s.604 - Appeal of decisions

Administrator of the Health Services Union, Victoria No. 1 Branch

Application for a stay under s 606 - rule alteration decision requiring branch disaffiliation from ALP - whether arguable case of error - balance of convenience - stay issued

[1] Charlie Donnelly, the administrator of the Health Services Union, Victoria No.1 Branch (Branch Administrator), has applied for a stay under s 606 of the Fair Work Act 2009 (FW Act) in connection with an appeal he has lodged against a decision made on 10 February 2026 by Patrick Coyle, a delegate of the General Manager of the Fair Work Commission ([2026] FWCD 13). The delegate's decision concerned an application by the Health Services Union (HSU) to alter its registered rules. Two of the alterations, proposed rules 93(m)(iii) and (iv), had the effect of requiring the HSU's Victoria No.1 Branch (Branch) to immediately end any affiliation with any body, other than trades and labour councils, that requires it to make payments to that body, while the Branch is subject to the current scheme of administration (the rule 93(m) alterations). These alterations were opposed by the Branch Administrator. In his decision, the delegate certified under s 159(1) of the Fair Work (Registered Organisations) Act 2009 (RO Act) that in his opinion the rule 93(m) alterations met the requirements of that section, namely: that they complied with, and were not contrary to, the RO Act, the FW Act, modern awards and enterprise agreements; were not otherwise contrary to law; and had been made under the rules of the organisation. The alterations took effect on the day of certification in accordance with s 159(3) of the RO Act. One effect of the decision is that the Branch is required to immediately disaffiliate from the Australian Labor Party (ALP). The Branch Administrator contends that the delegate erred in certifying that the rule 93(m) alterations met the requirements of s 159 and asks the Commission to stay the decision pending the determination of his appeal.

[2] The principles that apply to stay applications under s 606 of the FW Act are well-established. Before granting a stay, the Commission must be satisfied that the appellant has presented an arguable case that the appeal should be upheld, with some reasonable prospects of success both in respect of permission to appeal and the merits, and that the balance of convenience weighs in favour of a stay being granted.

[3] The HSU raise two threshold objections to the stay application. First, it contended that the Branch Administrator was not a 'person aggrieved' by the delegate's decision within the meaning of s 604 and that therefore the appeal and the stay application were incompetent. It was contended that the Branch Administrator could not demonstrate that the decision had an effect on his interests that went beyond that of the public at large, given his role as an administrator of a branch of a union of which he is not a member. In my opinion, the Branch Administrator is a person aggrieved by the decision because although as a private citizen he is not affected by it, his professional interests intersect with those of the Branch that he has been appointed to administer, whereby an order of the Court reposes in him the powers and duties of the Branch Committee, Branch Officers and the Branch Finance Committee. Plainly, the Branch Administrator is required to act in a manner that he believes will further the interests of the Branch. It was in this capacity and connection that he objected to the rule 93(m) alterations and that he is aggrieved by and appeals from the delegate's decision.

[4] Secondly, the HSU contended that the delegate's decision was not one that was capable of being stayed under s 606, because the role of the delegate was to certify under s 159 of the RO Act that in his opinion the alterations met certain requirements, and the delegate has now done so, such that his function is 'spent'. The HSU referred to the observation of Gibian VP in Louttit Bay Bakery v Le [2025] FWC 1454 at [13], a case which concerned an appeal against a decision to issue a certificate under s 368(3) of the FW Act, that it was not clear that a stay could affect the operation of s 370 (under which a person may make a general protections court application), because at least arguably a stay would not change the fact that a certificate had been issued. But this was a tentative view, and a stay was nevertheless issued in that case. In the present matter, the decision of the delegate had the effect that the rule 93(m) alterations took effect. It seems to me that this is the 'operation' of the decision for the purposes of s 606(1), and that this operation is amenable to being stayed.

[5] The Branch Administrator's notice of appeal advances three grounds. The first contends that the delegate erred in forming the opinion that the rule 93(m) alterations were made under the rules of the HSU, and that the delegate should have found that the alterations affect the autonomy of the Branch and were not passed in compliance with rule 35(a), which states that all branches of the HSU 'shall be completely and absolutely autonomous within the ambit of these rules', and that control of a branch 'resides exclusively in the members of the Branch.' The delegate rejected this contention on the basis that he considered himself bound to apply the decision of the Full Federal Court in Imlach v Daley [1985] FCA 132; (1985) 7 FCR 457 (Imlach). That case concerned an objection to an alteration of the rules of the Hospital Employees' Federation (HEF), a predecessor of the HSU, on the basis that it infringed rule 35(a) of the HEF's rules, which was in substantively identical terms to rule 35(a) of the HSU's rules. The majority observed that the HEF's rules empowered the National Council to alter the rules, that none of the restrictions that applied to this power concerned the alteration of branch boundaries, which was the subject of the alteration in that case, and that therefore the rule alterations made by the National Council had accorded with the HEF's rules. The delegate concluded that there was no basis to distinguish the majority decision in Imlach from the matter before him or otherwise to conclude that the rule 93(m) alterations were not made under the HSU's rules.

[6] The Branch Administrator contended that the delegate had misunderstood the effect of Imlach, noting that the majority had stated that 'in some cases the rules impose specific restrictions on the exercise of the power to alter rules' and that also 'a restriction is contained in r. 35(a) set out earlier in these reasons' (at 463-464). The Branch Administrator said that the majority had in fact accepted that rule 35(a) restricted the ability to make rules that impacted on the autonomy of the branch but had found that in the matter before them there was no such impact. I doubt that this is the correct analysis. Although the majority referred to rule 35(a) as containing a 'restriction', it did not characterise that restriction. In the preceding paragraph at 463, the majority stated that although 'under standard branch rules, wide powers are given to branches and committees of management within branches', nevertheless, 'the branches remain creatures of the rules of the Federation, and those rules may be altered in accordance with the provisions of the rules'. The majority emphasised that branches of unions are established for the purposes of internal management, whereas the existence of an organisation 'as a body corporate' was essential (at 462). It is far from clear to me that the majority contemplated rule 35(a) as one of paramount force. I note that rule 35(a) provides for branches to be 'completely and absolutely autonomous within the ambit of these rules'. This proviso appears to contemplate that rule 35(a) does not establish total branch autonomy. In my view, it would make sense that the 'creatures of the rules' would not be given a life that was independent of the governing body of the legal entity, the registered organisation, of which the branches are merely administrative subdivisions. Of course, subject to the RO Act, union rules can say what they like. But in this case, clause 16 of the HSU rules states that the National Council is the 'supreme governing body of the union'.

[7] The Branch Administrator submitted that the HSU's interpretative contentions on this point before the Commission were contrary to what it had submitted to Dowling J in the administration case (see Health Services Union v Asmar (Administration Decision) [2025] FCA 689 at [107]), where it contended that the breadth of the branch autonomy in rule 35(a) was a significant part of the problem. But these contentions are not necessarily in conflict. Facially at least, clause 35 is indeed of extremely wide import, and may have been part of the problem for this reason, regardless of its actual legal interaction with the rules relating to alteration of the HSU rules. It is not clear that any determination was made by the Court specifically on the latter point. Dowling J accepted that rule 35 conferred 'autonomy upon the Union in respect of its government and administration' (at [108]), that the 'dysfunction of the Branch has occurred in this autonomous context' and that the autonomy had 'restricted the ability of the rules to provide for effective means to enable the Branch to operate effectively' (at [109]).

[8] Nevertheless, I accept that the Branch Administrator's first ground of appeal is at least arguable, and that the appeal has at least some reasonable prospect of success in respect of permission to appeal and the merits. This is sufficient to resolve the first limb of the stay analysis in the appellant's favour however I will briefly address the other appeal grounds.

[9] The second ground of appeal contends that the delegate erred in concluding that the rule 93(m) alterations were not contrary to the RO Act, because they imposed a condition on members of the Branch requiring that they not affiliate with any body without a branch-wide plebiscite endorsing such a course, which was contrary to s 142(1)(c). That section states that the rules of an organisation must not impose on members 'conditions, obligations, or restrictions that, having regard to Parliament's intention in enacting this Act (see section 5) and the objects of this Act and the Fair Work Act, are oppressive, unreasonable or unjust'. The delegate concluded that although the rule 93(m) alterations contain a restriction, it was not one that was oppressive, unreasonable or unjust, as the alterations were of a limited duration; they would help restore the Branch's fragile financial position; they struck an appropriate balance between democratic control and ensuring that the Branch remains viable; and the differential treatment of the Branch was a measured response to the different circumstances in which the Branch found itself. In my view, the analysis of the delegate is compelling. The Branch Administrator contends that the delegate failed to take into account that the dysfunction of the Branch had no connection to its affiliation with the ALP and that he failed to consider why it was not contrary to justice to deny Branch members the right of affiliation. However, while the dysfunction may have been unconnected to ALP affiliation, it was connected to spending, and its consequence has been the Branch's parlous financial position. And the suspension of affiliation rights is a temporary one and will be followed by a plebiscite of members. The Branch Administrator asked rhetorically why the HSU was so interested in preventing Branch spending on its ALP affiliation but not in other items of expenditure and noted that the plebiscite will be a costly exercise. But the affiliation fees are a substantial head of discretionary expenditure (figures were cited close to the $100,000 mark), the indicative costs of the plebiscite were not identified, and no other prominent items of expenditure were referred to. Again however, the Branch Administrator's contention is at least arguable.

[10] The third appeal ground contends that the delegate erred in reaching satisfaction that the rule 93(m) alterations were not contrary to law (see s 159(1)(b) of the RO Act) when they were inconsistent with the order of Dowling J made on 25 June 2025, pursuant to which responsibility for the rectification of the Branch's finance and governance defects was vested in the Branch Administrator. The delegate rejected the Branch Administrator's contention that the rule 93(m) alterations interfered with his role. The delegate considered that the affiliation arrangements that were the subject of the rule alterations were not apt to be described as defects or irregularities and concluded that the rule 93(m) alterations were not inconsistent with the scheme of administration but instead sat side by side with it. The reasoning of the delegate appears to me to be sound however I accept that the third ground of appeal is at least arguable and carries some prospect of success.

[11] The Branch Administrator contended that the balance of convenience favoured the granting of a stay for several reasons. First, he said that the grounds of appeal had strong prospects of success. My own assessment would be that the appellant has presented an arguable case, with good prospects in respect of permission to appeal, and some prospect in respect of the merits of the appeal.

[12] Secondly, the Branch Administrator submitted that the rule 93(m) alterations require the Branch to immediately disaffiliate from the ALP, and that if this occurs, but the appeal is ultimately successful, the Branch will be required to undergo a lengthy process of reaffiliation which would result in a significant reduction of its affiliation entitlement for a period of three to four years. The entitlement in question is the right of a union (and, evidently, the right of branches of unions) to send a certain number of delegates to the annual ALP State Conference, in proportion to its number of members. The Branch Administrator said that as a newly reaffiliated group, the ALP rules would entitle the Branch to only 3 delegates, whereas at the 2025 State Conference it was entitled to 19 delegates. This was said to be a significant detriment to the members of the Branch.

[13] The HSU contended that there was no evidence of any detrimental effect on members of the Branch flowing from the rule 93(m) alterations and that it would be unsafe to assume that the current membership, having observed the dysfunctional behaviour of the Branch leadership in recent years, wished to maintain an affiliation that that leadership had supported. I make no assumption about the wishes of the membership in this regard. The wishes of the members will be manifested at the plebiscite that will occur after the administration ends in June 2026. But if the membership of the Branch votes to maintain the affiliation with the ALP, a break in the continuity of the affiliation will significantly reduce the delegates that the Branch will be able to send to the State Conference. This would represent a loss of opportunity for Branch members to be delegates, as well as a significant dilution of the collective influence of members at the Conference. In my assessment, this is a potential detriment that needs to be weighed in the balance of convenience.

[14] The HSU contended that there should be no stay on the prevention of spending scarce resources on the ALP affiliation in circumstances where the Branch owes substantial debts to the Australian Taxation Office and others, and where the Branch depends on the financial resources of the rest of the HSU to continue operating. However, the Branch Administrator undertook that the Branch would not make any payments to the ALP in respect of its affiliation until the appeal has been determined and contended that this removed any possibility of prejudice to the HSU. The HSU submitted that no assurance had been offered that the ALP would not seek to recover unpaid affiliation fees, and as the de facto underwriter of the Branch's continued operation, this was a matter of concern to the HSU. But the ALP rules, which are attached to the witness statement of the Branch Administrator, do not contemplate arrears of affiliation fees. Rather, if affiliation fees are not paid by certain times, an affiliate becomes 'not financial' and the affiliation will lapse (see rules 5.2.6 and 5.2.7 of the ALP rules). In addition, rule 24 states that the rules are not intended to be enforceable at law. I do not consider that there is any basis to apprehend that the Branch might be liable to the ALP for the payment of arrears of affiliation fees.

[15] The HSU contended that the rule 93(m) amendments only operate for the period of the Branch's administration, which ends in June 2026, and that if a stay were issued, it would lose the subject of the appeal. That may be true, however in my opinion, given the undertaking, the risk of greater injustice lies with the Branch Administrator. What stands to be lost is that part of the value of the Branch's affiliation with the ALP that is constituted by its present delegate allocation. A stay will preserve something of value to Branch members should they choose to vote in favour of continued affiliation at the upcoming plebiscite.

[16] I consider that the balance of convenience favours the granting of a stay. In all the circumstances, it is appropriate to stay the decision that is the subject of the appeal, subject to the undertaking that has been given by the Branch Administrator, until the determination of the appeal or further order. A stay order is issued separately in PR797225.

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