Federal Court of Australia

O’Connor v Setka (No 2) [2022] FCA 151

ORDERS

THE COURT ORDERS THAT:

1.    Within 7 days, the parties are to submit to the Court a joint minute of order to give effect to these reasons.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J:

Introduction

1    On 11 November 2020, the Full Court upheld Mr O’Connor’s (the applicant or Mr O’Connor) appeal from the orders that I had made in O’Connor v Setka [2020] FCA 441. See O’Connor v Setka [2020] FCAFC 195. The Full Court quashed those orders, and in their place made orders substantially in the form set out in [1A]–[6] of Mr O’Connor’s amended originating application dated 6 March 2020, and remitted for consideration the relief set out in [7]–[13] in accordance with its reasons.

2    These reasons deal with the issues that arose on remittal.

3    Before turning to those issues, it is useful to restate how the proceeding arose and to describe the various parties to it.

4    The proceeding arose out of an internal demarcation dispute between the Manufacturing, and Construction and General, Divisions of the Construction, Forestry, Maritime, Mining and Energy Union (the Union or the CFMMEU) about which such Division is entitled to represent the interests of cabinet makers, floor layers and glaziers employed on construction sites in Victoria.

5    Mr O’Connor is a member of the Union. He is also the National Secretary of its Manufacturing Division.

6    The National Rules of the Union provide for the existence and operation of four Divisions: the Construction and General Division; the Manufacturing Division; the Mining and Energy Division; and the Maritime Union of Australia Division. Each of the Divisions has its own rules.

7    The Manufacturing Division is divided into Districts, one of which is the Victorian District.

8    The Construction and General Division is divided into Divisional Branches, one of which is the Construction and General Division, Victoria-Tasmania Divisional Branch (the Construction Branch).

9    The proceeding was brought under s 164 of the Fair Work (Registered Organisations) Act 2009 (Cth) (the RO Act) by way of an originating application dated 13 January 2020 against 30 respondents. Each of them is a member of the Union. They are members of, and comprise, the Divisional Branch Management Committee of the Construction Branch (the DBMC). Subject to review by the Divisional Branch Council, the DBMC has the care, control, superintendence, management and administration of the affairs of the Construction Branch (including dealing with applications for membership) and may exercise all of the powers of the Divisional Branch Council. There are now 36 respondents. The thirty-first to thirty-sixth respondents were added to the proceeding following their election as members of the DBMC on 1 March 2021. They are thus amenable to and bound by the court’s orders in the same way as the original respondents.

10    The first respondent, Mr John Setka, is the State Secretary of the Construction Branch. The second respondent, Mr Elias Spernovasilis, is the Branch Assistant Secretary of the Construction Branch.

11    From around August 2019, the respondents, or some of them, began to encourage members of the Manufacturing Division to resign from it, and to join the Construction and General Division instead.

The decision at first instance

12    At the hearing at first instance, Mr O’Connor submitted that all but one of the persons who had resigned from the Manufacturing Division and joined the Construction and General Division were not eligible, on the proper construction of the National Rules, to be members of the Construction and General Division, and that they were (and are) only eligible to be members of the Manufacturing Division. He also submitted that the court should therefore make a declaration that persons eligible to be members of the Union pursuant to National Rule 2(F) in Victoria were not eligible to be members of the Construction and General Division, and make orders in substance:

(a)    enjoining the respondents from inducing further resignations;

(b)    requiring the respondents to provide written instructions and directions to representatives of the Construction Branch to cease inducing further resignations;

(c)    requiring the respondents to transfer back ineligible members, and to remit to the Manufacturing Division any contributions collected from those members; and

(d)    enjoining the respondents from engaging in activities that would result in enterprise agreements being made covering ineligible members, and requiring the respondents to notify the applicant of any such enterprise agreement negotiations currently on foot.

13    The respondents submitted that, on the proper construction of the National Rules, each of the relevant members rightly belonged to the Construction and General Division and that the proceeding should therefore be dismissed.

The decision of the Full Court

14    The Full Court held that members of the Union in Victoria in the relevant occupations described in Rule 2(F) (members working in the floor laying, glass and cabinet‑making industries in Victoria) were, in accordance with the National Rules, properly allocated to the Manufacturing Division, and accepted Mr O’Connor’s case that (J at [80]):

… members working in the floor laying, glass and cabinet‑making industries in Victoria are within Rule 2(F) of the eligibility rules; Rule 2 in the Manufacturing Division Rules provides that a member who is a member of the Union by virtue of Rule 2(F) shall belong to that Division; the eligibility rule of the Construction and General Division does not include Rule 2(F) members; Rule 7(iv) provides that a member may be attached to one Division only; in consequence, the disputed members must be attached to the Manufacturing Division.

15    The Full Court held that “the Rules of the Union are not being observed in relation to the disputed members … because the regime for transfer of members for which Rule 7 provides is not being observed” and that “[m]oreover, the Rules do not allow a member to ‘resign’ from one Division and to ‘join’ another”. See J at [105].

16    On the question of what orders should be made upon the allowing of the appeal and the setting aside of the orders below, the Full Court said as follows (J at [138]–[139]):

The parties disagreed as to the further orders which should be made by the Court. The appellant submitted that this Court should make the remaining orders sought in the Notice of Appeal. The respondents on the other hand contended that the form of relief should be remitted wholly to the primary Judge. They submitted that there were some issues concerning the form of relief and, in particular, the identification of the members who would be affected the Court’s orders about which the primary Judge had received evidence and submissions but which had not been reproduced or made to this Court.

In our view, it is desirable for this Court to make orders which will bring the matters to finality, so far as that is practicably possible. We accept, however, the respondents’ submission that this Court has not been provided with all the evidence and submissions which would be necessary for that purpose. Accordingly, we will adopt an intermediate position. We will make some of the orders sought by the appellant and remit consideration of the remaining orders to the primary Judge.

17    The Full Court made the following orders and declaration:

1.    The appeal be allowed.

2.    The orders made by the primary Judge on 6 April 2020 be set aside.

3.    In their place, the Court declares that, under the Rules of the Construction, Forestry, Maritime, Mining and Energy Union (the CFMMEU), the persons eligible for membership pursuant to Rule 2(F) are, until alteration of the Rules or a contrary decision by the National Executive (in either case, in accordance with the Rules), attached to the Manufacturing Division and not to the Construction and General Division.

4.    The First Respondent perform and observe the Rules of the CFMMEU (the Rules) by ceasing, desisting and refraining, by himself, his servants or agents, from inducing, encouraging or advising any members in the Victorian District of the Manufacturing Division eligible for membership pursuant to Rule 2(F) of the Rules (the Members) to resign their membership in the Manufacturing Division of the CFMMEU.

5.    The Second Respondent perform and observe the Rules by ceasing, desisting and refraining, by himself, his servants or agents, from inducing, encouraging or advising any of the Members to resign their membership in the Manufacturing Division of the CFMMEU.

6.    The Third to Thirtieth Respondents, jointly and severally, perform and observe the Rules by ceasing, desisting and refraining by themselves, their servants or agents, from inducing, encouraging or advising any of the Members to resign their membership in the Manufacturing Division of the CFMMEU.

7.    Within seven days, the Respondents issue and deliver a written instruction and direction to all organisers, other employees and officials of the Victoria Tasmania Divisional Branch of the Construction and General Division of the CFMMEU (the Branch), to cease, desist and refrain, by themselves, their servants or agents, from inducing, encouraging or advising any of the Members to resign their membership in the Manufacturing Division of the CFMMEU, and by 4.30 pm on 20 November 2020, file and serve an affidavit made by the First Respondent confirming compliance with this order.

8.    Within seven days of the making of this order, the Respondents publish a written instruction and direction to all delegates in the Branch, to cease, desist and refrain from inducing, encouraging, or advising any of the Members to resign their membership in the Manufacturing Division and from enrolling any of the Members as members of the CFMMEU in the Branch, and by 4.30 pm on 20 November 2020, file and serve an affidavit made by the First Respondent confirming compliance with this order.

9.    The Respondents, jointly and severally, perform and observe the Rules by ceasing, desisting and refraining by themselves, their servants or agents, from enrolling persons who are eligible to be members of the CFMMEU pursuant to Rule 2(F) of the Rules as members of the CFMMEU in the Branch.

10.    Consideration of the relief sought by the Appellant in paras [7]-[13] inclusive of the Amended Originating Application be remitted to the primary Judge for consideration in accordance with these reasons. Subject to any contrary order by the primary Judge, that consideration is to take place on the basis of the evidence and submissions already received by the primary Judge.

18    It was common ground that orders 7 and 8 were complied with, and orders 4, 5, 6 and 9 were, and continue to be, complied with. The practice of encouraging Rule 2(F) members to resign their membership in the Manufacturing Division and to join the Construction and General Division has ceased. And the respondents are not enrolling such persons in the Construction and General Division.

19    Paragraphs 7–13 of Mr O’Connor’s further amended originating application dated 17 August 2021 were as follows:

7.    An order that within 21 days the respondents, jointly and severally, perform and observe the rules of the Union by themselves, their servants or agents, by transferring the membership of each of the members set out in annexure PJP-2 to the Affidavit of Phillip Pasfield dated [27] April 2021 (the Affected Members), back to membership of the Victorian District of the Manufacturing Division of the Union.

8.    An order that within 21 days, the respondents by themselves, their servants or agents, remit to the Victorian District of the Manufacturing Division of the Union all contributions collected by the [Construction] Branch from any of the Affected Members since August 2019.

9.    An order that the respondents, jointly and severally, by themselves, their servants or agents, cease, desist and refrain from representing to any employer of the Members, that they are authorised to negotiate any enterprise agreement under the Fair Work Act 2009 (Cth) (FW Act) which would cover the Members.

10.    An order that the respondents, jointly and severally, by themselves, their servants or agents, cease, desist and refrain from negotiating or taking any other step in relation to the making of any enterprise agreement under the FW Act or otherwise, which would cover the Members.

11.    An order that the respondents advise the applicant in writing within seven days, of all negotiations in which the respondents or any of them are engaged for an enterprise agreement which would cover the Members.

12.    Such further or other orders as the Court considers appropriate.

13.    An order that the parties have liberty to apply.

20    Orders 9, 10, 12 and 13 were not pressed at the hearing. I shall call orders numbered 7, 8 and 11 (which were pressed) proposed orders 1, 2 and 3.

The remittal

21    One might have imagined that the question whether Mr O’Connor was entitled to orders to restore the status quo ante would have been an issue capable of being resolved by reference to relatively brief submissions. Early on, that seemed likely. At a case management hearing on 16 March 2021, the matter was set down for hearing on 29 July 2021 and directions made for the filing of written submissions. The applicant accordingly filed a five page outline dated 27 April 2021.

22    The respondents replied with equivalent and commendable brevity on 19 May 2021. As to proposed order 1 they sought leave to adduce further evidence and to make submissions at an oral hearing about any resolution of the underlying dispute about the appropriate allocation of the disputed members by the National Executive. As to proposed order 2 they contended in summary:

(1)    section 164 of the RO Act does not confer power on the court to remedy a past breach of union rules – the orders may only be directed to performance of an existing obligation, citing Darroch v Tanner (1987) 16 FCR 368 at 373–375; and

(2)    the order sought that “all” contributions be remitted was inappropriate, including because it would fail to acknowledge the work that the Construction and General Division had done in the meantime representing the disputed members, thus “earning” those dues, and give the Manufacturing Division a “windfall” gain.

23    As to proposed order 3, the respondents submitted that it was unnecessary.

24    The respondents also filed an affidavit of Mr Robert Graauwmans dated 19 May 2021, in which he deposed (among other matters) that the respondents intended, as soon as they were able, to have the underlying dispute determined by the National Executive. As a result, the 29 July hearing was vacated by consent.

25    At a case management hearing on 29 June 2021, the proceeding was set down for hearing on 23 August. The respondents were directed to file any additional affidavit evidence by 13 July, and the applicant was directed to file any reply evidence by 3 August.

26    In the events that occurred, the respondents did not seek to have the underlying dispute determined by the National Executive, and they did not file any additional evidence in relation to that question.

27    On 3 August 2021, the applicant filed an interlocutory application seeking leave to amend further his originating application to rely on the power contained in s 164A of the RO Act.

28    The applicant filed four reply affidavits – one of his own, and affidavits of Mr Phillip Pasfield, Mr Steve Abboushi and Ms Maria Kaplanis, each dated 3 August 2021. He also filed a seven page outline of submissions in reply, contending in summary:

(a)    in the absence of any further evidence about the dispute being referred to the National Executive, it had to be assumed that the respondents had abandoned their “plan” in that regard;

(b)    the submission that the court had no power to make proposed order 2 was newly minted and wrong in any event, because Darroch v Tanner (1987) 16 FCR 368 does not preclude the making of an order against parties who are under an ongoing obligation to comply with the rules, citing National Rule 8(i) (membership dues are to be paid in accordance with the rules of the Division to which the person is assigned) and Manufacturing Division Rule 6(vi) (membership dues are to be paid to and collected by the Divisional Secretary or an authorised agent of the Division);

(c)    if there is no power under s 164, such a power exists under 164A;

(d)    proposed order 2 would work no unfairness and would not mean that the Manufacturing Division would receive a windfall, because that submission had been “overtaken by the evidence in [Ms] Kaplanis’ reply affidavit as to the actual amount of membership dues claimed by the Manufacturing Division in respect of the Affected Employees” and that the applicant now sought “an order to remit only the amount specified in her affidavit”, namely the lesser amount that would have been payable had the disputed employees remained with the Manufacturing Division, rather than the amount actually collected by the Construction Branch; and

(e)    proposed order 3 would conduce to the performance and observance of the National Rules, and thus should be made.

29    Mr O’Connor also submitted that the respondents’ concerns with proposed order 3 could be addressed by deleting the words “which would cover” and instead inserting the words “as a bargaining representative for”. At the hearing, Mr Dowling SC, senior counsel for the respondents, submitted that this amendment “makes the position no better and possibly worse”.

30    On 17 August 2021, having heard oral argument from the parties on the application to amend, I vacated the 23 August hearing date and granted Mr O’Connor leave to rely on s 164A of the RO Act as an alternative source of power for the relief sought in [7]–[13] of the further amended originating application, and to add new respondents to the proceeding, being the new members of the DBMC.

31    Mr O’Connor was also ordered to file points of claim, which he did ten days later.

32    After setting out the terms of certain rules of the CFMMEU at [6]–[17], the points of claim continued:

C.    The disputed members

18.    There are 315 members of the CFMMEU who have been wrongly enrolled in or attached to the Construction Branch in and since 2019 (the Disputed Members).

PARTICULARS

A list of the Disputed Members is set out in Annexure PJP-2 to the affidavit of Phillip Pasfield dated [27] April 2021 filed in this proceeding.

19.    The Disputed Members are and were at all material times engaged in occupations or trades that fell under Union Rule 2(F) and in particular, cabinet makes [sic], carpet and linoleum planners and all floor covering layers and glaziers.

20.    By reason of the preceding paragraph, the Disputed Members are and were eligible to belong and required to be attached to the Manufacturing Division in its Victorian District, in conformity with Manufacturing Division Rule 2, Union Rules 7(i) and (iv) and Union Rule 26.

21.    By reason of the two preceding paragraphs, the Disputed Members are and were not eligible to belong or be attached to the Construction Branch: see Construction Division Rule 2, Manufacturing Division Rule 2, Union Rules 7(i) and (iv) and Union Rule 26.

22.    The Disputed Members were all, immediately prior to their aforementioned enrolment in or attachment to the Construction Branch, attached to the Manufacturing Division in its Victorian District.

D.    Section 164 of the RO Act

D.1.    The Respondents’ failure to perform and observe the rules

23.    The Respondents, by themselves, their servants or their agents, have failed to perform and observe the rules of the CFMMEU by:

(a)    inducing, encouraging and advising the Disputed Members to resign their membership in the Manufacturing Division of the CFMMEU; and

(b)    enrolling the Disputed Members as members of the CFMMEU in the Construction Branch.

PARTICULARS

The Respondents have failed to perform and observe [the] following rules:

(a)    Construction Division Rule 2;

(b)    Manufacturing Division Rule 2;

(c)    Union Rule 7(i);

(d)    Union Rule 7(iv); and

(e)    Union Rule 26.

24.    Further and in addition to the preceding paragraph, the Respondents, by themselves, their servants or their agents, have failed to perform and observe the rules of the CFMMEU by collecting membership dues from the Disputed members and not remitting those dues to the Manufacturing Division.

PARTICULARS

The Respondents have failed to perform and observe [the] following rules:

(a)    Union Rule 8(i);

(b)    Manufacturing Division Rule 6[(vi)];

(c)    Manufacturing Division Rule 14A(i); and

(d)    Union Rule 26.

25.    The rules noted in the Particulars appended to paragraphs [23 and 24] above impose an existing and continuing obligation to performance and observance on the Respondents.

26.    The Respondents, by themselves, their servants or their agents, continue to fail to perform and observe the rules of the CFMMEU by:

(a)    retaining the Disputed Members as members allocated to the Construction Branch;

(b)    failing to transfer the Disputed Members to the Manufacturing Division;

(c)    continuing to collect membership dues from the Disputed Members; and

(d)    retaining the membership dues collected from the Disputed Members and failing to remit them to the Manufacturing Division.

PARTICULARS

The Respondents continue to fail to perform and observe the rules noted in the Particulars appended to paragraphs [23 and 24] above.

D.2.    The relief sought will conduce to performance and observance of the rules

27.    The relief sought by the Applicant on the remitter is set out in the Amended Originating Application dated 17 August 2021 at paragraphs 7 to 11.

28.    The relief sought by the Applicant on remitter will conduce to performance and observance of the rules of the CFMMEU.

PARTICULARS

The relief will conduce to performance and observance of the following rules:

(a)    Construction Division Rule 2;

(b)    Manufacturing Division Rule 2;

(c)    Union Rule 7(i);

(d)    Union Rule 7(iv);

(e)    Union Rule 7[(viii)];

(f)    Union Rule 8(i);

(g)    Manufacturing Division Rule 6[(vi)];

(h)    Manufacturing Division Rule 14A(i).

E.    Section 164A

29.    In the alternative to the claim for orders under s.164 of the RO Act, the Applicant claims orders under s.164A of the RO Act.

30.    By reason of the matters set out above at paragraphs 24-27 the Respondents have breached and continue to breach the Rules of the CFMMEU identified in those paragraphs.

31.    Assuming but without conceding that the Respondents believed that the Disputed Members ought to have been attached to and be members of the Construction Branch and not the Manufacturing Division, they have acted unreasonably in breaching the rules of the CFMMEU because:

(a)    They failed to invoke the process under Union Rule 7[(viii)] and instead induced, encouraged and advised the Disputed Members to resign their membership in the Manufacturing Division of the CFMMEU and enrol as members of the CFMMEU in the Construction Branch;

(b)    despite the Full Court’s Judgment in [2020] FCAFC 195 they have:

(i)    retained the Disputed Members as members allocated to the Construction Branch;

(ii)    failed to transfer the Disputed Members to the Manufacturing Division;

(iii)    continued to collect membership dues from the Disputed Members; and

(iv)    retained and failed to remit to the Manufacturing Division the membership dues collected from the Disputed Members.

32.    [Deleted.]

33.    The relief sought by the Applicant in paragraphs 7 to 11 of the Amended Originating Application dated 17 August 2021 will as far as is reasonably practicable place the CFMMEU in the position in which it would have been if the breaches of the rules had not occurred, in that, (i) the Disputed Members will belong and be attached to the Manufacturing Division, and (ii) the dues collected from them will be received by the Manufacturing Division and form part of the funds of the Division as provided for in Divisional Rule 14A.

33    It is useful to set out here the terms of the rules referred to in the points of claim.

34    National Rule 7(i) provides:

A candidate for membership of the Union may make application to the National Secretary, the Division covering the occupation or industry in which the person is employed, the Branch covering the area in which the person is employed or resides, or the Divisional Branch covering the industry or occupation in which the person is employed, usually employed or desirous of being employed in the area in which the person resides or is employed, and such application shall be made and dealt with in the manner and subject to the conditions ... required by the rules of the Division. Any application shall be forwarded to the office in the appropriate division which under the rules of that division deals with such applications. The decision to accept or reject that application shall be made in accordance with the Rules of that division by that office. Provided that where a person makes application to any officer of the Union that application shall be a valid application for membership of the Union and the Union shall, treat the member as a member of the Division to which the officer is attached, until transferred in accordance with the rules.

35    National Rule 7(iv) provides:

A member shall be attached to the Division of the Union covering the industry or employment of the member and shall be in only one such Division. Each member shall be notified of the Division to which such member is attached or any other classification relevant to the Rules of the Union and such Division or classification shall be entered on the record of the Union in relation to that member which record shall be conclusive proof of the Division and/or classification to which that member is assigned.

36    As the Full Court explained in O’Connor v Setka [2020] FCAFC 195 at [35] “[National] Rule 7(viii) provides two means by which a member may be transferred from one Division to another. The first is available when the Division to which the member is attached considers that the member should belong to another Division (Rule 7(viii)(a)). The second is available when a Division considers that a member attached to another Division should more appropriately be attached to it (Rule 7(viii)(b))”. The second of those sub‑rules is relevant here and provides:

(viii)     (a)    …

(b)    … where a Divisional Secretary or a Divisional Branch Secretary forms the view that a member of another Division or Divisional Branch ought to be a member of the Division or Divisional Branch to which the Divisional Secretary or Divisional Branch Secretary is attached, the Divisional Secretary or Divisional Branch Secretary shall contact the … Divisional Branch Secretary of the Divisional Branch to which the member is now attached and seek agreement that the member be transferred. Where agreement cannot be reached the matter may be referred to the National Secretary and be determined by the National Executive or an officer designated by the National Executive.

  (c)    …

(d)    Any determination by the National Executive or officer designated by the National Executive shall use the principles established in and by sub-rules 42(i) and 42(iii) hereof.

Nothing in these paragraphs shall affect or detract from the provisions of sub-rule(s) 42(i), (iii) and (xii) and membership of a Division or a Divisional Branch shall be valid notwithstanding an irregularity in, breach of or failure to comply with the procedures in either one or both paragraphs (a) or (b) herein.

37    And as the Full Court went on to say at [36], “[a]s is apparent, Rule 7(viii)(b) contemplates a process of consultation in the first instance followed, if necessary, by reference to the National Secretary for determination by the National Executive or by an officer designated by the National Executive. The ‘principles’ established by Rules 42(i) and (iii) are to be used in the determination of the dispute”.

38    National Rule 26 provides:

These National Rules and all the rules of the Union, and all alterations, additions or rescissions thereof or thereto, shall apply to and be binding on all Divisions, Branches, and Divisional Branches in all sections of the Union and all members who now, or who may hereafter, belong to the Union until they are made or become null and void according to the law.

39    The rules of the Manufacturing Division of the Union, entitled the “Manufacturing Division Rules”, provide in Rule 2: “Every member who is a member of the union by virtue of Rule 2 Sub-Rule (C), (F) and (R) of the National Rules shall belong to this Division”.

40    The rules of the Construction and General Division of the Union, entitled the “Construction and General Division Rules” contain the following eligibility clause in Rule 2:

Every member who is a member of the union by virtue of Rule 2 Sub‑rules (A), (B) and (N) of the National Rules shall belong to this Division.

Further, every member who is a member of the Union by virtue of Rule No 2 sub‑rule (E) of the National Rules, shall also be eligible for membership of this Division.

…

41    The rules dealing with collecting membership dues pleaded at [24] of the points of claim are as follows.

42    National Rule 8(i) provides:

Entrance fees and contributions payable by any person on application to join the union and/or for membership or continuous membership of the Union shall be in accordance with the Rules of the division to which, in accordance with the Rules of the Union, the person or member is to be or is assigned.

43    Manufacturing Division Rule 6(vi) provides: “Contributions shall be paid to and collected by the Divisional Secretary, or an authorised agent of the Division”.

44    Manufacturing Division Rule 14A(i) provides: “The Divisional Office shall collect all entrance fees, contributions, levies and fines and all other monies relating to the membership”.

45    In response to the points of claim, and having filed points of defence on 13 September 2021, the respondents filed an 11 page submission entitled “Respondents’ Outline of Submissions on Threshold Issues”, together with a seven page document entitled “Respondents’ List of Issues”, on the first day of the hearing. They made two essential complaints about Mr O’Connor’s points of claim, viz that he had attempted to:

(a)    expand his case by asking the court to find that the respondents had failed to observe eight rules that were not the subject of the Full Court’s findings; and

(b)    put in issue the respondents’ state of mind, despite representing to the court and to the respondents that he would not do so.

46    The respondents submitted, for the reasons set out in the submission, that:

(a)    Mr O’Connor was not given leave to expand his case to include allegations that the respondents had failed to perform and observe Construction and General Division Rule 2; Manufacturing Division Rule 2; Manufacturing Division Rule 6(vi); Manufacturing Division Rule 14A(i); National Rule 7(i); National Rule 7(iv); National Rule 8(i); and National Rule 26.

(b)    Mr O’Connor was not given leave to introduce new causes of action, and the remitted hearing should be confined to the question of whether he should have the relief in [7]–‍[13] of his further amended originating application, determined by reference to the reasons of the Full Court, namely, that the transfer regime provided for in National Rule 7(viii) was not observed, and not otherwise; and

(c)    Mr O’Connor should not be permitted to put in issue the respondents’ state of mind and must not advance the contention in [32] of his points of claim (because Mr Borenstein QC, senior counsel for Mr O’Connor, had expressly disavowed intending to do so when leave was sought to amend the originating application to include a claim under s 164A and file points of claim).

47    The respondents’ “List of Issues” (and answers) was in these terms:

Scope of the remitted hearing?

1.    What is the scope of the remitter?

(a)    Is the scope of the remitted hearing limited to the question of relief as set out in order 10 of the orders of 11 November 2021?

The answer to this question is “yes”. The scope of the remitted hearing is limited to the question of whether Mr O’Connor should have the relief set out in paragraphs [7]-[13] of his further amended originating application because the jurisdiction of the primary Judge to determine those questions arises from the terms of the remitter, namely Order 10 of the Full Court’s orders made on 11 November 2021, and not otherwise.

Accordingly, the remitted hearing is to be conducted by reference to order 10, and not otherwise.

(b)    If the answer to question 1(a) is “yes”, is the question of relief to be determined only by reference to the respondents’ failure to observe rule 7(viii) and their conduct in encouraging members to resign from the Manufacturing Division to join the C&G Division, as found by the Full Court at paragraph [105] of its reasons?

The answer is “yes” because the express words of order 10 provide that the remitted hearing is to determine whether Mr O’Connor should have the relief in paragraphs [7]-[13] “by reference to” the reasons of the Full Court.

The Full Court found that the Union Rules were not being observed because the scheme for transfer of members under Rule 7(viii) was not being observed.

The Full Court did not find that any other Rule had not been performed or observed.

(c)    Alternatively, is Mr O’Connor entitled to rely on alleged failures to perform or observe:

(i)    Construction Division Rule 2;

(ii)    Manufacturing Division Rule 2;

(iii)    Manufacturing Division Rule 6[(vi)];

(iv)    Manufacturing Division Rule 14A(i);

(v)    Union Rule 7(i);

(vi)    Union Rule 7(iv);

(vii)    Union Rule 8(i); and

(viii)    Union Rule 26[?]

The answer is “no”. Mr O’Connor asks the Court to make findings that the respondents were under a duty to perform and observe these rules, and that they failed to perform that duty. However, these questions do not arise on the remitted hearing. The Full Court did not remit any question of liability to the primary Judge.

The Full Court referred to some, but not all, of these rules in its reasons. However, it did so for the purpose of construing the Rules. It did not find that any person had failed to perform or observe them.

Furthermore, Mr O’Connor did not advance this case at first instance. As the Full Court noted, Mr O’Connor’s case at first instance was “relatively confined” [see [80]] and centred on the division to which the Disputed Members were attached.

Section 164 of the Fair Work (Registered Organisations) Act 2009 (Cth)

2.    Does s 164 of the Fair Work (Registered Organisations) Act 2009 (Cth) authorise the Court to make the proposed orders?

The answer to this question is “no”. The proposed orders are directed to remedying the effects of a past failure to perform or observe the Rules. The Court does not have power under s 164 to make such an order.

The Court has no power under s 164 to make such an order because s 164 does not authorise the Court to make an order remedying the effects of a failure to perform or observe a rule. Section 164 only confers power on the Court to make a direction for the performance or observance of an existing obligation: R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett [1945] HCA 50; (1945) 70 CLR 141; Darroch v Tanner (1987) 16 FCR 368; The Queen v Joske and others; Ex parte Shop Distributive and Allied Employees’ Association [1976] HCA 48; (1976) 135 CLR 194 at 212 (Mason and Murphy JJ).

3.    Separately, does s 164 of the Fair Work (Registered Organisations) Act 2009 (Cth) authorise the Court to make an order that the respondent pay money to the Manufacturing Division?

This question is also answered “no”. This question arises because of Mr O’Connor’s proposed order 8, which would require the respondents to cause money to be paid to the Manufacturing Division in a sum equivalent to the union dues that the Members would have paid if they had remained members of the Manufacturing Division.

The authorities establish that s 164 does not authorise the Court to order payment of compensation: R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett [1945] HCA 50; (1945) 70 CLR 141; Darroch v Tanner (1987) 16 FCR 368; The Queen v Joske and others; Ex parte Shop Distributive and Allied Employees’ Association [1976] HCA 48; (1976) 135 CLR 194 at 212 (Mason and Murphy JJ).

4.    If the answer to question 2 (in relation to each of the proposed orders) or question 3 (in relation to proposed order 8 only) is “yes”, should the Court make the orders?

This question does not arise.

However, in any case, the answer is “no” because:

(a)    in relation to proposed order 7, the Members’ membership of the C&G Division has been regularised by operation of the Rules, the order would affect the rights of 315 individuals and the question of whether they should be transferred to the Manufacturing Division is a question that should be determined under the Rules of the Union and not by the Court;

(b)    in relation to proposed order 8, the Members were obliged to pay dues to the C&G Division and the C&G Division was entitled to collect those dues; the C&G Division expended substantial amounts of money and resources providing services and representation to the Members; the Manufacturing Division would be overcompensated if the order was made because it provided no services to the Members in the relevant period; and

(c)    in relation to proposed orders 9-11, the orders are beyond power because they impermissibly interfere with the rights of the CFMMEU under the Fair Work Act 2009 (Cth), cannot be complied with by the respondents without the cooperation of the Manufacturing Division and require the supervision of the Court.

Section 164A of the Fair Work (Registered Organisations) Act 2009 (Cth)

5.    For the purposes of s 164A of the Fair Work (Registered Organisations) Act 2009 (Cth), which rules have the respondents breached, having regard to the answer to question 1 above?

This question arises because jurisdiction under s 164A is only enlivened if the Court is satisfied that a person breached a rule or rules and that the person acted unreasonably in so breaching the rule or rules.

This requires identification of the rule or rules that were breached. On the respondents’ case, the breaches were the failure to follow the Rule 7(viii) transfer regime.

Mr O’Connor’s claim that a further eight rules have been breached must be rejected for the reasons given above.

6.    Did the respondents act unreasonably in breaching the rule or rules identified under question 4 above?

The answer to this question is “no”. It falls to Mr O’Connor to demonstrate unreasonableness.

Mr O’Connor relies on three matters to establish unreasonableness. The first is merely that the Rules were not followed (points of claim [31(a)]. A mere failure to comply with the Rules is not “unreasonable”. Something more is required, otherwise the word “unreasonable” has no work to do.

The second matter is certain conduct that occurred after the Full Court hearing (points of claim [31(b)]. This conduct is irrelevant to the question of whether the respondents acted unreasonably when engaging in the acts that constituted the breaches.

The third matter is the respondents’ state of mind (points of claim [32]). This claim has been withdrawn.

The matters relied on by Mr O’Connor do not demonstrate that the respondents acted unreasonably in breaching the rules. Accordingly, the Court has no jurisdiction under s 164A of the Act to grant the relief sought by Mr O’Connor.

7.    Does s 164A of the Fair Work (Registered Organisations) Act 2009 (Cth) authorise the Court to make an order that the respondent pay money to the Manufacturing Division?

This question arises because of Mr O’Connor’s proposed order 8, which would require the respondents to cause money to be paid to the Manufacturing Division in a sum equivalent to the union dues that the Members would have paid if they had remained members of the Manufacturing Division.

The answer to this question is “no” because the making of such an order is expressly prohibited by s 164B of the Fair Work (Registered Organisations) Act 2009 (Cth).

8.    If the answer to question 5 is “yes” (in relation to each of the proposed orders) and the answer to question (7) is also “yes” (in relation to proposed order 8), should the orders be made?

This question does not arise.

However, in any case, the answer is “no” because:

(a)    in relation to proposed order 7, the Members’ membership of the C&G Division has been regularised by operation of the Rules, the order would affect the rights of 315 individuals and the question of whether they should be transferred to the Manufacturing Division is a question that should be determined under the Rules of the Union and not by the Court;

(b)    in relation to proposed order 8, the Members were obliged to pay dues to the C&G Division and the C&G Division was entitled to collect those dues; the C&G Division expended substantial amounts of money and resources providing services and representation to the Members; the Manufacturing Division would be overcompensated if the order was made because it provided no services to the Members in the relevant period; and

(c)    in relation to proposed orders 9-11, the orders are beyond power because they impermissibly interfere with the rights of the CFMMEU under the Fair Work Act 2009 (Cth), cannot be complied with by the respondents without the cooperation of the Manufacturing Division and require the supervision of the Court.

48    The applicant filed his 25 page “Closing Submissions” on the same day that the respondents filed their “Outline of Submissions on Threshold Issues” and their “List of Issues”, so they were not responsive to them. They instead responded (understandably enough) to the respondents’ submissions dated 19 May 2021, described at [22]–[23] above.

49    The hearing could not take place until 8 November 2021, because counsel were not available before then.

50    The hearing occupied two days.

51    In addition to the evidence relied upon at first instance (see O’Connor v Setka [2020] FCA 441 at [49]–[52]), the parties read the following additional affidavits on the remittal:

(1)    Mr O’Connor read the following additional affidavits: an affidavit of his own dated 3 August 2021; an affidavit of Mr Steve Abboushi dated 3 August 2021; two affidavits of Mr Phillip Pasfield dated 27 April and 3 August 2021; and two affidavits of Ms Maria Kaplanis dated 27 April and 3 August 2021.

(2)    The respondents read the following additional affidavits: two affidavits of Mr Declan Murphy dated 6 April and 27 September 2021; and an affidavit of Mr Robert Graauwmans dated 19 May 2021.

52    In the end, not much turned on the affidavit material, much of which was directed at identifying the disputed members and calculating the membership dues owed by those members. Those two issues, in particular, were resolved by the time of the hearing. Relevant to Mr O’Connor’s proposed orders, Mr Pasfield’s 27 April 2021 affidavit identified (in annexure PJP-2) the members who Mr O’Connor believed fell under National Rule 2(F) but who were instead enrolled in and were (at the time of the affidavit) members of the Construction Branch, and were formerly members of the Manufacturing Division. Ms Kaplanis’ 3 August 2021 affidavit identified the amount of membership dues not paid by the disputed members to the Manufacturing Division since they left it.

53    Mr Graauwmans was the only witness who was cross-examined. He is the President of the Construction Branch. In his affidavit, Mr Graauwmans gave evidence about services provided by the Construction Branch to its members, and in particular, services provided to the disputed members since September 2019.

54    Mr Graauwmans was cross-examined about his role and responsibilities, as well as his knowledge of the services identified in his affidavit that were provided to members. The cross-examination was brief, and in the end, nothing in particular turned on it.

55    On 9 November 2021, the second day of the hearing, the respondents filed a 46 page “Outline of Closing Submissions”, including an 11 page “schedule responding to additional rules relied upon by the applicant”. The gist of the schedule was to found the contention that each of the additional rules (being those eight rules that were not the subject of the Full Court’s findings) did not impose an obligation, were not (among other various things) capable of being breached, and could not be “observed” or “performed”.

56    The 46 page submission repeated at greater length the substance of the respondents’ earlier submissions summarised above, in addition to the other matters complained of in the schedule.

57    Because the schedule raised a raft of new matters about individual rules, I granted leave to the applicant to file a response to the schedule by 12 November 2021, and to the respondents to file a reply by 19 November 2021.

58    A further case management hearing was requested by the parties and took place on 3 December 2021, because the parties were (regrettably) unable to agree about whether the applicant should be able to file a rejoinder to the respondents’ reply. I granted that leave, and the applicant filed it a week later.

Consideration

59    I turn first to the respondents’ contentions about the scope of remittal and whether the points of claim went too far.

60    There is, with respect, nothing in either contention.

61    The purpose of the remittal order (order 10), in light of the Full Court’s ruling on the question of eligibility, was for me to determine the final form of relief, and in particular to consider the relief sought in [7]–[13] of the further amended originating application. There was no express qualification involved. And the relief that is now sought by the applicant is the same as the relief that was sought at the outset. The fact that the Full Court allowed the appeal on the basis that there had been a breach of National Rule 7(viii) cannot, as the respondents contended, impliedly limit what relief should follow. Accordingly, it is for me now to determine any remaining issues of law or fact. See by way of example only, Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518 at 522 (Gleeson CJ).

62    Further, and in any event, the respondents’ submission that the court should confine the remitter to consideration of National Rule 7 only is inconsistent with the established principle that the power to make orders under s 164 (and s 164A) “is not confined to the making of orders directing the performance or observance of a particular rule or particular rules of the organization”. See R v Joske; Ex parte Shop, Distributive & Allied Employees’ Association (1976) 135 CLR 194 at 212 (Mason and Murphy JJ).

63    I should also add that, contrary to what the respondents asserted in their written submissions dated 8 November 2021, nothing that Mr O’Connor sought at the remitted hearing involved inviting the court to make orders, or undertake any task, inconsistent with the remitter order, or proving a case that he had failed to prove at trial.

64    As to the respondents’ argument about the scope of the points of claim, at the hearing on 8 November 2021, Mr Dowling’s only objection was that Mr O’Connor’s pleaded case under s 164A of the RO Act defied Mr Borenstein’s earlier assurance that his case was “very targeted” and would not involve any plea about the subjective state of mind of any of the respondents in not following the procedure set out in Rule 7(viii). As I understood the position, that objection fell away when Mr Borenstein agreed to the deletion of [32] of the points of claim. In those circumstances, I do not propose to say anything more about the point.

65    I now turn to the substantive issues.

66    The applicant relies on s 164 of the RO Act, or alternatively, the broader provision contained in s 164A.

67    Section 164 is headed “Directions for performance of rules” and provides:

164    Directions for performance of rules

Application for order directing performance of rules

(1)    A member of an organisation may apply to the Federal Court for an order under this section in relation to the organisation.

Note:    For the meaning of order under this section, see subsection (9).

(2)    Before making an order under this section, the Court must give any person against whom the order is sought an opportunity of being heard.

(3)    The Court may refuse to deal with an application for an order under this section unless it is satisfied that the applicant has taken all reasonable steps to try to have the matter that is the subject of the application resolved within the organisation.

Court may make interim orders

(4)    At any time after the making of an application for an order under this section, the Court may make any interim orders that it considers appropriate and, in particular, orders intended to further the resolution within the organisation concerned of the matter that is the subject of the application.

(5)    An order under subsection (4) continues in force, unless expressed to operate for a shorter period or sooner discharged, until the completion of the proceeding concerned.

Definition

(9)    In this section:

order under this section means an order giving directions for the performance or observance of any of the rules of an organisation by any person who is under an obligation to perform or observe those rules.

68    Section 164A is headed “Directions to rectify breach of rule of organisation” and provides:

164A    Directions to rectify breach of rule of organisation

Application for order

(1)    A member of an organisation may apply to the Federal Court for an order under subsection (4) in relation to the organisation.

(2)    Before making the order, the Court must give any person against whom the order is sought an opportunity of being heard.

Conditions for making order

(3)    The Court may make an order under subsection (4) in relation to an organisation if the Court is satisfied that:

(a)    a person was under an obligation to perform or observe a rule or rules of the organisation; and

(b)    the person breached the rule or rules; and

(c)    the person acted unreasonably in so breaching the rule or rules.

Nature of order

(4)    Subject to section 164B, the Court may make an order directing one or more persons (who may be, or include, the person who breached the rule or rules) to do specified things that will, in the opinion of the Court, as far as is reasonably practicable, place the organisation in the position in which it would have been if the breach of the rule or rules had not occurred.

(5)    The Court may make the order whether or not, at the time of making the order, the person is a member or officer of the organisation.

69    Section 164B is headed “Orders under sections 164 and 164A” and relevantly provides:

164B    Orders under sections 164 and 164A

…

Order must not require compensation

(2)    An order under section 164A does not include an order directing one or more persons to compensate an organisation for any loss or damage suffered by the organisation caused by the breach of the rule or rules.

Note:    An application for a compensation order may be made under Part 2 of Chapter 10.

70    Part 2 of Chapter 10 deals with the power of the court to order a person to compensate an organisation for damage suffered by it if the person has contravened a civil penalty provision and damage has resulted from the contravention, so it has no application here.

71    Sections 164A and 164B were introduced by the Workplace Relations Amendment (Registration and Accountability of Organisations) Act 2002 (Cth). As the Senate Revised Explanatory Memorandum to the corresponding Workplace Relations Amendment (Registration and Accountability of Organisations) Bill 2002 (Cth) explained (emphasis in original):

5.88    In Darroch and Ors v Tanner (1987) 74 ALR 559, a Full Court of the Federal Court held that it only had the power to give directions to persons who, at the time of the giving of the directions, were under an obligation to perform or observe the rules. The Court found that it did not have the power to make orders directing a person to take action to rectify a past breach of the rules, unless there was a continuing obligation on the relevant person to perform or observe the relevant rules. Clause 164A will give the Court such a power.

5.89    New clause 164A will give the Federal Court power to make an order in circumstances where a person, who was under an obligation to perform or observe rules of an organisation, has breached those rules and has acted unreasonably in doing so (subclause (3)).

5.90    The Court will have the power to order the person to take actions to rectify the effects of the breach of the rules. In effect, the provision is directed to placing the organisation in the position that it would have been if the breach had not occurred (subclause (4) refers).

72    In relation to s 164B, the Revised Explanatory Memorandum provided:

5.94    New subclause (2) provides that the Court cannot make an order under section 164A directing a person to pay compensation for any loss or damage suffered by the organisation. That is, any order under new clause 164A must be limited to rectification of the effect of the breach. (An application for a compensation order may be made under Part 2 of Chapter 10 of the Registration and Accountability Schedule in the context of a breach of a penalty provision – see notes on clause 307.)

73    The phrase “to compensate … for any loss or damage” in s 164B(2) of the RO Act is not defined, but in its ordinary meaning the notion of compensation means an amount of money payable in satisfaction of a liability. See, by way of example only, Gil v T & G Fire & General Insurance Co Ltd (1976) 10 ACTR 65 at 73 (Northrop J), approved in FAI Insurances Ltd v Zoric (1991) 28 FCR 250 at 264–265 (Neaves, Spender and von Doussa JJ).

74    It seems to me that s 164A is the obvious starting point for the relief that Mr O’Connor seeks. The gist of that relief is the making of orders that restore the status quo ante – that is to say, in the words of s 164A(4), the making of orders “directing one or more persons … to do specified things that will, in the opinion of the Court, as far as is reasonably practicable, place the organisation in the position in which it would have been if the breach of the rule or rules had not occurred”.

75    Here, there are two “specified things” that would place the Union in the position in which it would have been if the breach of Rule 7(viii) had not occurred – (i) putting the disputed members back where the Full Court said they belong (in the Manufacturing Division); and (ii) remitting back to the Manufacturing Division the dues wrongly collected, which would have been the property of the Manufacturing Division had the breach not occurred.

76    Here, in my view, the three conditions for the making of orders effecting those things are satisfied, namely the respondents (or some of them):

(a)    were under an obligation to perform or observe the rules of the Union;

(b)    breached the rules of the Union; and

(c)    acted unreasonably in breaching the rules of the Union.

77    The first two conditions are obviously met.

78    As to the third condition, in my view, the respondents (or some of them) did act unreasonably within the meaning of s 164A(3)(c) in breaching the rules of the Union because they failed to invoke the process under National Rule 7(viii) (see [36] above) and instead induced, encouraged and advised the disputed members to resign their membership in the Manufacturing Division and enrol as members in the Construction Branch.

79    The respondents submitted that I should “proceed on the basis that the relevant facts are that the transfer process in Rule 7(viii) was not followed and that some of the respondents encouraged the Members to resign from the [Construction and General] Division to join the Manufacturing Division”; that “[c]onsequently, Mr O’Connor’s submission amounts to nothing more than a contention that the breach was unreasonable because the Rules were not followed”; and that “as a matter of statutory construction, a mere breach of the rules is not enough to establish unreasonableness”.

80    I disagree. No authority was cited for the “statutory construction” assertion, and I can see no reason of statutory construction or principle why the notion of unreasonableness should be hidebound in that way.

81    The National Rules contain a tolerably straightforward mechanism for the resolution of demarcation disputes. That mechanism is contained in Rule 7(viii). As set out above, where a relevant Divisional Secretary or Divisional Branch Secretary forms a view that a person is, in substance, attached to the wrong Division or Branch, he or she must then seek agreement that the member be transferred. And where agreement cannot be reached, the matter may then be referred to the National Secretary and be determined by the National Executive or an officer designated by the National Executive, in accordance with the principles established by sub-rules 42(i) and 42(iii) (which, in substance, deal with transitional arrangements for the various amalgamations of the Union that have occurred since 1991). See O’Connor v Setka [2020] FCAFC 195 at [41]ff.

82    It was, in my view, unreasonable within the meaning of s 164A(3)(c) of the RO Act for the respondents (or some of them) to have acted unilaterally by encouraging members of the Manufacturing Division in Victoria to “resign” from that Division and to “join” the Construction and General Division instead, without any regard to the internal dispute resolution mechanism provided for in the National Rules, the obvious purpose of which is to make the decision as to who belongs where one for the National Executive (subject, of course, to review by the court in an appropriate case).

83    As Starke J said in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 160, it is “implicit that the rules of the organization shall be performed and observed by its members; the rules impose a duty upon the members of the organization to observe and obey them”. Not doing so, and instead embarking on drawn out and costly litigation, it seems to me, is readily capable of being characterised as unreasonable.

84    The respondents submitted that “[i]f … the Court finds … in relation to some [or] all of the rules relied on, that an identified person has breached an identified rule and, in doing so, acted unreasonably, it should nonetheless decline to exercise discretion to grant further relief”. No explanation was given as to why that should be the case, so I put that (mere assertion) to one side.

85    In their written closing submissions, the respondents had a laundry list of reasons why proposed order 1 should not be made. The list included the following:

(a)    there are 315 individuals who made a choice, whether encouraged or not, to join the Construction and General Division, some of who filed statements in the proceeding saying they wanted to remain where they were;

(b)    the National Rules contemplate that a member may be “eligible” for membership of more than one Division and the question of eligibility is separate to the question of to which Division a member is to be “attached”, citing Rule 7(iv) (“A member shall be attached to the Division of the Union covering the industry or employment of the member and shall be in only one such Division”);

(c)    the National Rules do not mandate or require that a member attached to the “wrong” Division be transferred to the “correct” Division, but operate to regularise, for all purposes, that member’s attachment to the “wrong” Division, citing Rule 7(v)(b) (“no membership or attachment to a Division, Branch or Divisional Branch of the Union shall be invalidated, void or otherwise treated as irregular on account of the member being attached to a Division, Branch or Divisional Branch which, in accordance with the Rules, may not be the correct Division”);

(d)    the processes prescribed by the National Rules are “facultative” and no person is directed or required to apply to have a member transferred from one Division to another and the Rules do not allow a member to request such a transfer;

(e)    any irregularity in the process by which a member came to be in one Division rather than another, including a failure to follow the Rule 7(viii) process, is “cured” by Rule 7(viii) (“Nothing in these paragraphs shall affect or detract from the provisions of subrule(s) 42(i), (iii) and (xii) and membership of a Division or a Divisional Branch shall be valid notwithstanding an irregularity in, breach of or failure to comply with the procedures in either one or both paragraphs (a) or (b) herein”); and

(f)    the outcome of the National Executive’s deliberations is “uncertain” and the court should not make an order that would, in effect, usurp the role of the National Executive under Rule 7(viii).

86    None of those submissions can be accepted. Taking each in turn:

(a)    the wishes of the transferees have nothing to do with the question of attachment, which the Full Court has ruled on;

(b)    that might be so, but again, here the question of attachment has been resolved in the Full Court’s declaration (see [17] above);

(c)    that is simply not so – the National Rules do not operate to regularise, for all purposes, a member’s attachment to the “wrong” Division;

(d)    to say that because the National Rules do not expressly provide for a member to make a “request” of a Divisional Secretary or Divisional Branch Secretary is to read Rule 7(viii) in an impermissibly artificial and narrow way, because the Rule self-evidently assumes or implies that such people may “form a view” about which Division a member ought belong to, based on things that they are told or requested to examine – were it otherwise, the Rule could be rendered largely unworkable;

(e)    again, that simply is not so (see (b) above); and

(f)    the making of proposed order 1 would not usurp the role of the National Executive under Rule 7(viii), because the question of attachment in the terms of the declaration made by the Full Court is, and remains, “until … a contrary decision by the National Executive”.

87    The respondents contended that the court has no power to make proposed order 2 because the order would be to “compensate” the organisation (and thus proscribed by s 164B(2)), not one (as Mr O’Connor contended) that would “place [it] in the position it would have been if the breach of the rule … had not occurred” (and thus within the power granted by s 164A(4)).

88    The respondents submitted that rule 7(viii) was a “complete answer” to Mr O’Connor’s contention, as follows:

134.    In support of his contention that monies are not sought by way of “compensation” but as part of an order for “rectification”, Mr O’Connor submits that the findings of the Full Court mean that “the Construction Branch has wrongly collected and [is] wrongly retaining the membership dues which have been paid to it” by the Members. He also submits that the respondents are in breach of the Rules by collecting and retaining those [membership dues].

135.    Rule 7(viii) is a complete answer to these contentions. Rule 7(viii) operated to perfect the transfer of the Members to the C&G Division notwithstanding the breach of Rule 7(viii). From the time that this perfection occurred, the Members ceased to be members of the Manufacturing Division and ceased to be obliged to pay dues under Manufacturing Division Rule 6[(vi)] and 14A(i). Instead, they became liable to pay dues to the C&G Division in accordance with the C&G Divisional Rules.

136.    Mr O’Connor points to National Rule 8(i) in support of his contention that the Members were required to be pay [sic] dues to the Manufacturing Division. However, National Rule 8(i) says only that the fees payable by any given member are to be in accordance with the Division to which they are assigned. By reason of Rule 7(viii), the Members were, on joining the C&G Division assigned to that Division. Accordingly, National Rule 8(i) only reinforces that the obligation on the Members was, from that time, to pay dues to the C&G Division.

137.    Accordingly, the C&G Division did not “wrongly collect” dues from the Members and did not “wrongly retain” those dues. The Members were obliged to pay dues to the C&G Division because they were (by operation of rule 7(viii)) members of the C&G Division.

138.    If there was no obligation on the Members to pay dues to the Manufacturing Division, then any payment of monies by the C&G Division to the Manufacturing Division can only be by way of compensation. For the reasons given above, the Court cannot make such an order.

89    I disagree. Rule 7(viii) is no answer at all. To read the rule as “operat[ing] to perfect the transfer of the Members to the [Construction and General] Division notwithstanding the breach of Rule 7(viii)” seems to me to fly in the face of the Full Court’s ruling that the transfer, far from being perfected by the National Rules, absent a ruling to the contrary by the National Executive or alteration of the Rules, was contrary to them. It is the declaration made by the Full Court that under the Rules of the CFMMEU the persons eligible for membership pursuant to Rule 2(F) are attached to the Manufacturing Division, not the Construction and General Division, that is the starting point. Given that the Rules were found to have been breached in that regard, s 164A(4) asks in the context of this case: how in the opinion of the court is the Union to be placed in the position in which it would have been if the disputed members had, as the Rules required, remained where they were, in the Manufacturing Division?

90    The answer to that question, if I may say so with respect, was provided by Mr Borenstein in his closing address:

MR BORENSTEIN: … Our reply is that we ask for no order for payment to the organisation. We ask for no payment to compensate for any loss or damage. Rather, we ask for an order that would adjust internally the funds of the organisation in order to rectify an erroneous transaction or series of transactions. It’s not a claim for compensation.

HIS HONOUR: Now, in the revised explanatory memorandum in relation to clause – subclause (2) of what was clause 164B of the Bill, it refers – having referred to the new subclause, it says, “That is, any order under new clause 164A must be limited to rectification of the effect of the breach”.

MR BORENSTEIN: Yes. And that’s precisely what we are seeking to do, that 164A in its own terms makes that point, your Honour will recall, because you’re seeking to put the organisation back in the position it would have been in but for the breach, and 164B advances that proposal and what we say is – as I just said, we are not asking for damages for loss of – compensation. We are asking for, effectively, a rectification in relation to the collection of the dues, that within the organisation the dues went into one of the internal accounts. It should have gone into another. And we’re seeking rectification of that situation. So what we’re seeking is entirely consistent with what your Honour has read.

91    In my view, for the reasons that Mr Borenstein submitted, the making of proposed order 2 is not an order directing the respondents “to compensate” an organisation. First, it is in substance to order the making of a book entry in the internal accounts of the one organisation. Secondly, the making of such an order does not constitute an order that an amount of money is ordered to be paid in satisfaction of a liability (cf Gil v T & G Fire & General Insurance Co Ltd (1976) 10 ACTR 65 at 73).

92    The respondents next urged another long list of reasons why the discretion to order remittal of the contributions should not be exercised, assuming it were enlivened, including the following:

(a)    the evidence was that during the lifetime of this dispute, the Construction and General Division had been representing the industrial interests of the disputed members while the Manufacturing Division had not, and to take all contributions from them fails to acknowledge the work that the Construction and General Division had done;

(b)    Mr Graauwmans in his 19 May 2021 affidavit gave detailed evidence about the services available to the disputed members, including access to organisers, the maintenance of a system of designated shop stewards, a dedicated telephone inquiry service, a membership centre and access to specialised industrial and legal staff;

(c)    Mr Graauwmans also gave evidence that the Construction and General Division employed two new organisers to service the members, and evidence of the substantial body of work undertaken on behalf of the members during the relevant period, including negotiating enterprise agreements covering the members employed by ten different employers, recovering more than $20,000 in underpayments, conducting compliance checks, assisting members with disputes about JobKeeper, negotiating wage increases, representing some members in a dispute about intrusive tracking technology and assisting at least one member to find new employment;

(d)    the Construction and General Division thus expended the dues obtained from the members for the purpose of providing them with a high level of representation and sophisticated industrial services;

(e)    the contributions paid by the members are not severable so as to be referrable to the provision of any particular services, but are paid in exchange for the right to be represented, and the Construction and General Division represented the members, and thus earned the dues; and

(f)    the Manufacturing Division cannot now go back in time and represent the members’ interests, and requiring the contributions to be paid to the Manufacturing Division “would give it a windfall and overcompensate it”.

93    Such factual matters may be accepted, at least for the sake of the debate. But in my view, they are not relevant to the question of the discretion to be exercised under s 164A(4), because as Mr O’Connor submitted, “any burden on the Construction Branch occurred because of a breach of the rules of the Union”.

94    In those circumstances, in my view, the power to make proposed orders 1 and 2 is enlivened and this is an appropriate case to exercise the discretion to make those orders under s 164A of the RO Act.

95    The whole point of the introduction of s 164A was to obviate the need to deal with the sometimes thorny question of whether an order was sought directing a person to rectify a past breach, and whether there was a “continuing obligation” to perform or observe the relevant rules. In those circumstances it is unnecessary, in this case, to consider the issues that may be said to arise under s 164 and about which much ink was spilled in written submissions.

96    If it matters, however, I would have made the same orders under s 164 in any event. Darroch v Tanner was a case far removed from this one. There, the court had been asked to order the appellants personally to repay union funds which they had wrongfully spent. The problem was that the respondent “was not able to refer the court to any rule of the Union which imposed upon any of the appellants … an obligation to reimburse the Union out of their own funds any money paid to a third party in accordance with the resolution which has been held to be null and void”. See (1987) 16 FCR 368 at 375.

97    But as Mason and Murphy JJ said in R v Joske; Ex parte Shop, Distributive & Allied Employees’ Association (1976) 135 CLR 194 at 212:

The judgments … in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett [(1945) 70 CLR 141] make it perfectly clear that sub-s. (1) of s 141 [the equivalent of s 164] is not confined to the making of orders directing the performance or observance of a particular rule or particular rules of the organization, as the prosecutors would have it, and that it extends, as its words explicitly state, to the giving of directions for the performance or observance of any of the rules of an organization, that is, for the doing of acts which will conduce to the performance or observance of such rules.

98    Here, it seems to me, as Mr O’Connor contended, proposed order 1 will conduce to the performance and observance of the rules of the Union by returning the disputed members to the Manufacturing Division to which they were properly attached in accordance with the National Rules, as interpreted by the Full Court, before they were procured by the respondents, in breach of the Rules, to leave that Division and join the Construction and General Division.

99    And proposed order 2 will conduce to the performance and observance of the Rules because it will put an end to the ongoing contravention of the Rules by the respondents. Further, again as Mr O’Connor submitted, an order for the respondents to remit the membership dues which they have collected, and continue to retain, from the disputed members, addresses a contravention which flows directly from the contravention whereby the respondents wrongly procured the enrolment of the disputed members into the Construction and General Division.

100    In those circumstances, it is neither here nor there that various of the rules referred to in the points of claim, and microscopically analysed in the schedule to the respondents’ closing submissions, may be said, standing alone, not to impose any obligation, or not to be capable of being breached or being observed or performed.

101    It remains to deal with proposed order 3. In my view, as the respondents submitted:

… even if the Members are transferred to the Manufacturing Division, order [3] would impose on the respondents an obligation that they could not comply with absent cooperation from the Manufacturing Division.

For example, Proposed order [3] attaches to the Members. If those Members are transferred to the Manufacturing Division, the respondents will not know, and will have no means of finding out, where those members are employed at any point in the future. The respondent would be forced to ask the Manufacturing Division for this information each time it proposed to commence negotiations for an enterprise agreement covering an employer that might possibly employ one of the Members. If the Manufacturing Division failed or refused to provide that information (which it might well do, including for privacy reasons), the respondents would be left in the position of not knowing, and being unable to determine, whether order [3] operated in relation to a particular enterprise agreement. It is not appropriate for the Court to make an order that is not capable of being complied with by the respondents or an order that requires the cooperation of a third party. The consequence of doing so would be that the respondents would be exposed to contempt of court in circumstances where their ability to comply with the orders of the Court was dependent on matters beyond their control.

Further, order [3] is impractical. It does not only operate where the Members continue to be members of the Manufacturing Division. It would operate where the Member left the CFMMEU altogether, and where the Member joined another union entirely (including because they changed occupations, such as by moving from a trades classification into an administrative or professional classification within the same workplace).

102    For those reasons, I decline to make proposed order 3.

Disposition

103    For those reasons, subject to anything further the parties may wish to say as to their form, I propose to make the following orders:

(1)    Within 21 days, the respondents, jointly and severally, perform and observe the rules of the Construction, Forestry, Maritime, Mining and Energy Union (the Union) by themselves, their servants or agents, by transferring the membership of each of the members set out in annexure PJP-2 to the affidavit of Phillip Pasfield dated 27 April 2021, from the Victoria-Tasmania Divisional Branch of the Construction and General Division of the Union back to the membership of the Victorian District of the Manufacturing Division of the Union.

(2)    Within 21 days, the respondents by themselves, their servants or agents, remit to the Victorian District of the Manufacturing Division of the Union the contributions collected by the Victoria-Tasmania Divisional Branch of the Construction and General Division of the Union from any of the members set out in annexure PJP-2 to the affidavit of Phillip Pasfield dated 27 April 2021 since August 2019, calculated in accordance with paragraph 4 of the affidavit of Maria Kaplanis dated 3 August 2021.

104    To that end, I will order that the parties submit to my chambers a joint minute of order to give effect to these reasons.

Associate:

Dated:    2 March 2022

SCHEDULE OF PARTIES