Conciliation and Arbitration - Registered organizations - Rules - Directions for performance - Construction - Nature of organization - Objects and powers - Structure of organization - Branches and sub-branches - Organs of government - Express and implied powers - Administrative and substantive powers - Exercise of powers - Power of supervision of sub-branches - Whether exercised bona fide - Fiduciary duty of committee of management - Substantial object of exercise of power - Relevance of surrounding circumstances - Participation of stranger in deliberations of committee of management - Abuse of power - Conciliation and Arbitration Act 1904-1976, s. 141. The Conciliation and Arbitration Act 1904-1976 provides by s. 140 that the rules of an organization shall not be contrary to, or fail to make a provision required by, the provisions of the Act, the regulations or an award or otherwise be contrary to law. The section also provides that the rules shall not impose upon applicants for membership or members of the organization, conditions, obligations or restrictions which, having regard to the objects of the Act and the purposes of registration of organizations under the Act, are oppressive, unreasonable or unjust. Section 141 provides by sub-s. (1) that the court may, upon complaint by any member of an organization, make an order giving directions for the performance or observance of any of the rules of the organization by any person who is under an obligation to perform or observe those rules.

The rules of an organization included amongst its objects the establishment of branches and sub-branches. Rule 39 created various branches of the organization, each with full local autonomy, including the Victorian branch, and by sub-r. (b) such branches might form sub-branches in their respective States. By r. 39 (c) branches and sub-branches were required to conform to the rules of the organization. Rule 45 provided for the establishment by a branch of a sub-branch under the control of and subject to the instructions of the branch and by sub-r. (b), each sub-branch should elect for its management a number of named officers including a secretary.

Rule 6 required, amongst other things, a period of five years' continuous membership for eligibility for nomination for election to the office of federal secretary. Rule 6A made a similar provision in relation to the office of assistant federal secretary. Rule 17 specified the powers and duties of the federal secretary and by sub-r. (n), the federal secretary was an ex officio member of all branch committees of management. Rule 21 of the Victorian branch rules provided for the conduct of a ballot of the membership on matters affecting the welfare of members, subject to the authorization of the ballot by the branch committee of management.

On the motion of the federal secretary of the organization, the committee of management of the Victorian branch resolved, amongst other things, that the secretary of the Geelong sub-branch should be advised as follows:

"(3) You are to account in writing within twenty-eight days of receipt of notice of this direction for all monies paid out by you since 1st January, 1970, for purposes other than wages, telephone expenses, gas, light, electricity, stationery or rent.

"(4) You are not to make any payments from your funds for the purpose of seeking legal aid or advice for any purpose without the consent of the branch but in particular no monies are to be made available either directly or indirectly to the respondents or their solicitors in Johns v. Allen ((1977) 29 FLR 249) or any High Court proceeding relative thereto without the consent of the branch.

"(5) You are within seven days of the date of your statement pursuant to (3) above to deliver to the branch or its representatives all books, bank statements, receipts and papers such as will allow a proper audit to be made of the sub-branch's affairs since 1st January, 1970.

"(6) You will terminate the employment of any person taken into employment since the direction imparted by letter dated 9th September, 1976.

"(7) You will co-operate with and provide office facilities for any branch organizers, officials or representatives which visit your office and will instruct your clerical staff accordingly."

The resolution was conveyed to the secretary of the Geelong sub-branch the following day.

Proceedings under s. 141 concerning the validity of the resolution and under s. 140 concerning the validity of federal rr. 6, 6A, 17 (n) and Victorian branch r. 21 were instituted by the secretary of the Geelong sub-branch. Proceedings were also instituted by the federal secretary under s. 171C and s. 171F concerning the existence of the Geelong sub-branch.

Held: (1) Per Evatt and Northrop JJ., Smithers J. dissenting - The rules requiring, as a condition of eligibility for nomination for election to the offices of federal secretary and assistant federal secretary, a period of five years' continuous membership, while depriving a large number of members of the opportunity for nomination for election to the offices, did not ensure that a person had gained the requisite experience in the conduct of the affairs of the organization. Accordingly, when regard was had to the objects of the Act and in particular, that of encouraging the participation of members in the affairs of the organization, the rules imposed oppressive and unreasonable conditions on members and were therefore void.

Observations on the effect on decisions of the court under s. 140 of the amendment to the Act by Act No. 138 of 1973 so as to include amongst the statutory objects that of encouraging the democratic control of organizations and the full participation by members in the affairs of the organization.

Per Smithers J. - In the context of the composition of the membership of the organization with its high rate of turnover of members, the number of persons excluded from standing for the offices was small. Given the important nature of the offices concerned, a five-year continuous membership qualification created a strong probability that the persons elected would possess the necessary qualities for office and accordingly the rules did not offend s. 140 (1) (a) or (c).

Observations on the distinction between restrictions on candidature for election to committees with many members and those for important offices.

Leveridge v. Shop Distributive and Allied Employees' Association [1977] FCA 9; (1977), 31 FLR 385, referred to.

(2) Per Evatt and Northrop JJ. - Because of the term of office of the federal secretary and the full-time paid nature of the office compared with the shorter term of office of the other branch committeemen and the honorary nature of some of their offices, the inclusion of the federal secretary as an ex officio member of the branch committee of management imposed on members an oppressive, unreasonable or unjust condition given the influence and persuasion capable of being exerted by the federal secretary on the other members of the branch committee. Accordingly, r. 17 (n) was void.

Per Smithers J. - The rule offended s. 140 (1) (a) because of its failure to comply with s. 140 (1) (d) in that branch autonomy was invaded if a member of a branch committee was elected by persons not being members of the branch and in that s. 133 (1) (a) required an election of an officer of a branch to be by members of the branch exclusively.

(3) A rule enabling a committee of management to prevent the conduct of a ballot of members was void on the grounds, first, that it did not provide for the control of the committee by the members in accordance with reg. 115 (1) (d) (v); and, secondly, that it imposed oppressive and unreasonable conditions in that rights purportedly given to members might be negatived by the committee of management.

(4) Per Evatt and Northrop JJ. - The presence and participation of the federal secretary in the meeting of a branch committee of management which adopted the resolution directed to the secretary of the sub-branch, when he was not properly a member of that committee, vitiated the resolution.

Lynch v. Hodges (1963), 4 FLR 348, applied.

Stewart v. Oliver (No. 2) (1971), 18 FLR 83, and Barter v. Maher (1972), 21 FLR 10, distinguished.

(5) Per Evatt and Northrop JJ. - Members of a committee of management are under a fiduciary duty to members of the organization and powers conferred on the committee must be exercised bona fide with a view to achieving objects not outside the purpose for which the powers are conferred. Accordingly, while the rules provided that the sub-branch should be under the control of and take instructions from the branch, the branch was required to exercise the power bona fide for the purpose of the government of the Victorian branch and, in doing so, to act fairly as between different groups of members of the branch.

Shrimpton v. Commonwealth [1945] HCA 4; (1945), 69 CLR 613, and Mills v. Mills [1938] HCA 4; (1938), 60 CLR 150, applied.

Observations on the similarity of the duties of members of a committee of management of an organization and those of directors of a company.

(6) In order to ascertain whether an exercise of power by a committee is bona fide, regard may be had to the intention and motive, as revealed by surrounding circumstances, of those participating in the collegiate act.

Dunlop v. Woollahra Municipal Council, (1975) 2 NSWLR 446, and Howard Smith Ltd. v. Ampol Petroleum Ltd., [1974] UKPC 3; (1974) AC 821, applied.

(7) Per Evatt and Northrop JJ. - Accordingly, on the evidence, the resolution was not passed bona fide for the purposes of the management of the Victorian branch and orders under s. 141 should be granted directing the respondents to treat as void the paragraphs of the resolution concerned.

(8) Per Smithers J. - On a proper construction of the rules, while the branch possessed powers of control in relation to the sub-branch, such powers were exercisable for the purposes of and to promote the objects of the organization and so far as the sub-branch was concerned, to promote the administration of the organization as a body administered in three tiers. To the extent that the sub-branch comprised a section of the membership, its powers included in relation to that section of the membership, the performance of administrative and substantive action conducive to the advancement of their interests in the same way as the branch in relation to its members.

Consideration of the nature of an organization, its branches and sub-branches and their objects and powers and the classes of those powers.

Williams v. Hursey [1959] HCA 51; (1959), 103 CLR 30, per Fullagar J., applied.

(9) Per Smithers J. - On the evidence, the resolution was passed not as a genuine step in the administration of the branch nor in the promotion of the objects of the organization but as a step designed and intended to obstruct and harass the sub-branch in the performance of its functions and, accordingly, the resolution was void.

Melbourne, 1977, April 20, 22; May 3, 4; June 1, 7-9, 14-16; August 28.

The secretary of the Geelong sub-branch of the Victorian branch of the Vehicle Builders Employees' Federation of Australia, an organization registered under the Conciliation and Arbitration Act 1904-1976, sought orders directing the members of the Victorian branch committee of management, the federal secretary and assistant federal secretary and the organization to treat as null and void specified rules of the organization and branch. Orders were also sought under s. 141 directing the respondent members of the Victorian branch committee of management to perform the rules of the organization by treating as null and void a resolution passed by the Victorian branch committee of management on 19th April, 1977.

M. Harrison, for the respondents other than Messrs. Burt, McKay and Slevin.

I. C. Campbell, for the respondents Messrs. Burt, McKay and Slevin.

Cur. adv. vult.

Solicitor for the applicant: A.J. Macken.

Solicitor for certain respondents: M. Harrison.

The following judgments were delivered.

SMITHERS J. An uneasy relationship between the Victorian branch of the

Vehicle Builders Employees' Federation of Australia and the Geelong sub-branch of the federation has been reflected in recurring litigation in the Australian Industrial Court and this Court during recent years. (at p435)

2. There can be little doubt that the ultimate reason for the difficulties experienced is that the rules of the federation fail to define with particularity the powers and functions of the sub-branch and the extent to which the sub-branch is subject to the control and direction of the branch. (at p435)

3. It is not surprising that in these proceedings, Mr. Harrison, appearing for the branch, was heard to say that: "It is imperative from the branch point of view that it knows where it stands and what its responsibilities are in relation to the sub-branch and . . . it needs some declaration from the court . . . " (at p435)

4. As a court exercising its jurisdiction only on particular issues arising under the rules, the court is unable to make the advisory wide-ranging declaration which seems to be sought. Of course the federation might attempt to solve the problems by amending its rules so that they do define the respective spheres of authority of the branch and the sub-branch. But the subject matter is one which does not lend itself to precise easily conceived regulation. (at p435)

5. In these circumstances the Victorian affairs of the federation, so far as they concern the Geelong sub-branch, have been carried on in an atmosphere of uncertainty which has led to frustration and created animosities. (at p435)

6. The litigation between sub-branch and branch during the last few years has resulted in considerable clarification of the operation of the relevant rules and it may be that with the continuation of the judicial process a tolerable degree of understanding and certainty is within reach. See Allen v. MacWhirter (1974) 157 CAR 1046 , Allen v. Jarrad (1974) 160 CAR 1018 , and Johns v. Allen (1977) 29 FLR 249 . (at p435)

7. The immediate problem concerns an attempt by the branch in April of this year to give directions to the sub-branch in a number of respects. These directions were in the terms of a resolution of the Victorian branch committee of management which was passed on 19th April, 1977. The meeting of the committee of management at which it was passed was attended by Mr. Townsend the federal secretary in his capacity as an ex officio member of the committee pursuant to federal r. 17 (n). The resolution was moved by Mr. Townsend and was carried unanimously. It was in the following terms: (at p436)

8. "The general secretary is directed to write to the secretary of the Geelong sub-branch in the following terms: (at p436)

9. "(1) Research at the branch office reveals that what we have been led to believe for some years, namely the legal existence of your sub-branch under the rules of the federation, to be incorrect. It appears that the branch executive of the day never received the appropriate requisition and of course never considered an appropriate requisition or granted the status of a sub-branch to any such body. (at p436)

10. You are therefore (a) called upon to appear before the State executive on 4th May, 1977, to show cause why you and your purported sub-branch executive should continue to be recognized as such; or (b) alternatively bring before the State executive a requisition from six or more adult employees within the meaning of federal r. 45 seeking the grant of sub-branch status for the State executive's consideration. In order to assist the State executive in its deliberations the requisition should set out the trade, occupations or callings of the members sought to be covered by the suggested sub-branch and/or the precise geographical area sought to be covered. (at p436)

11. "(2) Notwithstanding (1) above and without prejudice to the assertions there made you are called pursuant to r. 45 (d) of the federal rules, to pay forthwith to the branch: (a) the $32,509.75 disclosed by your balance sheet of 31st December, 1976 (less $200); and (b) all sustentation fees due for your purported members for the period to 31st March, 1977; (c) all sustentation fees not already paid for your financial membership over the period 1st January, 1974, to 31st December, 1976. (at p436)

12. "(3) You are to account in writing within twenty-eight days of receipt of notice of this direction for all monies paid out by you since 1st January, 1970, for purposes other than wages, telephone expenses, gas, light, electricity, stationery or rent. (at p436)

13. "(4) You are not to make any payments from your funds for the purposes of seeking legal aid or advice for any purpose without the consent of the branch but in particular no monies are to be made available either directly or indirectly to the respondents or their solicitors in Johns v. Allen (No. V7 of 1977) (1977) 29 FLR 249 or any High Court proceedings relative thereto without the consent of the branch. (at p436)

14. "(5) You are within seven days of the date of your statement pursuant to (3) above deliver to the branch or its representatives all books, bank statements, receipts and papers such as will allow a proper audit to be made of the sub-branch's affairs since 1st January, 1970. (at p436)

15. "(6) You will terminate the employment of any person taken into employment since the direction imparted by letter dated 9th September, 1976. (at p437)

16. "(7) You will co-operate with and provide office facilities for any branch organizers, officials or representatives which visit your office and will instruct your clerical staff accordingly." (at p437)

17. By letter dated 19th April, 1977, the resolution was conveyed to the applicant in his capacity as secretary of the Geelong sub-branch of the federation. (at p437)

18. It is said for the respondents that the authority for giving the sub-branch the directions contained in the resolution is to be found in federal r. 45 (a) which provides that where a sub-branch has been opened upon a branch granting a request by six or more members that it be opened, the sub-branch "shall at all times be under the control of and take instructions from the branch". The Geelong sub-branch was so opened. (at p437)

19. But the applicant contends that in the context of the rules the critical words are to be read in a qualified sense. It is said, in substance, that if regard is had to the nature and purpose of the organization as an organization registered under the Act, to its rules and its structure thereunder, it is to be seen that the sub-branch is a section of the union with functions to perform as such and with a degree of autonomy and that the capacity of the branch to exercise control and give instructions pursuant to federal r. 45 (a) are limited to control which is exercised and instructions which are given for the purpose of achieving the objects of the federation. It is said to follow from this that action by the branch purporting to be in the nature of control or instruction of the sub-branch is not authorized if it is taken for the purpose of impeding it in the performance of the functions properly exercisable by it pursuant to the rules or otherwise for some indirect purpose distinct from achieving the objects of the organization. Finally it is said that the resolution in question was passed not for the purpose of promoting the objects of the federation but to impede and harass the sub-branch in performing its functions as part of the federation. (at p437)

20. The question raised requires some examination of the nature of the federation, the scope of what may be done by it in the exercise of what may be called its lawful powers, and the extent to which the exercise of those powers is part of the function of branches and sub-branches.

21. The rules of the federation deal in considerable detail with the organization of the federation and the mutual relationships of the organization and the branches and the administrative authority of their managing councils and committees and officers. They thus provide the administrative machinery for the organization to carry on its business. That business is the promotion of the interests of the members as set out in the statement of its objects. It is the performance of that business which is the raison d'etre of the existence of the federation. It is the purpose of the rules to establish an organization every part of which is to engage in the promotion of those interests. Each administrative section of membership created by the rules is thus concerned with a dual aspect of union life, namely administration of union government according to the rules, and conduct of a substantive kind for promoting the industrial and other interests of the members specified in the statement of objectives. This conduct is not particularized in the rules. There is no need to do so. (at p438)

22. Some powers flow from the fact of incorporation of the federation. See Fullagar J. in Williams v. Hursey [1959] HCA 51; (1959) 103 CLR 30, at pp 67-68 . As a corporation the federation has the capacity to acquire legal rights and incur legal obligations. No doubt it would exceed its powers if it purported to undertake obligations for purposes outside the scope of the objects for which it was formed. It is by reference to the objects of the federation that the existence and boundaries of its powers are established. It was said by Fullagar J. in Williams v. Hursey in relation to the Waterside Workers' Federation of Australia: "When the rules use, in stating 'objects', such general expressions as 'the interests of members' and the 'improvement of the conditions of members', they must, of course be read as referring to the interests of members as waterside workers and to the improvements of the conditions under which they work (as to wages, hours, privileges, amenities, etc.). But, subject to that, no prima facie reason exists for limiting the meaning of such expressions in any way, and any action which can fairly and reasonably be regarded as likely to further the interests of the organization and its members is within the objects stated in the rules, and therefore within the powers of the federation acting directly or through the branch. To adapt slightly the words of Lord Selborne in Attorney-General v. Great Eastern Railway Co. (1880) 5 AC 473 '. . . whatever may fairly be regarded as incidental to, or consequential upon, what is expressly authorized ought not (unless expressly prohibited) to be held by judicial construction to be ultra vires'" (1959) 103 CLR, at p 57 . (at p438)

23. Later he said: "But it has been accepted ever since 1908 that the Commonwealth may create these corporations, and, if it can create them, it must be able to define their powers. They must be associations of employees or of employers formed for the purpose of protecting and advancing the interests of their members, and no reason exists for saying that they cannot be empowered to do anything 'not contrary to law' which is calculated to protect or advance those interests - to engage in propaganda by means of a newspaper or to contribute to the funds of a political party favourable to those interests" (1959) 103 CLR, at p 68 . (at p438)

24. The federation has a federal council which is described as the supreme governing body. Its decisions are subject to membership control by means of plebiscite but subject thereto and to certain special limitations on its authority to be found expressly or impliedly in the rules it may undertake whatever lawful activity is reasonably referable to the promotion of the federation's objects. (at p439)

25. But it is to be inferred from the rules that the branches also have "powers" to be exercised in the promotion of the objects of the federation. And there is no suggestion, and it is not to be thought, that except in special instances those powers proceed from any specific delegation from the federal council. They are conferred by inference or implication from the express provisions of the rules. The relevant provisions of the rules are those declaring the objects of the organization and those establishing the branches. The branches are to have "local autonomy subject to these rules". A branch is to have funds; it is to have officers and a management committee; it is to keep books; it may set up sub-branches; it may make rules to govern its affairs; and it must observe the rules of the federation and comply with all resolutions of federal council and federal executive and the requirements of the Conciliation and Arbitration Act. It may withdraw from the federation. It may control and instruct a sub-branch generally (federal r. 45 (a)) and in certain specific ways (federal r. 45 (i)). It is required to endeavour to settle industrial disputes occurring within its territory. (at p439)

26. But in accordance with the views expressed by Fullagar J. with reference to the powers of the Hobart branch of the Waterside Workers' Federation of Australia in Williams v. Hursey [1959] HCA 51; (1959) 103 CLR 30 it is apparent that within its territorial limits and subject to certain restrictions there is a wide range of activities in which the branch as part of the federation has the power to conduct business and there seems no reason to doubt that that range extends to all lawful activity in the territory of the branch which is reasonably referable to the pursuit of the objects of the association. He said: "But in truth, as had been said, the branch has in law no existence separate from that of the federation. It is merely an aggregate of members which is an integral part or section of the whole federation, having that degree of autonomy which is permitted to it by or under the constitution of the federation. It represents the federation in the port of Hobart. In and for the port of Hobart it is, so to speak, the federation. It is forbidden by rr. 2 and 4 of Pt II of the federal rules to strike or to take any step to 'enforce any wages, hours, or conditions of labour' without prior approval of the governing body of the federation. But, subject to those limitations, and perhaps one or two others, it is set up and organized in the port of Hobart to do in that port whatever the federation may do in any Australian port. Because it has that character and those functions, it seems to me that acts of the branch within its local limits are prima facie acts of the federation itself. The branch is in all respects subject to the control of the governing body of the federation, and that body could no doubt interfere and prohibit the branch from proceeding, or from proceeding further, with any particular course of action, and the federation would not be liable for anything done in breach of such a prohibition: cf. Waterside Workers' Federation v. Burgess & Sons, Ltd. [1916] HCA 2; (1916) 21 CLR 129 . But in the present case there was no such prohibition and no such interference" (1959) 103 CLR, at pp 81-82 . (at p440)

27. It was the maintenance by the Hobart branch of a picket line which was the subject of complaint against the Waterside Workers' Federation in the Hursey case. This was an activity undertaken by the branch essentially of its own motion. It was in fact supported by the federal body of the Waterside Workers' Federation. But clearly it was regarded by the learned judge as action, which merely, if not repudiated by the federation, was within the "power" of the branch as part of the federation and accordingly an activity involving the federation as a principal in the legal consequences thereof. Of course the relevant subject matter was a tort. But the critical point is that the branch as such was the legally effective author of the activity in question. (at p440)

28. The learned judge had already demonstrated (1959) 103 CLR, at pp 54-55 that the branch has "no separate identity, no existence apart from the organization of which it is an integral and inseverable part". Its members were merely a section of the total membership of the federation, locally organized for the sake of convenience, but in no respect independent of the federation and in all respects subject to the control of the federation. Quoting from Hall v. Job [1952] HCA 57; (1952) 86 CLR 639, at p 650 his Honour applied to a branch the following: ". . . it is in truth a branch of the Institution, a section of its membership, which provides for those who belong to it or may be admitted to its meetings, machinery for the enjoyment of the rights and benefits, and for the performance of the obligations and functions, which are the incidents of their membership of the Institution". But it is not a consequence of the lack of separate identity apart from the organization of which it is a part that a branch is not a group of members capable in accordance with its rules, of group action involving the creation of legal rights and obligations. It is set up for such action. It has its management committee, it has funds and an officer is appointed by the rules to sue and be sued on its behalf, and the members are joined together in the group for the promotion of the objects of the federation. (at p440)

29. It is relevant to observe that in the way the members of the branch who are also members of the federation are joined together they are at once in a legal relationship with all the members of the organization but also in a legal relationship with each other and that latter relationship is different and separate from the relationship that they have with the members of the organization generally. In their relationship to each other as members of the branch they constitute a group empowered by the rules to govern and discipline themselves by the provisions of their own set of branch rules and to take steps to promote the objects of the federation. (at p441)

30. It is to be observed also that in any discussion of this subject, reference to conduct, as being conduct "of the branch" or "its" conduct is commonplace. This nomenclature reflects the reality that within the organization and as an agency thereof the group of members in the branch has a capacity as such to conduct business affairs of the federation. (at p441)

31. The capacity of the branch to operate as an instrument of the federation, both in administering its affairs and in engaging in conduct of various but well-known kinds, including activity in business affairs to promote the interests of its members and the federation, is not to be doubted. (at p441)

32. There is a large measure of control in federal council of branch policy and action. But the existence of the branch and its power and duty, subject to the rules, to conduct affairs designed to promote the objects of the federation are essential features of the federation as established by the rules. (at p441)

33. It follows therefore that the power of the federal council to control the branch is itself subject to the implied qualification that it is exercisable only for the purpose of achieving the objects of the federation in accordance with the rules. Accordingly a resolution of federal council imposing upon a branch conditions incompatible with the exercise of its functions as a branch or merely for the purpose of impeding the branch therein or to supplant it in the exercise of the essential functions conferred on it by the rules would not be authorized by the relevant rule. (at p441)

34. This is but an example of the dominant principle relating to all powers of the federation at federal or branch level that that only is authorized which is genuinely done to promote the objects of the federation. All else is ultra vires.

35. But in this case the question of control arises as between branch and sub-branch. It is concerned with the nature of a sub-branch. (at p441)

36. It was said by Morgan J. in Murphy v. Applebee (1959) 3 FLR 361, at p 366 that ". . . a branch is something into which the organization itself is divided whilst a sub-branch is something into which a branch is divided". For present purposes however it is pertinent to inquire whether a sub-branch is a mere creature of the branch or itself an organized group of members partaking to an extent the nature of a branch and deriving from the rules powers of its own to engage in activities designed to promote the objects of the federation and corresponding duties. (at p442)

37. When the Victorian branch in 1936 granted the request of members that the Geelong sub-branch be formed it was implementing one of the expressed objects of the federation. It was to implement this object that the branch was authorized to form sub-branches (see federal r. 39 (b)). The method of formation was set out in federal r. 45 (a). (at p442)

38. There is no express power in the branch to abolish a sub-branch. It might be said that the power to form a sub-branch carries with it the power to abolish. But it is far from clear that that principle applies in this case. The formation of the sub-branch being an action taken to implement a specific object of the federation it would seem out of harmony with that situation that a sub-branch duly formed could be abolished at will by the branch which formed it. For present purposes however, it may be said that there is no suggestion that the resolution in question was intended to abolish the sub-branch. The ultimate attitude of the respondents in these proceedings is that if the sub-branch exists, its existence is accepted, and that the resolution in question is not an act of abolition. On the contrary it gives directions to a live sub-branch. (at p442)

39. It is useful to inquire whether in accordance with the rules the sub-branch has a role which is in its essential nature the same as that of a branch. Is it a body entitled and required to take action, not only to collect union fees and perform other administrative functions but also to take "any action which can fairly and reasonably be regarded as likely to further the interests of the organization and its members" as vehicle builders? Cf. Williams v. Hursey (1959) 103 CLR, at p 57 . (at p442)

40. In my opinion the sub-branch is so entitled and required, but of course its role is limited by its territory. Also its role is affected by the fact that just as branch members are not only branch members but also federation members so sub-branch members are members also of the branch and of the federation. Also it is to operate subject to control and instruction of the branch. It is to be observed that federal r. 39 which authorizes a branch to form a sub-branch is headed "Territory and Powers of Branches". The four State branches recognized by the rules are described as "The Victorian" or other State branch "in the capital city of" the relevant State. But it is clear if only from par. (b) of federal r. 39 that the "territory" of each branch is the whole of its State. It is interesting also that the authority of a State branch to set up a sub-branch extends to setting up a sub-branch in any other State or Territory "where no recognized branch is operating". (at p443)

41. It is to be inferred from federal r. 45 (a) that the formation of sub-branches is seen as a means of facilitating the performance of the functions of the branch in areas at a distance from the capital city in which the State branch is said to have its being. Only members not less than thirty-five miles from the capital may request the formation of a sub-branch. Thirty-five miles may be nothing today but the position was different when this union was formed. (at p443)

42. The conception would therefore appear to be that a branch operates in a territory, that is its State, and a sub-branch operates in a particular territory. Like the branch its territory is defined only by its name, but for the purpose of this organization that is enough. The rules assume this when they proceed on the basis that with respect to any applicant for membership it will be apparent that it is or is not appropriate that he be attached to the sub-branch rather than the branch. (See federal r. 20.) (at p443)

43. What then is the sub-branch authorized and required by the rules to do in its territory? Clearly, to speak metaphorically, it is to carry the flag in its territory. Because of distance between the territory and the place where the branch "is", it is set up to do things in that territory which the branch would otherwise do. But what things? Certainly to do the administrative chores such as collecting local members' contributions as expressly stated in the rules. It is characteristic of the rules that they concentrate on the administrative framework of the organization and leave the scope of authority of the bodies set up for action in doing what is necessary to achieve the objects of the federation to be implied from the statement of its objects. It is thus with the federal council and with the branch and it is so with the sub-branch. (at p443)

44. With all of these bodies what actions they are authorized or required to take is to be measured by looking at the body concerned in the hierarchy created by the rules, its area of authority, any express powers given to it, and treating it as one of the instruments of the federation required to busy itself in the promotion of the objects of the federation. (at p443)

45. The provision in the federation's rules that the establishment of branches and sub-branches throughout the Commonwealth although expressed as an object of the federation should perhaps be more properly regarded as a statement of intention to adopt an organization of branches and, where appropriate, sub-branches, to achieve the objects, properly so called, of the federation. At the very least it suggests that a sub-branch will partake, at least to some extent, of the nature of a branch. (at p443)

46. If this be correct, then, subject to restrictions to be found in the rules, it would follow that, to the extent that the sub-branch comprises or serves a section of the membership its powers are to do in relation to that section of members all those things conducive to the advancement of their interests as is done by a branch in relation to its members. (at p444)

47. Accordingly, both a branch and a sub-branch have two classes of powers, first to collect contributions, enrol members, keep records, conduct elections and do similar things in the administration of the organization of the branch, and secondly, to carry out within its territory other activities of all kinds which are seen as likely to advance the interests and rights of the members in the industry and to tend to achieve the other objects of the federation. These latter would relate to the solution of local problems arising in the employment of members, supporting the principle of union preference in employment, the closed shop, the observance of awards, protection of delegates in their employment, studying the scope for the improvement of labour conditions, support for members in workmen's compensation and other accident claims and a myriad of other items great and small. (at p444)

48. There is support for this in the attributes and functions of a sub-branch as specified in various rules. Thus the sub-branch was conceived of as a section of the members with powers and interests wide enough and important enough to require officers "for its management", namely an elected president, secretary, doorkeeper, trustees and auditors, and sub-branch committees as might be necessary. It may well be that if it had been thought that a sub-branch would grow to some 5,000 members more elaborate provisions would have been made. (at p444)

49. Its duty is to receive, approve or reject applications by persons for membership of the federation, to authorize persons to witness application forms, to receive resignations of members attached to it. It is authorized to cancel arrears of members. It is authorized to fine and levy members. Members resign by giving notice to the sub-branch. (at p444)

50. The sub-branch is the body to which members appropriate to be attached to it shall be attached. Applicants for membership of the branch are to be referred by the branch to the sub-branch if it is appropriate that they be attached to the sub-branch. It is clearly implied that the sub-branch will endeavour to enrol new members in its area. (at p444)

51. The Victorian rules confirm that the general secretary/ treasurer and the secretary of the sub-branch shall be the officers to sue and be sued on behalf of the branch and sub-branches respectively. They provide that no members of a sub-branch shall be entitled to vote in an election for the branch president or vice-president, members of the branch committee of management (other than secretary, assistant secretary and organizers) unless the sub-branch by resolution has claimed the right so to vote. It was thought unnecessary that "a member of the sub-branch" should vote for most of the members of the branch committee of management. Sub-branch members elect the officers of the sub-branch. (at p445)

52. The rules provide that the funds of the sub-branch shall be the common property of the State branch, but such a provision does not prevent the use of funds in its hands for its working and other expenses. (See branch r. 19.) (at p445)

53. The rules (federal r. 45 (i) (3)) acknowledge that the sub-branch has affairs of its own which it is entitled to manage unless rules have been broken. Even then, branch intervention is permissible only to the extent of achieving compliance with the rules. They impliedly acknowledge that the sub-branch may have premises to which, normally it is entitled to control. (Federal r. 45 (i) (1).) (at p445)

54. In addition the local sub-branch provides a place for regular members' meetings where members may busy themselves with matters of policy and ideas for promoting the objects of the federation and to feed ideas through the branch to the federal council. (at p445)

55. The sub-branch must remit sustentation fees within fourteen days of the end of the quarter. It must forward its balance sheet within twenty-eight days of the termination of each half-year. It must pay to the branch each half-year all moneys remaining in its hand less $20 after defraying all working and other expenses of the sub-branch provided that where a sub-branch employs a full-time official or officials the amount to be retained may be more than $20 as fixed by the branch. (at p445)

56. Although it is clear that the branch is in control of the sub-branch and the sub-branch must take instructions, such right to control and to give instructions is not absolute. Obviously it does not extend to the giving of instructions not to perform functions expressly conferred upon the sub-branch by the rules. Thus it could not instruct the sub-branch to refrain from accepting entrance fees or contributions or approving or rejecting candidates for admission to branch membership. It could not instruct the branch not to expend funds to acquire premises or employ persons or buy equipment reasonably required for its legitimate purposes in the conduct of the sub-branch as an enrolling, collecting and recording organization of the federation. (at p445)

57. But the question of branch control arises not only in respect of administrative functions expressly conferred on the sub-branch. There are those general functions of pursuing the objects of the federation by substantive action. It is a question whether in this sphere the right to control and instruct the sub-branch is absolute or limited. In my opinion it is limited. The limits are not subject to easy definition. (at p445)

58. But in my opinion it is to be inferred from the rules as they at present stand that instructions shall conform to the test that they are given for the purpose of and by way of promoting the objects of the federation and, so far as Geelong is concerned, promoting the administration of the union as an organization administered in three tiers, namely at federal, branch and sub-branch level. (at p446)

59. Instructions within these limits might well require the sub-branch in the performance of its functions to follow a course prescribed by the branch although against its will. But an instruction, the effect of which if obeyed, would create a situation incompatible with the performance by the sub-branch of the functions committed to it in its territory would be invalid. (at p446)

60. Similarly an instruction given, not genuinely for the promotion of the objects of the federation, but for the purpose of obstructing or harassing the sub-branch in the performance of its functions or supplanting it in the exercise thereof would be beyond the power of the branch. These conclusions are in accord with the view expressed by the Australian Industrial Court in Allen v. MacWhirter (1974) 157 CAR 1046 and Allen v. Jarrad (1974) 160 CAR 1018 . (at p446)

61. It is necessary to consider the resolution in the light of those conclusions.

62. It is said by the applicant that the branch committee passed the resolution not genuinely for the purpose of giving instructions to the sub-branch to promote the objects of the federation but for the purpose of embarrassing and obstructing the sub-branch in the performance of its functions. It is said also that in certain respects it invades an area of authority unconditionally conferred upon the sub-branch. (at p446)

63. The resolution was passed unanimously. (at p446)

64. To ascertain the purpose with which a body such as the committee can be said to have acted in passing the resolution it is appropriate to have regard to the contents of the resolution, the state of mind of the persons who voted for it and the surrounding circumstances. (at p446)

65. What is involved is alleged misuse of power. In relation to curial investigation of alleged misuse of power by a municipal corporation in resolving to apply certain building restrictions to certain land pursuant to the provisions of the Local Government Act, 1919 (N.S.W.), Wootten J. said in Dunlop v. Woollahra Municipal Council (1975) 2 NSWLR 446, at p 484 : "Both parties agreed that, in scrutinizing the council's actions, I should have regard, not only to the terms of the resolutions passed by council, but to the past history of consideration of the land in question, and to the reports to council by its officers and committees which were before the council when it made its decisions. There was some argument as to whether it was proper for me to have regard to what was said at council meetings, or to matters which might affect the vote of individual councillors or reflect individual states of mind. In the event I admitted, subject to its relevance, any evidence which any party wished to call. None of it has turned out to be critical in the case, but the subsequent argument did not convince me that any of it was inadmissible. It is not hard to imagine situations in which the most cogent evidence could be available of blatant conspiracies to abuse the powers of collegiate bodies, yet that evidence would not be admitted under the rules as they have sometimes been stated". Again, he said: "If, one says, as in Baiada's case (Baiada v. Baulkham Hills Shire Council) (1952) 87 WN (Pt 1) (NSW) 222, at p 228 that 'the corporate mind can only be read in the corporate resolution and action', corporations would be largely immune from judicial control of administrative abuse. Corporations must be held responsible through those who act on their behalf, whether an act is performed by one person or by a number. Doubtless there may be problems of mixed motives as between individuals, as indeed there often are within an individual, but it is better for the courts to grapple with the true facts, however difficult this may be, than to shut out the realities of corporate action by arbitrary rules of evidence" (1975) 2 NSWLR, at p 485 . (at p447)

66. In relation to a similar investigation dealt with in Werribee Shire Council v. Kerr [1928] HCA 41; (1928) 42 CLR 1, at p 30 the High Court upheld a decision by the primary judge that a decision of the council to make a road through certain private property was invalid, Higgins J. said: "The Council carried a resolution to provide a road between the Kororoit Creek road and the Altone road and to take a strip of the plaintiff's land for that purpose; but the plaintiff objects, alleging that the purpose of the Council was not a street or road, but to enable the Commonwealth Oil Refineries Ltd. ('the Company'), an adjoining owner, to maintain in position and use a pipe-line which the Company had unlawfully laid through the plaintiff's land. If this was the real purpose of the Council, the plaintiff must succeed in her objection . . . For the Council's power to take the strip of land is not general: it is limited to the particular purpose stated in the Act; and if the Council's real purpose is not a road, if its purpose is to get the company out of a difficulty (to which the Council had contributed), the plaintiff is entitled to prevent the interference with her rights of property". It is clear that the court regarded the surrounding circumstances as potent evidence of the real purpose of the council's decision to make the road. As Higgins J. said: "The learned judge of the first instance (Wasley A.J.) considered that the plaintiff had proved her case; and there was certainly evidence on which he could come to that conclusion. The very initiation of the scheme came from the Company, not from the public. According to the Council's minutes of 28th October, 1926: 'Mr. Byrne appeared on behalf of' (the Company) 'regarding a road along which the Company had laid a pipe-line under the impression . . . that it was a public road, and after obtaining permission from the Council. Mr. Byrne stated that the Company had since discovered that the road was private property, and asked the Council to have it reopened as a public highway. He stated that the Company was prepared to recoup the Council any expenditure connected with the opening of the road; to complete the fence on the left-hand side; and to clear the road of all surface boulders to the satisfaction of the engineer, without cost to the Council'. This led up to resolutions, which I need not detail, for a road one chain wide, running to a point on the Williamstown to Altona road. This chain road was part of a former chain-and-a-half road that had been given up, sold by Council some forty years before; and there is no evidence whatever of any change in circumstances that made the road necessary. The pipe-line, however, was within the chain. But such a road would have to pass over a railway embankment, vested in the Victorian Railways Commissioners, and used for a live railway; and no permission had been granted by, or was even sought, from the Commissioners. There was evidence also that the ground over which the proposed 'road' was to pass was low and swampy, and unsuitable for a road; and that the proposed 'road' could not satisfy any public need" (1928) 42 CLR, at p 31 . (at p448)

67. In this inquiry it is useful to remember that there has been for many years a desire on the part of an active section of the sub-branch that it should acquire the status of a branch and a desire on the part of a considerable section of the branch, not only to prevent this, but to assert strict branch control or even to abolish the sub-branch. The growth of membership of the sub-branch in recent times has contributed to the desire of the sub-branch for branch status. (at p448)

68. Various incidents illustrate the tensions between the branch and sub-branch. Thus in 1972 proposals had been made by the branch that a new sub-branch by-law should be adopted. One such by-law provided that the secretary/treasurer of the sub-branch should be elected every three years by all the members of the branch. The sub-branch did not accept this provision and the matter was ultimately dropped. (at p448)

69. In March 1974 the branch secretary and one Mr. Allamby went to Geelong on the authority of a resolution of the Victorian branch, took charge of the office and changed the locks thereof. These actions were part of the matters the subject of proceedings in Allen v. MacWhirter (1974) 157 CAR, at p 1050 . Concerning these matters it was said by the court: "We were left with the distinct impression that the only substantial motive for the action taken by the branch was to nip in the bud any move by the sub-branch to achieve independent branch status". (at p448)

70. Again in July 1974 the branch gave an instruction requiring all contributions of sub-branch members to be paid to the branch secretary. This instruction was the subject of proceedings in Allen v. Jarrad (1974) 160 CAR 1018 before the Australian Industrial Court which held that it was invalid. (at p449)

71. In September 1974 a joint meeting of the Victorian branch executive and the sub-branch executive was held with a view to improving the relationship between the branch and sub-branch. The representatives of the branch stated that if the sub-branch were re-structured to be a regional office of the Victorian branch the misunderstandings and animosities between the branch and sub-branch could be completely eliminated. The meeting achieved nothing. To downgrade the sub-branch to a regional office would of course bring the sub-branch to an end and make it merely a part of the branch. In that event the misunderstandings and animosities would certainly be eliminated. (at p449)

72. Since that time relationships between branch and sub-branch do not appear to have improved. In 1976 and 1977 steps were taken by the branch to have its officers attend sub-branch meetings, to use the sub-branch office and to have its organizers perform an organizer's functions in the Geelong district and concerning the employment of members of the sub-branch in Geelong. These measures have added to the animosities and misunderstandings. (at p449)

73. The question of the sub-branch acquiring branch status has remained live. Recently the sub-branch gave attention to the provision of federal r. 6 which restricts candidates for federal secretary and assistant federal secretary to members of the federation with five years' membership. It decided to challenge this rule. (at p449)

74. On 6th April, 1977, the sub-branch secretary wrote to the federal secretary stating that the sub-branch had instructed him to take proceedings in the Federal Court of Australia "to set aside this restrictive provision and to obtain a fresh election for federal secretary and assistant federal secretary upon a just and democratic basis". The letter stated also that Victorian branch r. 21 would also be challenged "since in its amended form it denies the rank and file and in particular the Geelong membership any effective say in the Victorian branch". It concluded with a request to the federal secretary to communicate the contents to the assistant federal secretary. It was thirteen days from the date of this letter that the federal secretary attended the only Victorian branch executive meeting ever attended by him and proposed the resolution in question in this case announcing that the Geelong sub-branch must be brought into line. (at p449)

75. I look first at the contents of the resolution of 19th April, 1977. It commences with the statement that "Research at the branch office reveals that what we have been led to believe for some years, namely the legal existence of your sub-branch under the rules of the federation to be incorrect. It appears that the branch executive of the day never received the appropriate requisition and of course never considered an appropriate requisition or granted the status of a sub-branch to any such body". (at p450)

76. It is clear that existence of the sub-branch has been recognized by the branch since 1936. It appears that the branch executive minutes for 1936 cannot be found. But branch minutes of 1936 are extant. Those of 26th March, 1936, stated: "The secretary reported having visited Geelong with comrades Harridence, Criddle, Spencer and Trezise on 15th March and at a poorly attended meeting a resolution was carried - That a sub-branch of the Victorian branch be formed at Geelong. Messrs. Hillier and Morrison were appointed president and secretary pro tem until members joining up . . . " Those of 23rd April state " . . . the secretary in conjunction with Messrs. Trezise, Criddle, Harridence and Spencer paid a further visit to Geelong for to be present at the sub-branch Geelong and fifty-four members were enrolled and nominations for officers received. The next meeting will be held in three weeks' time and the election of officers on 13th April". On 7th May the secretary reported the meeting had been held and the membership had increased to seventy-six. (at p450)

77. Accordingly it can be said that from research on the subject of the existence of the sub-branch it could not have appeared that the branch executive of the day never received the appropriate requisition and never considered an appropriate requisition or granted the status of a sub-branch to any such body. Research would have revealed that the activities of the branch executive in these respects could not be verified from branch executive minutes because they could not be found but that there was every indication from the branch minutes that the branch was satisfied that the sub-branch had been duly formed that it had members and that the branch was actively promoting its growth. A clearer situation for the application of the principle omnia praesumuntur rite esse acta would not often be found. (at p450)

78. It is difficult to understand how it came about after forty years during which the branch and sub-branch had carried on their business and innumerable transactions of magnitude had taken place between them, that doubt as to the legal existence of the sub-branch should have entered the mind of any person. It is more difficult to understand how it came about that the situation was actually misrepresented in the terms of the resolution of 19th April, 1977. One possible reason for such conduct would be that an attack upon the legal existence of the sub-branch would reduce its resilience in the current controversies between branch and sub-branch and advantage the branch therein. This is the only reason which occurs to the mind as rational. It would have been reassuring if some of the respondents had given evidence as to the origin of the notion that the sub-branch was not legally formed and of the real reason for this attack on its legality, but none did. In the absence of an explanation the inevitable conclusion is that the attack was a mere tactical manoeuvre. As such, it reflects badly on the genuineness of the whole exercise of 19th April. The attack has now of course been abandoned. (at p451)

79. The second item of importance in the resolution is the demand in par. 2 (a) of the resolution for payment by the sub-branch to the branch of $32,509.75 less $200. It was conceivable that a claim for payment of moneys kept in a sub-branch accident fund and a staff arrears fund amounting in all to $3,123.14 might have genuinely been made. But in previous years the branch had concurred in the retention of the moneys in these funds. But as to the balance, namely $29,186.61 there was no basis upon which a claim could be made. The fact was that the amount in question less $200 had been paid by cheque for $29,166.61 under cover of a letter of 3rd March, 1977. It is surprising that a business-like body such as the Victorian branch committee should have proceeded upon such an erroneous basis. The questions are how and why did the error arise and did it have significance with respect to the carrying of the resolution. (at p451)

80. No attempt has been made to explain how the error arose. Of the persons present at the committee meeting of 19th April at least two had no personal knowledge on the matter. During the course of the meeting, Mr. Slevin, one of the members of the committee asked the branch secretary whether the cheque for $29,186.61 which had been forwarded with the sub-branch balance sheet was anything to do with the $32,000 referred to in the resolution. The secretary said, "Nothing to do with it". How he could have said this is a mystery and it is not explained. If the statement could be challenged or explained there was ample opportunity in these proceedings for that to be done. It was not done. It is clear that at the meeting the federal secretary informed members that the Geelong sub-branch had been breaking the rules for years and something had to be done about it. The sub-branch had to be brought into line. Under cover of such statements members not acquainted with the truth could not but infer that although $29,186.61 had recently been paid it had nothing to do with the $32,309.75 claimed and that that sum was still due and owing and that it was partly in respect of that amount that the sub-branch had to be brought into line. Any member who knew the truth would have known that the claim was quite unfounded. Those members who believed that there was $29,000 odd outstanding from the Geelong sub-branch were misled. The belief was calculated to influence a voter to vote for the resolution. It gave point to the statement that the Geelong sub-branch had to be brought into line. Thus there is a situation in which the meeting proceeded upon a significant error of fact which could not have occurred but for gross inefficiency or conscious misrepresentation. It is the duty of the branch secretary to be aware of the financial position of the branch in relation to the sub-branch. In this case he had had the sub-branch balance sheet with the cheque for $29,186.61 some six weeks earlier. It is so unlikely that he was unaware of the true position that it is a reasonable inference that he was willing to allow the error to persist publicly in the meeting. He could not be unaware of its effect upon Mr. Slevin and others at the meeting who were interested. In these proceedings he was silent on these points. (at p452)

81. It is quite reasonable, almost compelling, to infer that he and various members of the committee and the federal secretary were most anxious to "bring the Geelong sub-branch into line" for reasons quite apart from the promotion of the objects of the federation. The incident is again a reflection on the bona fides of those who were supporting the resolution. (at p452)

82. I come next to par. 2 (b) of the resolution. It makes a claim for sustentation fees due for the purported members of the sub-branch for the period 31st March, 1977. This claim for such sustentation fees was valid. That the fees were in fact payable quarterly and a payment due on 31st March, 1977, was due to a change of rule which had been made in 1976. The secretary of the Geelong sub-branch had not paid the amount due on 31st March, 1977, because of the possibility of there being a change in the rate of sustentation fees at the March meeting of the federal council. There was no question of sub-branch ability or willingness to pay the amount and it was paid by 26th April, 1977. (at p452)

83. So far as par. 2 (c) is concerned the allegation is that there were arrears of certain sustentation fees in respect of the financial membership over the period 1st January, 1974, to 31st December, 1976. There is no evidence of any such arrears. The inference is the other way. So far as can be seen there was no substance in the allegation that any such fees were due and no reason for making it. As it is, it has the appearance of being mere propaganda to support the case for bringing the Geelong sub-branch into line. (at p452)

84. With respect to par. 3 of the resolution it may be said that the instruction is onerous. In a case in which there was some reason to suppose that the information requested in such a hurry was so required, or required at all, such an instruction might be regarded as given for the legitimate purpose of controlling the sub-branch and supervising its efficiency. But before this Court the sub-branch called as a witness its auditor, Mr. Cullen, a chartered accountant of Geelong who produced the balance sheets and accompanying papers with respect to the accounts of the sub-branch over the years from 1969. This professional man gave every impression of being reliable, efficient and aware of his responsibilities. He confirmed the accuracy of the accounts. It is of particular significance that in cross-examination not one question directed to the accuracy or otherwise of the sub-branch accounts was asked. No hint was made of any matter which would support the notion that there was some good reason for the instruction in question. It stands therefore, as on its face it appears, namely an unreasonable and oppressive instruction designed to harass the sub-branch in the administration of its affairs. In 1974 in Allen v. MacWhirter (1974) 157 CAR 1046 officers of the branch who gave evidence had conceded that there was no suggestion of financial impropriety on the part of the sub-branch executive. (at p453)

85. So far as concerns par. 4 of the resolution it is said that this is an instruction which, if obeyed, would create a situation incompatible with the performance by the sub-branch of a function conferred upon it by the rules. It is a blanket prohibition for an indefinite time on the obtaining of legal aid or advice. It is pointed out that the branch rules contemplate that the sub-branch may be sued or sue. In either event legal aid and advice would be essential. It is inherent in the carrying on of business affairs that legal aid and advice may be required. It is to be observed that it was said by the Australian Industrial Court in Allen v. MacWhirter (1974) 157 CAR, at p 1050 : "We were left with the distinct impression that the only substantial motive for the action taken by the branch was to nip in the bud any move by the sub-branch to achieve independent branch status. Taking control of the finances and the books of the sub-branch would obviously aid in this attempt because it would deny to the sub-branch the financial means to get necessary legal advice". (at p453)

86. Indeed there could well be a situation in which a branch might, as this branch showed some signs of doing, attack the very legal existence of the sub-branch. An order that the sub-branch should refrain from undertaking liability for legal aid and advice in such circumstances would be so oppressive that it could not be regarded as an instruction in good faith for promoting the objects of the federation. (at p453)

87. As to the instruction contained in par. 5 of the resolution the situation is broadly comparable with that in respect of the instruction contained in par. 3. Similar comments are appropriate. (at p453)

88. The instruction contained in par. 6 took effect, according to its terms, with respect to two employees of the sub-branch. One was Mr. Sherriff whose position of organizer was currently before this Court (see Johns v. Allen (1977) 29 FLR 249 ) and the other was Mrs. Kimmell. The instruction to dismiss Mrs. Kimmell has the appearance of being quite capricious. There is no suggestion that her services as a person skilled in foreign languages were not necessary and highly beneficial in the proper performance of the services of the sub-branch to its members, some sixty per centum of whom spoke a language other than English for normal communication. (at p454)

89. The instruction carries an implied order to refrain indefinitely from the employment of any further staff. It is interpreted by the sub-branch as an exercise designed progressively to deprive the sub-branch of the capacity to carry on its functions. In the absence of some explanation it is difficult to reject this conclusion. No explanation was put forward. (at p454)

90. So far as the instruction contained in par. 7 of the resolution is concerned it is plainly the duty of the sub-branch to co-operate with branch officers visiting the sub-branch in all respects as may be reasonable. The provision of office space for such officials raises questions. Does the sub-branch have the space and for how long and for what purposes is it sought? Indeed the presence of branch officers in the sub-branch office necessarily involves consideration of the purposes of such presence and their compatibility with the performance of the sub-branch of its functions. The past aggression of branch officers has created an atmosphere of tension in the sub-branch office, the clerical staff of which is uneasy and apprehensive in the presence in the office of branch officers. So far as these tensions are, as would seem likely, the result of branch action it is for the branch to take remedial steps. What is reasonable in the way of co-operation depends upon circumstances, one circumstance being the presence or absence of a proper attitude on both sides. If the instruction were intended to speak on a basis of reasonableness it would be unobjectionable. On past performance such basis cannot be assumed. In the light of the terms of the resolution generally it is reasonable to regard it as but one additional tactical step in the then current battle and not really directed to the promotion of the objects of the federation. (at p454)

91. In the applicant's attack upon the genuineness of the resolution as an exercise of branch control and instruction for the purpose of promoting the objects of the federation, circumstances other than those discussed above were relied upon. And in my opinion the evidence does disclose other circumstances which give support to the attack. I do not find it necessary to refer specifically to them however. I would however express surprise that no person who drafted or promoted the resolution attempted to support its contents as genuinely required or designed to further the objects of the federation. (at p454)

92. In the result I am satisfied that the resolution was passed, not as a genuine step in the administration of the branch in the promotion of the objects of the federation, but as a step designed and intended to obstruct and harass the sub-branch in the performance of its functions. Accordingly it ought to be treated by the respondents as null and void.

Federal rr. 6, 6A, 17 (n) and branch r. 21 - s. 140 proceedings. (at p455)

93. With respect to these rules the applicant seeks orders pursuant to s. 140 of the Act that they do not comply with sub-s. (1) of that section and consequently are void.

94. These rules provide that to be eligible for nomination for election as federal secretary or assistant federal secretary a person must at the date of his nomination for election to such office have been a member of the federation continuously for at least five years. (at p455)

95. It is clear from the authorities that provisions of the kind under discussion are not uncommon in registered organizations. They are based on considerations going to the stability of the organization, and the desirability of persons in office being acquainted with the rules, with the industry and with the practical administration of the union as a registered organization. I refer to the discussion of the relevant authorities of this matter in the judgment of this Court in Leveridge v. Shop Distributive and Allied Employees' Association [1977] FCA 9; (1977) 31 FLR 385 . (at p455)

96. The applicant contends that in the circumstances of this union the provision that eligibility to nominate for election to federal secretary and federal assistant secretary is conditional upon five years' previous continuous membership of the organization imposes upon the membership a condition which is unreasonable upon general considerations, but particularly having regard to s. 2 (e) and (f) of the Act to which reference must be made in accordance with s. 140 (1) (c). (at p455)

97. Section 2 (e) and (f) of the Act provide that the chief objects of the Act include: "(e) to encourage the organization of representative bodies of employers and employees and their registration under this Act; and (f) to encourage the democratic control of organizations so registered and the full participation by members of such an organization in the affairs of the organization." (at p455)

98. In particular it is said that a member who is excluded from the right to stand for any office in a union is to that extent excluded from full participation in the affairs of the organization, and that in such a case one of the chief objects of the Act is not achieved. It is not said that certain conditions may not be imposed upon participation by members in certain union affairs but that the reasonableness of conditions which do so must be assessed with the statutory object in mind together with other more general considerations. (at p455)

99. It is clear that there are a great number of members of this union whose membership is most likely to extend for less than five years and even considerably less. All those persons are excluded from the opportunity to stand for the offices in question. But it is not with respect to that class of member the rule is so important. A member whose period of membership is so short may well not be thought an appropriate person to occupy an office of importance and of four years' duration. But amongst the current membership of less than five years' duration there is, no doubt, a substantial number who will remain in the union for many years. The question is whether a condition excluding them from standing for election for the offices in question although they may have been active members for three or four years is reasonable. And it must be observed that in the case of a person whose membership commences just after an election has been held in an election year the period of his opportunity to stand for office may not arise until he has been a member for seven or almost eight years. (at p456)

100. Accordingly at the time for nominations in an election year there is a proportion of members who have joined within the last five years who cannot nominate and there are also members with membership going back almost to eight years before that time who have been unable to nominate during all that time. (at p456)

101. In this union it is a condition of eligibility to nominate that the candidate has attended one-half of the branch meetings during two years before nominating except when on shift work or engaged on official union business. (at p456)

102. In Victoria there are eleven branch meetings each year. (at p456)

103. The total membership of this union is about 41,500 comprising 18,000 in the Victorian branch; 9,000 in the New South Wales branch; 11,000 in the South Australian branch: and 3,500 in the Queensland branch. It appears that the turnover of members is very high. This arises from the fact that a high proportion of members is unskilled. It also appears that of the current total membership of the Geelong sub-branch some sixty-four per centum have joined during the last five years. It also appears that termination of members during that period fall not far short of the new admissions. These conditions appear to be fairly typical of the union as a whole. (at p456)

104. In many of the classes of work in which members engage there is said to be extreme instability. On the other hand there is a core of membership in stable situations such as government employment which is extremely stable. (at p456)

105. It was pointed out in Leveridge v. Shop Distributive and Allied Employees' Association [1977] FCA 9; (1977) 31 FLR 385 that in relation to this class of problem there is a distinction between restrictions on candidature for election to councils and committees with numerous members and restrictions on candidature for important officers, such as secretary and assistant secretary. (at p457)

106. There is to my mind a difference in quality between these two categories of offices. There is room for inexperienced persons amongst numerous councillors. But there is no room for an inexperienced federal secretary or one who lacks outstanding ability. (at p457)

107. For the position of federal secretary unusual qualities are required. The federal secretary requires a detailed knowledge of conditions in the industry, knowledge of innumerable awards, some work experience, managerial ability and qualities of leadership. His knowledge of the industry must extend over four States. It is a turbulent and important industry. In the conditions of the industry in which the members of this union work it is necessary that the federal secretary be a capable negotiator and have sufficient personality to press for advantage for his members when appropriate and to quench the tide of militancy when appropriate. In both these aspects of his work the secretary must be a man of exceptional strength of character. When the interests of his members or other considerations require the exercise of restraint it is then that the real interests of the members may be most at risk and that the secretary is vulnerable to pressure and competition from ambitious men. (at p457)

108. With elections recurring within each four years pursuant to the recent legislative provisions instead of six years as the rules would otherwise provide, this pressure is intensified. (at p457)

109. True it is that the provisions of rr. 6 and 6A exclude many members from nominating for election to the position of secretary and assistant secretary and to that extent exclude them from full participation in the affairs of the union. But a very large proportion of those persons could never have participated therein; a larger proportion would never have considered participation of the kind in question in any event. (at p457)

110. It would be reasonable to think that the number of persons in the union excluded from standing for either of the two positions by the rules would be very small. But it is perhaps the vital consideration that the rules do create a strong probability that the man who is elected will have the necessary qualities. Certainly he will be well-known to the leaders of the union. (at p457)

111. Whether the rule offends s. 140 is to my mind a question which will appeal differently to different reasonable people. I think most such persons would consider that a qualifying period of two years was minimal. To my mind this is too short a period. The very presence of the large shifting membership calls for caution in the choice of the chief executive officer. (at p457)

112. If one goes beyond a two-year period, as I think one must, where does one stop? It seems to me that in a matter of this kind great regard should be accorded to the opinion of the members themselves as expressed in the rules, especially as in this case the relevant rules have stood for many years. The state of the rules itself reflects indirect participation of all the members in the affairs of the organization. (at p458)

113. It is to be observed that there is no evidence of any general feeling in the organization requiring a change. The attack has emerged from the Geelong sub-branch at a time of considerable conflict in the organization, and may well be attributed to current dissatisfaction with union management rather than to depth of consideration of the real merits of the problem from the point of view of the organization as a whole. (at p458)

114. I have spoken rather of r. 6 than r. 6A but I think on the whole, although with less force, that what is said about the position of secretary is applicable to that of assistant secretary. (at p458)

115. Accordingly I am not satisfied that those portions of r. 6 or r. 6A which are attacked offend the provisions of s. 140 (1) (a) or s. 140 (1) (c).

116. Federal r. 17 (n) provides that the federal secretary shall be an ex officio member of all branch committees of management. (at p458)

117. It is said by Mr. Shaw Q.C., for the applicant, that on its proper interpretation the rule does not comply with reg. 115 (1) (d) (i) because it provides that a person not having been elected by the members of a particular branch shall be a member of its committee of management. (at p458)

118. Regulation 115 (1) (d) (i) does not state in express terms that the election which it prescribes for each branch committee of management shall be an election at which only the members of that branch shall vote. (at p458)

119. Accordingly it was argued by Mr. Harrison that there is compliance with reg. 115 (1) (d) (i) if the rules provide with respect to a member of a committee of management that he be a person who has acquired his qualification to be a member by the process of election. He contended that election by the whole membership of the organization was acceptable for this purpose. It is difficult to accept this contention. (at p458)

120. It seems to lead to the conclusion that reg. 115 (1) (d) (i) would be satisfied by a rule providing that the whole of the committee of management of the Victorian branch might be elected by the members of the New South Wales branch. In that case each person elected would have acquired his qualification to hold it by the process of election. (at p458)

121. Although it is not stated in the Act in express terms that committee members of a particular branch must be elected by the members of that branch there are indications in the Act which tend to support that view. Section 2 declares that one of the main objects of the Act is to encourage the democratic control of registered organizations and the full participation by members of such organization in its affairs. Section 140 (1) (d) requires that the rules of an organization shall be such as to provide for the autonomy of a branch in matters affecting members of the branch only. This latter is expressed in mandatory terms. Autonomy is not defined in the Act, but in the Oxford Dictionary the following meaning appears: "right of self government, personal freedom, a self governing community". It is a reasonable view that branch autonomy would be invaded if one or more of the members of its committee of management were elected by persons not being members of the branch. (at p459)

122. Reference to s. 133 (1) and s. 133 (6) is also much in point. Section 133 (1) read in conjunction with s. 133 (6) provides that the rules of a branch of an organization shall provide for the election of the holder of each office within the branch either by (i) a direct voting system, or (ii) a collegiate electoral system. (at p459)

123. A direct voting system as defined in s. 4 (1) means "a method of election at which all financial members, or all financial members included in such branch, section or other division or in such class as is appropriate . . . are . . . eligible to vote". (at p459)

124. A collegiate electoral system means "a method of election comprising a first stage at which persons are elected to a number of offices by a direct voting system and a subsequent stage . . ." (at p459)

125. It seems quite clear from these provisions that to comply with s. 133 (1) (a) an election to an office of a branch must be an election by the members of the branch exclusively. Such a state of affairs accords with the ordinary notions of the devolution of authority in federations. There is no real reason to depart therefrom in this case. In my opinion therefore federal r. 17 (n) is in conflict with s. 140 (1) (a) and accordingly is void. (at p459)

126. It is necessary to note the presence of federal r. 40 which provides that one of the officers of each branch shall be the federal secretary. There is much to suggest that "federal secretary" appears as an erroneous substitution for "branch secretary". However neither r. 40 nor any other federal or branch rule renders the federal secretary a member of the branch committee of management.

127. In relation to this rule for reasons stated in the judgment of Evatt and Northrop JJ. which I have had the opportunity of reading, I am satisfied that it offends s. 140 (1) (a) and (c) and is void accordingly.

Injunction concerning alleged inter-meddling. (at p459)

128. Pursuant to par. 3 of the rule nisi herein an order is sought that the respondents and each of them (other than the organization) perform and observe the rules of the organization by ceasing from exercising or purporting to exercise any of the rights, duties, powers and privileges of or properly exercisable by or pertaining to the committee of management of the Geelong sub-branch of the organization or of any full-time official or officials employed by the said sub-branch. (at p460)

129. The rule nisi is dated 20th April, 1977. (at p460)

130. On 18th April, 1977, the branch secretary wrote to the secretary of the sub-branch a letter in the following terms:

131. I know you will be as pleased to learn, as I am to advise you, that organizer Jim Buck and organizer Les MacKay have been made available to work in co-operation with you, the sub-branch leadership, and shop stewards in the Geelong area, for an indefinite period. (at p460)

132. The aim is to add additional strength to what the sub-branch is already doing in extending the membership influence and awareness among members of the benefits of unionism. (at p460)

133. We look forward to results from this decision that will be not only of lasting benefit to our Geelong members, but also to the Victorian branch and the federation as a whole. (at p460)

134. I think you will agree that the choice of Jim and Les is particularly appropriate as both are well up with the problems facing Ford workers. (at p460)

135. They are therefore equipped to work successfully with you among the main concentration of our members in your area, that is, of course, in the Ford plant. (at p460)

136. Several matters have arisen that have prompted us to make them available to help in Geelong. (at p460)

137. Just in case you have not yet received one I am enclosing a copy of the new Long Service Leave Award. In it you will see that we have made some advance in conditions. We will be issuing two leaflets of explanation. Jim and Les are familiar with the new conditions, and I have suggested they confer with you and work out how best to convey to members in Geelong their new entitlements. (at p460)

138. The new award operates from the first full pay period commencing on or after 15th April, 1977. (at p460)

139. It covers all of our members with the exception of those working under the Retail, Repair and Services Award. Enclosed you will find a report issued by the federal office which explains the reasons why this is so. (at p460)

140. Because of the above, one of our leaflets is directed to those who work in this repair section of the industry. Copies of both leaflets (in quantity) are available to you. I know this area is a difficult one to organize, but using the long service leave issue I hope the presence of Jim and Les will add weight to the sub-branch effort to recruit more members from this side of the industry. (at p460)

141. Then there is the federation decision to establish a union-controlled superannuation scheme. (at p460)

142. This too, is an issue that requires effective explanation among members if it is to succeed. We will ensure that you receive material on this from our federal office. (at p460)

143. My attention has been drawn to the minutes of the sub-branch meeting held on 7th April, 1977, in which a number of queries in regard to workers' compensation are referred to. (at p461)

144. For some time (for example see March issue of the journal) we have been circulating information to members on this subject. Thinking that it may be of help to you I am enclosing one copy of a shop stewards' guide we have distributed. (at p461)

145. We have other material which we have found to be very useful to our shop stewards which I think would be of help in the sub-branch campaign of explanation about the Act. (at p461)

146. We also need to alert members as to the consequences involved in the proposed changes to the Conciliation and Arbitration Act. We have circulated the enclosed letter from Hon. Clyde Cameron, and are having material prepared in different languages which will be of help in the various plants. (at p461)

147. I suggest that Jim and Les confer with you on any other issues you think should be raised with members, and decide on what form of organization may be necessary to ensure the maximum benefit is gained from their visit. (at p461)

148. I look forward to receiving from you favourable reports of their activities in service to the Geelong members." (at p461)

149. On 19th April the secretary wrote to the secretary of the sub-branch in the following terms:

"Dear Sir,

I note that you have called a special meeting of the Geelong

sub-branch on Wednesday 20th April, 1977.

I have instructed Mr. C. Zaglas and Mr. E. Lyons to attend this

meeting and to offer you any assistance you may require."

There is little doubt that on receipt of these letters the secretary

of the sub-branch was tempted to remember the ancient warning

about the Greeks bringing gifts.

The contents of these letters raise in a practical form the ambit

of the respective functions of the sub-branch and the branch with

respect to the federation's affairs in the Geelong territory. (at p461)

150. Once it is conceded or established that the sub-branch is an identifiable section of the federation organized pursuant to the federal and branch rules and deriving powers and functions therefrom as a section of the federation required to promote the interests of the federation in its area it inevitably follows that for the purpose of servicing the Geelong area and the members attached to the sub-branch and performing functions such as seeking and enrolling new members and generally administering that territory for the federation, it is primarily the federation's sole instrument to do all these things. The branch plays its part in these matters in its role in exercising control and giving instruction to the sub-branch as to the conducting by the sub-branch of its functions in accordance with principles discussed above. However, account must be taken of the factor that the sub-branch members are also members of the branch. Accordingly there may be branch affairs in respect of which action by the branch itself in the Geelong territory would be necessary or at least authorized. (at p462)

151. But in my opinion the creation of the sub-branch inevitably operated as an excision of Geelong from the territory of the branch except in respect of matters affecting the Geelong members as branch members rather than as sub-branch members. It would follow that there would be no objection to the offer of assistance made in par. 1 of the letter of 18th April. As an offer however it was subject to rejection by the sub-branch. In so far as that paragraph amounted to an instruction it apparently contemplated that Messrs. Buck and MacKay would operate otherwise than under the control of the sub-branch in matters clearly the function of the sub-branch and to that extent in substitution for or by way of supplanting the sub-branch in the performance of its functions. When Mr. Allen was asked, why, when Mr. Buck was in Geelong and doing work of interviewing employers and apparently employees, he found it necessary "to keep an eye on him", he said, "if he went there without myself being in attendance everybody would think that any problem or anything they had taken up with Mr. Buck would automatically be known to me and the sub-branch and the executive of the sub-branch, which fact would not be the case". (at p462)

152. This comment demonstrates and goes to the heart of the whole problem. (at p462)

153. The balance of the letter is expressed in terms of "help in Geelong". It thus concedes, and rightly so, that the matters referred to are matters concerning the servicing of the Geelong members in which the sub-branch would be the appropriate federation instrument. It would in my opinion be a matter for the sub-branch to decide whether it needed this help, whether if it did it would accept the branch offer or engage staff for itself. For the branch to say what persons, reasonably required for the work of the sub-branch, should be employed by the sub-branch, would extend beyond controlling the sub-branch or giving instructions to it for the purpose of the proper government of the federation as a three-tiered organization. It would be an interference in essential internal activities of the sub-branch undertaken by it within the limits of its funds in equipping itself as the local instrument of the federation to perform the functions committed to it by the rules. (at p462)

154. I do not read the decision of this Court in Johns v. Allen (1977) 29 FLR 249 as deciding that the sub-branch lacks authority to employ necessary staff to work in the field on the local affairs of the sub-branch. However it does not appear to me that an injunction in the proposed terms would be appropriate at this stage. (at p462)

155. I consider that liberty to apply should be reserved so that any further difficulty may be brought swiftly before the court. (at p463)

156. Having regard to the observations above it is unnecessary to make any orders in Nos. V16 and 17 of 1977. (at p463)

EVATT AND NORTHROP JJ. In matter No. V13 of 1977 the court has before it the return of an order nisi granted by Keely J. on 20th April, 1977, in which the claimant (hereinafter called "Mr. Allen"), a member of the Vehicle Builders Employees' Federation of Australia (hereinafter called "the federation"), seeks orders first, under s. 141 of the Conciliation and Arbitration Act 1904 (hereinafter called "the Act"), giving directions that the respondents, other than the federation, who, with the exception of Mr. Sandilands who is the assistant federal secretary, together constitute the State executive of the Victorian branch of the federation (which branch is hereinafter called "the Victorian branch"), each perform and observe the rules of the federation in specified respects, and secondly, under s. 140 of the Act, declaring specified rules or parts of rules of the federation contravene s. 140 (1) of the Act. In matter No. V16 of 1977 the court has before it an application by the federal secretary of the federation (hereinafter referred to as "Mr. Townsend"), who is a respondent in matter No. V13 of 1977, for orders to be made pursuant to ss. 171C and 171F of the Act relating to the existence of the Geelong sub-branch of the Victorian branch (which sub-branch is hereinafter called "the Geelong sub-branch"). In matter No. V17 of 1977, the court has before it an application by Mr. Townsend for orders to be made pursuant to s. 171C of the Act relating to the Geelong sub-branch and the meeting of the State executive held on 19th April, 1977. With the consent of all parties, the three matters were heard together, but for the sake of convenience, the matter arising under s. 140 of the Act was heard first. (at p463)

2. The federation is an organization within the meaning of the Act and pursuant to the provisions of the Act, its affairs are regulated by rules. For the purposes of these proceedings, the relevant rules of the federation are the rules which apply with respect to all members of the federation (hereinafter called "the federal rules") and the rules made by the Victorian branch pursuant to the powers conferred by federal r. 42 and which regulate the affairs of the Victorian branch (which rules are hereinafter called "the Victorian branch rules"). In addition, other branches of the federation have made rules regulating their branch affairs. Mr. Allen is seeking orders declaring that: (1) federal rr. 6 and 6A, in so far as they require that to be eligible for nomination for election as federal secretary or assistant federal secretary of the federation, a member must at the date of his nomination have been a member of the federation continuously for at least five years; (2) federal r. 17 in so far as it provides that the federal secretary shall be an ex officio member of all branch committees of management; and (3) Victorian branch r. 21 in so far as it purports to empower the State executive of the Victorian branch to decide whether a ballot of the financial members concerned should be held, each contravenes s. 140 (1) of the Act. If the court makes such declarations, the rules or part of the rules subject to the declarations "shall be deemed to be void from the date of the order": s. 140 (5) of the Act; The Queen v. Judges of the Commonwealth Industrial Court; Ex parte Amalgamated Engineering Union (hereinafter called "Shearer's case") [1960] HCA 46; (1960) 103 CLR 368 . (at p464)

3. The relevant part of the rules of the federation under challenge are set out in full: (at p464)

4. (1) Federal r. 6 relates to the office of federal secretary. The federal secretary is to be elected by a secret postal ballot of all financial members of the federation and is to hold office, subject to removal, resignation or dismissal (federal r. 6 (f), (g) and (h)) for a term of six years. Sub-rule (d) restricts the class of members of the federation eligible to be nominated for the office:

"6. FEDERAL SECRETARY

(d) To be eligible for nomination for election as federal

secretary a person must at the date of his nomination:

(i) have been a member of the federation continuously for at

least five years;

(ii) have been a financial member of the federation

continuously for at least two years immediately prior to his

nomination;

(iii) have taken an active interest in the work of the branch,

sub-branch or office to which he is attached or belongs by

attending at least fifty per cent of the branch or sub-branch

meetings for at least two years immediately prior to the date of

calling of application.

(iv) This condition shall not apply where: (a) the applicant was

working shift work providing he has attended fifty per cent of the

meetings of the branch or sub-branch which fall on the week or

weeks in which he works day shift; or (b) the applicant was absent

through attending to official union business; (c) an apology with

reasonable excuse accepted by the meeting to be taken as

attendance at the meeting." (at p464)

5. (2) Federal r. 6A relates to the office of assistant federal secretary. The assistant federal secretary likewise holds office for a term of six years. Sub-rule (b) provides:

"6A. ASSISTANT FEDERAL SECRETARY

(b) Subject to sub-cl. (a) hereof the provisions of r. 6 shall

govern the election, eligibility, suspension, dismissal, removal,

discipline, absence from duty, incapacity and speaking and

voting powers of the assistant federal secretary as fully and

effectively as if in all such provisions an expression 'assistant federal secretary' was substituted for the expression 'federal secretary' wherever appearing in r. 6 and all such provisions were reproduced in full in this rule." (at p465)

6. (3) Federal r. 17 specifies the powers and duties of the federal secretary. Sub-rule (n) provides:

7. The federal secretary shall: (n) Be an ex officio member of all branch committees of management." (at p465)

8. (4) Victorian branch r. 21 relates to the taking of ballots and provides:

9. On all occasions when a measure or measures are to be introduced, which may be decided at any branch meeting as being a measure or measures substantially affecting or likely to substantially affect the welfare of members generally, the branch may, subject to it being authorized by the State executive or the committee of management, cause to be held a ballot of all financial members of the branch (including the sub-branches appropriate to this rule). (at p465)

10. Where the State executive or committee of management is of the opinion that the question applies exclusively to a sub-branch or sub-branches, the ballot may be limited to financial members of the sub-branch or sub-branches concerned. (at p465)

11. Where the branch desires a ballot, the State executive or committee of management shall consider the proposal and shall decide whether a ballot of the financial members concerned shall be held. If a ballot is held a recommendation for or against the proposed measure or measures together with reasons may be submitted by the State executive or committee of management to all financial members concerned for approval or otherwise. (at p465)

12. Ballots taken on questions under this rule shall be conducted in accordance with the rules. The State secretary must inform all sub-branches of the results of such ballots. (at p465)

13. Results of ballots conducted by sub-branches in sub-branches shall be certified as correct by the sub-branch president and the State branch secretary/treasurer advised accordingly." (at p465)

14. It is noted that in the Victorian branch rules the phrases "branch executive", "executive committee", "the executive", "State executive" and "committee of management" appear to be synonyms for describing the committee of management specified in reg. 115 (1) (d) (i) (A) of the Conciliation and Arbitration Regulations (hereinafter called "the Regulations"). See also the definition of the word "office" contained in s. 4 (1) of the Act. Hereinafter the phrase "State executive" will be used to refer to the committee of management of the Victorian branch. (at p465)

15. The rules of the federation and in particular the federal rules and the Victorian branch rules each in their current form have been before this Court on two recent occasions namely in Johns v. Allen (1977) 29 FLR 249 and Allen v. Vehicle Builders Employees' Federation of Australia [1977] FCA 8; (1977) 30 FLR 263 . In addition, the federal rules and the Victorian branch rules as they existed prior to recent amendments and therefore not identical with the current rules, were before the Australian Industrial Court in Allen v. MacWhirter (1974) 157 CAR 1046 and Allen v. Jarrad (1974) 160 CAR 1018 . A number of the federal rules and of the Victorian branch rules are set out in full in the reasons for judgment for the first two matters referred to above and it is not proposed to set out the terms of those rules in these reasons for judgment. At this stage, it is sufficient to say that the federal rules recognize branches, each "with full local autonomy subject to" the federal rules (federal r. 39). The branches are the Victorian branch, the New South Wales branch, the Queensland branch and the South Australian branch. Each branch is empowered to form sub-branches (federal rr. 39 (b) and 45). A number of the branches have formed sub-branches and in particular the Victorian branch, subject to what appears hereafter, has formed the Geelong sub-branch and a sub-branch in Hobart. There are some 41,500 members of the federation of whom some 3,500 are members of the Queensland branch, some 9,000 are members of the New South Wales branch, some 11,000 are members of the South Australian branch and some 18,000 are members of the Victorian branch. The structure of the federal rules is such that each member of the federation of necessity must be a member of a branch of the federation, the rules making no provision for membership except through a branch: see federal rules under the heading "Membership", being federal rr. 20-23 inclusive. A member cannot be a member of more than one branch at any one time. The structure of the federal rules and the Victorian branch rules are such that each member of the federation, being a member of the Geelong sub-branch, or for that matter the Hobart sub-branch, of necessity is a member of the Victorian branch and, on the facts that have occurred with respect to the Geelong sub-branch, has the full voting rights conferred on members of the Victorian branch, the right to attend meetings of the Victorian branch and the right to be nominated for and elected to office on the State executive: federal rr. 40 and 45, Victorian branch rr. 5, 6, 11 and 12. It does not follow that every member of the Victorian branch is a member of the Geelong sub-branch and in fact it is only those members of the Victorian branch who are attached to the Geelong sub-branch, who as members of the Geelong sub-branch, have the privileges and obligations conferred or imposed upon sub-branch members of the federation by the rules of the federation. Of the 18,000 members of the Victorian branch, some 4,500 are members of the Geelong sub-branch. It is immediately apparent that the membership of the Geelong sub-branch is greater than the membership of the Queensland branch. The large membership of the Geelong sub-branch in proportion to the total Victorian branch membership and in comparison with membership in other branches, largely explains the frequent reference to legal proceedings involving matters internal to the federation. Until a satisfactory solution to this problem is reached, the federation will continue to find that its resources are being expended on legal proceedings concerning internal conflicts. (at p467)

16. For the purposes of considering the application made pursuant to s. 140 of the Act, the court is required to have regard to the objects of the Act and the purposes of the registration of organizations under the Act - see Cassidy v. Amalgamated Postal Workers' Union of Australia per Dunphy and Kerr JJ. (1967) 11 FLR 124, at pp 126-127 . We refer to one of the chief objects of the Act as contained in s. 2: "2. The chief objects of the Act are - . . . (f) to encourage the democratic control of organizations so registered and the full participation by members of such an organization in the affairs of the organization." This object was added to s. 2 by Act No. 138 of 1973, s. 3. The present application of decisions of the Commonwealth Industrial Court relating to proceedings pursuant to s. 140 of the Act, given prior to 13th November, 1973, being the date Act No. 138 of 1973 came into force, may thereby be affected. (at p467)

17. The purposes of the registration of organizations under the Act, stated very broadly, are to facilitate the prevention and settlement of disputes arising from industrial relationships between groups or classes of persons ascertained by reference to the conditions of eligibility prescribed by the rules of organizations so registered: the Jumbunna Coal Mine, No Liability v. Victorian Coal Miners' Association (1908) 6 CLR 309 ; R. v. Dunlop Rubber Australia Ltd.; Ex parte Federated Miscellaneous Workers' Union of Australia [1957] HCA 19; (1957) 97 CLR 71 . (at p467)

'140. (1) The rules of an organization -

(a) shall not be contrary to, or fail to make a provision required

by, a provision of this Act, the regulations or an award or

otherwise be contrary to a law;

(b) shall not be such as to prevent or hinder members of the

organization from observing the law or the provisions of an

award;

(c) shall not impose upon applicants for membership, or

members, of the organization, conditions, obligations or

restrictions which, having regard to the objects of this Act and

the purposes of the registration of organizations under this Act, are oppressive, unreasonable or unjust." (at p468)

19. Section 140 (1) (d) was inserted by Act No. 89 of 1974, s. 9, but its terms are not relevant for present purposes. (at p468)

20. The challenges to federal rr. 6 and 6A can be dealt with together. A declaration relating to federal r. 6 automatically affects federal r. 6A and no declaration need be made concerning that rule. It was submitted on behalf of Mr. Allen that the relevant part of those rules requiring at least five years' membership, imposes upon members of the federation conditions, obligations and restrictions which, having regard to the objects of the Act and the purposes of the registration of organizations under the Act, are oppressive, unreasonable and unjust (s. 140 (1) (c) of the Act) in respect of members who are eligible to be nominated for or elected to the office of federal secretary or assistant federal secretary. It is noted that the requirement of having been a financial member continuously for at least two years immediately prior to nomination and of having taken an active interest in the work of the branch or sub-branch for a similar period (federal r. 6 (d) (ii) and (iii)) are not being challenged. (at p468)

21. It is necessary to make a brief reference to some of the rules of the federation. Federal r. 1 constitutes the federal council as the supreme governing body of the federation which shall consist of fourteen persons being two delegates from each of the branches, neither of whom shall be the secretary of the branch, the secretary of each branch, the federal secretary and the assistant federal secretary. Federal r. 2 provides that the functions of the federal council are "to exercise the general control and conduct of the business of the federation, subject to the rules of the federation" and then lists a number of specific powers including the powers (a) "to formulate the policy of the federation in all matters affecting the interests of its members"; (c) "to fix the remuneration (if any) of the officers of the federal council"; (h) to make any necessary approach to the Conciliation and Arbitration Commission in respect of any industrial dispute or award; (j) to delegate to the federal executive such of its powers as concern routine administration; and (k) to delegate to any branch such part of its powers as may be necessary for more conveniently conducting the affairs of the federation. Federal r. 4 provides for the election of delegates to federal council. The elections are held biennially and to be eligible for nomination and election a person must be a financial member of the federation and shall have been a member for not less than two years and financial for not less than one year immediately prior to nomination. Any ballot is limited to the financial members of the branch electing the delegates. Federal r. 5 provides that the officers of the federation shall be the president, the vice-president, two trustees, the federal secretary and the assistant federal secetary. The first four listed officers are elected by and from the members of the federal council. Federal rr. 6, 6A and 7 provide for the election of the federal secretary and the assistant federal secretary respectively and any ballot is taken from all financial members of the federation. Federal r. 9 provides that the federal council shall meet at least once a year, but special meetings may be convened (federal r. 10) or a postal vote may be conducted without the necessity for a meeting (federal r. 11). Federal r. 12 constitutes the executive committee which comprises the officers of the federation and which meets at least once every four months: federal r. 13. Federal r. 15 provides for a ballot by all members of the federation upon any question and the result of the ballot is binding on all members. Federal r. 16 lists the duties of the president and vice-president. Federal rr. 17 and 18 list the duties and powers of the federal secretary and assistant federal secretary and it is sufficient to say that these are very extensive. Although the rules do not expressly so provide, in practice the federal secretary is the advocate of the federation in proceedings before the Conciliation and Arbitration Commission and is the officer charged with instituting and defending such proceedings. Federal r. 31 provides for the federal fund, being the property and funds of the federation at the disposal of the federal council and federal r. 32 provides for branch funds being the property and funds of the federation at the disposal of a branch in accordance with the rules of the branch. Federal r. 40 provides that "the officers of each branch shall consist of a president, vice-president, federal secretary, trustees and such other officers as may be deemed necessary for the conduct of the branch". The reference in this rule to "federal secretary" cannot refer to "the federal secretary" and in practice the rule has been applied as meaning "a branch secretary" although called by different names in different branches. Federal r. 42 empowers a branch to make rules to govern its affairs and federal r. 45 deals with rules to govern sub-branches. Federal rr. 46, 47 and 48 provide procedures for dealing with industrial disputes and reference of matters to industrial tribunals and it is sufficient to say that the executive council is the main body to take control of these matters. (at p469)

22. The officers in the Victorian branch are specified in Victorian branch r. 3 and comprise a president, two vice-presidents, a general secretary-treasurer, an assistant secretary and organizer, an unspecified number of organizers and three trustees. Victorian branch r. 4 provides that the branch shall be governed by a State executive consisting of the officers, the ex-president and four committeemen and is required to meet each month and where possible to refer to branch meetings for endorsement or otherwise any decisions it makes. Victorian branch r. 5 lists the duties and powers of the branch officers. Victorian branch rr. 6, 7 and 7A provide for the nomination and election of the members to the State executive. Each member, apart from the general secretary-treasurer, the assistant secretary and organizer and the organizers are elected every two years and to be eligible for nomination a member must have been a member of the federation for at least two years and financial for at least one year prior to the date of nomination (the same requirement as persons nominating as delegates to the federal council). The general secretary-treasurer is elected for a term of five years and to be eligible for nomination to that office a member must have had at least three years' continuous membership prior to nomination and have taken an active interest in the work of the branch or a sub-branch for at least two years immediately prior to nomination. The assistant secretary and organizer is elected for a term of four years and each organizer is elected for a term of three years. To be eligible for nomination to any of these offices, a member has to satisfy the same requirements as a candidate for the office of general secretary-treasurer. Any ballot for election to any of the offices is limited to financial members of the Victorian branch. Victorian branch r. 11 provides for general meetings of the branch to be held monthly except in the month of January, ten members to form a quorum. Sub-branches likewise meet monthly, three members to form a quorum. Victorian branch r. 12 provides for special meetings of the branch. Victorian branch r. 19 provides for the funds of the Victorian branch. (at p470)

23. From this summary, it can be seen that the federal council has very wide powers of policy making and control yet it is only with respect to the offices of federal secretary and assistant federal secretary that the five-year period of membership is required. But even here there is no requirement that the candidate must have taken an active interest in the affairs of the "branch, sub-branch or office to which he is attached" except for the two years preceding nomination. The other members of the federal council and federal executive, apart from the State secretaries, do not have to satisfy the test of "active interest". The five years' membership requirement does not ensure that a person has gained experience in the wide spectrum of work being done by persons eligible for membership of the federation or in the conduct or control of the affairs of the federation or its branches, including sub-branches. (at p470)

24. The federal secretary has important and onerous duties to perform and must have a wide knowledge of the affairs of the federation and experience in industrial matters. The same can be said with respect to the other members of the federal council and federal executive. The evidence presented established that at the present time, and probably at most times, a very large number of members of the federation cannot satisfy the five years' continuous membership requirement for nomination to the office of federal secretary. The requirement appears to be an arbitrary provision serving no useful purpose. Having regard to the objects of the Act, especially object (f) set out above, federal r. 6 (d) (i) imposes on members of the federation restrictions which are oppressive, in its ordinary meaning of unjustly burdensome or harsh. Further the requirement is unreasonable. (at p471)

25. Federal r. 17 (n) is challenged on the grounds that it is contrary to the provisions of reg. 115 (1) (d) (i) and (v) of the Regulations (s. 140 (1) (a) of the Act) and is contrary to the provisions of s. 140 (1) (c) of the Act. Regulation 115 prescribes conditions to be complied with by organizations: s. 132 (2) of the Act; reg. 115 (2). Regulation 115 (1) (d) (i) (A) provides that rules of an organization must provide for the election of: "(A) a committee of management of the association and of each branch of the association". Regulation 115 (1) (d) (v) provides that the rules of an organization must provide for: "(v) the control of committees of the association and its branches by the members of the association and the members of the branches respectively". (at p471)

26. There is much force in the submission made on behalf of the claimant that the Act and Regulations require that all members of a branch committee of management must be elected by the members of that branch and by no one else and that in so far as the federal secretary is elected by the whole membership of the federation, federal r. 17 (n) is contrary to the provisions of the Act and the Regulations. Without deciding that matter, it is our opinion that federal r. 17 (n) imposes on members of the federation a condition or restriction which, having regard to the objects of the Act and the purposes of the registration of organizations under the Act, is oppressive, unreasonable and unjust. In Victoria, where there are four organizers, the branch committee of management comprises seventeen members other than the federal secretary. Of these seventeen, six are paid officials of the Victorian branch elected for a term of office of five, four or three years, while the other members are elected for a term of two years only. At the present time, it appears that there is no ex-president member of the State executive. There was no evidence as to the composition of committees of management of other branches of the federation, but their structure would be similar: federal r. 40. The federal secretary is a paid official of the federation. He is elected for a term of six years. Because of his position, of necessity he is or will become a man of dominance able to exercise great influence and persuasive ability within a branch committee of management. He has a term of office three times that of the non-paid officers in the Victorian branch. To have such a person automatically a member of each branch committee of management, irrespective of the views of the members of the branch, is contrary to the provisions of s. 140 (1) (c) of the Act. (at p471)

27. Victorian branch r. 21 is challenged on the grounds that it is contrary to the provisions of reg. 115 (1) (d) (v) in so far as it provides that a ballot of members of the branch is subject to the consent of the State executive (s. 140 (1) (a) of the Act) and is contrary to the provisions of s. 140 (1) (c) of the Act. Procedures under r. 21 are instituted at a meeting of the branch and are limited to "a measure or measures" to be introduced. It follows that a change from an existing position within a branch is being contemplated and is being introduced. A ballot can be held only when the branch meeting decides that such a measure or measures will substantially affect or will be likely to substantially affect "the welfare of members generally". With a membership of some 18,000 persons, it is impracticable to have a general meeting at which all members are able to attend. Nevertheless, r. 21 purports to give a power of veto to the State executive so as to enable the State executive to prevent such a ballot from being held. Victorian branch r. 21, in so far as it purports to empower the State executive to decide whether such a ballot should be held, does not provide for the control of the committee of management of the Victorian branch by the members of the Victorian branch and to that extent is contrary to the provisions of s. 140 (1) (a) of the Act: see Mackenzie v. Administrative and Clerical Officers' Association, Commonwealth Public Service, per Joske J. (1962) 5 FLR 342, at pp 364-365 . Likewise, the rule is contrary to the provisions of s. 140 (1) (c) of the Act in that it imposes upon members of the federation conditions or restrictions which, having regard to the objects of the Act, are oppressive and unreasonable in that purported rights given to members may be negatived by the State executive. Attention is drawn to the fact that Victorian branch r. 21 does not make any provision for the giving of effect to the result of any ballot held: cf. federal r. 15 (d). (at p472)

28. We turn now to a consideration of the claim made under s. 141 of the Act. At a special meeting of the State executive held on 19th April, 1977, the following resolution was carried unanimously:

"The general secretary is directed to write to the secretary of the Geelong sub-branch in the following terms:

"(1) Research at the branch office reveals that what we have been led to believe for some years, namely the legal existence of your sub-branch under the rules of the federation, to be incorrect. It appears that the branch executive of the day never received the appropriate requisition and of course never considered an appropriate requisition or granted the status of a sub-branch to any such body. (at p472)

29. You are therefore (a) called upon to appear before the State executive on 4th May, 1977, to show cause why you and your purported sub-branch executive should continue to be recognized as such; or (b) alternatively bring before the State executive a requisition from six or more adult employees within the meaning of federal r. 45 seeking the grant of sub-branch status for the State executive's consideration. In order to assist the State executive in its deliberations the requisition should set out the trade, occupations or callings of the members sought to be covered by the suggested sub-branch and/or the precise geographical area sought to be covered. (at p473)

30. "(2) Notwithstanding (1) above and without prejudice to the assertions there made you are called upon pursuant to r. 45 (d) of the federal rules, to pay forthwith to the branch: (a) The $32,509.75 disclosed by your balance sheet of 31st December, 1976 (less $200); and (b) all sustentation fees due for your purported members for the period to 31st March, 1977; (c) all sustentation fees not already paid for your financial membership over the period 1st January, 1974, to 31st December, 1976. (at p473)

31. "(3) You are to account in writing within twenty-eight days of receipt of notice of this direction for all monies paid out by you since 1st January, 1970, for purposes other than wages, telephone expenses, gas, light, electricity, stationery or rent. (at p473)

32. "(4) You are not to make any payments from your funds for the purposes of seeking legal aid or advice for any purpose without the consent of the branch but in particular no monies are to be made available either directly or indirectly to the respondents or their solicitors in Johns v. Allen (No. V 7 of 1977) (1977) 29 FLR 249 or any High Court proceedings relative thereto without the consent of the branch. (at p473)

33. "(5) You are within seven days of the date of your statement pursuant to (3) above to deliver to the branch or its representatives all books, bank statements, receipts and papers such as will allow a proper audit to be made of the sub-branch's affairs since 1st January, 1970. (at p473)

34. "(6) You will terminate the employment of any person taken into employment since the direction imparted by letter dated 9th September, 1976. (at p473)

35. "(7) You will co-operate with and provide office facilities for any branch organizers, officials or representatives which visit your office and will instruct your clerical staff accordingly." (at p473)

36. On the same day, the Victorian branch secretary (hereinafter called "Mr. Jarrad") forwarded a copy of the resolution to Mr. Allen, being the secretary of the Geelong sub-branch. The two matters argued before the court were for orders first directing the respondents, other than the federation, to perform and observe the rules of the federation by treating as null and void and of no force or effect pars. 4 to 7 inclusive of the resolution, and, secondly, that they perform and observe the rules of the organization by ceasing from exercising or purporting to exercise any of the rights, duties, powers and privileges of, or properly exercisable by or pertaining to, the committee of management of the Geelong sub-branch and of any full-time official or officials employed by the Geelong sub-branch. (at p474)

37. Prior to the hearing, Mr. Allen filed a statement of bases on which the orders sought were claimed. Sub-paragraphs 1 (a) and (b) of the statement claimed that the resolution was passed by persons who were not eligible to vote, the validity of the election of some of the members of the State executive having been challenged in Allen v. Vehicle Builders Employees' Federation of Australia [1977] FCA 8; (1977) 30 FLR 263 . On 26th August, 1977, the court gave judgment in that matter and ruled that there was no irregularity. Accordingly, the claims contained in these two sub-paragraphs cannot be relied upon in these proceedings. (at p474)

38. Likewise, the claim in sub-par. 1 (j), which related to a dismissal from employment of an alleged officer of the Geelong sub-branch, has no basis following the decision in Johns v. Allen (1977) 29 FLR 249 . (at p474)

39. The bases in support of the first order sought claimed that the resolution was not made bona fide for the purposes of the powers conferred upon the State executive by the rules of the federation (sub-par. 1 (e) of the statement) and particulars were given of the alleged purposes for the making of the resolution: "(i) to prevent the Geelong sub-branch from applying for or from obtaining the status of a branch of the federation and/or to deprive the Geelong sub-branch of that substantial status to which it is entitled under the rules and to usurp its proper functions and powers; and/or (ii) to punish the Geelong sub-branch for having criticized the federal secretary of the federation; and/or (iii) to dissuade the Geelong sub-branch from pursuing the legal proceedings referred to therein, or to prevent it from so doing; and/or (iv) to prevent the Geelong sub-branch from being able to operate effectively or at all, without the consent of the Victorian branch; and/or (v) to take control of the affairs of the Geelong sub-branch although the requirements laid down by r. 45 (i) 3 for such a takeover had not been satisfied." (at p474)

40. Further, it was claimed that the resolution was invalid by reason of the fact that Mr. Townsend was present, moved the resolution and played a dominant role in the proceedings when by reason of s. 140 (1) (c), he was not validly a member of the State executive: sub-par. 1 (f) of the statement. Other particulars in support of invalidity were given in this sub-paragraph but, in our opinion, do not affect the validity of the resolution and no further reference need be made to them. (at p474)

41. Further, it was claimed that the resolution was invalid since the rules of natural justice required that the Geelong sub-branch should have been given notice of the proposal to pass the resolution and the reasons therefor, and should have been given a reasonable opportunity to be heard in relation thereto: sub-par. 1 (g) of the statement. (at p475)

42. Further, it was claimed that the resolution was invalid because it was procured by false statements of fact and by misrepresentations made by Messrs. Townsend and Jarrad: sub-par. 1 (h) of the statement. Particulars were given but, in our opinion, these matters are relevant in the consideration of the matters listed in sub-pars. 1 (e) and (f) and will not be considered separately. (at p475)

43. Finally, it was claimed that the resolution was not within the powers conferred on the State executive by federal r. 45 (sub-par. 1 (i) of the statement) and particulars were given. (at p475)

44. The bases in support of the second order sought claimed that by reason of a series of facts listed, the members of the State executive, for a period of time since at least September 1972, had been attempting to deprive the Geelong sub-branch "of the substantial status to which it is entitled under the rules and to usurp the functions and powers conferred on the sub-branch, its committee of management and officials by the rules", and that unless restrained they would continue in this conduct and that accordingly Mr. Allen is entitled to the order sought: par. 2 of the statement. (at p475)

45. A preliminary matter needs to be considered, namely whether the Geelong sub-branch had been validly formed or not. For over forty years, the federation has proceeded on the basis that the Geelong sub-branch was validly in existence and the cases referred to at the beginning of these reasons each proceeded on that basis. At the hearing, Mr. Harrison who appeared for the respondents other than Messrs. Burt, McKay and Slevin, announced that he would not be contending that the Geelong sub-branch was not validly formed and accordingly that Mr. Townsend would not be proceeding with the two applications being matters No. V 16 and No. V 17 of 1977, in so far as the latter related to the Geelong sub-branch. At the hearing, no witnesses were called by the respondents and in particular neither Mr. Townsend nor Mr. Jarrad gave evidence to justify the basis of the allegations contained in par. 1 of the resolution nor of the research referred to therein. In an attempt to establish the validity of the formation of the Geelong sub-branch, Mr. Allen, by subpoena, sought the production of the minutes of the State executive and of the Victorian branch. The minutes of the State executive were not produced, it being alleged that they had been lost. Minutes made of the Victorian branch for the year 1936 were produced and these minutes made reference to officers of the Victorian branch attending meetings at Geelong concerned with the establishment of a sub-branch at Geelong and the encouragement of new members, elections and generally for assisting in the conduct of the affairs of the sub-branch. All this is consistent with the valid formation of the Geelong sub-branch. There was no evidence of the appropriate rule of the federation then in force, the parties to these proceedings assuming it to be similar to the existing federal r. 45. (at p476)

46. In addition, a Mr. Kenworthy gave evidence that in 1936 he was employed as an assembler in the spring department at Ford Motor Works in Geelong and that he attended a number of meetings in Geelong at that time at which the State president and other officers of the Victorian branch of the federation, then known as the Coach-makers Employees' Federation, were present, giving information and help with respect to the Geelong sub-branch and encouragement for the enrolment of members. The sub-branch about that time conducted an election for a committee of management and shortly afterwards made by-laws and employed a full-time paid secretary. On this evidence and relying upon the presumption of regularity, we find that the Geelong sub-branch was validly formed in or about the year 1936. (at p476)

47. Before making findings of fact, it is desirable to make further reference to the rules of the federation. Federal r. 24 makes provision for entrance fees while federal r. 25 provides for annual contributions for members, the amount of which is to be determined by the federal council at its meeting in March in each year. The rules provide that the entrance fees, contributions and other receipts are payable to the branch secretary or, if the member is attached to a sub-branch, to the secretary of the sub-branch, and shall be paid into the bank in the name of the branch: federal rr. 28, 32 (b). Federal r. 31 establishes three main funds to be at the disposal of the federal council. The federal overseas fund is serviced by a proportion of all entrance fees received by branches and branch secretaries are required to pay that proportion to the federal secretary each quarter: federal r. 31 (b). There is no express provision that sub-branch secretaries are to pay any proportion of entrance fees to branch secretaries. The federal overseas fund is to be expended for the purposes specified in federal r. 31 (b). In federal r. 31, the phrase "sustentation fees" means that proportion of contributions which are to be paid by branch secretaries each quarter to the federal office. The amount of the contributions is determined by the federal council (federal r. 25) and at the same meeting federal council determines what proportion of the contributions shall be paid by way of sustentation fees to the federal office: federal r. 31 (c) (i). A sub-branch secretary is required to forward to the branch secretary within fourteen days of the end of each quarter, sustentation fees received by him as part of the contributions: federal r. 31 (c) (ii). Prior to the existing rules coming into force in the year 1976, the equivalent federal rule, then numbered 33, contained no such provision: see Allen v. Jarrad (1974) 160 CAR, at pp 1019-1020 . The sustentation fees are used to service the federal contingent fund (federal r. 31 (d)) and the federal council fund (federal r. 31 (e)) each to be expended for the purposes therein specified. Federal r. 32 provides for branch funds and this rule seems to assume that moneys received by sub-branches remain in the name of the branch (federal r. 32 (b)) and be subject to the eventual control "in accordance with the rules of the branch" by the branch: federal r. 32 (a). Federal r. 36 imposes special restrictions on the expenditure of branch funds in excess of $200 except for ordinary expenses. Federal r. 41 provides for the exchange of minutes between a branch and its sub-branches. (at p477)

48. Federal r. 45 provides rules to govern sub-branches. Paragraph (a) provides for the formation of sub-branches and provides further that a sub-branch "shall at all times be under the control of and take instructions from the branch". Paragraph (b) provides for the committee of management of a sub-branch. Paragraphs (c), (d) and (e) are as follows:

"KEEPING OF BOOKS

(c) All books, documents, return sheets, and everything

necessary in connection with the working of sub-branches, shall

be of a uniform nature and shall be supplied by the branch and

shall remain the property of the branch. The branch committee

shall have power to authorize the branch secretary to send for the

books of any sub-branch for the purpose of auditing or seeing that

they are kept in a proper manner.

(d) The committee of each sub-branch at the end of each half-year after

sub-branch, shall forward within twenty-eight days to the branch

secretary all funds above $20. Provided that where a sub-branch

employs a full-time official or officials the amount to be retained

by such sub-branch may be in excess of $20 and in such case the

amount to be retained shall be determined by the branch in

general meeting."

"SUB-BRANCH RETURNS

(e) The secretary of each sub-branch shall forward to the

branch secretary a correct balance sheet, duly audited and signed

at the end of each half-year, and also any other information

required by the branch committee of management." (at p477)

49. In the present case, the amount to be retained by the Geelong sub-branch has been determined at $200. Paragraph (f) authorizes branches to give financial assistance to sub-branches. Paragraph (g) imposes restrictions on a sub-branch in relation to the issue of documents in the name of the federation or of a branch without the approval of the branch committee of management. Paragraph (h) authorizes sub-branches to make by-laws but these must be approved by the branch. Paragraph (i) lists a number of specific matters, the relevant ones for present purposes being:

"(i) Without limiting the generality of any of the powers of a

branch committee of management contained in any federal or

State rule and in addition to any such power a branch committee

of management shall have the following powers in relation to a

sub-branch:

(1) To call for and/or take possession of all articles of property

and money, records, books, papers used by or in connection with

the affairs of a sub-branch and to enter the offices or premises of

a sub-branch for any such purpose.

(2) To require from the officers and employees of a sub-branch

whether in writing or orally information relating to the affairs of

a sub-branch.

(3) Wherever a sub-branch fails to observe the rules of the

federation or of the branch, the by-laws, regulations, decisions or

directions of any federal or State authority, the branch committee

of management may take control of and conduct and administer

the affairs of such sub-branch for the purpose of giving effect to

such rules, regulations, decisions or directions. In such case the

branch in general meeting or the branch committee of

management may give any necessary directions for the conduct

of the affairs of the sub-branch.

(4) . . .

(5) . . .

(6) In any of the foregoing cases the secretary of the branch

shall be the person to carry out the decision of the branch and all

officers and members of a sub-branch shall recognize this

authority and aid and assist him. The branch committee of

management may if it thinks fit, appoint one or more members

of the branch to advise and assist the secretary or to act as

a committee to advise and assist him." (at p478)

50. Sub-paragraphs 4 and 5 relate to the making of regulations and by-laws. Victorian branch r. 19 relates to branch funds and in so far as it deals with the funds of sub-branches, is complementary to and consistent with federal rr. 32 and 45 (d). (at p478)

51. Much detailed evidence was given on behalf of Mr. Allen, but it is necessary only to give a summary of the facts and inferences drawn. It is sufficient to say that in substance we find that the witnesses called were telling the truth to the best of their recollection and we accept their evidence as being true. In coming to this view, we are supported by the fact that although both Messrs. Townsend and Jarrad were present in court, neither was called to give evidence to rebut the evidence called on behalf of Mr. Allen or to rebut inferences claimed to be drawn from the evidence so given and no explanation was given as to why they did not give evidence: see O'Donnell v. Reichard [1975] VicRp 89; (1975) VR 916 and Jones v. Dunkel [1959] HCA 8; (1959) 101 CLR 298 . (at p478)

52. Over many years and in particular since 1970, there have been tensions between the Victorian branch and the Geelong sub-branch. One area of conflict has related to whether the Geelong sub-branch should be constituted a branch of the federation or not. Another area related to the degree of control to be exercised by the Victorian branch or the State executive over the affairs of the Geelong sub-branch. This last aspect has involved questions of how the control is to be exercised, whether the Geelong sub-branch can be "taken over" by the Victorian branch or the State executive, whether the Geelong sub-branch can elect its own organizers or must accept organizers elected by the Victorian branch and what curbs, if any, the Victorian branch or State executive can put on expenditures by the Geelong sub-branch: Allen v. Jarrad (1974) 160 CAR 1018 , Allen v. MacWhirter (1974) 157 CAR 1046 , Johns v. Allen (1977) 29 FLR 249 , Allen v. Vehicle Builders Employees' Federation of Australia [1977] FCA 8; (1977) 30 FLR 263 , and Behan v. Vehicle Builders Employees' Federation of Australia Unreported (Australian Industrial Court, 19th November, 1976). , being illustrations of these conflicts and tensions. (at p479)

53. Since the six-month period ending 31st December, 1969, at least, the Geelong sub-branch, in compliance with the rules of the federation, has forwarded to the Victorian branch secretary all funds above the agreed amount and certain other funds for special purposes which were retained with the consent either expressly or impliedly of the Victorian branch secretary, together with audited balance sheets as at 30th June and 31st December of each year relating to the affairs of the sub-branch. From time to time, questions were raised by the State executive concerning matters contained in the balance sheets and these queries were always answered. On occasions, the auditor provided explanations to the State executive. Prior to the amendments to the federal rules made in 1976, there was no obligation imposed on the Geelong sub-branch to pay sustentation fees, as such, to the Victorian branch. The balance of funds, subject to the specific funds retained, was forwarded each half-year, although on occasions, owing to practical difficulties, the payment was delayed beyond the twenty-eight days referred to in federal r. 45 (d). The problem facing the State executive was how to ensure that the Geelong sub-branch be restricted in the incurring of working and other expenses so as to increase the amount to be paid by the sub-branch to the Victorian branch. (at p479)

54. By letter dated 6th April, 1977, from Mr. Allen to Mr. Townsend, a warning had been given that the Geelong sub-branch would renew its attempt to become a branch of the federation and would challenge the validity of certain federal rules including the rule relating to the office of federal secretary. The relationship between the Victorian branch and the Geelong sub-branch had been the subject of a number of conversations between Mr. Townsend and the federal president, Mr. Thompson, and between Messrs. Townsend and Jarrad relating to the relationship and to whether the payment of funds was being made by the Geelong sub-branch correctly, but there is no direct evidence as to what these three officers suggested should be done. (at p480)

55. On 18th April, 1977, a meeting was held between Mr. Townsend and the paid officers of the Victorian branch. At this meeting Mr. Townsend said that there were moves by the Geelong sub-branch against federal officers. He reminded those present of the tensions and conflicts which had existed and still existed between the Victorian branch and the Geelong sub-branch and suggested it was time they were brought to an end. He hinted that it was better for the paid officers to side with the Victorian branch since the Victorian branch elected those paid officers. Immediately prior to the special meeting of the State executive on 19th April, there was a private meeting of members except those members who were known to be favourably disposed to the Geelong sub-branch. The notice calling the special meeting gave no indication of the matters to be considered at that meeting. Mr. Townsend was present, purporting to rely upon federal r. 17 (n), and moved the resolution. He was at his "persuasive best" and was the dominating presence. He insisted that the resolution be passed unanimously and without amendment. He told the meeting that he had discussed the resolution with the federal president who was in agreement with it and with the action to be taken. In fact, the federal president had no knowledge of the resolution or of the proposed action. No evidence was given as to any research undertaken and directed to the legal existence of the Geelong sub-branch, yet the matters contained in par. 1 of the resolution could and did affect the whole of the resolution. In accordance with past practice, the Geelong sub-branch, on 3rd March, 1977, had forwarded to Mr. Jarrad the audited balance sheet as at 31st December, 1976, together with a cheque in the sum of $29,166.61, being the amount properly payable pursuant to federal r. 45 (d). In addition to the $200 retained, certain other sums were retained being the special funds referred to above. At the meeting, in answer to a question of whether that sum of $29,166.61 had been paid, Mr. Jarrad said that the $32,509.75 referred to in par. 2 of the resolution was completely separate and had nothing to do with the $29,166.61 received by him. With the possible exception of the last two quarters of the year 1976, there was no requirement that the Geelong sub-branch should pay sustentation fees to Mr. Jarrad. In fact all funds properly payable by the Geelong sub-branch had in fact been paid on 3rd March, 1977, and the amount so paid was greatly in excess of the amount of any sustentation fee for the last two quarters of the year 1976. Mr. Allen had not been informed of the rate of the sustentation fee determined by the federal council at its meeting in March 1977: federal r. 31 (c). It was only during the course of the hearing of the matter Johns v. Allen (1977) 29 FLR 249 , that he discovered the rate had not been changed whereupon he forwarded, on 26th April, 1977, the sustentation fee for the quarter ending 30th March, 1977: par. 2 (b) and (c) of the resolution. (at p481)

56. The remaining parts of the resolution must be seen in the light of the falsity of the facts implied behind the first two paragraphs. There had been no prior suggestion that the books and records of the Geelong sub-branch had not been kept properly or had not been audited properly. Paragraphs 3, 5, 6 and 7 of the resolution are difficult to justify except as being a consequence of the establishment of the matters referred to in pars. 1 and 2. Paragraph 4 is an attempt to restrict the officers of the Geelong sub-branch from seeking legal advice or taking legal proceedings in the course of the conduct of litigation in which a member of the federation, not being a member of the Victorian branch, was seeking orders against them under s. 141 of the Act. Although it is not for this Court to express a view on whether the State executive should or should not exercise its powers under the rules of the federation, the court should and does express an opinion on whether the exercise of those powers is done bona fide or not. (at p481)

57. On the facts of this case, we find that the resolution passed at the State executive meeting on 19th April, 1977, was not made bona fide for the purposes of the powers conferred upon the State executive by the rules of the federation. The nature of a bona fide exercise of powers is discussed later. (at p481)

58. On these facts, it is necessary to consider whether the order sought under s. 141 of the Act relying upon the invalidity of federal r. 17 (n) should be made. It is open to a party in proceedings under s. 141 of the Act, or for that matter in any proceedings in any court where the matter may be an issue, to claim that a rule of an organization contravenes the provisions of s. 140 (1) of the Act and if upheld a party to those proceedings cannot rely upon facts dependent upon the validity of that rule. In legal proceedings of this kind, the invalidity arising from a non-compliance with the requirements of s. 140 (1) of the Act results from the operation of that subsection itself and the invalidity does not depend upon an order having been made in proceedings instituted under the provisions of s. 140 of the Act. Any order made in proceedings other than in proceedings instituted under s. 140 of the Act is binding upon the parties to those proceedings only and operates on preceding facts. An order so made has no effect similar to an order made in proceedings instituted under s. 140 of the Act which order operates as from the date of its making and thereafter affects and is binding upon all persons; generally see Shearer's case [1960] HCA 46; (1960) 103 CLR 368 . . (at p481)

59. In the proceedings currently before the court, for the reasons earlier expressed, we find that on 19th April, 1977, federal r. 17 (n) contravened s. 140 (1) (c) of the Act and accordingly was void and of no effect. It follows that on 19th April, 1977, Mr. Townsend was not a member of the State executive and should not have been present at the meeting of the State executive, should not have moved the resolution and should not have played the dominating part that he did. (at p482)

60. In these circumstances, we apply the principles stated in Lynch v. Hodges (1963) 4 FLR 348 . In that case, at a meeting of a committee of management of an organization, Mr. Lynch, who subsequently was found to have been invalidly elected to that committee, moved a motion which was carried nine votes to five. Mr. Lynch had a personal interest in the subject matter of the resolution as passed and participated in the deliberations concerning the motion. The Commonwealth Industrial Court held that these facts vitiated the resolution and refused to make orders directing compliance with the resolution. In a joint judgment, Spicer C.J. and Joske J. said: (at p482)

61. "The vital motion in this case was moved by Lynch himself. It is clear that he had no right to move it. In those circumstances it seems to us the chairman of the meeting should have refused to accept Lynch's motion and doubtless would have done so had the Court's decision been pronounced at that time. Had this course been followed it is impossible to say that the motion would have been moved by anyone else. This circumstance is we think sufficient to vitiate the motion and we do not think it has any validity. (at p482)

62. "Furthermore, the motion was one which Lynch had a personal interest to promote. His participation in the deliberations and his vote in its favour are additional reasons for discarding it. True his vote in the event was not vital to the passage of the resolution, but it is impossible to say that his promotion and support of the resolution had no influence upon others who voted with him" (1963) 4 FLR, at p 350 . (at p482)

63. There is nothing said either in Steuart v. Oliver (No. 2) (1971) 18 FLR 83 or in Barter v. Maher (1972) 21 FLR 10 which is contrary to this view. (at p482)

64. In the present case, the resolution was carried unanimously. Nevertheless, on the facts found, including the presence of Mr. Townsend at the meeting, his moving of the motion, the dominating part he played in the deliberations on the motion and the false statement made by him concerning his conversations with Mr. Thompson, we are satisfied that Mr. Townsend's presence and participation at the meeting of the State executive vitiated the whole of the resolution. Accordingly, orders pursuant to s. 141 of the Act should be made in relation to pars. 3, 4, 5, 6 and 7 of the resolution. (at p482)

65. We turn now to a consideration of whether the resolution of the State executive made on 19th April, 1977, was made bona fide for the purposes of the powers conferred upon the State executive by the rules of the federation. There is no doubt that under the rules of the federation, the State executive has wide powers over the Geelong sub-branch, or rather, to be exact, over that group of members of the federation who, being members of the Victorian branch, are attached to the Geelong sub-branch. All moneys received by the Geelong sub-branch must be banked in an account in the name of the Victorian branch and form part of the branch funds to be managed and controlled in accordance with the rules of the Victorian branch: federal r. 32. The Geelong sub-branch makes no direct payment into the federal fund, it is the Victorian branch which is directed to make those payments: federal r. 31. Victorian branch r. 19 provides that the funds of the Geelong sub-branch shall be the common property of the Victorian branch. Victorian branch r. 4 provides that the Victorian branch shall be governed by the State executive but that where possible decisions of the State executive shall be referred to the branch meeting for endorsement or otherwise. Federal r. 45 is to be considered in this context. Consistent with the provisions of the rules of the federation, the members of a branch who are attached to the sub-branch "shall at all times be under the control of and take instructions from the branch": federal r. 45 (a). In the Victorian branch, initially it is the State executive which has the power to control and give instructions to the Geelong sub-branch. The books and records of the Geelong sub-branch are supplied by and remain the property of the Victorian branch: federal r. 45 (b). Subject to retaining specified amounts, the Geelong sub-branch is required each half-year to forward to the Victorian branch all funds together with audited returns: federal r. 45 (d) and (e). These provisions are consistent with those funds being Victorian branch funds. Federal r. 45 (i) confers specific powers on the State executive relating to the Geelong sub-branch. (at p483)

66. In our opinion, the State executive is required by law to exercise the powers conferred upon it bona fide for the purposes for which they are conferred, namely the government of the Victorian branch: Victorian branch r. 4. In our opinion, members of the committee of management of an organization, a branch of an organization or a sub-branch of a branch of an organization owe a fiduciary duty to members of the organization, to members within the branch and to members within the sub-branch as the case may be. Members of committees of management are to be compared with directors of incorporated bodies being companies incorporated under legislation such as the Companies Acts of the States of Australia. The courts have developed principles of law of general application regulating the manner in which directors of companies are required to exercise powers conferred upon them. Subject to necessary adaptations, similar principles of law should apply to regulate the exercise of powers conferred upon members of a committee of management of an organization or of a branch of an organization or of a sub-branch of a branch of an organization. (at p484)

67. There are many similarities between organizations and legal persons incorporated under the Companies Acts. Each is a creature of statute. Their essential similarity is that each has a legal personality separate and distinct from its members. Each has an independent existence as a legal person. Each is given a personality which is distinct from that of all or any of its members and which continues to subsist unchanged notwithstanding the changes which are bound to occur from time to time in its membership. Each has perpetual succession. Each maintains its identity and its personality notwithstanding changes in its membership, which may occur from day to day. The property of each does not belong to its members from time to time. Compare Williams v. Hursey, per Fullagar J. [1959] HCA 51; (1959) 103 CLR 30, at pp 52-54 . Each must act at the direction of individuals who manage its activities. The powers of these individuals depend upon the rules which regulate the affairs of the incorporated body. The rules may be included in the memorandum and articles of association of companies incorporated under the Companies Acts or in the rules of organizations made pursuant to the Act. The rules include not only the objects to be pursued by the incorporated body but also the powers by which those objects are to be pursued. The rules also contain provisions regulating the affairs of the members as between themselves. Normally the rules provide for a small group of natural persons to be the appropriate group to manage the affairs of the incorporated body subject to eventual control by all the members. Though in theory the ultimate control is conferred upon and retained by the members of the incorporated body, in practice, the group managing the affairs of the incorporated body has a very substantial control over the affairs of that body, the affairs of its members, and the privileges and obligations affecting different groups of members within that body. Within organizations, the committees of management constitute the managing group. The duty imposed upon directors of a company incorporated under the Companies Acts and the duty imposed upon members of a committee of management are but aspects of the application of a wider principle of law applicable where persons have a discretion in the exercise of powers. This wider principle is stated in Shrimpton v. Commonwealth [1945] HCA 4; (1945) 69 CLR 613 when, in discussing the Commonwealth treasurer's power "in his absolute discretion" to grant or refuse consent or to consent subject to such conditions "as he thinks fit", Latham C.J. said: "The discretion which the Treasurer is entitled to exercise, though described as absolute, is, in my opinion, not arbitrary and unlimited; it must be exercised bona fide and for the purposes of the Regulations . . . it has been held in this Court, in a series of cases, that a discretion, or a power to grant a licence, though conferred in very general terms, does not entitle the authority to which the discretion is granted, or upon which the power is conferred, to take into account what has been described as extraneous conditions. The discretion must be used and the power exercised bona fide and with a view of achieving ends or objects not outside the purpose for which the discretion or power is conferred . . . The Regulations do not make the Treasurer 'an autocrat free to act as he pleases'" (1945) 69 CLR, at pp 619-620 . (at p485)

68. The relevant principle is stated in Mills v. Mills [1938] HCA 4; (1938) 60 CLR 150 . In that case a resolution passed by the directors of a company to increase the voting power of one of the directors but which was believed by the directors to be in the best interests of the company was challenged, unsuccessfully, on the basis that one of the directors thereby derived some benefit. Dixon J. said: (at p485)

69. "Directors of a company are fiduciary agents, and a power conferred upon them cannot be exercised in order to obtain some private advantage or for any purpose foreign to the power. It is only one application of the general doctrine expressed by Lord Northington in Aleyn v. Belchier [1758] EngR 208; (1758) 1 Eden 132, at p 138; [1758] EngR 208; 28 ER 634, at p 637 : 'No point is better established than that, a person having a power, must execute it bona fide for the end designed, otherwise it is corrupt and void.' (at p485)

70. "Upon the facts of the present case, or at all events upon the expressions used by Lowe J. in stating his findings, it may be thought that a question arises whether there must be an entire exclusion of all reasons, motives or aims on the part of the directors, and all of them, which are not relevant to the purpose of a particular power. When the law makes the object, view or purpose of a man, or of a body of men, the test of the validity of their acts, it necessarily opens up the possibility of an almost infinite analysis of the fears and desires, proximate and remote, which, in truth, form the compound motives usually animating human conduct. But logically possible as such an analysis may seem, it would be impracticable to adopt it as a means of determining the validity of the resolutions arrived at by a body of directors, resolutions which otherwise are ostensibly within their powers. The application of the general equitable principle to the acts of directors managing the affairs of a company cannot be as nice as it is in the case of a trustee exercising a special power of appointment. It must, as it seems to me, take the substantial object the accomplishment of which formed the real ground of the board's action. If this is within the scope of the power, then the power has been validly exercised. But if, except for some ulterior and illegitimate object, the power would not have been exercised, that which has been attempted as an ostensible exercise of the power will be void, notwithstanding that the directors may incidentally bring about a result which is within the purpose of the power and which they consider desirable." (1938) 60 CLR, at pp 185-186 . (at p486)

71. In the same case Latham C.J. said: "Directors are required to act not only in matters which affect the relations of the company to persons who are not members of the company but also in relation to matters which affect the rights of shareholders inter se. Where there are preference and ordinary shares a particular decision may be of such a character that it must necessarily affect adversely the interests of one class of shareholders and benefit the interests of another class. In such a case it is difficult to apply the test of acting in the interests of the company. The question which arises is sometimes not a question of the interests of the company at all, but a question of what is fair as between different classes of shareholders" (1938) 60 CLR, at p 164 . This statement, with necessary adaptations, has application to the duty imposed upon members of a committee of management to act fairly between different groups of members of an organization. (at p486)

72. In a recent decision, Dunlop v. Woollahra Municipal Council (1975) 2 NSWLR 446 , Wotten J. makes a detailed analysis of the principles and authorities applicable to this type of problem. In particular, his Honour deals with the matters "Bona fides, improper purposes and irrelevant consideration" (1975) 2 NSWLR, at pp 481-491 . Illustrations of the application of these principles and the nature of the investigations which can be made are seen in Werribee Shire Council v. Kerr [1928] HCA 41; (1928) 42 CLR 1 and Arthur Yates and Co. Pty. Ltd. v. Vegetable Seeds Committee [1945] HCA 55; (1945) 72 CLR 37 . Finally, reference is made to Howard Smith Ltd. v. Ampol Petroleum Ltd. [1974] UKPC 3; (1974) AC 821 . In that case the Supreme Court of New South Wales held that in allotting and issuing shares, the directors of a company had not been motivated by self-interest but nevertheless had improperly exercised their powers in that they were not acting bona fide for the benefit of the company as a whole and accordingly the allotment of shares was invalid. The Privy Council dismissed an appeal from that decision. In delivering judgment, Lord Wilberforce said: (at p486)

73. "But it does not follow from this, as the appellants assert, that the absence of any element of self-interest is enough to make an issue valid. Self-interest is only one, though no doubt the commonest, instance of improper motive: and, before one can say that a fiduciary power has been exercised for the purpose for which it was conferred, a wider investigation may have to be made. This is recognised in several well-known statements of the law. Their Lordships quote the clearest which has so often been cited: 'Where the question is one of abuse of powers, the state of mind of those who acted, and the motive on which they acted, are all important, and you may go into the question of what their intention was, collecting from the surrounding circumstances all the materials which genuinely throw light upon that question of the state of mind of the directors so as to show whether they were honestly acting in discharge of their powers in the interests of the company or were acting from some bye-motive, possibly of personal advantage, or for any other reason' (Hindle v. John Cotton Ltd. per Viscount Finlay (1919) 56 SLR 630 ). (at p487)

74. "On the other hand, taking the respondents' contention, it is, in their Lordships' opinion, too narrow an approach to say that the only valid purpose for which shares may be issued is to raise capital for the company. The discretion is not in terms limited in this way: the law should not impose such a limitation on directors' powers. To define in advance exact limits beyond which directors must not pass is, in their Lordships' view, impossible. This clearly cannot be done by enumeration, since the variety of situations facing directors of different types of company in different situations cannot be anticipated. No more, in their Lordships' view, can this be done by the use of a phrase - such as 'bona fide in the interest of the company as a whole,' or 'for some corporate purpose.' Such phrases, if they do anything more than restate the general principle applicable to fiduciary powers, at best serve, negatively, to exclude from the area of validity cases where the directors are acting sectionally, or partially: i.e. improperly favouring one section of the shareholders against another. Of such cases it has been said: 'The question which arises is sometimes not a question of the interest of the company at all, but a question of what is fair as between different classes of shareholders. Where such a case arises some other test than that of the 'interests of the company' must be applied, . . .' (Mills v. Mills per Latham C.J. (1938) 60 CLR, at p 164 ). (at p487)

75. "In their Lordships' opinion it is necessary to start with a consideration of the power whose exercise is in question, in this case a power to issue shares. Having ascertained, on a fair view, the nature of this power, and having defined as can best be done in the light of modern conditions the, or some, limits within which it may be exercised, it is then necessary for the court, if a particular exercise of it is challenged, to examine the substantial purpose for which it was exercised, and to reach a conclusion whether that purpose was proper or not. In doing so it will necessarily give credit to the bona fide opinion of the directors, if such is found to exist, and will respect their judgment as to matters of management; having done this, the ultimate conclusion has to be as to the side of a fairly broad line on which the case falls" (1974) AC, at pp 834-835 (at p488)

76. Applying these principles to the facts of the case before the court, it is our opinion that the resolution passed by the State executive on 19th April, 1977, was not passed bona fide for the purposes of managing the Victorian branch nor for any of the purposes enumerated in federal r. 45. We rely upon a number of factors. The resolution was passed as one motion consisting of a series of numbered paragraphs. The basis for the resolution appears to be the suggestion that after forty years' activity, the Geelong sub-branch had not been properly constituted. It followed that the group of members of the Victorian branch of the federation attached to the Geelong sub-branch were not validly so attached and this suggestion called for some explanation but none was given. In addition, a number of substantial facts set out in par. 2 of the resolution were completely false and were false to the knowledge of Mr. Jarrad, yet again no explanation was tendered to explain how such a mistake was made. The presence of Mr. Townsend at his "persuasive best" so shortly after a suggestion that members of the Geelong sub-branch might challenge his election to the office of federal secretary, may explain the resolution which, on its face, appears to be directed to destroying the Geelong sub-branch or at the very least, to require it to be reconstituted in such a way as to render it ineffective. Further, the mis-statements by Mr. Townsend concerning his conversations which the federal president must have had an effect on other members of the State executive in their support for the resolution. The first two paragraphs are factually wrong and are not a valid exercise of any power. The remainder of the paragraphs of the resolution are consequential upon the first two paragraphs and, in any event during the period referred to, the Geelong sub-branch had been complying with the rules of the federation. In our opinion, the members of the State executive did not exercise the powers conferred upon them for the bona fide management of the Victorian branch nor for any of the purposes set out in federal r. 45. It follows that the resolution is thereby rendered void and of no effect. (at p488)

77. We have said already we would consider the allegations that Messrs. Townsend and Jarrad had made false statements as relevant in considering the claim that the exercise of powers was not bona fide and we make no further reference to this aspect of the claim. We find it neither necessary nor desirable to express any view on the claim that the resolution was invalid on the ground that there was an absence of the rules of natural justice. Likewise, we do not express any opinion on whether the court has power to make an order in the form of the second order sought in the order nisi relating to the proceedings under s. 141 of the Act. The form of order is in the nature of a perpetual injunction directed against future actions that may be taken by the State executive. We refer to what Lord Wilberforce said in Howard Smith Ltd. v. Ampol Petroleum Ltd. (1974) AC, at pp 834-835 . In the present case, it is impossible to define in advance exact limits beyond which the State executive must not pass. In our opinion, it would be most unwise to make an order in such broad and ill-defined terms which is to operate on future facts in relation to undefined rights, duties, powers or privileges of the committee of management of the Geelong sub-branch. (at p489)

78. Having regard to our findings already made, in matter No. V 17 of 1977, we would refuse to make any order pursuant to s. 171c of the Act with respect to the resolution passed by the State executive. (at p489)

79. In all the circumstances, we would make orders under s. 141 of the Act in the form of par. 2 of the order nisi and under s. 140 of the Act in the form of pars. 1, 2 and 3 of the order nisi. We would dismiss matters No. V 16 of 1977 and No. V 17 of 1977. (at p489)