Industrial Court of New South Wales CITATION: University Teaching Hospitals' Association (Industrial) in New South Wales - Application for Cancellation of Registration [2008] NSWIRComm 105 APPLICANT Industrial Registrar PARTIES: RESPONDENT University Teaching Hospitals' Association (Industrial) in New South Wales FILE NUMBER(S): IRC 275 of 2008 CORAM: Marks J; Schmidt J; Backman J CATCHWORDS: Application brought under s225 to cancel registration of Association - cancellation of registration not opposed - cancellation ordered - ancillary order sought on behalf of Association relating to utilisation of funds - Association sought approval of establishment of trust fund - dispersal of assets not characterised as an obligation - court not empowered to make order with respect to funds - ancillary order declined LEGISLATION CITED: Industrial Relations Act 1991 Industrial Relations Act 1996 ss225, 226, 228 CASES CITED: In Re Printers and Transferrers Amalgamated Trades Protection Society (1899) 2 Ch 184 HEARING DATES: 21 May 2008 DATE OF JUDGMENT: 3 June 2008 APPLICANT Ms M Anastasi, Deputy Industrial Registrar LEGAL REPRESENTATIVES: RESPONDENT Ms J Fisher, former secretary of University Teaching Hospitals' Association JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES FULL BENCH CORAM: Marks J Schmidt J Backman J Tuesday 3 June 2008 Matter No IRC 275 of 2008 University Teaching Hospitals' Association (Industrial) in New South Wales - Application for Cancellation of Registration Reference by the Industrial Registrar to the Industrial Court of New South Wales under the Industrial Relations Act 1996 of a failure by University Teaching Hospitals' Association (Industrial) in New South Wales to comply with statutory requirements and the rules of the organisation JUDGMENT [2008] NSWIRComm 105 1 By notice of motion filed 1 May 2008, Maria Anastasi, Deputy Industrial Registrar, has sought an order of this Court for the cancellation of the registration of the University Teaching Hospitals' Association (Industrial) ("the Association"). The Association is registered as an industrial organisation of employers under Chapter 5, Part 3 of the Industrial Relations Act 1996 ("the Act"). 2 The application for cancellation was brought under s 225 of the Act which is in the following terms: 225 Institution of proceedings for cancellation of registration (1) An industrial organisation or, with the leave of the Commission, a person who has a sufficient interest in the matter may apply to the Commission for the cancellation of the registration of an industrial organisation. (2) The Commission may institute proceedings under this Division on its own initiative. (3) An industrial organisation may apply for the cancellation of its own registration. (4) An industrial organisation must be given an opportunity to be heard by the Commission in any proceedings against the organisation under this Division. 3 Section 226 sets out the grounds upon which registration may be cancelled. It is in the following terms: 226 Grounds on which registration may be cancelled The registration of an industrial organisation may be cancelled on any one or more of the following grounds: (a) that the organisation, or a substantial number of its members, has or have contravened the industrial relations legislation, any industrial instrument, or any order of the Commission, (b) that the industrial organisation, or a substantial number of its members, has or have engaged in any industrial action that has had, is having or is likely to have, a substantial adverse effect on the safety, health or welfare of the community or a part of the community, (c) that the organisation or a substantial number of its members, has or have engaged in any industrial action that has had or is having a major and substantial adverse effect on the provision of any public service by the State or an authority of the State contrary to the public interest and without reasonable excuse, (d) that the industrial organisation was registered by mistake, (e) that the industrial organisation is no longer effectively representative of the members who are employees or employers, as the case requires, (f) that the organisation has applied for the cancellation of its own registration, (g) that the organisation is defunct, (h) in the case of a federal organisation-that the rules of the organisation (and any parent body) no longer confer on the organisation a reasonable degree of autonomy in the administration and control of New South Wales assets and in the determination of questions affecting solely or principally members resident in New South Wales. 4 Once a ground for cancellation has been established, a Full Bench of this Court is empowered to cancel the registration by reason of the combined effects of ss 227(1) and 153 of the Act. 5 Section 228 of the Act sets out the consequences of cancellation. Section 228 is in the following terms: 228 Consequences of cancellation (1) On cancellation of registration of an industrial organisation, the organisation ceases to be an industrial organisation for the purposes of this Act. (2) The cancellation of registration does not relieve the industrial organisation or any of its members from any penalty or liability incurred by the industrial organisation or its members before the cancellation. (3) The cancellation of registration of a State organisation also has the following consequences: (a) the organisation ceases to be a body corporate under this Act, but does not thereby cease to be an unincorporated organisation, (b) the Commission may, on application by a person interested, make such order as it considers appropriate in relation to the satisfaction of the debts and obligations of the organisation out of the property of the organisation, (c) the property of the incorporated organisation is, subject to any such order, the property of the unincorporated organisation and is required to be held and applied for the purposes of the organisation under the rules of the organisation so far as they can still be carried out or observed. 6 At the hearing of the notice of motion, Ms Anastasi appeared and an affidavit sworn by her with a number of annexures was admitted into evidence. In addition, Ms JoAnne Marie Fisher, the former secretary of the Association, appeared to represent its interests and an affidavit sworn by her became evidence in the proceedings. 7 Ms Fisher did not oppose the cancellation of the registration of the Association. However, on behalf of the Association she sought an order of an ancillary kind relating to the utilisation of the funds of the Association, which approximate $261,500. 8 We note that the application for cancellation was served by way of a notice published by the Industrial Registrar on the website of the Industrial Relations Commission of New South Wales, dated 1 May 2008. Furthermore, there was evidence that a number of State peak councils, as described in ss 215 and 216 of the Act, were notified of the application for cancellation and the hearing before this Full Bench. 9 We now proceed to deal with the issues raised in the course of the proceedings. Cancellation 10 The Association was originally registered on 20 December 1995, under the prior 1991 Industrial Relations Act. It is taken to have been registered under the Act. The Association has failed to notify the Industrial Registrar of the conduct of elections, as required by s 249 of the Act; has failed to lodge accounting records and other financial statements, as required by s 282 of the Act; and has failed to lodge certain statutory declarations, as required by s 278 of the Act since 12 February 2001. 11 Ms Fisher's evidence was that the Association has been inactive for a period in excess of six years, predominantly because University Teaching Hospitals, have not been employing bodies since approximately 1986, when Area Health Services were established by the New South Wales Government. She had consulted members of the Association, who recommended that the Association seeks deregistration. It consented to its registration being cancelled. 12 On the evidence we are satisfied that the provisions of s 226(e),(f) and (g) warrant an order for cancellation of the registration of the Association. Ancillary Order 13 The Association sought that the Court approve of the establishment of a Special Purposes and Trust fund by the Sydney South Western Area Health Service, to which the Association's funds could be transferred. The funds would be used "to support research, travel and education of health administrators employed within the public health system of New South Wales." 14 There are a number of reasons why, in our opinion, no such order should be made. The first relates to the power and jurisdiction of this Court, governed by the provisions of s 228(3)(b), which we have previously set out. This would seem to us to be confined to the making of an order 'in relation to the satisfaction of the debts of and obligations' of the Association. 15 We are of the opinion that any question as to the disposal of the assets of the fund, given the current state of inactivity associated with the Association could not be characterised as an obligation of the Association for the purpose of s 282(3)(b) of the Act. Accordingly, on this ground, this Court is not empowered to make any order of any kind with respect to the funds. 16 There was no other evidence of any indebtedness of or any obligation incurred by the Association. Further, we note that by reason of the provisions of s 228, upon cancellation the Association remains an unincorporated organisation, which we take to mean an entity in the nature of an unincorporated voluntary association. By s 228(3)(c), the property of the Association becomes the property of that unincorporated organisation and those persons who are responsible at law for the conduct of the voluntary organisation, are required to deal with its assets in accordance with its purposes and pursuant to its rules. 17 Section 228(3) expressly provides that its property is required to be held and applied for the purposes of the organisation under the rules of the organisation, so far as they can still be carried out or observed. 18 It is probable at law that the assets of the Association upon cancellation are to be held in trust for the members of the Association, in proportion to the amount contributed by each of them to the funds of the Association. (See In Re Printers and Transferrers Amalgamated Trades Protection Society (1899) 2 Ch 184). If, as appears, there are no persons currently holding any office within the Association, then its control may vest in its members. 19 Furthermore, the rules of the Association, which are in evidence, names those entities which are eligible to become members of the Association as various Area Health Services, St Vincent's Hospital, Royal Alexandra Hospital for Children and the Mater Misericordia Hospital, Newcastle, or any corporation which is either a teaching hospital in Australia not controlled by an Area Health Service, an Area Health Service which controls a teaching hospital or within such "other related field as shall be determined from time to time by the Board, and is an employer or capable of employing others." "Teaching hospital" is defined to mean "a teaching hospital with permanently based academic staff on site and a fully funded professorial chair." There was no evidence as to the identity of current members of the Association, although Ms Fisher deposed that she had consulted with them. 20 Provisos to the objects of the Association contained within rule 2 of the Association's Rules make it clear that the Association is not entitled to sell or dispose of any of its "main undertaking" without the prior approval of the members and the prior written approval of the Minister, nor is it entitled to dispose of fixed assets exceeding more than 10% of the value of its fixed assets, without the prior approval of the members and the prior written approval of the Minister. 21 The objects for which the Association was established, pursuant to its rules, predominantly relate to fostering "the role of teaching hospitals as perceived from time to time." There is also a reference to the provision of advice on industrial matters and the procurement of registration as an industrial union of employers under the Industrial Relations Act 1991. 22 Accordingly, the purposes for which the Association was established appear to be one of industrial representation in association with the role of teaching hospitals within the health system. 23 Having regard to the membership eligibility criteria created by the rules, and the rules as to the use of the funds of the Association, in the context of the objects for which the Association was established, it is difficult to see how the transfer of the funds of the Association to another entity, for the purpose of supporting research, travel and education of health administrators employed within the public health system of New South Wales, accords with the requirements of the Association's rules. 24 In her evidence, Ms Fisher outlined the proposal that the Trustees of the proposed fund are to be the Chief Executive Sydney South West Area Health Service and three other Area Health Service Chief Executives, as well as herself. None of these persons, so identified, appear necessarily to be eligible to belong to the Association, given its rules. Nor is there any suggestion that the Minister has approved what is proposed to be done with the Association's funds. To the contrary in submissions Ms Fisher said: "The Health Department currently does not support senior managers in their continuing education and therefore we thought this money could be used in order to do that." 25 For all these reasons we decline to make any order of an ancillary nature as sought by the Association. Order 26 The registration of the University Teaching Hospitals' Association (Industrial) in New South Wales as an industrial organisation is hereby cancelled. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.