FEDERAL COURT OF AUSTRALIA
Belan v National Union of Workers [2001] FCA 724
INDUSTRIAL LAW – Agreement between State-registered union and federal organisation – Interpretation of agreement – Whether a term should be implied limiting organisation’s power to amend its rules – Validity of rule amendments – Whether amendments to create a new branch are oppressive, unreasonable or unjust – Validity of resolutions of federal organisation’s National Committee of Management giving directions to a State branch and its officers.
Workplace Relations Act 1996 (Cth) ss 196, 202, 208, 209
FRANK BELAN and NATIONAL UNION OF WORKERS NEW SOUTH WALES BRANCH -v- NATIONAL UNION OF WORKERS, GREGORY SWORD and JOHN BARLOW and ORS
N93 of 2001
WILCOX, RYAN and MARSHALL JJ
15 JUNE 2001
SYDNEY
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IN THE FEDERAL COURT OF AUSTRALIA |
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N 93 of 2001 |
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
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BETWEEN: |
FRANK BELAN First Appellant
NATIONAL UNION OF WORKERS NEW SOUTH WALES BRANCH Second Appellant
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AND: |
NATIONAL UNION OF WORKERS First Respondent
GREGORY SWORD Second Respondent
JOHN BARLOW and ORS Third Respondents
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DATE OF ORDER: |
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WHERE MADE: |
THE COURT ORDERS THAT:
1. The appeal be upheld in part.
2. The orders made by Moore J on 15 December 2000 be varied by omitting orders 3 and 4 and substituting the following new orders:
“3. The respondents perform and observe the rules of the National Union of Workers by treating as null and void and of no effect the resolution of the National Committee of Management of the said organisation, dated 30 November 1998, directing the New South Wales Branch of the organisation, its Branch Secretary and all of its officers, employees and members not to make any comment to anybody concerning certain specified legal proceedings.
4. The application be otherwise dismissed and the rule to show cause otherwise discharged.”
3. The appeal be otherwise dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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N 93 of 2001 |
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
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BETWEEN: |
FRANK BELAN First Appellant
NATIONAL UNION OF WORKERS NEW SOUTH WALES BRANCH Second Appellant
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AND: |
NATIONAL UNION OF WORKERS First Respondent
GREGORY SWORD Second Respondent
JOHN BARLOW and ORS Third Respondents
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JUDGES: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
THE COURT:
1 This is an appeal challenging parts of a judgment of Moore J, given on 15 December 2000. The proceeding before the primary judge was an amended rule to show cause which sought relief pursuant to ss 208 and 209 of the Workplace Relations Act 1996 (Cth) (“the WR Act”) and, also, pursuant to the accrued jurisdiction of the Court.
2 The amended rule called upon the respondents to show cause why “each of them should not be prohibited from proceeding or further proceeding in respect of [certain] resolutions of the National Committee of Management of [the first respondent]”. In the context of s 209 of the Act, the amended rule, in effect, called upon the respondents to perform and observe the rules of the first respondent by treating certain resolutions made by its National Committee of Management as null and void and of no effect.
3 In addition, the applicants challenged the validity of, first, certain alterations to the registered rules of the first respondent as being oppressive, unreasonable and unjust; and, second, certain resolutions of the National Committee of Management of the first respondent made in connection with a particular industrial dispute.
The 202 agreement
(i) Background
4 The first appellant, Frank Belan, is the Secretary of the second appellant, National Union of Workers New South Wales Branch (“the State Union”). The State Union is a trade union registered pursuant to the Industrial Relations Act 1996 (NSW). The first respondent, National Union of Workers (“the Organisation”), is an organisation of employees operating nationally and registered pursuant to the WR Act. The second respondent, Gregory Sword, is the National Secretary of the Organisation and the remaining respondents, together with Mr Sword, constitute the National Council of the Organisation.
5 After lengthy negotiations, which are recounted by the learned primary judge at paras 5 to 12 of his reasons for judgment, on 26 October 1992 the Organisation and the State Union executed a series of documents that were intended to effect an agreement pursuant to s 202 of the Industrial Relations Act 1988 (Cth) (“the IR Act”) and to deal with their subsequent relationship. The primary purpose of the agreement (“the 202 agreement”) was to permit persons who were members of the State Union, but were ineligible to join the Organisation, to become eligible to join the Organisation and to participate in its affairs.
(ii) The terms of the agreement
6 The first part of the 202 agreement, which met the description in s 202(1) of the WR Act, said the Organisation and the State Union “hereby agree that the members of the [State] Union who, under the eligibility rules of the Organisation are not eligible to be members of the Organisation are subject to the provisions set out in the attachment hereto, eligible to become such members.”
7 The attachment consisted of a Memorandum of Agreement which itself had three annexures. The Memorandum of Agreement contained the following recitals:
“1. The National Union of Workers, New South Wales Branch, is an industrial union of employees registered pursuant to the Industrial Arbitration Act 1940 [NSW] ("the union”).
2. The National Union of Workers is an organisation registered pursuant to the Industrial Relations Act 1988 [Cth] (‘the organisation’).
3. The union and the organisation shall jointly be referred to herein as ‘the parties’.
4. In order to achieve constructive and co-operative relations the parties have agreed to enter into an agreement pursuant to Section 202 of the Industrial Relations Act 1988 [Cth] (‘the Proposed Section 202 agreement’).
5. Consistent with the proposed Section 202 agreement the organisation agrees that its rules shall be altered subsequent to the approval of the amalgamation and subsequent to the execution of the section 202 agreement so as to give effect to the proposed section 202 agreement.
6. Consistent with the proposed section 202 agreement the union agrees that its Rules shall be altered subsequent to the approval of the amalgamation and subsequent to the execution of section 202 agreement so as to give effect to the section agreement.”
8 Following the recitals there occurred these operative clauses:
“NOW IT IS AGREED:
1. There shall be a program for giving effect to this agreement in the order appearing below:
(i) the organisation and the union shall enter into this memorandum of agreement with the intention to give effect to its terms in accordance with thebelow mentioned program in the order there shown;
(ii) upon the completion of the amalgamation of the union pursuant to the Industrial Arbitration Act 1940 [NSW] and the completion of the amalgamation of the organisations pursuant to the Industrial Relations Act 1988 [Cth] the union and the amalgamated organisation shallenter into an agreement pursuant to section 202 of the Industrial Relations Act 1988 [Cth] as specified in Schedule A hereto;
(iii) subsequent to the execution of the section 202 agreement referred to in (ii) above, the organisation shall as soon as practicable amend its rules in accordance with the provision of Schedule B hereto;
(iv) subsequent to the execution of the section 202 agreement referred to in (ii) above, the union shall as soon as practicable vary its rules in accordance with the schedulehereto marked with the letter “C”;
2. Subject to the above program the parties agree:
(i) the union agrees with the organisation to enter into a section 202 agreement between the union and the organisation in accordance with the terms of Schedule A hereto and the union agrees to alter its rules in accordance with the terms of Schedule C hereto; and
(ii) the organisation agrees to amend its rules in accordance with the terms of Schedule B hereto.
3. The unions will take all steps available to support, promote and encourage the amalgamation of the organisation with any other organisation.”
9 The first annexure to the Memorandum of Agreement, Attachment A, contained a recital, as follows:
“The National Union of Workers is an organisation of employees registered pursuant to the Industrial Relations Act 1988 Cth) and in this agreement called ‘the organisation’, and the National Union of Workers, New South Wales Branch is an industrial union of employees registered pursuant to the Industrial Arbitration Act 1940 (NSW) and in this agreement called ‘the union’, hereby agree that the members of the union who, under the eligibility rules of the organisation, are not eligible to be members of the organisation are, subject to the provisions set out in the schedule, eligible to become such members.”
10 The operative provisions of Attachment A included the following terms:
“1. A person who is a member of the union shall be entitled to exercise all the rights of membership of the organisation which,without limiting the generality of any other provisions of this document or being limited in any way thereby, shall include, subject to compliance with the rules of the organisation, the following:
(a) the right to vote in all elections of the organisation:
(b) the right to nominate and be nominated for office in the organisation:
(c) to attend meetings of the organisation and to vote at those meetings in accordance with the rules of the organisation:
(d) to qualify for office in accordance with the provisions od [sic] the rules of the organisation:
(e) to qualify for voting in accordance with the provisions of the rules of the organisation.
2. Members of the union shall be subject to the same duties and obligations as are prescribed by the rules of the organisation on members of the organisation.
…
4. Upon payment of entrance fees and contribution, in accordance with paragraph 3 herein, those persons shall automaticallyreceive membership in both the union and the organisation.
5. All moneys received by theunion and/or the organisation by way of entrance fees, membership contributions, levies, fines or otherwise shall vest in the union and/or the organisation pursuant to the rules of the union and/or the organisation.
6. The union shall be bound by decisions of National Conference of the organisation on matters of National significance. The union shall haveautonomy todecide matters which do not directly effect [sic] members of the organisation outside the State of New South Wales.
…
8. The NSW (NUW) Branch funds of the organisation andthe funds of the unionshall be held in joint accounts in the name of and for the benefit of the union and the NSW (NUW) Branch of the organisation jointly. All real property situated in NSW held in the name of the union (or any of its constituent State unions prior to amalgamation) or the organisation (or any of its previously constituent NSW Branches) shall be henceforth held by and in the name of and for thebenefit of both the union and the organisation as tenants in common and in equal shares.
9. Sustentation fees shall be fixed by the National Council and payable in accordance with the Rules of the organisation and shall be calculated on the entire membership of the union and the organisation NSW (NUW) Branch (whichever is greater) from time to time.
…
11. The Secretary of the union shall consult with the General Secretary of the organisation in writing, providing him with at least one months notice of the union's rule alteration proposals. Such consultation shall be in an effort to ensure the consistency of rules, as between the union and the organisation. The union Secretary shall take into account all reasonable concerns expressed by the General Secretary of the organisation prior to anyaction designed to effect any proposed union rule change.
Subject to compliance with the above procedure, the union shall have rules and the powers to make, alter or rescind such rules, provided that the union shall, subject to the requirements or legislation, ensure that alterations or rescissions torules shall not conflict with therules of the organisation.
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14. This agreement is made by the organisation which is an organisation of employees registered pursuant to the provisions of the Industrial Relations Act 1988 and the union which is an industrial union of employee registered pursuant to the provisions of the Industrial Arbitration Act 1940 (NSW) and the Trade Union Act 1881 (NSW), pursuant to Section 202 of the Industrial Relations Act 1988, provided that this agreement does not purport to determine the legal status created by the registration of the organisation and the union, respectively, pursuant to that legislation.
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16. The officers of the union shall conform with all relevant obligations prescribed by the rules of the organisation to the extent that such obligations are not expressly prescribed in the union’s rules.”
11 Attachment B, the second annexure to the Memorandum of Agreement provided for a series of alterations to the Organisation’s rules. They included the insertion of a new rule 71, stipulating, so far as is relevant;
“(1) The following provisions shall apply in respect of the NUW Branch in the State of New South Wales (in this rule called ‘the New South Wales Branch’). Nothing contained in this rule shall affect the application of any other rule to the New South Wales Branch and to the holders of offices within and to the members of the Branch, except insofar as this rule may be inconsistent with another rule in which event the provisions of this rule shall prevail to the extent of any such inconsistency.
…
(7) Powers and Constitution of the Branch Committee of Management
(i) The Branch Committee of Management shall manage and control the affairs of the Branch including Division of the Branchand shall consist of:
(a) the Branch Secretary
(b) the Branch President
(c) the Branch Secretary of each Division
(d) the Trustees; and in addition thereto
(e) members from each Division determined as follows:
A Division [sic] up to 4,000 shall be entitled to one member on the Branch Committee of Management:
B Division [sic] having between 4,001 and8,000 members shall be entitled to two members on the Branch Committee of Management:
C Division [sic] having between 8,001 and 12,000 members shall be entitled to three members on the Branch Committee of Management:
D Division [sic] having in excess of 12,000members shall be entitled to one member on the Branch Committee of Management per each 4,000 members of [sic] part thereof above 12,000 members. …”
The proposed sub-rule went on to stipulate the manner in which the Branch Committee of Management should operate.
12 Proposed sub-rule (9) dealt with the constitution and procedures of the Branch Finance Committee.
13 Attachment B did not provide for any amendments to the Organisation’s existing rule 37A(1), which was a rule of general application to all branches and read:
“Subject to these Rules or any decision of National Council made pursuant to these Rules the government, management and control of the affairs of each Branch of the Union shall be vested in a Branch Committee of Management to be elected in accordance with Rule 13.”
14 The third annexure to the Memorandum of Agreement was Attachment C. That Attachment set out agreed amendments to the rules of the State Union. The amendments included the adoption of a new rule 48A entitled “Special Rule – Relations with Federal Organisations and Agreements Pursuant to Section 202 of the Industrial Relations Act 1988 (Cth)”. Sub-rule 2 of that rule provided that:
“Notwithstanding the provisions of these rules, the Committee of Management shall not have power at any time to alter, amend, revise, rescind or add to this rule without the consent of the National Council of the National Union of Workers.”
(iii) Implementation of the agreement
15 After the making of the agreement, the Organisation proceeded with rule amendments, substantially as agreed, although with some apparently uncontroversial additions and consequential rule renumbering. The new rule 71, as the primary judge said at para 45, “created a special rule dealing with the NSW branch [of the Organisation].”
16 Under s 202(2) of the IR Act a copy of the agreement was required to be lodged in the Industrial Registry. Under s 202(3) and (4) the agreement did not come into force unless and until the Industrial Registrar had been directed by a designated Presidential Member of the Australian Industrial Relations Commission (“AIRC”) to enter the particulars of the agreement in a register of organisations kept by the Industrial Registrar. A direction in respect of the 202 agreement was given by Deputy President Acton on 2 February 1993.
The issues before Moore J
(i) The “legal expenses” resolution
17 Each of the four resolutions challenged before Moore J was carried by the National Committee of Management of the Organisation on 30 November 1998. The first of those was in these terms;
“The Branch Committee of Management of the Union's Branch in the State of New South Wales (“the NSW Branch”) and each member of it is directed to take all steps necessary (including the making of any resolution necessary) to pay all the legal expenses (and associated costs) incurred since 13 July, 1998 by the Union as a registered organisation in the following matters or proceedings. Such payment will be made from the funds of the Branch within fourteen days of the General Secretary forwarding notice of any of those costs addressed to the NSW Branch Secretary of the NSW Branch office.
MATTERS OR PROCEEDINGS
1. Supreme Court of NSW No. 11712 of 1998
2. Federal Court of Australia No. VG 382 of 1998
3. Federal Court of Australia Appeal No.1
4. Federal Court of Australia Appeal No. 2”
18 The four proceedings referred to in this resolution were all proceedings between the Organisation and Davids Distribution Pty Ltd, arising out of an industrial dispute in 1998 at Davids Distribution’s Sydney premises: see Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463 and National Union of Workers v Davids Distribution Pty Ltd (1999) 91 FCR 513.
19 Moore J held the legal expenses resolution to be null and void. There is no appeal against that decision. We need say no more about the legal expenses resolution.
(ii) The “no comment” resolution
20 The second resolution effectively prohibited officers of the NSW Branch from speaking about the Davids Distribution litigation. It read:
“The NSW Branch, its Branch Secretary and all of its officers, employees and members are directed not to make any comment to anybody (except in the course of giving instructions to lawyers) about any of the following matters or proceedings without the express written approval of the National Council, National Committee of Management or the General Secretary
MATTERS OR PROCEEDINGS
1. Supreme Court of NSW No. 11712 of 1998
2. Federal Court of Australia No. VG 382 of 1998
3. Federal Court of Australia Appeal No.1
4. Federal Court of Australia Appeal No. 2”
21 Moore J rejected a challenge to the validity of this resolution. His decision to take that course is one of the issues in the appeal. We will deal with it later.
(iii) The “bargaining period/protected action” resolution and “enterprise bargaining” resolution
22 The third resolution dealt with the right of the New South Wales Branch to take industrial action. It provided:
“The Branch Secretary of the NSW Branch and each member of the Branch Committee of the NSW Branch is directed not to take any action to initiate a bargaining period or give notice of intention to take protected action under the Workplace Relations Act 1996.”
23 The final contested resolution was in these terms:
“The General Secretary is directed as a matter of urgency to submit the following matter to the members of the National Council by any of the methods permitted under Rule 52 of the Union.
“The Union's Enterprise Bargaining policy is amended by including the following words at the end of paragraph 6.
‘Notwithstanding anything elsewhere in this policy the Branch Secretary and/or the members of the NSW Branch Committee of Management may not make any application in accordance with the Act or agreements to be certified nor initiate a bargaining period or give notice of protected action under the Workplace Relations Act 1996 without the prior written approval of the General Secretary’.”
24 Moore J held the New South Wales Branch Committee of Management of the Organisation had authority to give notice of an intention to take protected industrial action, pursuant to s 170MO(2) of the Act, and made a declaration to that effect. However, his Honour thought the Branch Committee of Management had no authority to initiate a bargaining period or to apply for certification of agreements. As each resolution dealt with one of those subjects, Moore J declined to hold them invalid.
(iv) The rule changes
25 Also at issue in the proceeding was the validity of certain amendments to the Organisation’s rules. In February 1999 the National Council amended the rules in such a manner as to create a new branch, called the Central Branch, and to provide for the allocation to it of certain members. The February resolution was modified by the National Council, by a further rule change, in October 1999.
26 Another rule alteration under challenge related to amendments, in June 1999, to Rule 71 which, it will be recalled, applied specifically to the New South Wales Branch.
27 Since the validity of the rule changes was put at the forefront of the appellants’ case on appeal, it is convenient to deal first with that issue.
The June 1999 amendments
(i) Contentions
28 As indicated, the 202 agreement proposed insertion into the Organisation’s rules of a new rule 71(7), concerning the powers and constitution of the New South Wales Branch Committee of Management. Rule 71 eventually emerged in altered form, in which the proposed sub-rule (7) became sub-rule (9). However, that sub-rule retained the opening statement: “The Branch Committee of Management shall manage and control the affairs of the Branch.” Unlike in rule 37A, which applied generally to Branches, the prefatory statement in rule 71 was not qualified by a reference to decisions of the National Council.
29 The changes to rule 71 effected in June 1999 consisted of the deletion of sub-rule (9), dealing with the powers and constitution of the New South Wales Branch Committee of Management, sub-rule (10) relating to Branch meetings and sub-rules (13) to (20) concerning Branch officers. The most contentious of these changes is the deletion of sub-rule (9); and, particularly, the omission of its opening words referring to management and control of the affairs of the Branch.
30 It was suggested at first instance, on behalf of the respondents, that “the content of what was sub-rule 71(9)” was moved to a new rule 37D. However, the appellants responded that “a comparison of the two rules shows that the form of the new rule reduces the arrangements for the government of the NSW Branch to the same as that for all other branches under Rule 37A.” That statement seems to be correct. The new rule 37D deals only with the composition and procedures of the New South Wales Branch Committee of Management. It does not include a statement giving to that Committee unfettered management and control of the Branch’s affairs. It has to be accepted that the effect of the July 1999 amendments is to remove the so-called “statement of autonomy” contained in the previous rule 71(9). The question is whether it was open to National Council to take that course.
31 The appellants’ contention that it was not open to National Council to take that course is founded on the 202 agreement. The submissions made by counsel for the appellants, Mr M Slattery QC and Mr B Docking, on the point are encapsulated in the following paragraphs in their written submission:
“(a) That upon the true construction of the Section 202 Agreement the expression ‘the Union’ as used in clause 6 of the Agreement refers to autonomy of both the NSW Union and the same persons as are members and governors of that Union in their role as members of the NSW Branch of the NUW.
(b) That there should be implied into the Section 202 Agreement a term that the rule resulting from the implementation of the Agreement would not be further amended (or its substance not altered) (or not deleted from the rules).
(c) That whether or not sub-rule 71(9) was amended, the members of the NSW Branch, to the extent that and becausethey were also all members of the NSW Branch, should be treated notwithstanding the repeal of rule 71(9) as having autonomy as branch members provided for by clause 6 of the Section 202 Agreement.”
32 In elaborating the first submission, counsel make the point that the 202 agreement attempted to achieve a number of purposes relating to members of the Organisation and the State Union, utilising the mechanism of a legally binding contract between two bodies corporate. The contract involved merger of the finances and property of the New South Wales Branch of the Organisation and the State Union, and the creation of an entitlement, in members of the State Union, to exercise all the rights of membership of the Organisation; and, also, placing upon them the obligations of membership. Counsel argue it followed “that membership of the [State] Union would immediately create two parallel sets of membership rights, as is contemplated in section 202 itself.” Counsel submit:
“Apart from these clauses, the rights conferred under the Agreement are principally between the bodies corporate themselves. However, to the extent that the NSW Union as a body corporate received a benefit of promises from the NUW, it did so on behalf of and for the benefit of its members in the dual role which they acquired by virtue of that Agreement.”
33 Counsel contend it follows that cl 6 of Attachment A to the Memorandum of Agreement refers, not just to the State Union, but to its members as well. They say:
“The words in clause 6 ‘the Union shall have autonomy to decide’ are meaningless unless they also refer to the members of the NSW Union. As an independent body corporate prior to the making of the Section 202 Agreement, the NSW Union had that autonomy in any event, unless it had been taken away by some means. Autonomy means ‘the right of self government: a self governing community: independent: self-sufficiency: self-regulation’ (Macquarie Dictionary). Inherent in the concept of autonomy is that it is the right of the body politic or the members themselves. What clause 6 of the Agreement was actually doing was ceding to the NUW the NSW Union’s and its members’ rights of self government to the extent that those rights might otherwise:
(a) conflict with decisions of national conference of the NUW on matters of national significance; or
(b) would directly affect members of the NUW outside NSW.
In exchange for the benefit of the acquisition of a right of membership of the NUW conferred by clause 1, each member of the NSW Union forewent an aspect of his or her right of self-government in respect of the subject matters described in clause 6. In each case, the benefit and the burden of the promises were exchanged for convenience on behalf of a changing membership of the NSW Union, through the contracting party, the corporate entity of the NSW Union itself: Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107.
In this sense the benefit and burden of the promises made by the NUW are conferred upon or borne by each of the members of the NSW Branch of the NUW for the time being by reason of their automatic and simultaneous membership of the NSW Union. The making of the distinctions which are made by the learned trial judge between the NSW Union and the NSW Branch of the NUW in relation to the construction of clause 6 does not answer the argument put by the appellants that the benefit of the promise of autonomy was for the members in their dual capacities as members of each body corporate.”
34 Counsel for the appellants suggest the only way in which effect may be given to these purposes is to construe the words “[t]he union” in cl 6 of Attachment A as extending to the New South Wales Branch of the Organisation. On that basis, the New South Wales Branch of the Organisation would have autonomy, free of direction by the Organisation’s National Conference or National Council, in relation to all matters that did not directly affect members of the Organisation outside New South Wales. Counsel argue the corollary of cl 6’s limitation on the role of “the union” in respect of matters that do not directly affect members outside New South Wales is that “the union” has full autonomy within New South Wales.
35 Counsel for the appellants alternatively contend that, if clause 6 is not to be construed in this way, it is necessary to import into the agreement an implication that the substance of agreed sub-rule 71(7) will not be altered, or the sub-rule deleted from the rules, during the currency of the 202 agreement. They refer to the fifth recital in the Memorandum of Agreement, set out in para 7 above, which refers to an alteration of the Organisation’s rules “so as to give effect to” the proposed 202 agreement. Counsel say a promise to “give effect to” an agreement is not a once-for-all promise; it includes a promise to give continuing effect to the proposed rule changes by maintaining them during the continuance of the 202 agreement.
36 Counsel also say that an implication is necessary in order to give business efficacy to the agreement because:
“(a) otherwise a conflict will arise between clause 6 of the Section 202 Agreement and rule 37A of the rules of the NUW;
(b) the branch committee of management of the NSW Branch and the committee of management of the Union (they being the same persons) would come under conflicting obligations in dealing with the same joint property of the NSW Union and the NUW vested in them: see clauses 5 and 8;
(c) business efficacy in the operation of the Section 202 Agreement is not established merely by the continuing existence of democratic processes within the NUW … The preservation of at least limited autonomy to the extent defined by clause 6 of the Agreement for persons who are both members of the NSW Union and the NUW is the objective of the agreement.”
37 Counsel for the appellants submit it is not an answer to the claim of an implied term that the State Union has a right to seek termination of the 202 agreement under s 202(8); this is a discretionary remedy, termination might not be granted by the designated Presidential Member of the AIRC; moreover, termination would be unsatisfactory, given the substantial intermingling of the financial affairs of the State Union and the New South Wales Branch of the Organisation.
38 Mr R Hinkley, counsel for the respondents, challenged each of the points made by his opponents. He argues the 202 agreement must be read in accordance with its defined terms. He points out the evidence concerning the course of negotiations shows that one of the matters of contention was the National Council’s power to amend its rules relating to the New South Wales Branch, without the consent of that Branch. Those who negotiated on behalf of the Organisation rejected a proposal by Mr Belan for the insertion of a rule providing for a New South Wales veto on relevant rule amendments; the final agreement compromised differences of opinion on that matter. Accordingly, Mr Hinkley argues, it should be literally construed; and without the implication of additional terms.
39 Mr Hinkley also adopted the reasons of Moore J on this aspect of the case. Moore J said, at para 79 of his reasons, that the present appellants’ submission about the construction of cl 6 of Schedule A to the Memorandum of Agreement is at odds with the language used in the clause. He went on (at paras 79-80):
“… there is no reason to believe that clause 6 was not intended to relate to the NSW Union only and, to the extent that the parties were agreeing to confer autonomy on the NSW Branch, that was achieved (and only achieved) by the inclusion of the proposed rule 71 in the rules of the NUW. In my opinion, clause 6 was directed only to the position of the NSW Union and the expression ‘the union’, was a reference to the NSW Union only.
Understood this way, clause 6 was intended to confer limited autonomy on the NSW Union in circumstances in which it was agreeing to be bound by decisions of the National Conference of the NUW ‘on matters of National significance’. It was not intended to confer autonomy on the NSW Branch whose position (in terms of independence from the activities and powers of federal officials or federal governing bodies and other branches) was, at the time, established by the registered rules of the NUW and would be enhanced by the inclusion of proposed rule 71.”
(ii) Conclusions
40 We agree with Moore J in rejecting the appellants’ contentions about the June 1999 amendments.
41 The 202 agreement was negotiated over a period of some 15 months, both sides being represented by union officials who were seasoned negotiators. The recital to Attachment A (quoted at para 9 above) defines the term used in cl 6, “the union”, as being “an industrial union of employees registered” under the New South Wales legislation. The definition clearly points to the State Union. We see no justification for attributing to the words “the union” a meaning different from that which the parties themselves agreed to attribute to them.
42 Contrary to submissions put to us on behalf of the appellants, there is no incongruity or practical difficulty in construing cl 6 as referring only to the State Union. One of the purposes of the agreement was to enable persons who were members of the State Union, but who were otherwise ineligible to become members of the Organisation, to become so eligible; and, if they wished, to participate in its management and affairs. It would not be incongruous if, in return for this benefit to some of its members, the State Union had agreed to accept the direction of National Conference (and National Council) in respect of matters that had significance outside New South Wales. At the same time, it was no doubt important to the State Union to have the Organisation concede the autonomy of the State Union in respect of matters that were within the purview of a State-registered union and of merely local interest; for example, the making of an application by the State Union to the New South Wales Industrial Commission in respect of a State award.
43 We accept that cll 5 and 8 envisage pooling of the finances and (to a lesser extent) the real estate of the State Union and the New South Wales Branch of the Organisation. But we do not think this circumstance affects the proper construction of cl 6. Those assets may be used for the activities of the State Union, acting within its own rules and in accordance with cl 6. They may also be used for activities of the New South Wales Branch of the Organisation, acting in accordance with the Organisation’s rules. The only present significance of cl 8, in our opinion, is in the contrast it makes between “the NSW (NUW) Branch” and “the union”. The drafters of the agreement saw those as being separate entities, and knew how to distinguish between them.
44 The argument for an implied term runs into the immediate difficulty that it requires the imposition of an unstated qualification upon terms that were intensively negotiated and carefully framed. In our opinion, it is not inconsistent with the fifth recital in the Memorandum of Agreement that the parties intended that effect would be given to their agreement by making the rule amendments they set out in the 202 agreement, leaving the possibility of future alterations to the rule-amendment processes prescribed by the rules. If it had been intended that rule 71 was to be incapable of significant alteration, or of deletion altogether, during the term of the 202 agreement, it would have been easy for the parties to have so provided in their agreed list of rule amendments. They had a precedent immediately to hand. As mentioned in para 14 above, Attachment C to the Memorandum of Agreement, which set out agreed amendments to the rules of the State Union, included a proposed rule 48A that included a provision that the State Union’s Committee of Management:
“…shall not have power at any time to alter, amend, revise, rescind or add to this rule without the consent of the National Council of the National Union of Workers.”
45 Moore J referred to this provision, as being an indication that the parties turned their minds to the matter of further rule changes. He said (at para 87):
“The absence of any reference to the future alterations of the rules of the NUW (that is, alterations following the inclusion of the proposed rule 71) provides a fairly compelling indication that, insofar as the rules of the NUW were concerned, it was not intended that the power of the NUW to alter its rules was to be fettered or limited even in relation to rule 71.”
46 In paras 88 and 89 Moore J also dealt with some submissions put to him on behalf of the present appellants and repeated to us:
“Counsel for the applicants submitted, in a variety of ways, that the 202 Agreement must have been intended to limit alterations to rule 71 having regard to the subject matter of that agreement. This submission really raised for consideration the circumstances in which the 202 Agreement was negotiated and concluded. However the submissions proceeded on assumptions that are not self-evident. Whether the NSW Union owned property, whether employees who applied for membership of the union (in a practical and not legal sense) would become members of the NUW or the NSW Union or both and what would happen to their membership contributions and indeed whether the NSW Union had legal existence independently of the NUW were all issues confronting both the NUW and the NSW Union and their officials at the time the 202 Agreement was negotiated and concluded. They were questions that were coming into particular focus because of amalgamations proposed both under state legislation and federal legislation. They were (and are) issues of considerable legal complexity: see Re McJannet; Ex parte the Australian Workers' Union of Employees, Queensland (1995) 184 CLR 620 and The Sweeney Report, Report of the Committee of Inquiry on Co-ordinated Industrial Organisations (1974). The assumptions underpinning the submissions of counsel for the applicants were that these questions would be answered in favour of the NSW Union in the sense that when it entered the 202 Agreement it was relinquishing rights (including property rights) for which it was receiving some benefit in return. There is no basis evident to me for making these assumptions. Indeed it appears to me that the parties to the 202 Agreement were, in a sense, content to avoid having to answer these difficult legal issues (with potentially significant practical consequences) by entering into that agreement. The 202 Agreement was in terms that rendered it unnecessary to answer them.
In my opinion a term should not be implied in the 202 Agreement that the rule resulting from the alteration to the rules of the NUW which was agreed to (the adoption of rule 71) would not be susceptible to further alteration either in form or in substance. It is not a term that would have been obvious to the parties to be included had they addressed the question (indeed, as just discussed, the terms of the agreement suggest otherwise). Nor is it a term necessary to give efficacy to the agreement. It was not as if, at the time, there were no constraints on the further amendment of rule 71. Any further alterations to rule 71 would be subject to the rules of the NUW and the democratic processes provided for in the rules concerning their alterations. Members and officials in the NSW Branch (if also members and officials of the NSW Union) would be able to participate in those processes with the objective of preventing alterations to rule 71 or ensuring any alteration was one that was acceptable to them.”
47 We agree with the observations quoted in the last two paragraphs. The argument for an implied term is untenable.
48 Although the point was not developed by Mr Hinkley in argument, there seems to be a second major difficulty about the appellants’ implied term argument. Counsel for the appellants in essence argue that cl 6 of Annexure A to the Memorandum of Agreement effectively inserts into the Organisation’s rules an implied provision qualifying the National Council’s rule-amendment power. However, there is authority in this Court against the recognition of an implication of that kind. The point was discussed by Gray J in Scott v Jess (1984) 3 FCR 263 at 282-284. Gray J pointed out that, in Porter v Dugmore (1984) 3 FCR 396 at 407-408, Smithers J (with whom Sheppard J agreed) made a distinction that Gray J described as between “[t]he idea that implied terms can be found in the rules of organisations, and that those implied terms are capable of enforcement pursuant to s 141 of the Act [the predecessor to s 209 of the WR Act]”, and implications “from the express terms of the rules, the terms of the Act and the Regulations, and the nature, function and purpose of the organisation concerned … which limit what might otherwise be the extent of the express terms of the rules”. Gray J illustrated the latter type of implication by reference to the implication that penal powers will not be exercised without adherence to the principles of natural justice. Smithers J accepted the possibility of the latter type of implication, but not the former. The implication argued in the present case is of the former type.
49 In Darroch v Tanner (1987) 16 FCR 368 a Full Court (Northrop, Keely and Ryan JJ) upheld the approach taken by Smithers J in Porter v Dugmore. Their Honours declined to follow the decision of the Australian Industrial Court in Gordon v Carroll (1975) 27 FLR 129. They said at 377:
“… we prefer the view that the rules cannot ‘be supplemented by implied terms’, as distinct from permitting the ascertainment of ‘the meaning of the rules upon their true construction’: per Smithers J in Porter v Dugmore (1984) 3 FCR 396 at 408.”
50 We reject the appellants’ attack on the validity of the June 1999 rule changes.
The Central Branch
51 As previously mentioned, in February 1999 National Council made an amendment to the rules in order to create the Central Branch. The new rule was itself amended in October 1999. As so amended, the relevant provision (part of rule 37) reads:
“There shall be a Central Branch of the Union which shall comprise those persons eligible for membership of the Union throughout Australia in accordance with:
(a) Rule 5(E); or
(b) any other Part of Rule 5 and whom with their consent the National Council or National Committee of management notwithstanding any other rule allocates to the Central Branch in order in the circumstances to adequately or more adequately provide for the representation of their industrial and/or other interests as members of the Union, and admitted as members of the Union.
Any person who is allocated to the Central Branch in accordance with paragraph (b) above thereby becomes a member of the Central Branch to the exclusion of any other Branch.”
52 Rule 5(E) is a rule providing membership eligibility to people occupying specified categories of supervisory positions. Prior to the establishment of the Central Branch, these members were allocated to a non-geographic Branch of the Organisation known as the “Foremen and Supervisory Branch”. When the Central Branch was established, that branch was abolished. The difference between the old Branch and the new, in terms of eligibility, is that the Central Branch may also receive members engaged in non-supervisory work who fall within para (b), set out above.
53 The appellants’ attack on the validity of the rule changes relating to the Central Branch is put on two bases. First, counsel say that, if cl 6 of Attachment A to the Memorandum of Agreement is construed in accordance with their submission, the changes infringe the autonomy of the New South Wales Branch of the Organisation. Second, they say the changes have the effect of making the rules of the Organisation oppressive, unreasonable and unjust, in contravention of s 196(c) of the Act; and therefore vulnerable to be declared void by the Court pursuant to s 208(5) of the Act.
54 Having regard to what we have already said about cl 6 of Attachment A, it will be apparent the first argument fails.
55 As to the second argument, there is an immediate question as to the identity of the persons who are said to be oppressed, or unreasonably or unjustly treated, by the rule concerning the Central Branch. Given the fact that members whose eligibility depends on rule 5(E) have always been allocated to a special, non-geographic branch, it can hardly be said such members, who now fall within para (a) of the new rule, are oppressed etc. Nor can it be said members who fall within para (b) are oppressed, or unreasonably or unjustly treated, by the rule; they may be allocated to the Central Branch only with their consent.
56 No doubt in recognition of these considerations, counsel for the appellants did not argue the rule is oppressive etc to members of the Central Branch. The oppression etc, in their contention, is of the remaining members of the Branches from which the allocated members are removed, pursuant to para (b).
57 In considering this aspect of the case, Moore J set out some background material (in paras 96 and 97):
“All branches were created by rule 37 though the manner in which they were to operate was addressed in many of the other rules of the NUW. While the National Council had express power under rule 8(A)(b) to “alter, amend, revise, rescind or add to” the rules, it also had express power to establish branches, arrange for branches to amalgamate, allocate branches the territory within which they could operate, transfer members from branch to branch and close or disband a branch: see rule 8(A)(e). Under the scheme in the rules as it existed at the time in question, the latter power could be exercised (at least as it related to any reallocation of territory or closing or disbanding a branch) only by exercising the former power. However the exercise of these powers to reallocate territory, transfer members or disband a branch was subject to rule 46(D) which required, inter alia, notice being given to the branch affected and, in substance, affording the branch an opportunity to have members of the branch vote on the question. The result of any such vote was binding on the NUW, the National Council, the National Committee of Management and officers and members of the NUW: see rule 46(D)(c). Thus the power of the National Council to reallocate territory between branches, transfer members between branches or disband a branch was subject to what was, effectively, ratification by the members of the affected branches if a plebiscite was requested by the branch committee of management of the branch or branches involved. It has not been part of the applicants’ case in these proceedings that the procedures in rule 46(D) were not followed.
There was, immediately before the alterations creating the Central Branch, an anomaly involving the proviso concerning the Foremen and Supervisory Branch (enabling members to transfer from a geographically based branch to that branch) and rule 46(D). The proviso permitted the transfer of a member or members from a geographically based branch with the agreement of the branches involved. This must be viewed, in my opinion, as an exception to the scheme involving the exercise of the power of the National Council to, inter alia, transfer members between branches which might trigger a referendum under rule 46(D). The exception was applicable, at the relevant time, to a limited and specially defined class of member, namely members who were foremen or supervisors.”
58 After holding that the rule concerning the Central Branch could not be considered oppressive, unreasonable or unjust from the perspective of the members concerned, Moore J dealt with the effect of the rule on geographically-based branches; and, in particular, with the contention that re-allocations under para (b) would reduce members’ contributions to Branch funds and the representation of the New South Wales Branch on National Council. He commented (at para 105):
“However this submission effectively ignores that the member or members in question would have elected to transfer from the NSW Branch to the Central Branch. There can be, in my opinion, no objection in principle to the representation of members of the Central Branch on National Council by delegates drawn from the branch in numbers corresponding to the proportion members of that branch represent to the membership of the NUW as a whole. All the submission demonstrates is a potential anomaly in the process for collecting the contributions of members of the Central Branch who are also members of the NSW Union and some obscurity in the way the contributions would be treated under the rules. It is a potential anomaly and obscurity which desirably should be clarified by further alterations to the rules. It does not, however, reveal an unfairness of the type contemplated by s 196 if, as I understand is the position, the fundamental attack of the applicants is on the rules creating the Central Branch and rule 37 in its amended form in particular. I should add, parenthetically, that the final form of the rule to show cause advanced by the applicants sought orders in relation to ‘rule changes’ and did not impugn specified rules or parts of rules or the rules generally as contemplated by s 208. However this is ultimately of no consequence given that the applicants have not demonstrated oppression, unreasonableness or injustice in the way they have contended.”
59 Moore J also dealt with a submission that the new rule was oppressive etc because it permitted National Council to transfer members out of a Branch without the entire membership of that Branch having the opportunity to vote on the proposed transfer, as it would if there were a transfer to another geographically-based branch. Rule 8(A)(e) permits National Council, amongst other things, “to transfer members from Branch to Branch and to close or disband any Branch or Branches”. However, rule 46(D) provides that, where National Council decides to exercise that power, the General Secretary must notify the relevant Branch and the Branch Committee of Management may, within 35 days of notification, request the decision be submitted to a referendum of the financial members of the Branch. The sub-rule does not compel the National Council to agree to the request, but it applies sub-rule (c) of rule 46 to any referendum that may be undertaken.
60 It appears the argument put to Moore J, on behalf of the present appellants, assumed that rule 46(D) would not apply to any decision of National Council to re-allocate members pursuant to para (b) of the rule relating to Central Branch. His Honour thought this would not necessarily make the rule oppressive etc. He said at para 107:
“… there is nothing inherently oppressive, unreasonable or unjust about a rule that may operate in a way that resulted in a group of members securing representation on a governing body of the organisation in a proportion that broadly corresponded with the proportion of their numbers to the membership as a whole. The same can be said of a rule which reduced the representation of a particular group as a result of a reduction in their numbers as a proportion of the membership as a whole. The second observation is that any purported exercise of the power to allocate members (even with their consent) to the Central Branch which was for a purpose for which the power was not conferred (bearing in mind that the allocation must [be] in order to achieve the objective referred to in par (b) of the new Central Branch provision in rule 37) and/or was not a bona fide exercise of the power would expose the members of the body making the allocation to proceedings under s 209 ...”
61 We agree with these comments. They furnish a complete answer to the appellants’ second argument concerning the validity of the rule amendments relating to the Central Branch.
62 In the course of argument before us, counsel for the appellants put a contention, about the relationship of rule 46(D) to a transfer decision under rule 8(A)(e), that was directly opposed to that apparently put to Moore J. They contended cl 46(D) would apply to any such transfer and sought a declaration to that effect.
63 Counsel for the respondents argued rule 8(A)(e) had nothing to do with any re-allocation under rule 37; rule 37 was itself the source of the power to re-allocate. He adopted the view of Moore J, expressed in the second paragraph of the extract from his reasons quoted at para 57 above, that the proviso to the old rule concerning the Foremen and Supervisory Branch should be viewed “as an exception to the scheme involving the exercise of the power of the National Council to … transfer members between branches that might trigger a referendum under rule 46(D).”
64 It seems to us that rule 46(D) does not apply to a decision by National Council or National Committee of Management to allocate a member of an existing Branch to the Central Branch. The reason for our view is not that rule 37 uses the word “allocates”, whereas rule 8(A)(e) speaks of a power to “transfer members from Branch to Branch”; an allocation of an existing member from a geographically-based Branch to the Central Branch will effect a transfer of that person’s membership from the former Branch to the latter. Our reason is that the power of allocation under para (b) of the relevant part of rule 37 applies “notwithstanding any other rule”. In other words, even if the allocation effects a transfer from one Branch of the Organisation to another Branch, the allocation may proceed notwithstanding rule 8(A)(e).
65 Further, para (b) permits an allocation only “in order in the circumstances to adequately or more adequately provide for the representation of their industrial and/or other interests as members of the Union”. In other words, the power of allocation is one to be exercised to advance the interests of particular members. It would be curious if the ability of the National Council, or National Committee of Management, to provide representation, or better representation, of the interests of individual members was intended to be vulnerable to veto by remaining Branch members concerned to retain their influence in the Organisation.
66 We agree with this aspect of the decision of Moore J. We decline to make the declaration sought by the appellants.
The “no comment” resolution
67 The no comment resolution arose out of the Davids’ Distribution litigation. The course of that litigation is traced in the reasons for judgment of Moore J at paras 13 to 20. It is unnecessary to repeat his Honour’s account. It is sufficient to note the litigation included contempt proceedings in the New South Wales Supreme Court directed at both Mr Belan and the Organisation. On 13 November 1998 Smart J found the Organisation and Mr Belan guilty of contempt. Moore J said, at para 19 of his reasons for judgment:
“Mr Belan was reported commenting on the matter in a NSW newspaper the following day which appears to have led to a decision of the National Committee of Management of 30 November 1998 directing that there be no comment about proceedings without the express approval of the Committee or Mr Sword.”
68 We were informed by counsel for the appellants that judgment on the question of penalty for the contempt is reserved. Consequently, despite the passage of time since the no comment resolution was made, it appears still to have practical significance, and scope for operation, in relation to rights “which remain capable in a real and genuine sense of being enjoyed”; see Beitseen v Johnson (1989) 29 IR 336 at 338.
69 Counsel for the appellants submitted the no comment resolution is self-evidently too wide and invalid. This submission was one of two submissions on the resolution put to Moore J. His Honour described it in the following way (at para 72):
“The first was that it imposed on the NSW Branch and its secretary, officers, employees and members a restriction that was unreasonable and excessive and not referable to the valid exercise of any power conferred on the National Committee of Management.”
70 Moore J answered that submission by saying that (at para 72):
“I do not accept that the resolution of the National Committee of Management was of a character that travelled beyond the exercise of the general power it had to control and conduct the business of the NUW. In the circumstances, the assets of the NUW were at risk in the sense that conduct by anyone who might reasonably be viewed as acting on behalf of the NUW might ultimately lead to a fine for contempt. It was a matter for members of the National Committee of Management to weigh this consideration with considerations concerning the freedom that officers and members would generally have to speak publicly on any issue. It is true that the resolution prohibited “any comment to anybody”. However, in my opinion, the resolution should be construed as a prohibition on comment by an officer or member that might be taken to be made in their capacity as an officer or member. So construed it is unexceptionable.”
71 It may be accepted the resolution was intended to bind people only in their capacities as officers or members of the New South Wales Branch. However, with respect to Moore J, we do not think that removes the objection to it. Consistently with the resolution, it would have been impossible for a New South Wales officer to inform an inquiring member about the nature of the Davids Distribution litigation, or the likely progress or result of any of the four proceedings mentioned in the resolution. While we understand the desire of the National Committee of Management to avoid a comment that may be regarded as contempt of court by the Organisation, the proscription goes too far. As Gray J said in Scott v Jess (1984) 3 FCR 263 (at 286):
“It is proper, and perhaps necessary, for an organisation to communicate with its members about the affairs of the organisation and matters which may be of interest to the members.”
That observation was cited with approval by Evatt and Northrop JJin Tanner v Maynes (1985) 7 FCR 432 at 441.
72 Similar considerations apply to the affairs of branches of organisations. The no comment resolution prohibits Branch officials from communicating with members about legal proceedings that were of particular importance to members of the Organisation attached to the New South Wales Branch. We comprehend the desire of the National Committee of Management to protect the assets of the Organisation, in circumstances where they might reasonably be regarded as having already been put at some risk by Mr Belan’s actions. However, this objective could have been met by a resolution prohibiting the making of any public statement about the relevant proceedings (or, perhaps preferably, the making of any statement reflecting upon the integrity or competence of any court or the merit of any court decision) rather than one imposing a blanket prohibition which would extend even to communications between Branch officials and members. Accordingly, the appeal should be upheld in part and the following additional order and declaration made:
“The respondents perform and observe the rules of the National Union of Workers by treating as null and void and of no effect the resolution of the National Committee of Management of the said organisation dated 30 November 1998 directing the New South Wales Branch of the said organisation, its Branch Secretary and all of its officers, employees and members not to make any comment to anybody concerning certain specified legal proceedings.”
The “bargaining period/protected action” and “enterprise bargaining” resolutions
73 Rule 53A of the Organisation’s rules provides “industrial action that the Industrial Relations Act entitles the Union to organise or engage in may be authorised by”, amongst others, the Branch Committee of Management of the Branch to which relevant members belong or the Branch Secretary of that Branch. The term “industrial action” is not defined. Despite the reference to the IR Act, Moore J rightly thought the term must now be construed by reference to the WR Act. Taking that approach, he held that giving a notice of protected action pursuant to s 170MO of the WR Act constituted industrial action; accordingly, the notice might be authorised by the relevant Branch Committee of Management or Branch Secretary.
74 However, Moore J thought rule 53A did not extend to initiation of bargaining periods or applications for the certification of agreements. Counsel for the appellants dispute that view. They say “the terms of rule 53A are of an all embracing character which would include both concepts and accordingly the impugned resolutions should be found invalid”.
75 We think Moore J was correct on this aspect of the case. The WR Act makes a clear distinction between the initiation of a bargaining period (s 170MI), which will not necessarily involve the initiation of industrial action, and the taking of industrial action, which will be “protected action” if certain preconditions are satisfied: see ss 170ML-170MP.
76 Applications for certification of agreements are even further removed from initiation of industrial action. In theory at least, an agreement may come into existence without any prior industrial action at all. It may (and often will) come into existence after industrial activity has concluded.
77 As will be apparent, rule 53A was drafted before the enactment of the amendments that transformed the IR Act into the WR Act. There may be procedures under the WR Act, not mentioned in rule 53A, that are appropriate to be performed by Branch Committees of Management and Branch Secretaries. If so, that matter ought to be addressed by amendment of the rule, not by an artificial construction of its language.
Disposition
78 In the result, the appeal is upheld only to a limited extent. We will add to the orders made by Moore J an order concerning the no comment resolution. Otherwise the appeal will be dismissed.
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I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. |
Associate:
Dated: 15 June 2001
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Counsel for the Appellants: |
Mr M Slattery QC with Mr B Docking |
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Solicitor for the Appellants: |
Maurice May & Co |
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Counsel for the Respondents: |
Mr R W Hinkley |
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Solicitor for the Respondents: |
Ryan Carlisle Thomas |
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Date of Hearing: |
28 May 2001 |
