LYNCH v NEW SOUTH WALES NURSES' ASSOCIATION SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SHELLER and COLE JJA and Simos AJA 23 October 1996, 5 November 1996 [1996] NSWCA 334 CONTRACTS — membership of Association nature of relationship — express or implied terms under membership agreement — whether Association obliged to pay member's legal expenses The appellant was a member of the respondent Association which had been Incorporated under the Associations Incorporation Act 1984. In 1984 she was dismissed by her employer and she sought legal advice from the respondent. The respondent negotiated an offer of reinstatement which the appellant refused to accept. She then engaged solicitors to bring reinstatement proceedings in the Industrial Commission of New South Wales, and incurred legal expenses which she then claimed from the respondent. When the respondent refused to pay her legal expenses, she brought an action in the District Court to recover the amount. The appellant argued that the relationship between herself and the respondent was contractual in nature. She submitted that an express or implied term of this membership with the respondent was that it would pay and continue to pay the full legal expenses of all industrial and professional issues arising out of a member's employment. She claimed that the respondent had made written and oral representations to this effect, and that she had chosen to take industrial action on the strength of these representations. The respondent denied that it was liable to pay the appellant's legal expenses, and also denied the alleged representations or that the appellant had acted to her detriment in reliance upon any such representation. HELD: 1. The rules of the Association imposed an obligation on it to undertake court proceedings when it considered it necessary that proceedings should be taken. There was no rule which required the respondent in express terms to bring court proceedings on behalf of a member or to fund proceedings brought by a member. However, the obligation should be read as extending to such proceedings as considered necessary to achieve the objects of the Association. 2. In the circumstances of this case the Association was entitled to he satisfied that, since it had successfully negotiated the reinstatement of the appellant by her former employer, the industrial proceedings proposed by the appellant were unnecessary. The trial Judge was correct in concluding that the Association was under no contractual obligation to pay the sum claimed. ORDERS Appeal dismissed with costs. Sheller JA INTRODUCTION Theresa Monica Lynch appeals from a decision given by Judge Rummery QC on 24 February 1994 finding a verdict for the respondent, New South Wales Nurses'; Association (the Association), in proceedings commenced by the appellant against it. The appellant started the proceedings in the District Court in 1991. According to a document headed "Amended Statement of Liquidated Claim" she alleged that since 1968 and at all material times she had been a member of the Association which was incorporated under the Associations Incorporation Act 2 UNREPORTED JUDGMENTS 1984. The appellant pleaded that it was and always had been a term of the membership that the Association would pay and continue to pay the full legal expenses of all industrial and professional issues arising out of a member's employment. In 1984-1986 the appellant incurred legal expenses arising out of issues associated with her employment with St Vincent's Private Hospital and brought proceedings in the Industrial Commission of New South Wales as a result of which she incurred legal expenses in the sum of $16,576.52. Despite her request to the Association to pay this sum the Association refused to do so. She sued to recover it from the Association. In addition she claimed that before she joined the Association and whilst she was a member, the Association had represented to her both orally and in writing that it had always and would continue to pay the full legal expenses of all industrial and professional issues arising out of members [sic] employment. She claimed that acting on the strength of such representation she took industrial action arising out of her employment and incurred the legal expenses referred to In the circumstances she alleged that the Association was estopped from denying that a term of membership was that it would pay such legal expenses. The Association did not dispute that the appellant had brought the proceedings in the Industrial Commission, incurred the legal expenses and requested the Association to pay them, which the Association refused. However the Association denied that it had ever been a term of her membership that the Association would pay full legal expenses of all industrial and professional issues arising out of a member's employment. It also denied the alleged representations or that the appellant relied upon them in taking industrial action. The following facts were agreed. On 4 October 1984 the appellant was dismissed by St Vincent's Private Hospital and sought advice from the Association with respect to her termination. The Association sought to negotiate reinstatement. On 25 October 1984 the appellant's former employer agreed to take her back into employment but not in the intensive care unit where she had previously been working. Between 25 and 29 October 1984 the Association communicated this offer to the appellant but the appellant refused it and would only accept reinstatement to the intensive care unit. On 26 October 1984 the appellant approached and engaged her own solicitors to take reinstatement proceedings. These proceedings were unsuccessful and the appellant incurred the legal expenses claimed. JUDGMENT AT FIRST INSTANCE His Honour Judge Rummery summarised the appellant's case as one based on a contract between herself, as a member of the Association, and the Association. which contained an express term or an implied term that the Association would pay and continue to pay the legal expenses of all industrial and professional issues, arising out of the appellant's employment. The appellant had two specific grievances. One related to what she regarded as her wrongful dismissal by St Vincent's Private Hospital. The other was that the Association had not taken proceedings in the Industrial Commission for her reinstatement in accordance with what she said was an express or implied term of her membership. His Honour said that the issue to be resolved was whether there was an express or implied term that the Association would pay the legal expenses of the industrial proceedings she took. He said: "The action that she brings is simply an action in contract and she relies on there being an express or an implied term in the contractual relationship between her and the defendant Association which entitles her to recover." URJ LYNCH v NEW SOUTH WALES NURSES' ASSOCIATION (Sheller JA) 3 On 6 August 1968 the appellant signed an application form, applying for membership of the Association and agreeing "if admitted to abide by the rules and regulations adopted by the Association". Judge Rummery concluded that the terms of the contract between the Association and its members, including the appellant, were to be found in the rules of the Association. There were before him two versions of these rules. The first version was annexed to an affidavit of 16 February 1994 by the General Secretary of the Association, Patricia Jane Staunton, who at all times material to the events in this case held the position of legal officer with the Association. This version of the rules appeared to be contained in a booklet called "Constitution and Rules 1984" which contained an index and rules numbered from 1 to 55. R42 was headed "Proceedings before Court" and provided: "Any necessary proceedings before any Court shall be taken and conducted by the General Secretary, an Assistant General Secretary, counsel, solicitor, agent or such other person as the council may appoint for the purpose." Miss Lynch objected to the tender of this version of the rules. To overcome her objection the Association tendered a certificate of the Deputy Industrial Registrar dated 23 February 1994 certifying, as a true and correct copy of the registered rules of the Association as at 24 October 1984, a copy of the rules which accorded with those set out in the booklet, apart from r2 which was missing either from the certification or from the certified documents as appearing in the appeal book. This is of no moment whatever There is no reason whatever for going behind the Deputy Industrial Registrar's certification that the documents attached were a true and correct copy of the registered rules of the Association as at 24 October 1984. The second version of the rules appeared to be contained in a booklet called "Constitution and Rules 1979". In that version, r41 had the same heading as r42 in the later version and was in the same words. The Association demonstrated through the evidence of Ms Staunton that this version of the rules had been certified by the Registrar. Judge Rummery pointed out that the rules could only be changed in accordance with r50 subject to the approval of the Registrar. R42 made it abundantly clear that any necessary proceedings before any Court should be taken and conducted by the General Secretary, an Assistant General Secretary, counsel, solicitor, agent or such other person as the council might appoint for the purpose. His Honour found that the appellant asked the Association to conduct litigation on her behalf in the Industrial Court which the Association refused to do. It decided that the proceedings for reinstatement that the appellant wished it to bring would be fruitless. Accordingly the Association decided that it would not underwrite such litigation, nor would it bring it or conduct it on the appellant's behalf. The outcome of the proceedings conducted by a well-known firm of solicitors, expert in industrial litigation, supported, if it did not vindicate, the value judgment or professional judgment made by the Association. In the trial Judge's opinion it was not possible to construe the contractual relationship between the appellant and the Association as one which permitted the appellant either to require the defendant to take up and maintain and conduct litigation on her behalf at her will, or to assume an obligation for the cost of litigation taken up and maintained by her through private solicitors engaged by her. Accordingly her case failed. APPEAL 4 UNREPORTED JUDGMENTS The appellant relied upon the grounds set out in her supplementary notice of appeal. She filed written submissions and a chronology. Before dealing with her grounds of her appeal and her submissions in support of them, it is important to reiterate the essence of the appellant's case as pleaded and advanced in the District Court. Her case was that the Association was bound in contract to pay the legal expenses claimed. The estoppel argument does not seem to have been separately pressed. In any event the appellant did not give evidence and there was no other evidence that she acted to her detriment in reliance upon any representation made by the Association as to the terms of membership or payment by it of her legal expenses. According to Ms Staunton's affidavit of 16 February 1994, within a week of the last week of October, she received a telephone conversation about the appellant's termination. She recounted the following exchange as having taken place: "Caller: 'T am the Solicitor acting for Therese Lynch who was recently terminated by St Vincents Private Hospital. She wants to take proceedings in the Industrial Commission for reinstatement and I would like to know whether the Association is prepared to meet her legal costs in those proceedings' (or words to that effect) I said: 'The Association is not prepared to meet any legal expenses associated with those proceedings. We have already successfully negotiated her reinstatement and there is just no basis upon which to commence proceedings' (or words to that effect)." On this evidence the inference is inescapable that when the appellant undertook the proceedings in the Industrial Commission she knew full well that the Association was not prepared to meet her legal costs in those proceedings. Clearly enough, if the appellant is to succeed in these proceedings: it must be because the Association breached its contract with her. The appellant submitted that neither version of the rules in evidence applied or had been proved by the Association to apply, and in particular that r42 or R41 did not apply. The terms of the contract were to be found in statements in other documents issued on behalf of the Association. His Honour referred to these documents and the appellant took us to them again. It is unnecessary to set them all out and sufficient to quote from two of them. An information brochure issued before November 1972 on behalf of the Association under the heading "What the Association does for the nurses" included the following: ". INVESTIGATES thoroughly every complaint received from its members and takes legal action where necessary to secure justice for them. GRANTS free legal representation to every member of six months standing or more who may be involved in litigation arising from her employment." The latest example was the Association's magazine "The Lamp" for August 1986 which contained the following: "Free Legal Representation The type of situation in which the Association would be justified in meeting the cost of legal advice provided to members was clarified recently by the Assistant General Secretary, Patricia Staunton, in response to an enquiry. The distinction which she draws is of potential interest to every member. The Association has always paid, and will continue to pay, the full legal expenses of all INDUSTRIAL and PROFESSIONAL issues arising out of a member's employment (for example, termination of employment, workers' compensation, URJ LYNCH v NEW SOUTH WALES NURSES' ASSOCIATION (Sheller JA) 5 allegations of professional negligence or misconduct, etc). The Association does not, however, as a matter of routine pay for criminal legal expenses incurred by members. Miss Staunton emphasises that there is a clear distinction between industrial and professional legal expenses and legal expenses for criminal charges. It has to be remembered that some Association members face, from time to time, criminal charges relating to motor traffic offences, drug offences, etc. The financial resources of the Association simply do not permit the covering of an individual's criminal legal expenses." It is convenient now to return to the grounds of appeal. GROUNDS 1,2, 9 AND 10 The appellant says that the trial Judge erred in finding that the Association had not breached its obligations to the appellant and should have held that the Association breached its obligations to the appellant to pay her legal expenses, and that his Honour erred in accepting as relevant R42 and should have held that 142 was "irrelevant, not certified by Industrial Registrar [sic], not relating to the Industrial Commission. [sic]" The case proceeded on the basis, which there is no reason to doubt, that the rules of the Association could have been altered only by a majority of members at an annual conference of the Association or on a ballot of members and with the approval of the Industrial Registrar appointed pursuant to the Industrial Arbitration Act 1940; see r50 of the 1984 version and r47 of the 1979 version. I agree with the trial Judge that the terms of the contract between the appellant and the Association were to be found in the rules or to be implied by the application of ordinary principles in the context of those rules. The terms were not to be found in any other document. Despite the appellant's arguments to the contrary, I am satisfied that at all relevant times a rule in the form of r42 in the 1984 version or r41 in the 1979 version was in force. In my opinion the language of r42 or r41 imposed upon the Association an obligation, when it considered it necessary that proceedings should be taken. to cause such proceedings to be taken and conducted by one or other of the persons mentioned in the rule. The rules contemplated that court proceedings which were necessary should be taken and conducted by the persons referred to. This must be read as meaning such proceedings as the Association considered necessary. There was no rule which required the Association in express terms to bring court proceedings on behalf of a member or to fund proceedings brought by a member. However, bearing in mind that the objects of the Association included the endeavour by all lawful means to promote the interests of all members in matters relating to employment and health and safety in the nursing profession, to secure redress for any grievances to which members might become subject in the course of working in the profession of nursing, to advise and assist members in preparing and placing cases before the Public Service Board, or any other authority, and to make financial provision for the carrying out of any of these objects and to do all such things as were incidental or conducive to the attainment of these objects if considered necessary, I would read the power to take proceedings as extending to such proceedings as the Association considered necessary to be brought on behalf of a member to achieve those objects. The Association correctly submitted that, to the extent that members were to obtain "free legal representation" before any court, that would only be in circumstances where the Association was satisfied that those proceedings were necessary and the proceedings were conducted either by or on behalf of the Association by 6 UNREPORTED JUDGMENTS agents or persons actually appointed by the Association's council. The evidence showed that the appellant received free legal representation by Ms Staunton, the Association's legal officer, in negotiations with the employer. On the evidence the Association was entitled to be satisfied that, since the Association had negotiated the reinstatement or re-employment of the appellant by her former employer, the unfair dismissal proceedings the appellant proposed were entirely inappropriate and "unnecessary". The lawyers who conducted the unfair dismissal proceedings on the appellant's behalf were not appointed by the Association's council. In my opinion the trial Judge was correct in concluding that the Association was not obliged as a matter of contract to pay to the appellant the sum claimed and these grounds of appeal fail. GROUNDS 3, 4, 8, 11 AND 12 These grounds relate to the rejection of the appellant's affidavit of 23 February 1994, the treating as irrelevant what the appellant described as a conflict of interest with the Association's legal officer, representing the appellant and the appellant's employer at the same relevant time, and his Honour's error in treating as relevant the judgment of the New South Wales Industrial Commission (Sweeney J). It was said that the Association and the appellant's employer withheld relevant evidence of a conflict of interest from Sweeney J and the appellant. "The plaintiffs employer was a member of defendant's organisation of employees." In her affidavit of 23 February 1994, which was rejected, the appellant deposed to a conversation with an officer of the Association revealing that Sister Elizabeth Wall of St Vincent's Private Hospital was a financial member of the Association in 1984. The affidavit continued: "Sister E Wall was my employer at the above hospital who dismissed me from my employment on 4.10.84. That dismissal was without notice nor the giving of reasons. Ms PJ Staunton, while legal officer of the above Association was legal officer for my employer, Sister E Wall, and I at the same relevant time." I agree with the trial Judge that the material in this affidavit was irrelevant to the issues he had to try which, I repeat, concerned whether there was a contract between the appellant and the Association obliging the Association to pay the legal fees claimed. It was pointed out during the course of argument to the appellant that Sister Wall was not her employer but her immediate superior. There was no conflict of interest. No doubt the employer had its own representatives in the negotiations for reinstatement which took place. These grounds of appeal also fail. GROUNDS 5 and 6 The appellant claimed that the trial Judge erred in continually interrupting through cross examination by her and in objecting and rejecting questions during the cross examination by her which resulted in a miscarriage of justice. She gave examples of what she described as undue intrusion into the ordinary course of eliciting evidence from a witness called by her in both her written and oral submissions. She claimed that the trial Judge assumed the role of advocate. The gravamen of the complaint seems to be that the trial Judge intervened excessively; see generally Galea v Galea (1990) 19 NSWLR 263 at 280 and following. Judge Rummery was very much alive to the difficulties the appellant faced in appearing unrepresented. He was alert to ensure that the appellant would not suffer any injustice in consequence. However his duty was also to try the case and to do justice and act fairly to the Association. Accordingly he had to rule on URJ LYNCH v NEW SOUTH WALES NURSES' ASSOCIATION (Simos AJA) 7 the evidence as it was presented to him and reject objectionable questions put by the appellant and inadmissible evidence. The appellant's challenge to the way the trial Judge ran the trial stems, in my opinion, from her failure to come to grips with the issues. The appellant wished to agitate the conflict of interest said to exist because Sister Elizabeth Wall was a member of the Association. In my opinion this was irrelevant to any issue at the trial. Ultimately after some discussion his Honour asked the following question of Ms Staunton: "Q. Were you in any conflict of interest situation when you were negotiating for Miss Lynch when dealing with Sister Elizabeth? A. Not at all your Honour, no." The appellant now submits that the form of this question was different from the question which she had put and which the trial Judge rejected. Her question was "Would you consider that a conflict of interest?", the 'that' being the appellant's allegation that Sister Elizabeth, 'the employer', the person who actually dismissed her, was a member of this same Association and there was only one legal officer and that was Miss Staunton. The trial Judge indicated he was not prepared to investigate an allegation that there had been a breach of union rules. In either form the question was directed to a matter of no relevance to the issue before the Court. In evidence was a copy of a minute of a special council meeting of the Association held on 8 October 1985 concerning "Complaint by the appellant under r13 against the NSW Nurses' Association and Pat Staunton". The minute revealed that this item was to be discussed in camera. In cross examination of Ms Staunton the appellant sought to investigate what power, if any, the officers of the Association had to hold in camera discussions on complaints. An interchange took place, during which his Honour indicated that he regarded this as irrelevant. Clearly it was irrelevant to the issue of whether the Association was contractually bound to pay to the appellant her legal expenses. His Honour said that he was not interested in the reasons for the appellant's dismissal. The case was not about her dismissal but about the terms of the alleged contract between the appellant and the Association. I have read those parts of the transcript to which the appellant has referred us. His Honour was quite properly attempting to keep the appellant's questioning within the bounds of relevance to the issues before him. None of the questions that he rejected have been shown to be directed to anything relevant to the issues in this case In my opinion his Honour acted in an exemplary fashion both to assist the appellant in presenting her case and to keep the evidence within proper bounds. These grounds of appeal also fail. The only other ground relied upon was a general reservation "to such other grounds as might become evidenced when the transcript of his Honour's judgment becomes available." Nothing was put forward under this head. CONCLUSION In my opinion the appeal should be dismissed with costs. Cole JA I agree with Sheller JA. Simos AJA I agree with Sheller JA. Appeal dismissed with costs. 8 UNREPORTED JUDGMENTS TM Lynch appeared in person Counsel for the respondent: B Kimber Solicitors for the respondent: RL Whyburn and Associates