was held upon the construction of that charter that, as the powers had been granted to a body consisting of a definite number, it was necessary for there to be a majority of that definite number in order validly to exercise the power of election. Although it may be, as Rath J thought possible, that the construction adopted by the Court was based on the policy of the charter nonetheless the case stands as a decision on the particular charter. With great respect to counsel for the appellant I do not see that these cases provide any support for the propositions he seeks to advance or the appellant's case in general. S18 provides that one half of the total number of members for the time being of the Council shall form a quorum Taken alone, or in conjunction with s20(1), this section makes it clear that where a majority vote is required the vote of less than half of the total number of counsellors provided for by the Act may pass a valid resolution. The submission that s20(1) has the limited effect for which the appellant argues cannot stand in the light of the terms of the sections to which I have referred which enable the Council to pass valid resolutions even though there might be a large number of casual vacancies. 6 UNREPORTED JUDGMENTS The appellant's counsel also submitted that the power to amove is to be strictly interpreted and referred to the passage in Halsbury (4th Ed) Vol 9, at 751, para 1266, to the effect that "the word 'majority' will, in connection with such a power, be construed to mean a majority of the whole corporation, including the persons to be amoved". The appellant's argument in substance was that the by law called for a vote equal to two thirds of the members of the Council when fully constituted. There are a number of difficulties with this submission quite apart from the one posed by the distinction to which Rath J referred. For instance, the Council may be fully constituted when it has 23, or 24, or 25 members, depending upon whether the Chancellor and Vice Chancellor are appointed or elected members of Council or not Where the Chancellor is appointed and the Vice Chancellor ex officio then the maximum is 24. But the point is that it is impossible to say in advance what number will constitute the full complement of Council at a given time in the future. More to the point there is nothing in the language used which points in favour of the construction for which the appellant argues. S18 does superficially provide some support but its terms are not sufficient, in my opinion, to lead to a construction of the section which is likely to create significant difficulties in the working of the Council and may in certain circumstances (eg where the Chancellor has died and not been replaced) leave it quite uncertain what number is required to constitute a two thirds majority. Ihave made these observations solely to emphasise my opinion that Rath J was correct to dismiss the appeal for the reasons given by his Honour. In the circumstances there is no need to consider the issue of damages. The appeal should be dismissed with costs. Handley JA I agree with Clarke JA. Powell JA I agree with Clarke JA. Appeal dismissed with costs. Counsel for the Appellant: JD CUMMINS QC and RW CAMERON Instructed by: DAVID MORROW Counsel for the Respondent: JC CAMPBELL QC and JP GLEESON Instructed by: MINTER ELLISON