Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd

Conclusion on the first challenge To sustain s298G as a valid enactment by reference to the corporations power (s51(xx)), the applicant must establish :- (a) that the section is characterised as a law with respect to foreign corporations, and trading and financial corporations formed within the Commonwealth; and (b) that there is a sufficient connexion between the exercise of the power and the subject matter of s51(xx); (The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 152; Re Dingjan; Ex parte Wagner at 336 - 337, 351 - 352, 368 - 369). The character of the section is to be ascertained from its legal operation. That is, by reference to the rights, duties, obligations, power and privileges which it creates, changes, regulates, abolishes or affects: The Tasmanian Dam Case at 152; Fontana Films at 202, 216; Re Dingjan Ex parte Wagner at 337, 350 - 351, 369. The requirement that there be a sufficient connexion between the law as characterised and the subject matter of the head of power does not mean that the connexion must be substantial or close. It only means that the connexion must not be so insubstantial, tenuous or distant that it cannot properly or sensibly be regarded as a law with respect to the head of power: Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 79; The Tasmanian Dam Case at 152; Re Dingjan: Ex parte Wagner at 353, 369. Section 298G(1)(a), in terms, applies to the conduct of a constitutional corporation itself. It seeks to regulate the conduct of such corporations in the manner provided for in Part XA of the Act. If the regulation is in the nature of prohibiting particular conduct on the part of the constitutional corporation for the protection or for the benefit of others, such a law would be one characterised as a law with respect to constitutional corporations, and if, in terms, it prohibited the conduct, then it would operate directly in relation to the rights, duties and obligations of the corporation. Such a law would be supported by s51(xx) of the Constitution, at least insofar as it governs the trading activities of trading corporations formed within the limits of the Commonwealth: Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468 at 490, 508, 525; Fontana Films at 183, 205, 217. There is no allegation in the amended statement of claim that the conduct complained of constituted the trading activities of the TWU or the TWU (Qld). Rather, the contention is that as a constitutional corporation, a law which operates directly upon any of its activities is a law supported by s51(xx) of the Constitution. The High Court of Australia has not attempted to define the outer limits of the corporations power. Some of its members have at different times expressed the opinion that it is undesirable to do so, preferring an incremental approach developed from case to case: Strickland v Rocla Concrete Pipes Ltd at 490, 511; Fontana Films at 182, 215, 218 - 219. In my opinion, the balance of authority is against the corporations power being limited to the trading activities of a trading corporation. Such a limitation has been expressly rejected: Fontana Films by Mason J (at 207), Aicken J (at 215) and Murphy J (at 212); The Tasmanian Dam Case by Mason J (at 148 - 150), Murphy J (at 179) and Deane J (at 270 - 271); Re Dingjan; Ex parte Wagner by Mason CJ (at 334). The discrimination test of Brennan J formulated in the Tasmanian Dam Case (at 240 - 241) and repeated in Dingjan Ex parte Wagner (at 331) does not require that the connexion be limited to the trading activities of a trading corporation. A narrower formulation of the connexion, which requires that the character of the trading corporation be a significant element in the nature or character of the laws, if the laws are to be valid under s51(xx) (Fontana Films by Gibbs CJ (at 182) and Wilson J (at 215); The Tasmanian Dam Case by Gibbs CJ (at 118 - 119) and Dawson J (at 316) and Dingjan Ex parte Wagner by Dawson J (at 346 - 347), has not achieved broad acceptance. It is a sufficient connexion if the law in its legal and practical operation operates on or by reference to the business functions, activities and relationships of a constitutional corporation: Re Dingjan Ex parte Wagner per Gaudron J (at 364 - 365) with whom Mason CJ (at 333) and Deane J (at 342) agreed and by McHugh J (at 369). The strike out application is to be determined on the basis that the facts pleaded are made out on trial. The TWU and the TWU (Qld) are alleged in the pleadings to be trading corporations within the meaning of s51(xx). Section 298G(1)(a) directly affects their activities, although not their trading activities. In the present state of the authorities it cannot be said that constitutional validity of the section is so manifestly untenable that the proceedings based on s298G(1)(a) cannot possibly succeed. In those circumstances the statement of claim and the proceedings to the extent that they rely on s298G(1)(a) of the Act should not be struck out or dismissed or stayed as disclosing no cause of action or as being frivolous or vexatious or an abuse of process: Dey v Victorian Railways Commissioners (1949) 78 CLR 125 at 91,109; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 - 130; Munnings v Australian Government Solicitor (1993) 68 ALJR 169 at 171. Section 298G(1)(b), in conjunction with s298G(2)(a), satisfies the requisite formulations as set out above to establish a sufficient connexion, because it relates to the direct adverse effects of conduct when carried out against the constitutional corporation itself. Such a law is protective of the constitutional corporation and its activities, functions, relationships and business, and falls within s51(xx): Fontana Films at 181 - 183, 195, 205 - 206, 212, 215, 222. The TWU, the TWU (Qld) and the intervener did not seek to argue otherwise. The remaining issue concerns s298G(1)(b), in conjunction with s298G(2)(b), insofar as it relates to independent contractors. Is the connexion with a constitutional corporation so remote, tenuous, insignificant or insubstantial, however expressed, that it cannot be said, in reality, that the sections are laws with respect to constitutional corporations? In my view, there is a sufficient nexus between the conduct specified in s298G(1)(b), when read in conjunction with s298G(2)(b), and the constitutional corporation to support the provisions under s51(xx) of the Constitution. Conduct of third parties may be controlled by a law which is properly characterised as a law with respect to corporations insofar as it operates to protect the corporation and its activities, functions, relationships and business from being adversely affected by such conduct: Fontana Films. Such conduct may impact directly on the corporation itself or directly on its activities, functions, relationships or business. An adverse effect is nonetheless an adverse effect because it is caused indirectly. Where an employee or the independent contractor is in such a relationship with the corporation that the effect of the conduct on the employee or the independent contractor interferes with the relationship, the indirect effect of the conduct is to adversely affect the corporation itself. This is because it affects the corporation in its right to enter into that relationship, and in the enjoyment of any rights or benefits flowing from it. Section 298G(2)(b) takes as its focus the relationship between the person either as an employee or as an independent contractor of the constitutional corporation. The section does not operate in respect of persons generally who are incidentally employees or independent contractors of the constitutional corporation. The section only operates where the conduct is directed at the person because of the relationship and affects the person in the capacity as an employee or independent contractor to the constitutional corporation and not otherwise. Such a law is one which creates rights in a constitutional corporation to be protected from conduct which interferes with its relationship with its employees or independent contractors. The Act also gives a remedy to enable the right to be enforced. In this sense the law operates directly with respect to a relationship to which the constitutional corporation is a party. Any interference with the relationship by conduct which affects the other party to the relationship acting in that capacity, necessarily adversely affects the relationship by the mere fact of interference, whether or not that interference is causative of any particular adverse effects to the business or business affairs of the constitutional corporation. To the extent that the section can be characterised, as I consider it can, to be a law to protect a constitutional corporation from adverse effects to itself and to its activities, functions, relationships or business consequent upon conduct taken against its employees or independent contractors in that capacity, it is a law with a sufficient connexion with s51(xx) of the Constitution to sustain it. What distinguishes this section from the legislative provisions in issue in Re Dingjan Ex parte Wagner is the absence in that case of any substantial effect, whether direct or indirect, on the constitutional corporation or its business or business affairs: 183 CLR at 337 - 339 per Brennan J, at 347 per Dawson J, at 354 per Toohey J and at 371 per McHugh J. In my opinion for the reasons above, s298G(1)(b), read in conjunction with s298G(2)(b), is a valid exercise of Commonwealth power supported by s51(xx) of the Constitution.

The challenge to s298B(2) and s298B(3) of the Act The challenge to s298B(2) and s298B(3) is mounted on two bases. The first is that the sections cannot be supported by any head of power of the Commonwealth. The second is that the provisions constituted an infringement or usurpation of the Commonwealth judicial power. As to the first issue, the TWU, the TWU (Qld) and the intervener submit that the subsections cannot be sourced in the conciliation and arbitration power because the subsections show a clear legislative intention to deal with bodies that are not capable of registration as organisations under the Act. Further, they submit that the provisions cannot rest upon the corporations power because the provisions are too remote or tenuous. The effect of the judgment in Fontana Films, they submit, is that s298B(2) and s298B(3) are properly characterised as laws with respect to industrial associations and not laws with respect to constitutional corporations: Fontana Films at 211, 223. The applicant submits, in respect of the first ground, that the subsections are means adopted by the Commonwealth legislature to enforce compliance with the prohibitions imposed and that the subsections are sustainable by the conciliation and arbitration power or the corporations power or a combination of these two heads of power. As the substantive provisions s298G and s298S are within the legislative powers of the Commonwealth, the applicant submits s298B(2) and s298B(3) are within the legislative powers themselves as an incident of the power and empower the legislature to pass without resort to s51(xxxix) of the Constitution, "... all laws which are directed to the end of those powers and which are reasonably incidental to their complete fulfilment": Burton v Honan (1952) 86 CLR 169 at 177 - 178 per Dixon CJ; Nationwide News Pty Ltd v Wills at 26 - 27, 100; Re Dingjan Ex parte Wagner at 352. As to the second ground of challenge, the TWU, the TWU (Qld) and the intervener submit that :- (a) the sections deem proof of one set of facts to be proof of another in circumstances where the second set of facts is not merely another description of, or an inevitable consequence of, the first set of facts: Fontana Films at 213 - 214; (b) the sections require the court to act contrary to accepted notions of judicial power: Polyukovich v Commonwealth (1991) 172 CLR 501; (c) the sections are not a law which merely prescribe a court's practice and procedure, but one that impairs the curial function to find facts, reducing the judicial function to the merest formality; it allows the legislature to adjudge guilt by preventing the court from ascertaining the true facts: Nicholas v R (1998) 151 ALR 312. The TWU, the TWU (Qld) and the intervener, in developing the second ground of challenge, submit that s298B(2) operates to make an industrial association liable for conduct that is ultra vires the committee of management, or for conduct that is engaged in contrary to the instructions of the industrial association as expressed by its membership in general meeting or by its committee of management. The conduct may be engaged in without the knowledge of the industrial association, its committee of management or its officers or servants. In these circumstances, they submit there is no reasonable basis to rationally assume that the conduct is that of the industrial association. Further, they submit s298B(2) requires that the conduct attributable to the industrial association be treated as an incontrovertible fact, notwithstanding that it is contrary to the true fact, and that it must be given effect to by the court. The applicant submits that the provisions of s298B(2) and (3) do not interfere with a proper exercise of the judicial power of the Commonwealth or attempt to improperly exercise that power because the subsections :- (a) do not create a statutory fiction in the sense in which that term is used by Mr Justice Murphy in Fontana Films at 214 and merely give legislative voice to a presumption as to how corporate bodies necessarily act through natural persons; and (b) as a matter of construction do not operate to direct the courts to find the facts as they are taken to be by the operation of the subsections rather than they actually exist. Conclusion on the third challenge Sections 298B(2) and 298B(3) are concerned with the circumstances in which, for the purposes of Part XA, the conduct specified in s298B(2)(a), (b), (c) or (d) will be taken to have been done by an industrial association. The object of Part XA is to ensure that employers, employees and independent contractors have a free choice as to whether or not to join an industrial association, and to ensure that they will not be discriminated against or victimised because of the choice made or because a person is an office holder of such an association (s298A). As stated earlier in these reasons, the definition of an industrial association is broad and is not limited to organisations registered under the Act or organisations registered or recognised under an industrial law (as defined) of a State or Territory. It includes any association which has as its principal purpose the promotion of the members' interests in matters concerning employment. The definition therefore includes both incorporated and unincorporated industrial associations, whether or not they are registered or recognised under a relevant industrial law. The applicant alleges that the TWU is an organisation as defined by s4 of the Act. If made out, that has the consequence that the TWU is a body corporate by the operation of s192(a) of the Act. The applicant also alleges that the TWU (Qld) is an organisation as defined in Schedule 3 of the Industrial Organizations Act 1997 (Qld). If made out, that has the consequence that the TWU (Qld) is a body corporate by the operation of s18 of that Act or by the combined operation of s18 and s296 of that Act. The TWU is an industrial association within the meaning of that term as defined in s298B(1) of the Act because it is an association of employees registered as an organisation under the Act. The TWU(Qld) is an industrial association as defined in s298B(1) because it is an association of employees registered as an organisation under an industrial law of Queensland. The principal application is only concerned with the operation of s298B(2) and s298B(3) insofar as the provisions relate to bodies corporate. It is therefore unnecessary to deal specifically with the operation of the subsections in respect of unincorporated associations. The issue of the legal personality of trade unions as unincorporated associations has been the subject of much academic writing: see for example Smith and Rawson Trade Union Law in Australia 2nd Ed, Butterworths (1985); M Pittard A Personality Crisis: The Trade Union Acts (1979) 6 Mon U.L.R 49; Stoljar Groups & Entities ANU Press (1973) Ch 5. However, there is no difficulty in bringing proceedings against industrial associations as unincorporated associations or in their being liable, upon agency principles, for the conduct of their committee of management, servants or agents: see, Taff Vale Railway v Amalgamated Society of Railway Servants [1901] AC 426, and in the United States see, United States v White (1944) 322 US 694 at 701 - 702. The conduct which is proscribed in relation to industrial associations is that contained in Division 5 of Part XA, specifically s298P, s298Q, s298R and s298S. Each of the prohibitions is imposed in the form "An industrial association, or an officer or member of an industrial association must not ...". As such the sections speak directly to each of the industrial association, the officers of it and the members of it. The prohibition and the liability for breach is the direct and principal liability of the industrial association. It is not a secondary or vicarious liability The TWU and the TWU (Qld), as bodies corporate and as industrial associations have a legal personality which is a fiction. They cannot act other than through natural persons. The principles applicable to primary corporate liability in respect of a corporation's own acts were stated by Lord Reid in Tesco Supermarkets Ltd v Nattras [1972] AC 153. They were adopted by the High Court of Australia as a correct statement of the law in this country in Hamilton v Whitehead (1988) 166 CLR 121 at 127 and Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at 514 - 515. Lord Reid said (at 170) :- "I must start by considering the nature of the personality which by a fiction the law attributes to a corporation. A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company or, one could say, he hears and speaks through the persona of the company, within his appropriate sphere, and his mind is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company. It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company's servant or agent. In that case any liability of the company can only be a statutory or vicarious liability." This is not the occasion to examine the limits of the directing mind principle or to seek to identify the point at which the conduct of a person or persons ceases to be conduct through the persona of the corporation. It is sufficient to state that there is a point where the conduct of the directing mind becomes so antithetical to the interests of the corporation that it cannot be regarded as the conduct of the corporation: see generally Canadian Dredge and Dock Co Ltd v The Queen (1985) 19 DLR (4th) 314 at 351; Dixon v Deacon Morgan McEwan Easson (1990) 70 DLR (4th) 609 at 612 - 613; Beach Petroleum NL v Johnson (1993) 43 FCR 1 at 27 - 32. Where the directing mind principle operates to make the conduct of a particular person or group of persons the conduct of the industrial association itself, if that conduct is proscribed conduct under Division 5 of Part XA, the association will have contravened the prohibition and be liable to the making of an order of the type provided for in s298U of the Act. The industrial association in that situation will be liable without the need to have recourse to s298B(2) and s298B(3). Sections 298B(2) and 298B(3), as a matter of construction, are not intended to exclude the operation of the directing mind principle discussed above. Indeed, the operation of the principle and the two subsections may overlap. The subsections were intended to cover relationships between an industrial association and the persons specified in paragraphs (a) to (d) inclusive who are servants, agents, delegates or representatives of the industrial association rather than its alter ego. The subsections are also intended to remove the necessity to identify where the line is to be drawn between persons acting as the directing mind of the industrial association and those acting in a representative capacity only. The submissions of the TWU, the TWU (Qld) and the intervener at the outset require consideration of the language and practical operation of the subsections to establish whether the subsections do or may create a statutory factual fiction which may be contrary to the true facts as alleged. The statutory fiction of which Murphy J spoke in Fontana Films, as appears from his judgment, is of the type with which the court was concerned in Muller v Dalgety & Co Ltd (1909) 9 CLR 693. There, Griffith CJ said (at 696) that the word "deemed" is commonly used to create a statutory fiction for the purpose of extending the meaning of some term to a subject matter which it does not properly designate. The other use of the word "deemed" is in an interpretative clause whereby the word imports an exclusive definition and not an extension of meaning. Barton J (at 705) and O'Connor J (at 712) were of the same view. Barton J made clear in Muller that when used as a statutory fiction the mechanism is to enlarge the class of things that fall within the meaning of a term only for the purposes of the legislation. His Honour cited in that regard Cave J in The Queen v County Council of Norfolk 60 LJ QB 379 at 380 where his Lordship said :- "Generally speaking, when you talk of a thing being deemed to be something, you do not mean to say that it is that which it is deemed to be. It is rather an admission that it is not that particular thing, nevertheless, for the purposes of the Act, it is to be deemed to be that thing." This means that it is important to consider the statutory purpose for which the statutory fiction is introduced and the statutory fiction should not be given a meaning and operation beyond that which is necessary to achieve the statutory purpose of the enactment: see per Griffiths CJ at 9 CLR 969; Hill v East and West India Dock Company (1884) 9 App Case 448 at 456, to which the Chief Justice refers, and also at 457 - 458. One of the purposes of Part XA is to prevent industrial associations engaging in the conduct proscribed in Division 5 in the circumstances specified in Division 2 of the Part. This it does by prohibiting the industrial association from engaging in such conduct and imposing civil sanctions for breach. An industrial association can only act through the agency of individuals. Section 298B(2) is a law which takes as its focus the relationship between an industrial association and the individuals or groups of individuals referred to in paragraphs (a), (b), (c) and (d) of the subsection. As the statement of principle of Lord Reid in Tesco demonstrates, once the relevant facts are ascertained, whether or not the conduct of a particular person is the conduct of the body corporate is a question of law. Conduct which is engaged in in a representative capacity as a servant, agent, delegate or representative of a corporation is not, in law, conduct of the corporation. For present purposes it is not conduct which falls within the prohibitions contained in Division 5 when the conduct occurs in the circumstances specified in Division 2 of the Part. Section 298B(2) operates to extend the category of conduct which is, for the purposes of the Act, to be treated as conduct of the industrial association when strictly it is not legally the conduct of the industrial association, although it may be conduct for which the industrial association is legally vicariously liable at common law. The statutory object is to prevent an industrial association doing, or permitting to be done, by servants, agents, delegates or representatives which are not the persona of the industrial association, that which it is prohibited from doing itself. This is achieved by making the conduct of the persons specified in s298B(2)(a), (b), (c) and (d) the conduct of the industrial association in circumstances where the industrial association may be vicariously liable for such conduct, or the conduct is that of persons having such a relationship with the industrial association that the persons have authority to act on behalf of the industrial association or its members generally and where the industrial association is in a position to prevent or attempt to prevent the conduct occurring by taking reasonable steps as provided in s298B(3) and failed to do so. Section 298B(2) and s298B(3) are part of the means adopted to control the conduct, and to regulate the affairs, of organisations registered under the Act, and, to control the conduct of industrial associations in respect of the affairs of registered organisations and the affairs of constitutional corporations. The submission that s298B(2) requires the court to treat as an incontrovertible fact that conduct unknown by, unauthorised by, or engaged in contrary to the direction of the membership or committee of management, is conduct of the industrial association, and, to give formal effect to it contrary to the true factual situation, fails to distinguish between the ascertainment of the relevant facts and the legal consequence of the facts as found. Once this distinction is drawn, the question, in my view, becomes one of whether s298B(2) and s298B(3) are supportable under a head of power rather than a question of whether the judicial power of the Commonwealth is impermissibly interfered with or intruded upon. That is, on the proper construction of s298B(2) and s298B(3) no question of failure of the sections, because of the constitutional arrangements for the exercise of the judicial power of the Commonwealth, properly arises for consideration. The position may be illustrated in this way. Where a person or a group of persons acting collectively do acts which are proscribed by Division 5 of Part XA, there is a factual inquiry as to the acts done and the circumstances giving rise to the conduct in issue including an inquiry as to the factual relationship of the person or persons individually and collectively to the industrial association. Depending upon the circumstances as found, the action of the person or group of persons, upon the application of the principle in Tesco, may as a matter of law be conduct of the organisation itself. It may, on the other hand, be found not to be conduct of the industrial association itself. The question then to be determined is what legal consequences do the facts, as found, have on the industrial association. A body or group of persons which is not authorised by the constitution, rules or membership of an industrial association, cannot bind the industrial association and it is not liable for such conduct unless it ratifies the conduct or takes the benefit of it: Giblan v National Amalgamated Labourers' Union of Great Britain and Ireland [1903] 2 KB 600 at 617, 620, 625; Denaby and Cadeby Main Collieries Ltd v Yorkshire Miners Association [1906] AC 384 at 390; Waterside Workers Federation of Australia v Burgess Brothers Ltd (1916) 21 CLR 129 at 133, 136, 137 - 138; Commonwealth Steamship Owners Association v Federated Seamans Union of Australia (1923) 33 CLR 297 at 303, 307, 311, 314 - 315. Nor does such a group constitute a committee of management as defined by s4 of the Act and thus it is not a committee of management for the purposes of s298B(2). Where, however, the body or group is authorised to manage the affairs of an industrial association it is a committee of management to which s298B(2) applies. At common law, if the conduct found to have been engaged in collectively by the body or group, constituting a committee of management has been done, or purportedly done, as part of the management of the affairs of the industrial association and the conduct falls within that class of authorised conduct, the industrial association is bound by it and is liable for it if the conduct constitutes a wrong. As Farwell J said in Taff Vale Railway Company v Amalgamated Society of Railway Servants at 433 :- "... I have already held that the society are liable for the acts of their agents to the same extent that they would be if they were a corporation, and it is abundantly clear that a corporation under the circumstances of this case would be liable. See, for example, Ranger v Great Western Ry Co (1854) 5 HLC 86, where Lord Cranworth points out that, although a corporation cannot in strictness be guilty of fraud, there can be no doubt that if its agents act fraudulently, so that if they had been acting for private employers the persons for whom they were acting would have been affected by their fraud, the same principles must prevail where the principal under whom the agent acts is a corporation. It is not a question of acting ultra vires, as in Chapleo v Brunswick Permanent Building Society (1881) 6 QBD 696, but of improper acts in the carrying out of the lawful purposes of the society. In such cases the principal, whether an individual or a corporation, or a body like turnpike trustees, is answerable for every such wrong of the servant or agent as is committed in the course of the service and for the master's benefit, though no express command or privity of the master be proved. Granted that the principal has not authorized the particular act, but he has put the agent in his place to do that class of acts, and he is answerable for the manner in which the agent has conducted himself in doing the business with which the principal has entrusted him: see Barwick v English Joint Stock Bank in the Exchequer Chamber (1867) LR 2 Ex 259. ..." The common law position as to when a servant or agent will bind the principal has been, at least since the decision in Barwick v English Joint Stock Bank (1867) LR 2 Exch 259, that :- "... the master is answerable for every wrong of the servant or agent as is committed in the course of the service and for the master's benefit, though no express command or privity is proved". (per Willes J at 265). His Lordship further explained the principle in Bayley v Manchester, Sheffield, and Lincolnshire Railway Co (1872) LR 7 CP 415 at 420 :- "... A person who puts another in his place to do a class of acts in his absence, necessarily leaves him to determine, according to the circumstances that arise, when an act of that class is to be done, and trusts him for the manner in which it is done; and consequently he is held answerable for the wrong of the person so intrusted either in the manner of doing such an act, or in doing such an act under circumstances in which it ought not to have been done; provided that what was done was done, not from any caprice of the servant, but in the course of the employment...." The principle is not limited to the relationship of master and servant but applies to all relationships of principal and agent: Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-Operative Assurance Co of Australia Ltd (1931) 46 CLR 41 at 46 - 47, 50. If the act is within the scope of the authority of the agent, it is immaterial that the principal directed the agent not to do it or was unaware that the act had been or was to be done: Colonial Mutual Life Assurance Society Ltd at 47, 50; Limpus v London General Omnibus Company (1862) 1 H & C 526, 539, 541, 543; 158 ER 993, 998, 999, 1000. Even where the agent acts fraudulently with a view to secure the benefit of the fraudulent conduct to the agent rather than the principal's benefit, the principal will be liable if the agent commits the fraud purporting to act in the course of business such as the agent was authorised or held out as authorised to transact on account of the principal: Lloyd v Grace Smith & Co [1912] AC 716 at 725, 727, 738, 739, 742; Kooragang Investments Pty Ltd v Richardson and Wrench Ltd [1982] AC 462, 472. These general agency principles apply to the conduct of the committee of management as well as any officer, servant or agent of the industrial association: Giblan v National Amalgamated Labourers' Union of Great Britain and Ireland at 620, 625; Atkinson v Lamont [1938] St RQ 33 at 43, 58, 64 - 65. Further, as Murphy J observed in R v Bowen ex parte Amalgamated Metalworkers and Shipwrights' Union (at 479), it can rationally be presumed that action, including industrial action of the type proscribed in Division 5 of Part XA, taken by a committee of management, or a branch committee of management or an officer, employee or agent acting as such, is the action of the industrial association. Section 298B(2)(a) and s298B(2)(b) have the effect of making an industrial association liable for the conduct of the committee of management or an officer or agent of the industrial association, acting in that capacity, where that conduct occurs in circumstances which would render the industrial association liable if the conduct was a civil wrong. As such, it involves no incontestable factual assumption contrary to the real fact. The issue involves a question of the constitutional power to enact such a law; it does not involve any impermissible interference with or encroachment upon the Commonwealth judicial power. The court is not prevented from ascertaining all relevant facts or required to draw a factual inference or make an assumption contrary to the real facts as found. The court is however bound to apply, for the purposes of the Act and for no other purpose, the statutory consequences to the facts as found provided that the enactment of those statutory consequences is within power. A like conclusion follows to the approach to be taken to s298B(2)(c) and (d). As I have stated earlier, insofar as the present applications are concerned, the conduct in issue is conduct alleged to be in contravention of s298S(2) of the Act as limited in its application by s298D and 298G(1) of the Act. Those sections, in my view, are supported by the conciliation and arbitration power (s51(xxxv)) and the corporations power (s51(xx)) respectively, or at least it cannot be said that it is manifestly untenable to contend that the sections are sourced in those grants of constitutional power. It is irrelevant, for reasons previously given, that in the exercise of those powers the legislation extends to the conduct of industrial associations which cannot be registered as organisations under the Act. Because industrial associations must act through the agency of individuals, fixing liability on an industrial association for the conduct of third parties by identifying the conduct which shall be treated as the conduct of the industrial association for the purposes of the Act, is a conception which naturally falls within either the conciliation and arbitration power or the corporations power in the particular circumstances of Division 5 of Part XA: Fencott v Muller (1983) 152 CLR 570 at 618. The question is whether s298B(2) in its application goes too far by taking particular conduct to have been done by an industrial association for the purpose of the Act where that conduct could not be regarded as other than the conduct of an individual: Fencott v Muller at 618. This question merely raises in another context the requirement that there be a sufficient connexion between the subject matter of the constitutional power and the provisions contained in s298B(2)(a), (b), (c) and (d) in their practical application: The Industrial Relations Act Case at 548 - 549; Nationwide News Pty Ltd v Mills at 27 - 27, 86 - 87, 101. Subsection 298B(2)(a) deals with the conduct of the committee of management. It is a defined term (s4) and is the group or body of persons that manages the affairs of an industrial association including a registered organisation. The committee of management is prima facie the controlling mind of an industrial association and the body through which it acts so that the acts of the committee of management are those of the association. Where the committee of management acts in its collective capacity, it has the general authority to act in and in relation to the affairs of the industrial association and its conduct could not reasonably be regarded as other than the collective conduct of the individuals comprising the group. Upon the application of ordinary agency principles the industrial association would be liable for the conduct of the committee of management. In my view, s298B(2)(a) has a sufficient connexion to be supported by the relevant heads of power. An "officer" means a person who holds an office in an organisation or branch (s4). The term is given an expanded meaning in s298B(1), for the purposes of Part XA, to include a delegate, representative or employee of an association. It has a like meaning in ordinary parlance in the context of an industrial association. "Office" is defined in s4(1) of the Act in an expansive way which identifies the duties and functions of the office in relation to the affairs and management of the association. The defining feature of s298B(2)(b) is that the officer or agent is acting in that capacity. The definition excludes conduct not undertaken in the capacity of officer or agent. The authority of an officer to act on behalf of and to bind the industrial association depends upon the extent of the authority which attaches to the particular office or agency. However, within those limits, it is an authority to carry out the duties of the office or to carry into effect the terms of the agency. In my view s298B(2)(b) has a sufficient connexion to be supported by the relevant heads of power. Section 298B(2)(c) is concerned with the conduct of the membership of an industrial association. It is submitted, by those challenging the validity of the provision, that the conduct of individual members or groups of members of an industrial association could not reasonably be regarded as other than the conduct of individuals and not conduct of the industrial association. The mere fact of membership, they submit, by itself is too remote or tenuous a connexion. The subsection however does not rely on bare membership alone as a sufficient connexion. The subsection provides that the members are "acting under the rules of the association". Section 298B(2)(c) takes as its premise that an industrial association as defined in s298B(1) is a body whose principal purpose is the protection and promotion of the interests of its membership in matters concerning their employment or their interests as independent contractors. Accordingly, the rules of the industrial association are treated as having been drawn to achieve this objective and to direct and control the conduct of members qua members in the achievement of this objective. Where a member or group of members of an industrial association do an act acting under the rules of the industrial association, the member or group are doing an act authorised by the association and may be regarded as doing it on behalf of all the members of the association and for the association itself, for the protection and promotion of the association's membership in matters concerning their employment or their interests as independent contractors. The member or group of members acting in accordance with the rules do not require authorisation or delegation from the committee of management or someone in the hierarchy above the member or group of members. The authority to act, in this circumstance, is not from "the top" but rather from "the bottom". It is an authority from the membership which holds the ultimate power to control the content of the rules and the disposition of power and authority between the various organs or elements of the industrial association: Heatons Transport (St Helens) Ltd v Transport and General Workers Union [1973] AC 15 at 102 - 104; Chappell v Times Newspapers Ltd [1975] 1 WLR 482 at 500. The industrial association, by its membership, has the power to remove the authority granted under the rules to any member or group of members to engage in proscribed conduct. In my view, s298B(2)(c) has a sufficient connexion with the relevant heads of power. Although s298B(2)(c) is within the incidental power inherent in either or both of s51(xx) or s51(xxxv) of the Constitution, the legislature has provided for the amelioration of the operation of s298B(2)(c) in the circumstances provided in s298B(3). The exculpatory circumstances demonstrate an intention on the part of the legislature to secure compliance with Division 5 of Part XA by encouraging the committee of management, a person authorised by the committee or an officer of the industrial association, to take all reasonable steps to prevent conduct on the part of a member or group of members which, although authorised by the rules of the industrial association, is proscribed by Part XA of the Act. What will be reasonable steps will depend on the circumstances of each case but mere lack of knowledge of the conduct or proposed conduct in the absence of some systematic means to exercise all due diligence to secure compliance with Division 5 of Part XA by the membership is unlikely to be sufficient. Section 298B(3) is itself part of the means adopted to achieve the statutory objectives and has a sufficient connexion with the relevant heads of power. Finally, s298B(2)(d) deals with a member of an industrial association who performs the function of dealing with an employer on behalf of the member and other members of the association, acting in that capacity. The purpose of this subsection is to enforce an obligation on an industrial association to exercise proper control over its members in the conduct of their industrial relations to prevent or settle interstate industrial disputes or to prevent circumstances which are likely to give rise to such a dispute. Such a purpose is one within the conciliation and arbitration power where it relates to a registered organisation: R v Ludeke; Ex parte The Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 652. In my view it extends to the conduct of all members of industrial associations where that conduct may give rise to an interstate industrial dispute or may adversely affect or interfere with a constitutional corporation in its business and its affairs: The Industrial Relations Act Case at 497, 556 - 557. The connexion between an industrial association and the circumstances specified in s298B(2)(d) lies in the representation of the members of an industrial association in respect of the protection and promotion of their interests in matters concerning their employment. Specifically, it concerns their employment with a particular employer and representation at the workplace level. It involves a situation where the rules of the industrial association provide for a member of the association to undertake the function, or where a particular person is approved or delegated by the committee of management, to undertake the function. The subsection is also broad enough to cover the situation where in a particular workplace the members of the industrial association, in default of the industrial association making any provision for their representation at the workplace level, authorise one of their own to represent them in their dealings with the employer. Where representation at the workplace level by a member on behalf of members employed by the particular employer is authorised by the rules, or is approved or delegated by the committee of management to a specific person, the workplace representative need not necessarily be seen as only acting for the membership of that employer and not acting for the membership generally and the industrial association in particular. Rather, the authorised members' conduct can be properly characterised as conduct engaged in for the purpose of achieving the objects of the industrial association generally and thereby for the industrial association itself and for the membership generally: Heatons Transport at 103. Where the industrial association allows representation at the workplace level to go by default, the legislature makes the industrial association responsible for the conduct of the member as if it were the conduct of an industrial association. That this was intended is apparent from the exculpatory provision (s298B(3)): Otzen v Beaubont (1947) 75 CLR 116 at 122 - 123. The TWU, the TWU (Qld) and the intervener submit that this would make the industrial association liable for conduct which could not reasonably be regarded as other than the conduct of the individual member, because the industrial association was unaware that the individual member was acting or intended to act in a representative capacity or did or intended to engage in proscribed conduct. I do not agree. In my view there is a sufficient connexion between the conduct specified in s298B(2)(d) and the industrial association. The connexion is subject to a test of relevance and reasonableness. Firstly, the function being performed is properly a function to be performed by the industrial association and the function is the principal object for which the industrial association was formed. Secondly, the conduct must be conduct of the member acting or purporting to act in discharge of the representative function. Thirdly, the industrial association will not be liable if the committee of management, the agent of the committee or an officer of the industrial association took reasonable steps to prevent the action. The provision is directed at industrial associations with a view to bringing about compliance with Division 5 of Part XA by the industrial association and its members. Its purpose is to cause industrial associations to put in place a system of reasonable prudential supervision of its members in their workplace relations with employers. For these reasons s298B(2)(d) has a sufficient connexion with the relevant heads of power.

At a glance

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Judgment (15 paragraphs)

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Legislation Cited (5)

Cases Cited (27)