FEDERAL COURT OF AUSTRALIA

Brown v Health Services Union (No 4) [2012] FCA 1376

THE COURT ORDERS THAT:

1    The Orders of the Court made 21 June 2012 (as varied) be amended to insert the following Order numbered 12:

“An order that:

(i)    upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the Victoria No. 3 Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be the Administrator and James Simmonds cease to be the Assistant Administrator of that Branch;

(ii)    upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the New South Wales Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be Administrator, Brian Daley and James Simmonds cease to be Assistant Administrators; and

(iii)    James Simmonds be appointed as Administrator of the Victoria No.1 Branch under the scheme attached as Appendix A.”

2.    The time for compliance with paragraph 28 of Appendix A to the Orders made on 21 June 2012 (as varied) is extended to the date upon which the Australian Electoral Commission issues to the Administrator of the Victoria No 1 Branch a copy of the declaration of the results of the elections for the offices in that Branch.

3.    Paragraph 25 in Appendix A to the Orders of the Court made 21 June 2012 (as varied) be amended by the addition of the following at the conclusion thereof:

“To avoid doubt:

(vi)    the elections for the New South Wales and Victoria No.3 Branch contemplated by clause 24 are to be conducted in accordance with the schedule prescribed by the Returning Officer for those elections as determined by him on or about 5 September 2012 pursuant to Section 193 of the Act and notwithstanding the provisions of Rule 29A of the Rules;

(vii)    the elections in the Victoria No.1 Branch contemplated by clause 24 will be conducted in accordance with the schedule prescribed by the Returning Officer for those elections as determined by him on or about 5 September 2012 pursuant to Section 193 of the Act, as such schedule was varied in accordance with the Orders made by Justice Tracey in Matter VID 829/2012 on 16 November 2012 (as varied), notwithstanding the provisions of Rule 29A of the Rules.”

4.    Paragraph 29 in Appendix A to the Orders of the Court made 21 June 2012 (as varied) be amended by deleting the contents thereof and inserting in lieu thereof the following:

“29.1    Upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the Victoria No. 3 Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be the Administrator and James Simmonds cease to be the Assistant Administrator of that Branch

29.2    Upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the New South Wales Branch:

(k)    The Honourable Michael Francis Moore shall cease to be the Administrator;

(l)    the persons declared elected in those elections shall forthwith take up the offices to which they are elected, and to avoid doubt shall do so notwithstanding the provisions of Rule 29A of the Rules;

(m)    Brian Daley shall cease to be the Assistant Administrator (NSW);

(n)    James Simmonds shall cease to be the Assistant Administrator (Victoria); and

(o)    Paragraph 27A shall cease to have effect.”

5.    In Appendix A to the Orders of the Court made 21 June 2012 (as varied) insert after Paragraph 29 the following new Paragraph 29A as follows:

“29A    Administrator of Victoria No.1 Branch

29A.1    Upon the Honourable Michael Francis Moore ceasing to be the Administrator pursuant to Paragraph 29.2 (a), James Simmonds shall be appointed as Administrator of the Victoria No.1 Branch;

29A.2    From the date of appointment of James Simmonds as the Administrator he may exercise such of the powers and functions of the Administrator under the Scheme as are capable of application to the Administration of the Victoria No.1 Branch, other than paragraphs 2,3,4,9,11,12,13,14,15,17,18,19 and 21;

29A.3    Upon the issuing by the Australian Electoral Commission to the Administrator a copy of the declaration of the result of the election for the offices in the Victoria No.1 Branch, James Simmonds shall cease to be the Administrator;

29A.4    The persons declared elected in those elections shall forthwith take up the offices to which they were elected, and to avoid doubt shall do so notwithstanding the provisions of Rule 29A of the Rules.”

6.    The Assistant Secretary-Treasurer of the New South Wales Branch, the Assistant Secretary-Treasurer of the Victorian No. 1 Branch and the Branch Secretary of the Victorian No. 3 Branch:

a.    Keep the records of HSU East Branch referred to in section 252(1)(a) of the Fair Work (Registered Orgnaisations) Act 2009 (Cth); and

b.    On receipt of a request made by the National Secretary of the Health Services Union, provide those records to the Health Services Union.

7.    Leave is granted pursuant to r 2.32(4) of the Federal Court Rules 2011 to all persons to inspect

a.    the following affidavits:

(i)    the affidavit of Angela Lee McDonald affirmed on 21 November 2012;

(ii)    the affidavit of Peter James Punch sworn 6 November 2012;

(iii)    the affidavit of Peter James Punch sworn 14 November 2012;

(iv)    the affidavit of Peter James Punch sworn 20 November 2012;

(v)    the affidavit of Stephen Freeman sworn 21 November 2012;

(vi)    the affidavit of Selwyn Leslie Black sworn and filed 27 November 2012 other than Annexures SLB5 and SLB6;

(vii)    the affidavit of Selwyn Leslie Black sworn 27 November 2012 and file 28 November 2012; and

b.    the letter from the Fair Work Australia General Manager, Ms Bernadette O’Neill to the Court dated 20 November 2012.

8.    The parties have liberty to apply on 48 hours’ notice in writing.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT ORDERS THAT:

1.    The Orders of the Court made 21 June 2012 (as varied) be amended to insert the following Order numbered 12:

“An order that:

(i)    upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the Victoria No. 3 Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be the Administrator and James Simmonds cease to be the Assistant Administrator of that Branch;

(ii)    upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the New South Wales Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be Administrator, Brian Daley and James Simmonds cease to be Assistant Administrators; and

(iii)    James Simmonds be appointed as Administrator of the Victoria No.1 Branch under the scheme attached as Appendix A.”

2.    The time for compliance with paragraph 28 of Appendix A to the Orders made on 21 June 2012 (as varied) is extended to the date upon which the Australian Electoral Commission issues to the Administrator of the Victoria No 1 Branch a copy of the declaration of the results of the elections for the offices in that Branch.

3.    Paragraph 25 in Appendix A to the Orders of the Court made 21 June 2012 (as varied) be amended by the addition of the following at the conclusion thereof:

“To avoid doubt:

(iv)    the elections for the New South Wales and Victoria No.3 Branch contemplated by clause 24 are to be conducted in accordance with the schedule prescribed by the Returning Officer for those elections as determined by him on or about 5 September 2012 pursuant to Section 193 of the Act and notwithstanding the provisions of Rule 29A of the Rules;

(v)    the elections in the Victoria No.1 Branch contemplated by clause 24 will be conducted in accordance with the schedule prescribed by the Returning Officer for those elections as determined by him on or about 5 September 2012 pursuant to Section 193 of the Act, as such schedule was varied in accordance with the Orders made by Justice Tracey in Matter VID 829/2012 on 16 November 2012 (as varied), notwithstanding the provisions of Rule 29A of the Rules.”

4.    Paragraph 29 in Appendix A to the Orders of the Court made 21 June 2012 (as varied) be amended by deleting the contents thereof and inserting in lieu thereof the following:

“29.1    Upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the Victoria No. 3 Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be the Administrator and James Simmonds cease to be the Assistant Administrator of that Branch

29.2    Upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the New South Wales Branch:

(k)    The Honourable Michael Francis Moore shall cease to be the Administrator;

(l)    the persons declared elected in those elections shall forthwith take up the offices to which they are elected, and to avoid doubt shall do so notwithstanding the provisions of Rule 29A of the Rules;

(m)    Brian Daley shall cease to be the Assistant Administrator (NSW);

(n)    James Simmonds shall cease to be the Assistant Administrator (Victoria); and

(o)    Paragraph 27A shall cease to have effect.”

5.    In Appendix A to the Orders of the Court made 21 June 2012 (as varied) insert after Paragraph 29 the following new Paragraph 29A as follows:

“29A    Administrator of Victoria No.1 Branch

29A.1    Upon the Honourable Michael Francis Moore ceasing to be the Administrator pursuant to Paragraph 29.2 (a), James Simmonds shall be appointed as Administrator of the Victoria No.1 Branch;

29A.2    From the date of appointment of James Simmonds as the Administrator he may exercise such of the powers and functions of the Administrator under the Scheme as are capable of application to the Administration of the Victoria No.1 Branch, other than paragraphs 2,3,4,9,11,12,13,14,15,17,18,19 and 21;

29A.3    Upon the issuing by the Australian Electoral Commission to the Administrator a copy of the declaration of the result of the election for the offices in the Victoria No.1 Branch, James Simmonds shall cease to be the Administrator;

29A.4    The persons declared elected in those elections shall forthwith take up the offices to which they were elected, and to avoid doubt shall do so notwithstanding the provisions of Rule 29A of the Rules.”

6.    The Assistant Secretary-Treasurer of the New South Wales Branch, the Assistant Secretary-Treasurer of the Victorian No. 1 Branch and the Branch Secretary of the Victorian No. 3 Branch:

a.    Keep the records of HSU East Branch referred to in section 252(1)(a) of the Fair Work (Registered Orgnaisations) Act 2009 (Cth); and

b.    On receipt of a request made by the National Secretary of the Health Services Union, provide those records to the Health Services Union.

7.    Leave is granted pursuant to r 2.32(4) of the Federal Court Rules 2011 to all persons to inspect

a.    the following affidavits:

(i)    the affidavit of Angela Lee McDonald affirmed on 21 November 2012;

(ii)    the affidavit of Peter James Punch sworn 6 November 2012;

(iii)    the affidavit of Peter James Punch sworn 14 November 2012;

(iv)    the affidavit of Peter James Punch sworn 20 November 2012;

(v)    the affidavit of Stephen Freeman sworn 21 November 2012;

(vi)    the affidavit of Selwyn Leslie Black sworn and filed 27 November 2012 other than Annexures SLB5 and SLB6;

(vii)    the affidavit of Selwyn Leslie Black sworn 27 November 2012 and file 28 November 2012; and

b.    the letter from the Fair Work Australia General Manager, Ms Bernadette O’Neill to the Court dated 20 November 2012.

8.    The parties have liberty to apply on 48 hours’ notice in writing.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    This is hopefully the last judgment which will be required in this matter.

2    The matter had its origins in a series of Applications filed in this Court. Some of those Applications were brought pursuant to the Fair Work (Registered Organisations) Act 2009 (‘the Registered Organisations Act’). One part of the matter had its origins in a proceeding commenced in the New South Wales Industrial Court seeking relief under the Industrial Relations Act 1996 (NSW). That matter was transferred to this Court pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW): Katherine Jackson v Peter James Mylan [2012] NSWSC 552.

3    However commenced, all proceedings focussed attention upon what was compendiously referred to in the media as the “Health Services Union” or the “HSU”. That was a reference to a state-registered organisation, the HSUeast union (the ‘State Union’), and a Branch of the federally-registered Health Services Union (the ‘Federal Union’) known as the HSU East Branch (the ‘Federal Branch’). The Federal Branch was a merged entity comprising the former New South Wales Branch and the Victoria No 1 and No 3 Branches. Media attention was first attracted in September 2011 when allegations of corruption were levelled at Mr Michael Williamson who held the position of Secretary of the State Union and the Federal Branch as well as President of the Federal Union. Media attention has continued.

4    A hearing was held on 5, 6, 7, 8 and 15 June 2012. Judgment was delivered on 21 June 2012: Brown v Health Services Union [2012] FCA 644, 291 ALR 497. It was concluded that the Federal Branch and the State Union had ceased to function effectively and that there were no effective means under the rules of those organisations whereby they could be enabled to function effectively. Appropriate declaratory orders were made. It was concluded that there should be an immediate demerger of the Federal Branch back into its original three constituent Branches. An order was also then made appointing a former Judge of this Court, the Honourable Michael Moore, as Administrator. Orders were also made vacating all of the offices in the Federal Branch and the State Union. Two identical schemes of administration were approved pursuant to s 290B of the Industrial Relations Act and s 323 of the Registered Organisations Act. A Notice of Appeal was filed on 11 July 2012. It was abandoned.

5    The administration proceeded. A number of orders have been made from time to time varying the orders first made and varying the terms of the Schemes as well as extending the time for compliance with various elements of these Schemes as first approved. Extensions of time became necessary to accommodate the Australian Electoral Commission’s election timetables and to accommodate difficulties that were encountered in the redistribution of assets between the demerged Branches. Another variation of some significance was the appointment on 30 August 2012 of two Assistant Administrators, Mr James Simmonds (Victoria) and Mr Brian Daley (New South Wales).

6    But the time has now come to finalise the involvement of the Administrator and the Assistant Administrators and to return the organisations to the control of the members and their elected officers. Although it has taken longer than initially anticipated to reach this stage, no member of the former Federal Branch could justifiably criticise the time taken. The administration, it may be observed, has involved a vast range of tasks being undertaken – the extent of which could not be fully appreciated at the outset.

7    Now before the Court is an application made on behalf of the Administrator seeking a number of orders – each designed to facilitate bringing the administration to an end. The hearing commenced on Thursday 22 November 2012 and was stood over to this morning. Some of the orders sought were more urgent than others and were made on 22 November 2012; some matters raised on 22 November 2012, it was considered, warranted the filing of further evidence.

The more urgent matters

8    On 22 November 2012, the Administrator sought the making of two orders. One was for an extension of the time for compliance with paragraph 18 of the Schemes to 28 November 2012. The other was an order conferring a discretion upon the Administrator to pay certain monies from the funds of the Victoria No 1 Branch to (inter alia) cover the costs and expenses associated with the transfer of the property previously referred to as the South Melbourne property as part of the demerger process.

9    Paragraph 18 of the Schemes addressed the apportionment and distribution of assets and liabilities of the State Union and the Federal Branch between the State Union and the federally-registered demerged Branches.

10    Both orders concerned difficulties that had arisen in respect to the conveyance of the South Melbourne property. There have been two earlier variations to paragraph 18: Brown v Health Services Union (No 2) [2012] FCA 1014 at [7]-[10]; Brown v Health Services Union (No 3) [2012] FCA 1246 at [1]-[4]. Some further delays have been experienced in the resolution of an application for an exemption from the payment of ad valorem stamp duty and the negotiation of security documents. The application for an exemption from the payment of stamp duty was unsuccessful; duty in the sum of $231,000 was assessed. The form of the security documents, however, has now been agreed.

11    The making of the two orders sought on 22 November 2012 was necessary to make money available for the payment of the assessed stamp duty, albeit under protest.

12    The making of the orders extending the time for compliance and conferring a discretion on the Administrator to employ the funds of the Victoria No 1 Branch was considered to be appropriate. The orders made on 22 November 2012 enabled the conveyance of the South Melbourne property to be completed.

The outstanding orders

13    On 22 November 2012 the parties were informed that each of the remaining orders sought by the Administrator would be made. But it was desirable to redraft some of those orders to make express that which may otherwise have only been implied.

14    The making of these outstanding orders was thus stood over to today.

Ending the involvement of the Administrator and the Assistant Administrators

15    First, an order is sought that the appointment of the Honourable Michael Moore as the Administrator is to cease (in effect) upon the declarations of the results of the elections for the offices in the New South Wales Branch and the Victoria No 3 Branch. The order sought also directs that the appointment of Mr Brian Daley as the Assistant Administrator in New South Wales and Mr James Simmonds as the Assistant Administrator in Victoria is also to cease on those dates.

16    Upon the declaration of the results for those two elections, control will then revert to the members and the duly elected officials of those organisations. Some consideration was given to whether the appointment of the Administrator should continue until the declaration of the results for the Victoria No 1 Branch elections. But the nature and extent of the steps which have been undertaken by the Administrator to date – and the nature and extent of the steps which remain outstanding – are such that there is no reason to continue the Administrator’s appointment. The steps which have been undertaken by the Administrator have been set forth in an Affidavit sworn in the proceedings by the solicitor acting for the Administrator. It is further concluded that the appointment of the Assistant Administrators should also cease at that time.

17    Left outstanding was the fate of the Victoria No 1 Branch. Those elections have been the subject of orders made by his Honour Justice Tracey: Asmar; in the matter of an election for an office in the Victorian No 1 Branch of the Health Services Union (No 3) [2012] FCA 1289. That decision followed an application made by a member of the Victoria No 1 Branch for an inquiry pursuant to s 200 of the Registered Organisations Act. His Honour varied the timetable for the elections of the offices in the Victoria No 1 Branch.

18    Pending the declarations of the results of the elections for the Victoria No 1 Branch, it is considered that the Victorian Assistant Administrator, Mr James Simmonds, should be appointed Administrator. His appointment should cease upon the declaration of the election results for that Branch.

19    One of the redrafting suggestions made on 22 November 2012 was to separate out the two orders – one order bringing to an end the appointment of the Administrator and the Assistant Administrators; the other order addressing the separate circumstances in respect to the Victoria No 1 Branch. Those orders as redrafted should now be made.

Extension of time for completion of the administration

20    Second, an order is sought extending the time for compliance with paragraph 28 of the Schemes approved on 21 June 2012. As at that date paragraph 28 provided as follows:

The Administrator shall use his best endeavours to ensure the completion of the administration within 120 days of the date of the Order, or such further time as the Court may allow.

On 14 September 2012 that 120 day period was extended to 180 days: Brown v Health Services Union (No 2) [2012] FCA 1014 at [5]-[6]. The order sought on 22 November 2012 was an order extending the time for a further period of 13 days. As drafted, that order had the prospect of itself setting a further time which may also have needed an extension. Given that:

    the administration of the State Union, the New South Wales Branch and the Victoria No 3 Branch would be complete in late November 2012; and

    the administration of the Victoria No 1 Branch was also nearing completion, with the results of the elections in that Branch expected to be declared shortly thereafter;

it was considered appropriate to not extend time for a specified period of days. The preferable course was to make an order varying paragraph 28 such that the administration of the Victoria No 1 Branch and, thus, the administration in its totality, would cease upon the declarations of the results of the elections for that Branch.

21    The form of order has been redrafted to combat this concern and, as redrafted, should now be made.

An order pursuant to s 323?

22    Third, it was previously suggested that consideration should be given to whether any order or direction pursuant to s 323(6) of the Registered Organisations Act should be made to make clear that the timetables for the elections that are presently being undertaken in respect of the New South Wales Branch and the Victoria No 1 and No 3 Branches are effective despite the lack of provision for them in the rules of the respective Branches. The Administrator has suggested that an order should be made “to avoid doubt”. Such an order should be made.

Reporting requirements and THE APPOINTMENT OF AN AUDITOR

23    Three further issues emerged during the course of the hearing on 22 November 2012, namely:

    whether the former HSU East Branch, the Federal Branch, may have contravened provisions of the Registered Organisations Act and whether the Federal Union itself may assume liability for those contraventions;

    whether an auditor had been appointed in respect of the three demerged entities; and

    the steps being taken by the auditor to review the financial affairs of each of the three demerged entities.

Some hesitation was expressed as to whether orders should be made bringing the administration to an end in respect to any or all of the three demerged entities prior to these issues being resolved. No conclusion other than that the Administrator has fully discharged the responsibilities entrusted to him under the Schemes is open. But some reservation was expressed on 22 November 2012 as to whether it was desirable to return to the control of the members an entity lacking the financial supervision of an auditor.

Non-compliance with civil penalty provisions

24    The first of these issues emerged because the orders in respect to the Federal Branch (as it then was) were made on 21 June 2012. Thereafter, no financial returns were filed, nor could they be filed, for the financial year ending on 30 June 2012. The concern was whether this failure or failures were contrary to the requirements of Division 5 of Part 3 of Chapter 8 of the Registered Organisations Act.

25    A further difficulty was that the Federal Union (the Health Services Union) may itself assume liability for those contraventions. Provision is made, however, for relief from liability for contraventions of civil penalty provisions in s 315 of the Registered Organisations Act. That section provides as follows:

Relief from liability for contravention of civil penalty provision

(1)    In this section:

eligible proceedings:

(a)    means proceedings for a contravention of a civil penalty provision; and

(b)    does not include proceedings for an offence.

(2)    If:

(a)    eligible proceedings are brought against a person or organisation; and

(b)    in the proceedings it appears to the Federal Court that the person or organisation has, or may have, contravened a civil penalty provision but that:

(i)    the person or organisation has acted honestly; and

(ii)    having regard to all the circumstances of the case, the person or organisation ought fairly to be excused for the contravention;

the Court may relieve the person or organisation either wholly or partly from a liability to which the person or organisation would otherwise be subject, or that might otherwise be imposed on the person or organisation, because of the contravention.

(3)    If a person or organisation thinks that eligible proceedings will or may be begun against them, they may apply to the Federal Court for relief.

(4)    On an application under subsection (3), the Court may grant relief under subsection (2) as if the eligible proceedings had been begun in the Court.

26    Whatever proceedings may or may not be brought against the Federal Union, on one view, was something extraneous to the administration and the demerger of the former Federal Branch. On another view, if a proceeding were to be commenced against the Federal Union, and if an application were to be made to the Court pursuant to s 315(2), it was desirable for any such application to be made sooner rather than later. And to be resolved by the Court as presently constituted. But there was no imperative for any such application to be made and resolved prior to the making of orders bringing the administration to an end.

27    Yesterday, on 27 November 2012, an Originating Application was filed by the Federal Union seeking orders pursuant to s 315 of the Registered Organisations Act.

28    After the hearing on 22 November 2012 a meeting was held with a delegate of the General Manager of Fair Work Australia. The delegate, Ms Carruthers, was unable to give a commitment not to take action as against the Federal Union. That attitude, perhaps, was understandable. Documents and records of potential relevance to the decision were not available. They had been seized by the New South Wales police pursuant to search warrants executed at the State Union and New South Wales Branch premises in Pitt Street, Sydney. A request made of the police to access the seized documents was rejected. A request to be provided with a list of the documents seized was disturbingly met with the response that the police intended to index all of the documents but lacked the resources to do so “at this stage”.

29    The lack of the commitment on the part of Fair Work Australia to not institute a proceeding against the Federal Union was apparently considered by the Federal Union to be sufficient to satisfy the requirements of s 315(3) of the Registered Organisations Act.

30    The very difficulty confronting Ms Carruthers is much the same as the difficulty now confronting this Court. The documents that may have been seized are of potential relevance to both any decision to be made by Fair Work Australia and any decision to be made by this Court as to whether it should grant “relief” pursuant to s 315(3). The seized documents may potentially be relevant as to whether the Federal Union should be relieved “either wholly or partly from a liability” and relevant to the extent of any “relief” that may be granted.

31    A further difficulty was raised during the course of the hearing this morning. Some of the contraventions against which “relief” was being sought had not as yet occurred. A very legitimate question was raised as to whether the Court had power to grant “relief” in such circumstances.

32    Although it would have been desirable (if possible) to have resolved that further Originating Application today, and to have thereby brought hopefully all issues outstanding as a result of the orders made on 21 June 2012 to an end, it is regrettably not possible to do so. The resolution of the Originating Application must thus await another day.

The maintenance of financial records

33    A further matter was raised during the course of the hearing this morning – albeit one related to the former issue as raised on 22 November 2012. That matter concerned s 252 of the Registered Organisations Act.

34    That section provides as follows:

Reporting unit to keep proper financial records

(1)     A reporting unit must:

(a)    keep such financial records as correctly record and explain the transactions and financial position of the reporting unit, including such records as are prescribed; and

(b)     keep its financial records in such a manner as will enable a general purpose financial report to be prepared from them under section 253; and

(c)    keep its financial records in such a manner as will enable the accounts of the reporting unit to be conveniently and properly audited under this Part.

(2)     Where an organisation consists of 2 or more reporting units, the financial records for each of the reporting units must, as far as practicable, be kept in a consistent manner.

(3)     Financial records of an organisation may, so far as they relate to the income and expenditure of the organisation, be kept on a cash basis or accrual basis, at the option of the organisation.

(4)     If an organisation keeps the financial records referred to in subsection (1) on an accrual basis, it may keep the financial records for its membership subscriptions separately on a cash basis.

(5)     An organisation must retain the financial records kept under subsection (1) for a period of 7 years after the completion of the transactions to which they relate.

The concern was to ensure that whatever financial records presently existed which satisfied s 252 were retained. No order is sought against the Administrator. In the short period of time between the hearing this morning and the delivery of these reasons, a form of order to address these concerns has been forthcoming. Those consent orders should also now be made.

Appointment of an auditor

35    The second and third of the issues raised on 22 November can be addressed together. Without attempting to canvass each of the statutory provisions of potential relevance, it may be noted that s 256 of the Registered Organisations Act requires a “reporting unit” to ensure that there is an auditor. Each of the three demerged entities, it was accepted, was a “reporting unit”. Section 265 requires a “reporting unit” to provide to its members a full report consisting of (inter alia) a copy of the report of the auditor in relation to each financial year. That would be a report to be provided in respect to the financial year ending on 30 June 2013.

36    Again, there was perhaps no imperative for an auditor to be appointed prior to the administration being brought to an end. Paragraphs 13 and 14 of the Schemes already addressed the need to prepare financial accounts as to assets and liabilities and to establish and implement internal control policies.

37    It was nevertheless considered of importance for an auditor to be appointed for each of the three demerged entities prior to their being returned to the control of their members. It was less than desirable for the oversight of the financial affairs of each of the three demerged entities presently being exercised by the Administrator be left in a void pending the future appointment of auditors.

38    Moreover, the 3 July 2012 Final Report prepared by Mr Ian Temby QC and Mr Dennis Robertson FCA focussed attention upon the importance of the role of auditors. Those authors there helpfully summarised the role of auditors and their recommendation in respect to the selection of an appropriate auditor as follows:

The Audit Process

9.19     Auditors do not just sign off on the financial report as representing a true and fair view as to a company’s position as at balance date. They also draw to the attention of management and the governing board any procedures they have observed which give rise to risk of losses to the company. This is generally done by way of a management letter.

…

9.22     We recommend that the Union call tenders for auditing services, consistently with [9.12] above, as soon as is practicable.

Paragraph [9.12] set forth what were there described as the “characteristics of a satisfactory procurement system”.

39    The Administrator, accordingly, in September 2012, sought tenders and responses were received by 5 October 2012. Further steps were undertaken to assist in the auditor selection process.

40    The result has been that Mr Robert Mayberry of Nexia Australia has been appointed for each of the three demerged registered organisations.

Access to the affidavit evidence

41    Rule 2.32 of the Federal Court Rules 2011 provides for those circumstances in which both a party and a non-party may inspect specified documents in a Registry of this Court. Rule 2.32 had as its counterpart Order 46 r 6 of the now-repealed Federal Court Rules. With one qualification, none of the parties opposed the granting of leave, should leave be necessary, to any non-party seeking access to the Affidavits and evidence relied upon in support of the making of the orders on 22 November 2012 and those orders to be made today. Those Affidavits were the following:

    the Affidavit of Angela Lee McDonald affirmed on 21 November 2012;

    the Affidavit of Peter James Punch sworn 6 November 2012;

    the Affidavit of Peter James Punch sworn 14 November 2012;

    the Affidavit of Peter James Punch sworn 20 November 2012;

    the Affidavit of Stephen Freeman sworn 21 November 2012;

    the Affidavit of Selwyn Leslie Black sworn and filed on 27 November 2012; and

    the Affidavit of Selwyn Leslie Black sworn 27 November 2012 and filed on 28 November 2012.

The evidence also included a letter from Fair Work Australia General Manager, Ms Bernadette O’Neill to the Court, dated 20 November 2012.

42    Each of these Affidavits and the letter were read and relied upon during the course of the present hearing. Many Affidavits in many proceedings, including the present, are simply “taken as read”. There may thereafter be limited disclosure in open court of the contents of those Affidavits. Mere snippets of evidence may be referred to in open court or in a judgment.

43    The one qualification concerns the pleadings in the Supreme Court proceedings which have been annexed to the Affidavit of Mr Black. Access to that pleading should be left to be resolved by the Supreme Court of New South Wales.

44    Subject to that qualification, it is nevertheless important in all litigation to bear in mind that any member of the public has an entitlement to be as fully informed as possible about the nature of the issues or the disputes being resolved. That entitlement does not extend to unfettered access to the court file: P v Australian Crime Commission [2008] FCA 1336 at [19], 250 ALR 66 at 70 per Emmett J. But where Affidavit evidence has been read in open court, access to such material should normally be allowed.

45    In granting a non-party access to statements of agreed facts and outlines of submissions, Finkelstein J in Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No 3) [2002] FCA 609, (2002) ATPR ¶41-873 thus observed:

[7]    The question that I must resolve is what principle should be applied when deciding whether to allow inspection in cases where leave is required. In giving the answer I propose to confine myself to those cases where a non-party seeks access to material which has been relied upon by the judge. In such a case I have no doubt that the proper approach is that access should be allowed unless the interests of justice require a different course. It is only by adopting this approach that, in a practical sense, the principle of open justice will be preserved. Put differently, in my view there is a strong presumption in favour of allowing any member of the public who wishes to do so to inspect any document or thing that is put into evidence. Inspection should only be refused in exceptional circumstances. I think that the position is a fortiori when the material has been read by the judge in private and is not read out in court. If that material is not made available for inspection then the manner in which the case has been conducted will only be known to the parties. That is an unacceptable position.

Similarly, Allsop J (as his Honour then was) in Richardson v Commissioner of Taxation [2006] FCA 1306, 64 ATR 267 observed:

[3]    … It is sufficient for me to say that the … approach that I am taking is based on a view which is contained in and underlies O 46, r 6; that is, that, prima facie, a document which stands as a pleading, that is a document which defines the controversy which this court in the exercise of judicial power seeks to quell, should be made public. The reason for this approach is that not only should the public hear what is said at the final hearing of a case or at the arguing of a motion, but also the public is entitled to understand the nature of the controversy which the court is charged with quelling. It is an important governmental function of the third arm of government and the public is entitled to understand its processes and what is happening.

46    No different approach should be adopted in the present proceedings. The proceedings have attracted some media attention. Of more immediate concern, the orders made on 21 June 2012 affected the interests of those whose offices were vacated by the orders made on that date. The proceedings also affected the interests of members of the registered organisations the subject of those orders. There is no reason why any person who is interested enough to seek access to the material which formed the factual basis upon which the Court is proceeding in making final orders should be denied that access.

CONCLUSIONS

47    The outstanding orders as initially sought on behalf of the Administrator, and as redrafted since the adjournment of the hearing from last Thursday to this morning, should now be made.

48    Those orders, it should finally be noted, will not impact upon the proceedings which have been commenced by the Administrator, namely:

    a proceeding commenced on 6 November 2012 against Mr Michael Williamson in the Industrial Court of New South Wales seeking recovery of amounts pursuant to s 270 of the Industrial Relations Act; and

    a proceeding commenced on 7 November 2012 against five defendants (Mr Michael Williamson, the trustee of his family trust, Katherine Jackson, Peter Mylan and Kerrie Seymour.

An application has been made to transfer the Industrial Court proceedings to the Supreme Court so that both proceedings can be heard together. Those proceedings will continue when the elected officers assume control of the State Union.

THE ORDERS OF THE COURT in nsd 621/2012 and nsd 735/2012 ARE:

1.    The Orders of the Court made 21 June 2012 (as varied) be amended to insert the following Order numbered 12:

An order that:

(i)    upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the Victoria No. 3 Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be the Administrator and James Simmonds cease to be the Assistant Administrator of that Branch;

(ii)    upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the New South Wales Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be Administrator, Brian Daley and James Simmonds cease to be Assistant Administrators; and

(iii)    James Simmonds be appointed as Administrator of the Victoria No.1 Branch under the scheme attached as Appendix A.

2.    The time for compliance with paragraph 28 of Appendix A to the Orders made on 21 June 2012 (as varied) is extended to the date upon which the Australian Electoral Commission issues to the Administrator of the Victoria No 1 Branch a copy of the declaration of the results of the elections for the offices in that Branch.

3.    Paragraph 25 in Appendix A to the Orders of the Court made 21 June 2012 (as varied) be amended by the addition of the following at the conclusion thereof:

“To avoid doubt:

(vi)    the elections for the New South Wales and Victoria No.3 Branch contemplated by clause 24 are to be conducted in accordance with the schedule prescribed by the Returning Officer for those elections as determined by him on or about 5 September 2012 pursuant to Section 193 of the Act and notwithstanding the provisions of Rule 29A of the Rules;

(vii)    the elections in the Victoria No.1 Branch contemplated by clause 24 will be conducted in accordance with the schedule prescribed by the Returning Officer for those elections as determined by him on or about 5 September 2012 pursuant to Section 193 of the Act, as such schedule was varied in accordance with the Orders made by Justice Tracey in Matter VID 829/2012 on 16 November 2012 (as varied), notwithstanding the provisions of Rule 29A of the Rules.”

4.    Paragraph 29 in Appendix A to the Orders of the Court made 21 June 2012 (as varied) be amended by deleting the contents thereof and inserting in lieu thereof the following:

“29.1    Upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the Victoria No. 3 Branch of the Health Services Union, the Honourable Michael Francis Moore cease to be the Administrator and James Simmonds cease to be the Assistant Administrator of that Branch

29.2    Upon the issuing by the Australian Electoral Commission to the Administrator of a copy of the declaration of the result of the election for the offices in the New South Wales Branch:

(k)    The Honourable Michael Francis Moore shall cease to be the Administrator;

(l)    the persons declared elected in those elections shall forthwith take up the offices to which they are elected, and to avoid doubt shall do so notwithstanding the provisions of Rule 29A of the Rules;

(m)    Brian Daley shall cease to be the Assistant Administrator (NSW);

(n)    James Simmonds shall cease to be the Assistant Administrator (Victoria); and

(o)    Paragraph 27A shall cease to have effect.”

5.    In Appendix A to the Orders of the Court made 21 June 2012 (as varied) insert after Paragraph 29 the following new Paragraph 29A as follows:

“29A    Administrator of Victoria No.1 Branch

29A.1    Upon the Honourable Michael Francis Moore ceasing to be the Administrator pursuant to Paragraph 29.2 (a), James Simmonds shall be appointed as Administrator of the Victoria No.1 Branch;

29A.2    From the date of appointment of James Simmonds as the Administrator he may exercise such of the powers and functions of the Administrator under the Scheme as are capable of application to the Administration of the Victoria No.1 Branch, other than paragraphs 2,3,4,9,11,12,13,14,15,17,18,19 and 21;

29A.3    Upon the issuing by the Australian Electoral Commission to the Administrator a copy of the declaration of the result of the election for the offices in the Victoria No.1 Branch, James Simmonds shall cease to be the Administrator;

29A.4    The persons declared elected in those elections shall forthwith take up the offices to which they were elected, and to avoid doubt shall do so notwithstanding the provisions of Rule 29A of the Rules.”

6.    The Assistant Secretary-Treasurer of the New South Wales Branch, the Assistant Secretary-Treasurer of the Victorian No. 1 Branch and the Branch Secretary of the Victorian No. 3 Branch:

a.    Keep the records of HSU East Branch referred to in section 252(1)(a) of the Fair Work (Registered Orgnaisations) Act 2009 (Cth); and

b.    On receipt of a request made by the National Secretary of the Health Services Union, provide those records to the Health Services Union.

7.    Leave is granted pursuant to r 2.32(4) of the Federal Court Rules 2011 to all persons to inspect

a.    the following affidavits:

(i)    the affidavit of Angela Lee McDonald affirmed on 21 November 2012;

(ii)    the affidavit of Peter James Punch sworn 6 November 2012;

(iii)    the affidavit of Peter James Punch sworn 14 November 2012;

(iv)    the affidavit of Peter James Punch sworn 20 November 2012;

(v)    the affidavit of Stephen Freeman sworn 21 November 2012;

(vi)    the affidavit of Selwyn Leslie Black sworn and filed 27 November 2012 other than Annexures SLB5 and SLB6;

(vii)    the affidavit of Selwyn Leslie Black sworn 27 November 2012 and file 28 November 2012; and

b.    the letter from the Fair Work Australia General Manager, Ms Bernadette O’Neill to the Court dated 20 November 2012.

8.    The parties have liberty to apply on 48 hours’ notice in writing.

Associate:

Dated:    3 December 2012

Schedule

    No: (P)NSD 621 of 2012

Federal Court of Australia    

District Registry: New South Wales

Division: Fair Work

Applicants

Second Applicant:    LLOYD ALBERT WILLIAMS

Third Applicant:    DANIEL PATRICK HILL

Fourth Applicant:    ROSEMARY LOUISE KELLY

Fifth Applicant:    JORGE NAVAS

Sixth Applicant:    ZITA DARLENE MITCHELL

Respondents

Second Respondent:    HSU EAST

Third Respondent:    MICHAEL WILLIAMSON

Fourth Respondent:    KATHERINE JACKSON

Fifth Respondent:    GERARD HAYES

Sixth Respondent:    PETER BEATON

Seventh Respondent:    LEANNE BURNS

Eighth Respondent:    LEIGH BUSH

Ninth Respondent:    RAY DUNN

Tenth Respondent:    GRAHAME EDWARDS

Eleventh Respondent:    JOHN FITZROY

Twelfth Respondent:    HELEN GOODLUCK

Thirteenth Respondent:    BARBARA GRAY

Fourteenth Respondent:    LYNETTE GUYMER

Fifteenth Respondent:    SHARALYN HAYNES

Sixteenth Respondent:    SHARON JONES

Seventeenth Respondent:    LINDEN MARTIN

Eighteenth Respondent:    SHARON MCCULLOUGH

Nineteenth Respondent:    DEBORAH NEUMANN

Twentieth Respondent:    PAULINE O'NEILL

Twenty First Respondent:    VICKI RILEY

Twenty Second Respondent:    BRUCE ROWLING

Twenty Third Respondent:    LYNNE RUSSELL

Twenty Fourth Respondent:    ZI ZHENG SHAO

Twenty Fifth Respondent:    CLARRIE SMITH

Twenty Sixth Respondent:    MARK STERREY

Twenty Seventh Respondent:    LYNETTE THOMPSON

Twenty Eighth Respondent:    DAVE VEALEY

Twenty Ninth Respondent:    GRAHAM CONROY

Thirtieth Respondent:    JODIE COWDREY

Thirty First Respondent:    RODNEY FELTHAM

Thirty Second Respondent:    LACHLAN GILCHRIST

Thirty Third Respondent:    CHRISTINE GILCHRIST

Thirty Fourth Respondent:    CHRISTINE GILKINSON

Thirty Fifth Respondent:    ZELDA GISLETT

Thirty Sixth Respondent:    ADAM HALL

Thirty Seventh Respondent:    ROBERT HULL

Thirty Eighth Respondent:    ANGELA HUMPHRIES

Thirty Ninth Respondent:    MONIQUE IRVINE

Fortieth Respondent:    IRIS KNIGHT

Forty First Respondent:    KEN MCINTOSH

Forty Second Respondent:    KIM MULLER

Forty Third Respondent:    SEAN O'CONNOR

Forty Fourth Respondent:    MICHAEL O'DONNELL

Forty Fifth Respondent:    STEPHEN POLLARD

Forty Sixth Respondent:    JOHN SANTANGELO

Forty Seventh Respondent:    TIM THORBURN

Forty Eighth Respondent:    BEV TURELLO

Forty Ninth Respondent:    MARCO BOLANO

Fiftieth Respondent:    BRYAN YEATES

Fifty First Respondent:    TED HINGE

Fifty Second Respondent:    TERRY AGIUS

Fifty Third Respondent:    LIA AUGOUSTAKIS

Fifty Fourth Respondent:    STUART BOWLES

Fifty Fifth Respondent:    SHANE BRASIER

Fifty Sixth Respondent:    GINO CATHERINE

Fifty Seventh Respondent:    BRETT DAVIDSON

Fifty Eighth Respondent:    REUBEN DIXON

Fifty Ninth Respondent:    JENNY DUNLOP

Sixtieth Respondent:    LEONIE FLYNN

Sixty First Respondent:    JULIE GRAHAM

Sixty Second Respondent:    JOE GRECH

Sixty Third Respondent:    MARK HINDSON

Sixty Fourth Respondent:    PHILIP ADRIAN KERR

Sixty Fifth Respondent:    LISA MAGNUSSON

Sixty Sixth Respondent:    MELISSA NENADOVIC

Sixty Seventh Respondent:    PATRICK O'BRIEN

Sixty Eighth Respondent:    JIM PAPARAS

Sixty Ninth Respondent:    LORI SCIDONE

Seventieth Respondent:    LYN SHEPHERD

Seventy First Respondent:    STEPHEN SIGISMONDI

Seventy Second Respondent:    JIMMY VILLANUEVA

Seventy Third Respondent:    TAMMIE WHEELHOUSE

Seventy Fourth Respondent:    KATE WILKINSON

Seventy Fifth Respondent:    STUART MILLER

Seventy Sixth Respondent:    KERRIE SEYMOUR

Seventy Seventh Respondent:    PETER JAMES MYLAN

Seventy Eighth Respondent:    KIM HAZELWOOD

Seventy Ninth Respondent:    KIM GOODLOCK

Eightieth Respondent:    SHARON JOSEPH

Eighty First Respondent:    ALICIA ANSET

Eighty Second Respondent:    ROBERT BRADLEY

Eighty Third Respondent:    PETER BRAVIS

Eighty Fourth Respondent:    MELISSA BUTLER

Eighty Fifth Respondent:    ANDREW HEWAT

Eighty Sixth Respondent:    DEIDRE MCINTOSH

Eighty Seventh Respondent:    ADRIANA VESPUCCI

Schedule

    No: (P)NSD 735 of 2012

Federal Court of Australia    

District Registry: New South Wales

Division: Fair Work

Second Respondent:    MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS

Third Respondent:    HEALTH SERVICES UNION

Fourth Respondent:    CHRISTOPHER PAUL BROWN

Fifth Respondent:    LLOYD ALBERT WILLIAMS

Sixth Respondent:    DANIEL PATRICK HILL

Seventh Respondent:    ROSEMARY LOUISE KELLY

Eighth Respondent:    JORGE NAVAS

Ninth Respondent:    ZITA DARLENE MITCHELL

Tenth Respondent:    KATHERINE JACKSON

Other:                    UNIONS NSW

Second Other:    MICHAEL FRANCIS MOORE