Bailey L.J. v. Krantz, H.D. & Ors [1985] FCA 370

Associations Incorporation Act 1956-1965 (S.A.), Judiciary Act 1903, s. 78B,

Real Property Act 1886 (5.A.), Trustee Act 1936 (5.A.) s. 5,

Allingham v. The Australian Workers' Union [19723 Qd R 218,

In Re Wages and Working Conditions of Persons Employed as Clerks

and Clerical Workers and Office Workers £19411 S.A.S.R. 65,

Ryan v. Federated Clerks Union of Australia (South Australian Branch) £1951] S.A.S.R. 249,

Egan v. Shop Distributive and Allied Employees' Federation of

JAMES LESLIE BAILEY v. HARRY DAVID KRANTZ & ORS. GRAY J. 16TH JULY, 1985

IN _THE FEDERAL COURT OF AUSTRALIA) ) SOUTH AUSTRALIA DISTRICT REGISTRY) S.A. No. 1 of 1983

1. The motions the subject of the Notice of Motion dated 31st January 1985 are dismissed.

2. The motions the subject of the Notice of Motion dated 21st February 1985 are dismissed.

3. Paragraphs (a), (b), (c), (d), (e), (f£), (g), and (h) (where second appearing) of the Rule to Show Cause are discharged.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

SOUTH AUSTRALIA DISTRICT REGISTRY) S.A. No. 1 of 1983 i } INDUSTRIAL DIVISION )

This proceeding was commenced by Rule to Show Cause granted on 23rd March 1983. In substance, the relief sought is pursuant to s. 141 of the Conciliation and Arbitration Act 1904 ("the federal Act"), being orders for the performance and observance of the rules of the Federated Clerks Union of Australia ("the Union"), an organization of employees registered

! Originally there were two applicants, one of whom was

subsequently removed from the proceeding. Mr. H.C. Williams Q.C.

-~-2- appeared at the trial for the remaining applicant, together with

Mr. Turner, later Mr. Lindsay, and later still Mr. Jarvis.

The respondents fall into two groups. The first group, for which Mr. Heywood-Smith appeared, consists of members of the Branch Council of the South Australian branch of the Union ("the Branch"), some of whom are also national councillors representing the Branch, as well as national councillors representing the Central and Southern Queensland Branch and the Taxation Officers Branch of the Union. The second group, for whom Dr. Jessup appeared, consisted of the remaining members of the National

By order made on 23rd July 1984, there were added as parties to the proceeding the Union and an association registered

under the Industrial Conciliation and Arbitration Act 1972 (5.A.}

("the state Act"), and known as Federated Clerks' Union of Australia, South Australian Branch ("the South Australian Association"). Dr. Jessup appeared for the Union, and Mr.

Heywood-Smith for the South Australian Association.

The trial began on Sth February 1985. Because of the

time which had elapsed between the grant of the Rule to Show

Cause and the trial, consent orders were made on 21st February 1985, adding as respondents the persons who now hold the offices

The application concerns land on which is erected a4

building occupied as to part by the administration of the Branch

~3- and the South Australian Association. Pursuant to the Real Property Act 1886 (S.A.), this land is registered in the name "Federated Clerks' Union of Australia South Australian Branch". Also the subject of the proceeding are funds deposited to the credit of the same or a similar name in a credit union in South Australia known as the Satisfac Credit Union. The applicant contends that the land and building and the deposits are the property of the Union, and that the rules of the Union oblige those respondents who are officers of the Branch and members of the Branch Council of the Branch to cause the land and the

At the outset of the trial, senior counsel for the applicant told the Court that discussions had occurred between him and Dr. Jessup; the interests of the applicant and the respondents for whom Dr. Jessup appeared were substantially the same, and Mr. Williams was aware of the evidence that Dr. Jessup

intended to lead. On Mr. Williams's application, and that of Dr.

Jessup, Dr. Jessup was permitted to put his case first. In the result, the applicant did not put forward any evidence, but

At a late stage of the trial, the possibility emerged that s. I171F of the federal Act might operate to validate relevant decisions of the Branch Council that were more than four years old. In consequence of this possibility, Dr. Jessup's clients filed a notice of motion dated 21st February 1985, seeking an order pursuant to s. 171G of the federal Act. It was

necessary for the Court to make an order for the advertisement of

-4- this application, and the service of the notice of motion and other documents in the proceeding on the Australia and New Zealand Savings Bank Limited, the mortgagee of the land and building. Argument on this issue took place some weeks after the

There was also a notice of motion, dated 3lst January 1985, which was filed on behalf of the applicant. This notice of motion concerned inspection of documents in the possession of the respondents. On the first day of the trial, the applicant's counsel applied to have this notice of motion stood over generally. This application was granted, and the motion for

A number of issues arose in the course of the proceeding. It is appropriate that the Reasons for Judgment he

On 13th April 1911, the Union became registered as an organization of employees, pursuant to the federal Act. It was so registered under the name "The Federated Clerks' Union of Australia". The original rules which were filed with the application for registration are in evidence before me. They

contained provisions governing the banking and expenditure of

"BRANCHES 34. For convenience of members the Union may consist of as many Branches throughout Australia as may he deemed desirable. All branches shall conform to the rules of the Union. Such Branches shall be allowed one representative on the Committee of Management for every

fifty members in addition to the number set out in rule 4 but no branch shall be entitled to more than three

Save for rule 34, the rules made no provision at all with respect to branches. Rule 4 made provision for a committee of management to consist of "a President, two Vice-Presidents, Secretary, Treasurer and six committee men". Various provisions were made for the exercise of powers by general meetings. Apart from rule 34, the original rules of the Union did not bear the character of rules of a federation, especially one having branches in various

Of some interest is a letter from the General Secretary of the Union to "the Commonwealth Industrial Registrar", dated 22nd September 1915, which is in evidence. The letterhead bears the nawe of the Union, together with a signification of its registration under the federal Act. Printed at the left hand side is the word "Branches", under which are listed the names of five States, including South Australia. The letter informs the Industrial Registrar of a resolution of a "Special Meeting of the Federal Council held in Adelaide, South Australia, on September

7th 1915", concerning proposed alterations to the rules of the

On 8th March 1916, the General Secretary of the Union submitted to the Industrial Registrar a set of rules of the Branch, said to have been adopted on 15th February 1916, Provision was made by these rules for a committee of management and officers. By Rule 3, subject to decisions of general meetings, the committee of management was given "full power to govern the Branch according to the Federal registered Rules and Branch By-Laws." Rule 6 related to the office and duties of the Treasurer of the Branch. It provided among other things "the money shall be deposited in the Commonwealth Bank of Australia in the name of the Branch, within forty-eight hours of receipt of

"Funds. 14, The funds of the Branch shall be used in such

Tanner as may be provided by the Rules and By-laws for the furtherance of any of the objects of the Union or as

A note at the end of this set of rules describes them as having been adopted at a general meeting on 28th August 1912, anc revised and amended by a committee specially appointed to de sc

Audited balance sheetS and statements of income anc expenditure were lodged by the Union with the Industria2 Registrar. In respect of the year 1915, these documents showec entries for various branches, including the Branch, under the heading "Affiliation Fees". In respect of the year 1916, there were recorded receipts of "Sustentation Fees" from various

branches, including the Branch. There were also recorded amongst

-7- expenses of an annual conference, held at Sydney in May 1916, fares for various delegates, including South Australian delegates. A return of officers dated 15th May 1916, and filed with the Industrial Registrar, recorded the election of a

On 16th June 1917, the Union filed an application to change its name to "Australian Clerical Association". The application was said to be based on a resolution of the annual conference of the Union between 8th and 14th May 1917. The

There has been tendered in evidence a copy of the rules of the Union as at 21st August 1917, together with certain

amendments which operated from lst April 1918. It is appropriate

(a) To regulate the conditions under which all members or persons entitled to become members of this Association may be employed.

(b) To advance and protect the interests of all members and all trade unionists by industrial, political, or any other means.

(c) Yo establish funds for the general conduct of the Association.

29. The Federal Executive may withhold support from any Branch entering upon any dispute involving the interests of other Branches, without first having obtained the sanction of the Federal Executive.

The Federal Executive may pay the whole or any part of the expenses incurred by or on behalf of any Branch in an appeal to any industrial tribunal.

In the event of any dispute taking place in any State, the Secretary of the Branch thereof shall try by conciliation to settle the dispute. [In the event of the

Secretary of the Branch not being able to come to a satisfactory arrangement immediately, the Secretary of the said Branch shall report the matter at once to the Branch Executive, whose duty it shall be to report the matter to the Federal Executive who shall take such action as the circumstances require. The action of the Federal Executive shall be binding on all members of the Association in such State.

32. Any Union situated in a State not already included in the Association, and which is eligible to join, may apply to the Federal Executive to be admitted as a Branch of the Association. Such application shall be in writing, and shall be accomplished by a copy of the resolution of the Union authorising the person making application to do so. Such application shall be dealt with by the Federai Executive.

33. The Association shall consist of members throughout Australia, and may have a Branch in each State. All Branches shall conform to the rules of the Association.

Each Branch shall be called the "Australian Clerical Association, - Branch" (the blank being filled in with the name of the particular place or State in which the Branch exists).

All Branches are pledged to support one another financially when required. Each Branch shall conduct its own election of delegates to Federal Conferences, the result to be in the hands of the General Secretary at least seven days prior to Conferences.

Branches shall have power to make rules from time to time for their own internal management, as they may deem

advisable: such rules shall not be contrary to the spirit of these rules."

Various other provisions relating to branches were also present.

consistently showed a substantial number of members of the

Returns of members filed with the Industrial Registrar

the years 1918, 1919, and several years thereafter,

-9- name of the Union to its present name, Federated Clerks Union of Australia. The application was said to be based upon a resolution of Federal Conference. The change of name was

In the meantime, events were occurring in the State of

South Australia. The Industrial Arbitration Act 1912 (S.A.)

sought to regulate industrial relations at the State level.

Provision was made for participation by associations in the

system of regulation laid down in the Act. The word

"association" was defined in s. 3 of the Act as follows:

""Association" means any trade or other union, or branch of any union, or any association, society, or body composed of or representative of employers or employes, or for furthering or protecting the interests of employers or employes:""

No provision was made by the 1912 Act for the registration of

The Industrial Arbitration Act Amendment Act 1915 (S.A.)

introduced a system of registration of associations. Section 2

of that Act provided that it was incorporated with the Industrial

Arbitration Act 1912 (S.A.), and that both were to be read as one

Act. Section 8 of the 191315 Act made provision for registration of an association, upon compliance with prescribed conditions, and for the issue of a certificate of registration "which shall be conclusive evidence of the fact of such registration and of the validity thereof". Sections 9 and 10 of the Act provided as

purposes of this Act, and as from the date of registration, be a body corporate by the registered name, having perpetual succession and a common seal, and by that name may sue and be sued for the purposes of this Act.

10. Any branch of an association may be treated as a distinct association for the purposes of this Act, and, with the approval of the Registrar, may be separately registered under this Act: Provided that no branch

shall be registered as an association unless, in the opinion of the Registrar, it is a bona fide branch of

sufficient importance to be registered separately." It is common ground between the parties that the records of the Industrial Registrar appointed under the state Act are incomplete. So far as they are available, they have been tendered in evidence. They disclose that, prior to 27th November 1918, application had been made under the 1915 Act for the registration of an association called "Australian Clerical Association South Australian Branch". Registration in this name was effected on 10th January 1919. At the time, there were

regulations known as "Rules of Industrial Court 1916", made

pursuant to the 1915 Act. Rule 56 of these Rules prescribed the conditions for registration of an association, including the

matters for which the rules of an association were required toa

Make provision, the form of application for registration, and the documents which were required to accompany it. Neither the original rules filed, nor any of these other documents is available for inspection. Accordingly, it cannot be determined from such primary documents whether the application purported to be made on behalf of the Branch, or whether action was taken to form a completely separate association. Such copy correspondence

from the state Industrial Registrar as is on the file is

addressed to "R. Youlton, Esg., Secretary, Australian Clerical

• ii - Association, S.A. Branch". There is evidence that a person by the name of Youlton was secretary of the Branch prior to this

Some attempt was made to establish that a union of clerks existed in South Australia prior to the registration of the Union under the federal Act. Over objections from Dr. Jessup, there were put in evidence extracts from newspaper articles published in 1905, concerning the formation of a clerks' association. Even if admissible, these documents do nothing to establish any connection between any association formed at that time and that which was the subject of registration in South Australia in 1919. Similarly, reference was made to appearances in two cases in the South Australian Industrial Court in 1917 and

1918, reported respectively as The Clerks' Case (1917) 1 S.A.I-R.

284, and The Retail Drapers' Clerks Case (1919) 3 5.A.I.R. 53.

In each of these cases, there was an appearance by an association. In the latter case, this was described as "the Australian Clerical Association, South Australian Branch". An examination of the report of each of these cases indicates that the original claims were made by a number of employees as individuals, a procedure still sanctioned by the state Act. The association concerned had intervened in the proceedings to support the claims. If there had been a registered association, it would have been entitled to institute the claim in its ow yight. The fact that steps were taken to institute, and then to support, a claim by a number of individuals suggests strongly the absence of a registered association. There was some speculation

as to whether registration might not have been effected under the

-~ 12 - Trade Union Act 1876 (S.A.), but 1t appears that the original register under that Act cannot be found. There is, therefore, no evidence of the previous existence as a separate association, or

of the registration, of the body which became registered in South

On 19th March 1925, a few months after the Union had registered its change of name, a change of name was registered in South Australia to "Federated Clerks' Union of Australia, South

The successive South Australian statutes relating to industrial conciliation and arbitration operated to preserve the registration of associations which had been effected under the

1912 and 1915 Acts. Reference should be made to s. 3 of the

Industrial Code 1920 (S.A.), s. 5 of the Industrial Code 1967

(S.A.) and s. 5 of the state Act. The attention of the Court was also drawn to s. 137 of the state Act, which contains more detailed provisions making it clear that an assocration registered under the 1912 and 1915 Acts, the registration of which has not been cancelled subsequently, is "deemed to be and

always to have been validly and effectually so registered" and is

a registered association under the state Act. Section 117 of the state Act also deems a certificate of registration of a registered association to be and always to have been conclusive evidence of the fact of such registration and of the validity

In many cases in which the courts have been called upon to deal with cases of dual registration of industrial bodies, under federal and state law, it has been necessary for the court to piece together the history of operation of such bodies, often from inadequate records. In the present case the Court has heen extremely fortunate in having available to it first hand evidence of the operation of the Branch and of the South Australian Association over many years. Mr. Harry Krantz was first elected as Secretary of the Branch and the South Australian Association in 1941. Shortly thereafter, he left to serve inthe armed forces, but he returned to the position in 1946, and held it until August of 1984. Mr. Leslie Haseldine first became an organizer in 1948, and has held the office of Assistant Secretary of the Branch and of the South Australian Association from 1950 or 1951 until the present time. Fach of Mr. Krantz and Mr.

Haseldine gave evidence at some length in the proceeding.

Notwithstanding the very great assistance given to the Court by these two witnesses, the very early history of the operation of the Branch and the South Australian Association must necessarily remain obscure. It does appear that, from the earliest times, there were filed with the Industrial Registrar under the federal Act, and with the Industrial Registrar under South Australian legislation, copies of rules which purported to be the rules of the Branch and the rules of the South Australian

Association respectively. More will he said about the content of

For many years, the requirements of the federal rules,

the Branch rules, and the rules of the South Australian Association, with respect to admission to membership, have coincided. No particular form of application for membership has been detailed in the rules, the requirement simply being that a prospective member supply such information as to his identity and occupation and such other particulars as to his eligibility for membership as the Branch Executive may require, and fill in and sign such application form "as may be provided". The earliest available form of application for membership in South Australia is one dated 7th February 1968. This form bears the title "Federated Clerks' Union of Australia", and contains the following words:

"I, the undersigned, hereby apply to be admitted as a

member of the above Union, and, if accepted, pledge

myself to loyally conform to the Rules and By-Laws of the said Union."

There follow spaces for the name and other particulars of the prospective member, as well as spaces for the signature of the prospective member, the signature of a witness and the date. The uncontradicted evidence is that this form of application for membership was used consistently for many years prior to 1968, at least as far back ag the early years after World War II. Substantially the same form of application for membership has been in use consistently since 1968. Some minor changes have occurred in the layout of the form, and in more recent times a heading "Application Card" has been added, and the prospective member has been invited to indicate whether dues are to be deducted from his or her pay. In some cases, a reference to a

specific section has been inserted beneath the heading in the

-~ 15 - printed form, eg. "S.A. T.A.B. Off Course Clerk's Association Section". Otherwise, the name of the Union as it appears on the form, and the words of application and pledge have remained the

All persons who have applied for membership have, until recently, had their names entered in a single register of members, and have been treated for all purposes as members of both the Union and the South Australian Association. The recent exceptions to this practice are of little relevance. In the first place, as a result of the decision of Evatt J. in Re an

Application for an Inquiry into an Election in the Federated

Clerks Union of Australia, South Australian Branch (matter 5.A.

No. 15 of 1981, judgment delivered on 28th June 1983, unreported) zt became clear that persons admitted to life membership under rule 7 of the rules of the South Australian Association and the rules of the Branch could not properly be given the right to vote in an election within the Branch or the Union. Since that time, the practice has been adopted of not giving such members a vote. The other instance concerned one Prichard, a former member of the Union, whose name was removed from the register of members pursuant to a power contained in rule 1l of the rules of the Branch. Mr. Prichard subsequently applied to the Court pursuant to s. 144 of the federal Act, and was held to be entitled to membership of the Union under that section. The view has been taken that Mr. Prichard is not a member of the South Australian

For a number of years, the practice has been for each

-16- new member, and in some cases prospective members, to be supplied with a pamphlet giving information. These pamphlets did not distinguish between the Branch and the South Australian Association; rather, they spoke consistently of a Union registered under both state and federal legislation. Information was given about the services offered to members by the Union, both directly and through the Branch, and by the South Australian

It has never been the practice to distinguish between the Union and the South Australian Association in charging

subscriptions. One subscription was charged to each member, and was treated as entitling that member to any relevant benefits offered by the South Australian Association and the Union. Monies raised from members were generally paid into a bank account. The major account was and is a current account with the Bank of Adelaide Savings Bank Limited and, after September 1980, with its successor, the Australia and New Zealand Savings Bank Limited, at 185 Hutt Street, Adelaide. This account has consistently been titled "Federated Clerks' Union of Australia South Australian Branch". There was, for a number of years, also a savings account with the Bank of Adelaide Savings Bank Limited at 185 Hutt Street, Adelaide, styled "Federated Clerks' Union of Australia - South Australia Branch Premium Interest Account

From these bank accounts liabilities of the Branch and

of the South Australian Association were discharged as and wher

they arose, and other sums were spent, as the Branch Council,

~-417- administering both the Branch and the South Australian Association, saw fit. A single set of books of account was kept, dealing with all income and expenditure, not distinguishing between that which occurred on behalf of the Branch and that which occurred on behalf of the South Australian Association. From the monies available, what were described as "sustentation fees" were paid regularly to the head office of the Union. These fees were required under the rules of the Union to be calculated on the income of a Branch; the calculation of them was made on the total income of the Branch and the South Australian Association from the one set of subscriptions and other amounts paid by members. From the single set of books of account, there were drawn up periodical statements of income and expenditure, and balance sheets as at various dates. These were the subject of audit. They were filed with the Industrial Registrar under the state Act and previous South Australian Acts, and with the Industrial Registrar under the federal Act, except for the years 1952 to 1961 inclusive, when they do not appear to have been filed with the federal Industrial Registrar at all. The audited balance sheets and statements of income and expenditure for the years 1964 to 1972 inclusive were filed together, accompanied by a statutory declaration of Mr. Krantz dated 13th July 1973. This indicates that there was some failure to file them with the Industrial Registrar under the federal Act during the period 1964 to 1971. Mr. Krantz's evidence was that any failure to file these documents, on time or at all, was the result of neglect, rather than of any conscious decision not to file the documents.

In respect of 1962 and 1963, and the years after 1971, the

documents appear to have been filed annually. There is no real

• 18 - consistency in the headings which appear on these documents. From 1973 onwards, the documents bore the name of the Union (with no apostrophe), and the words "South Australian Branch" on the next line. From 1968 to 1972, the name of the Union appeared with an apostrophe after the word "Clerks", and with the words "South Australian Branch" in brackets on the next line. Prior to 1968, the name of the Union appeared with an apostrophe, and the words "South Australian Branch" in lower case on the next line. Items of expenditure apparently relating to attendance at meetings of the Federal Council of the Union are found in many of the statements of income and expenditure which were filed. The auditor's report attached to the accounts for 1980 specifically referred to compliance with s. 158AD of the federal Act, a4 provision relating to the preparation of accounts by registered

organizations, which came into operation on 20th December 1980.

The practice as to election of officers has been consistent. At no time have separate elections been held with respect to the Branch and the South Australian Association. Rather, one set of elections has been held on each occasion, for officers and members of a Branch Council. The officers have discharged the duties and obligations falling upon the relevant officers under both the rules of the Branch and the rules of the South Australian Association. They have not made any express distinction between acts done with respect to one or the other. Similarly, one Branch Council has administered the affairs of the Branch and the South Australian Association, without any formal

division between those affairs. Elections have also been held,

in conjunction with other elections, for persons to represent the

• 19 - Branch on the Federal Council (more recently called the WNatizonal Council) of the Union. It has been unnecessary for members of the Branch to vote in elections for Federal (later National) officers, as these elections have been by a collegiate process,

In order to comply with the provisions of the federal Act and of the state Act and its predecessors, it was necessary for the rules of the Branch and the South Australian Association respectively to he filed with the respective Industrial Registrars under those Acts. The Branch Council, and the officers in South Australia did make genuine attempts to ensure that the rules of the Branch and the rules of the South Australian Association were in identical terms. In particular, in 1951 and 1952, Mr. Krantz, as Branch secretary, engaged in correspondence with the Industrial Registrar under the Federal Act, for the purpose of ensuring that the Branch Rules were in the same terms as the rules of the South Australian Association. The fact that different requirements were imposed by the federal Act and the state Act and its predecessors, and that different persans were performing the functions under those Acts, inevitably led to some differences between the two sets of rules. A further complication was that, from at least as early as 9th May 1967, under the rules of the Union, a branch was required to submit any alterations in its rules to the Federal (later National) Executive for approval, before those alterations were sent to the Industrial Registrar for certification under s. 139 of the federal Act. The need for such consent invariably

resulted in a time lag between the registration of rule

• 20 - amendments under the state Act and their certification under the

The position was made even more complex by the fact that s0mé rule amendments which found their way into the rules of the South Australian Association were never certified by the Industrial Registrar under the federal Act. These amendments never became valid parts of the rules of the Branch. The most striking of these amendments were those which related to subscriptions. On 18th April 1961, the Branch rules were amended to fix subscriptions payable by members. The adult male rate was fixed at four pounds a year and rates for other categories were fixed at lesser sums. These amounts were not further amended in the Branch rules until 2nd November 1979, when the adult maie yate was raised to $52.00 a year, and the rates for other categories were also raised. In the meantime, the subscription rates for all categories in the rules of the South Australian Association had been increased in a number of stages. The annual rate for an adult male became six pounds on 26th February 1964, $15.00 on 16th December 1968, $18.70 on 24th December 1971, s26.00 on 14th January 1974, $36.40 on 10th January 1975, and $52.00 on 3rd January 1979. The first of these changes was submitted to and approved by the Federal Executive, but not forwarded to the Industrial Registrar for certification pursuant to s. 139(4) of the federal Act; it could not, therefore, operate as part of the Branch rules. The later changes were not approved by the Federal Executive. This situation seems to have resulted from a considerable antagonism, which has existed for

some time, between the officers of the Branch and some federal

The other major area in which the rules of the South Australian Association differed from those of the Branch was with respect to eligibility for membership. The eligibility of persons for membership of the Branch is determined by the rules of the Union. Any alteration to the rules in that respect can only be effective if the Industrial Registrar gives his consent to such alterations, after an application is made in the prescribed form, and the alterations are advertised and objectors given an opportunity to be heard. See s. 139(1}) and (2) of the

federal Act, and reg. 127 of the Conciliation and Arbitration

Regulations. Such an alteration could not be effected without action at the federal level of the Union. An alteration to the conditions of eligibility for membership of the South Australian Association did not depend upon any action at the federal level of the Union. The Branch Council could, and did, submit alterations to the state Industrial Registrar and, after the procedures laid down in the relevant South Australian legislation were carried out, these alterations became registered at the state level. Most of such alterations were prompted by decisions at the state level as to the eligibility of certain classes of persons to belong to the South Australian Association, and by the desire of the officials of the South Australian Association to obtain award coverage for persons who were members but were held to be, or might be held to be, in occupations which fell outside the constitution rule as it then stood. In some cases, classes of employees existed, the members of which had been eligible to

belong to the Union and the South Australian Association, but had

• 22 - become, or were thought to have become ineligible by reason of promotion, or changes in the nature of their employment. Their membership continued, but obstacles existed, or were thought to exist, to the obtaining of awards governing their terms and conditions of employment. As a consequence, the South Australian Association changed its constitution rule, in the hope of

obtaining award coverage with respect to those persons.

Since 27th November 1924, the constitution rule of the

The Union shall consist of all persons male and female engaged in any clerical capacity whatever and also those engaged in the occupation of shorthand writers and typists, or on calculating or other machines designed to perform or assist in performing any clerical work whatever."

As a result of a series of changes registered in South Australia on lst October 1941, Ist October 1943, 15th December 1959 and

25th May 1965, the constitution rule of the South Australian

The association shall consist of any person male or female

(a) engaged in or about an office. Without limiting the generality of the foregoing shall include:- any person 50 engaged

(ii) either wholly or partially in the occupations of shorthand writer, typist, teleprinter

operator, addressing machine operator, Gictation machine operator, punch card machine operator, cashier, receptioniste,

{iii) either wholly or partially in calculating whether by ordinary means, or by means of any machine designed to perform or assist in performing clerical work.

(iv) on invoicing, charging, billing, pricing, scheduling, planning, correspondence, books and accounts, checking or otherwise dealing with records, or in any other clerical capacity whatsoever.

(v) as salesman, tracer, draughtsman, or in any similar technical capacity.

(v1) as secretary, cost accountant, accountant, chief clerk, paymaster, sales manager, purchasing officer, production control officer, pay clerk, costs clerk, purchasing clerk, sales clerk, statistics clerk,

foreman''s clerk, timekeeper or any similar or other designated clerical position.

(b) engaged outside an office in any clerical capacity or as & meter reader.

(c) engaged as depot superintendent by any 0i1 Company.

(d) engaged as branch manager, sub-branch manager, auctioneer, wool valuer, wool technician, wool cadet or store manager by any Stock and Station Agent.

(e) engaged as two-way radio operator in connection with a fleet of motor vehicles.

(f) engaged as terminal officers, grain officers, senior inspectors or inspectors employed by South Australian Co-operative Bulk Handling Limited.

During Mr. Krantz's years as Secretary of the Branch and the South Australian Association, rule books were printed for distribution to office representatives, and to members and prospective members who sought copies of the rules. From 1947 onwards, these books have been printed within the office in Adelaide, by means of a duplicating machine. The purpose of this

was to enable the regular publication of the rules as amended

• 24 - from time to time. From 1953 until 1979 each of these rule books bore a note to the effect that the book contained the rules registered under the state Act, or the corresponding earlier South Australian legislation. Thereafter the books have been produced to show differences between the rules registered under the state Act and the Branch rules, where such differences exist,

and appropriate notes explaining this have been included.

The evidence is that the rules used as "working rules" during the 1950's, 1960's and 1970's were those printed in the rule books, namely those which were registered under South Australian legislation. Those rules were relied on in day-to-day operations. The then current rule book was given to the Commonwealth Bank during the 1960's, when the relevant bank

account was kept with that bank. A further copy of the rule

book, said to contain all amendments registered with the state Industrial Registrar up to 26th February 1964, was produced from the records of the branch of the A.N.Z. Bank at 185 Hutt Street, Adelaide. It had apparently been deposited with the Bank of Adelaide at that address, at or about the time the bank account

The terms and conditions of employment of some members of the Union in South Australia were governed by awards made under the federal Act, and the terms and conditions of other Members were governed by awards and agreements made under the state Act and its preceding legislation. In the witness box, Mr. Krantz estimated that approximately 31 per cent of members in

South Australia are subject to federal awards at the present

=- 25 - time. This figure was as high as approximately 50 per cent in

the mid 1960's, and was around 33 to 35 per cent during the

Various matters of fact were put forward by the parties for whom Dr. Jessup and Mr. Heywood-Smith appeared, in order to indicate the dominance in operation of the Branch over the South

Australian Association, or the latter over the former.

A letter dated 14th March 1928 to the state Industrial Registrar from the then Branch secretary was on paper bearing a letterhead listing branches of the Union in all other states. A hand-written letter to the state Industrial Registrar dated 7th April 1933, advising a change of registered office, described the change as having been effected by resolution of a general meeting of "members of the South Australian Branch of the Federated Clerks Union." By letter dated 12th August 1941, Mr. Krantz advised the state Industrial Registrar of his appointment as "Secretary of this Union." The letterhead also listed branches

In a letter to the State Secretary of the Australian Railways Union, dated 22nd September 1953, Mr. Krantz relied on limitations in the federal rules as a reason for refusing a plea for a donation towards the expenses of a person who had attended overseas conferences. Mr. Krantz's evidence was to the effect that it was convenient for the South Australian Association to be

• 26 - Mr. Haseldine gave evidence that the membership application card, which I have described, was treated by the

Branch Council and the officers in South Australia as being the

card appropriate for joining the South Australian Association.

Prior to 1970, office premises from which the affairs of the Branch and the South Australian Association were conducted were leased. Two leases of such premises are in evidence. The first, dated 22nd October 1941, shows the lessee as "Federated Clerks' Union of Australia S.A. Branch". The second, dated 9th March 1956, is in the name of "Federated Clerks Union of Australia South Australian Branch". Each bears the seal, a

Although there is no requirement in the rules of the Union, the Branch or the South Australian Association to issue membership cards, it has been the practice in South Australia for a card to be issued to each member as evidence of membership. Two versions of such cards are in evidence. The headings are of some interest. The earlier form of card which was introduced in the 1960's, bore the words "FEDERATED CLERKS' UNION OF AUSTRALIA" in heavy type, with the words "South Australian Branch" in smaller type underneath. The later card, used from about 1980, bore a crest in the shape of a shield, with the initials "F.C.U." and a representation of an ink well and quill pen, superimposed on a map of the Australian continent, beneath the Southern Cross. In it, the heading was altered, so that the words "Federated Clerks' Union of Australia" were no longer wholly capitalized,

and appeared in type of the same size as the words "South

• 27 - Australian Branch; a horizontal line was inserted between these

two inscriptions. The words "Founded 1905" were added.

One document tendered was a document entitled "Payroll

Deductions Remitting Advice", apparently emanating from Ansett

Airlines of Australia. It records the payment of contributions by members employed by that airline in Adelaide, by means of deductions from their wages or salaries, in the month ending 30th December 1979. Beside the words "Union or Association" in the form, the words "Federated Clerks Union" have been handwritten. The Union is, and has been for some years, a party to an award made under the federal Act, governing the terms and conditions of employment of certain persons employed by Ansett Airlines of Australia. The official receipt given for the payroll deductions headed "Federated Clerks' Union of Australia" in heavy type, with

the words "SOUTH AUSTRALIAN BRANCH" in small type underneath.

The picture which emerged from the evidence was of a group of responsible officers and members of a Branch Council, concerned to meet the needs and desires of their members with respect to their industrial and other relevant interests. They were conscious of the existence of the legal requirements under the federal Act and the state Act and its preceding legislation, and determined to comply with them so far as was reasonably practicable. This is not an unusual picture in cases of this kind. There was no desire to allow the legal strictures imposed by two systems of registration to dominate the affairs in which these persons participated. Rather, it was a case of attending

to obligations when the occasion arose, whether those obligations

• 28 - arose by reason of the registration of the Union under the federal Act, or the registration of the South Australian Association. Again, this is not an uncommon feature of the conduct of trade unions in states which offer separate registration under state law. In one respect, however, the present case differs from many other cases. In some cases in the past, it has been found that officials of trade unions conducted their affairs without any inkling that any legal problems at all arose out of dual registration. By contrast, Mr. Krantz was unusually well informed of the potential problems of dual registration. The evidence discloses that Mr. Krantz attended a Federal Conference of the Union at Hobart in 1946. Present was Mr. J.B. Sweeney, who was later leading counsel for the

successful respondents in Moore v. Doyle (1969) 15 F.L.R. 59, and

later still Mr. Justice J.B. Sweeney of the Australian Industrial Court and of this Court. Mr. Sweeney, as he then was, delivered to the Federal Conference of the Union a report on a meeting of a delegation from the Union with Senator McKenna, concerning a number of aspects of the federal Act. One part of the report is recorded in the minutes of the Federal Conference in the

"(3) Question touched on to some degree was possible conflict between State and Federal Unions. This was occurring particularly in New South Wales. Instanced argument that N.S.W. Branch registered in State Court as a Union but was also Branch of

Federal body. Legal effect of these two registrations appeared to be that they were two entirely separate and distinct bodies at law. In

future it might be found that a group would declare they were no longer acting as a branch of the Federation but only as a State union."

The evidence of Mr. Krantz was that, as a result of this report,

• 29 - and discussion on it, he had some awareness of the potential legal difficulties of dual registration. Some of Mr. Krantz's subsequent actions, which are detailed below, show that he, at least, was aware of the possibility that registration under the federal Act and under state legislation might give rise to the existence of two separate legal entities. Notwithstanding this, as the foregoing account of the history of the Branch and the South Australian Association shows, no attempt was made to Operate separate bodies. Rather, every attempt seems to have

been made to operate as if there were one body only.

On 15th November 1977, at a State Conference, it was

"that the South Australian Branch of the F.C.U. take legal advice to determine the requirements necessary for

the South Australian Branch of the F.C.U. to be free of

the encumbrances of the Federal Body and for the South

Australian Branch of the F.C.U. to become an independent

organization." The issue was raised by members employed by one of the automobile manufacturers in South Australia. At the State Conference in the following year, on l2th October 1978, Mr. Krantz reported on this issue. He explained that automobile manufacturers' clerks were employed under a federal award, that without the co-operation of employers, it would be difficult to change to a state award, and that, even if this were done, another organization registered under the federal Act had the capacity to enrol clerks in the

vehicle industry, and would probably occupy the field. The 1978

"that the report be received and the advice noted and that this matter should not be further considered at

• 30 - this time and that this Conference declares that it

hopes that the functioning of the national body of the

Clerks' Union will become more representative and responsive to the views of the rank and file members in

the various industry sections as expressed by those

sections who should have the right of greater participation in the industrial affairs at negotiation

One other matter of general history requires to he mentioned. This was a matter described by Mr. Heywood-Smith as "industrial service fees". In 1968, Mr. Krantz became Federal Secretary of the Trustee Companies Officers Association, an organization of employees registered pursuant to the federal Act. The Branch Council did not desire to lose his services altogether, so entered into an agreement with the Trustee Companies Officers Association, whereby that association contributed half of Mr. Krantz's salary and that of his secretary, and a sum in respect of office rental. This agreement continued to operate until about 1974, when the association began to pay a separate salary to Mr. Krantz, and his salary from the Branch or the South Australian Association was fixed at a correspondingly lower figure. The association was then charged an industrial service fee to cover rent, office equipment and secretarial costs. Mr. Krantz still held office with the Trustee Companies Officers Association at the time of the trial. Beginning in 1970, until about 1975, Mr. Krantz advised the Royal Australian Nursing Federation, South Australian Branch, as toa andustrial matters. Almost all of this advice was given at meetings held outside Mr. Krantz's normal working hours. Payment was received for his services, which was passed on directly to the Branch or South Australian Association. In about 1973 and

1974, industrial services were offered to the Wool Classers'

-~ 31 - Association in return for payment. From 1975 until 1984, similar services were performed for, and similar payments made by, the Commercial Travellers' Guild. These payments were intended to cover costs of staff, space and office equipment. Moneys were also received from the Wool Brokers Staffs' Association. Initially, in about 1974, an employee of the Branch or South Australian Association was made available to perform clerical work on behalf of that association. In about 1976, that employee, Mr. Clarke, became secretary of the Wool Brokers Staffs Association, which then became a tenant in the premises occupied by the branch or South Australian Association, and paid rent and monies to cover other services. Finally, in 1984, industrial services were performed for the Australian Social Welfare Union,

On 22nd June 1970, Mr. Krantz reported to the Branch Executive about an unsuccessful attempt to secure further rented space 1n a building, part of which was then occupied by the Branch office. Mr. Krantz raised the possibility of purchasing a4 small building, and referred to a building known as the Newsagents' Association building, which was then on the market. The Branch Executive resolved:

"to report this matter to the Branch Council seeking approval for the Executive to endeavour to negotiate a reasonable price, to seek proper advice on the valuation of any property concerned and to negotiate the availability of finance for such a venture and, if necessary, to take a short term option on any property

while the matter was being reported to the Branch Council for its decision."

On the following day, Mr. Krantz reported to the Branch Council upon the desirability of purchasing a building, and the availability and suitability of the Newsagents' Association building. The Branch Council authorized the Branch Executive to make further investigations concerning the purchase of the building and to report back to the Branch Council. On 7th July 1970, a notice went out advertising a conference of "the Union" concerning the purchase of a building. This notice recited that the Executive had secured an option ona small freehold, and contained statements as to its suitability and a comparison of rental costs with the costs of purchase. The Branch Council had inspected the property and recommended its purchase. The Branch Executive had started a building fund with $5,000.00. The conference was convened to deal with all aspects of the proposal. It was intended that the conference would consist of all members of the Branch Council, all members of section committees, all office representatives and former Branch Presidents. The conference was to be held on 14th July 1970. On that day, the conference was held. There were several invited guests present, including Mr. Furphy, the Deputy Industrial Registrar in Adelaide, appointed umder the federal Act. The conference resolved in the following terms:

purchase land and buildings for occupancy by the Union,

such property to be as described by the title, being the

building known as the Newsagents Association Building in

payable on occupancy by the Union approximately the Ist

Appeal should be established for the purpose of receiving donations and moneys for the purchase of the

Building, the Branch Council to commence such Fund with a contribution of $5,000 from Union funds and to make further payments as it is able.

Conference authorises the Branch Council to further provide for the purchase price by establishing a Building Fund payment beEsic.J3 each member of ten cents a month for the period lst August, 1970 to 31st December, 1971. The payment will become due and payable on the ist day of each month. The payment will be a levy 1m accordance with Rule 37 and will therefore he entitled to be claimed by members for income tax

A Building Fund payment will not be required of part time members covered by clause 12(d)(i).

Building Fund Payments may be paid at the same time and

in the same manner as ordinary subscriptions, e.g. hy

Building Fund and progress reports of the state of the

fund shall be issued to all office representatives and

building for rental." On 28th July 1970, the Branch Council adopted the conference resolution and resolved to impose the levy set out in the conference resolution. There was a report that the Bank of Adelaide had approved a loan of up to $20,000.00 for the purchase of the Newsagents' Association building. Thereafter, a brochure was prepared relating to a building fund appeal. This brochure contained a copy of the conference resolution and a photograph of the Newsagents' Association building. It set out details of the requirements, price and purchase terms relating to the building. By letter dated 4th August 1970, all office representatives were advised of the conference resolution and the levy for the

building fund. This was followed by a circular letter to office

representatives dated 10th August 1970, inviting each office

• 34 - representative to distribute a copy of the building fund brochure

to each member, and containing more information about procedures

By a contract note, dated 12th August 1970, the Authorized Newsagents' Association of South Australia Limited agreed to sell the Newsagents' Association building. The purchaser was described in the contract note as "the Federated Clerk's Union of Australia - South Australian Branch - registered persuant€C€sic.J to the South Australian Industrial Code 1967". The purchase price was $29,000.00 a deposit of $1,000.00 heing payable on the signing of the contract note. On lst September 1970, the Branch Council by resolution gave authority to use "the seal" for documents in connection with the purchase of the building. The seal referred to was, and is, circular in design. Around its edge are the words "Federated Clerks' Union of Australia". In the centre appear the words "Seal of South Australian Branch". The rules of the Branch do not make any provision for a _ seal. The rules of the South Australian

At a meeting of the Federal Council of the Union on 30th September 1970, discussion occurred of the proposal to purchase the Newsagents' Association building. The Federal President of the Union reported, quoting rule 37 of the rules of the Union (which is set out below). Obviously taking the view that the purchase of a building was a disbursement of funds for extraordinary purposes, and that the funds disbursed were those

of the Union, the Federal President stated that the requirement

• 35 - of rule 37(3) had been overlooked, and that this went to the contractual capacity of the Branch. He stated his desire to draw the attention of the Branch to these problems and to ask the Branch to take immediate steps to put the full proposal before the Federal Executive or the Federal Council for consideration under rule 37(3). The Federal Council carried a motion bringing the attention of the Branch to rule 37(3), stating that the entry into the contract to purchase the building, and the disbursement of funds by way of deposit were a violation of that rule, and calling on the Branch to take steps to place the full proposal before the Federal Executive or the Federal Council. On 3rd November 1970, the Branch Council considered this resolution. Mr. Krantz referred to the constitution of the South Australian Association and the provisions of the Industrial Code 1967 (South Australia) authorizing a Union registered under that Act to hold property. He stated that he helieved that he and the other efficers of the Branch had acted entirely correctly and in accordance with the wishes of the members and the law applicable to the South Australian Association. He believed that the matter should be discussed with the Registrar of the state Industrial Court to establish what were the rights of the South Australian Association to purchase a building in accordance with its rules and the Industrial Code 1967 (South Australia). The Branch Council received the report and instructed Mr. Krantz to discuss the position with the state Industrial Registrar. On Ist December 1970, Mr. Krantz reported to the Branch Council that he had had discussions with Mr. Hilton, the state Industrial Registrar, and that his advice was that the decisions to acquire

the building were within the competence of the South Australian

On 5th January 1971, Mr. Krantz reported to the Branch Executive that settlement of the purchase should occur before the end of that month. On llth January 1971, Mr. Krantz forwarded to the Manager of the Bank of Adelaide Savings Bank Limited at its post office branch a copy of s. 139 and s. 150 of the Industrial Code 1967 (South Australia). These provisions related, among other things, to the incorporation of registered associations, their power to make contracts, and their power to purchase and hold real property. The purpose of this was to facilitate the obtaining of a loan for the purchase of the Newsagents'

On 12th January 1971 the members of the Branch Executive agreed by telephone that application should he made to the Bank of Adelaide for an overdraft limit of $20,000.00 for the purpose of assisting the purchase of the Newsagents' Association building. On the same day, Mr. Krantz sent a letter to the bank, seeking such an overdraft limit and offering a mortgage over the property being purchased as security. A copy of the telephone

On 22nd February 1971, two instruments, each entitled "Memorandum of Mortgage", were executed. In each, the mortgagor was described as "Federated Clerks' Union of AuStralia South

Australian Branch". One mortgage was to secure a loan of $15,000.00 from the Bank of Adelaide Provident Fund Incorporated,

which was the mortgagee. The other mortgage was to secure an

• 37 - overdraft loan from the Bank of Adelaide, for the purpose of providing the additional $5,000.00 thought to be needed. Each of these instruments was sealed with the seal which I have described earlier, and bore the signatures of one O'Grady, the then Branch President, and Mr. Krantz as Branch Secretary. Also sealed and signed in the same manner on the same day was an authority to the Bank to debit the current account, to which I have referred earlier, with interest, in favour of the trustees of the Bank of Adelaide Provident Fund Incorporated. On 23rd February 1971, Mr. Krantz reported to the Branch Council on the execution of the mortgage documents, and on the imminent settlement of the purchase of the Newsagents' Association building. The Memorandum of Transfer relating to that building was in fact dated 25th February 1971. It also bore the seal which I have described earlier, and the signatures of Mr. O'Grady and Mr. Krantz. In the body of the Memorandum of Transfer, the transferee was named as "Federated Clerks' Union of Australia - South Australian Branch". As the document was originally drawm, the sealing clause described the seal as that of "Federated Clerks' Union of Australia"; immediately after those words, there were inserted in handwriting, apparently initialled by Mr. O'Grady and Mr.

On 23rd March 1971, Mr. Krantz reported to the Branch Council that settlement had occurred on lst March, and that the new premises were occupied and open for business on 15th March. Part of the ground floor had been let to a neighbouring company for storage. $3,000.00 had been lent by the Port Adelaide

Shipping Clerks' Section Funeral Benefit Fund, and certain advice

• 38 - about this matter was considered and a _ resolution passed concerning the repayment of this loan. Consideration was also given to the furnishing and partitioning of the new premises, and to an official opening scheduled for May. Mr. Krantz reported, as recorded in the minutes:

"The new property was registered in the name of the Federated Clerks' Union of Australia, South Australian Branch" Strictly, this report was incorrect. The certificate of title shows the name of the registered proprietor as having a dash

In 19723 some correspondence occurred between the Federal Secretary of the Union and Mr. Krantz, relating to the purchase of the Newsagents' Association building. By letter dated 17th May 1973, the then Federal Secretacy wrote to Mr. Krantz, "...to ascertain the name in which the building had been purchased and to ask the Branch to comply with the Federal Rules of our Union and provide the full details of the Contract of Purchase". Reference was made to the resolution of the Federal Council on 30th September 1970, and to the fact that the records did not show that the Branch had complied with the request of the Federal Council. This letter was placed before the Branch Council on 22nd May 1973, and was referred to the Branch Executive for its attention and advice, on a motion moved by Mr. Krantz. On 15th

June 1973, Mr. Krantz replied to the Federal Secretary in the

"I acknowledge your letter of the 17th May last (Ref: B(c)) which adverts to the purchase by this Branch in 1970 of the building which is now its registered

• 39 - office. The building is owned by the Branch in its

registered name, was purchased in accordance with our registered rules and in compliance with them."

This prompted a reply by the Federal Secretary on behalf of the Federal Executive, dated 29th June 1973, stating that the letter of Mr. Krantz of 15th dune did not supply the information required, and specifically asking if the building had been

purchased by the "State Union". Mr. Krantz replied by letter

"The property is included in our audited financial statements filed with both the Federal and State Industrial Registrars. The title of the Building, as are all our other holdings, is in the name of Federated Clerks' Union of Australia, South Australian

On 14th, 125th and 16th August 1973, the Federal Executive Committee of the Union met. There was discussion about the purchase of the building in South Australia, and concern expressed about non-compliance with the rules of the Union. The Federal Executive Committee resolved: "that we write to the Secretary of the South Australian Branch and say that the F.E.C. expects him to carry out the decision of the Federal Council and the rules of the union and obtain approval for the purchase of the building and also that he should acknowledge that the building is part of the property of the Federated Clerks' Union of Australia and held by the South Australian Branch of that Union." This resolution was communicated to Mr. Krantz by letter of the Federal Secretary dated 25th September 1973, with a request that Mr. Krantz inform the Federal Secretary whether the building

belonged to the Union and was held by the Branch, and if so

• 40 - whether the Branch would request the approval of the Federal Council for its purchase. Mr. Krantz wrote at length in reply to this letter on 22nd November 1973. He disputed the characterization of expenditure on the purchase of a building as "extraordinary", stating that the acquisition of an interest in property for a union office, either by way of freehold or leasehold, appeared to be an ordinary thing to do. Mr. Krantz stated that Branch rule requirements "as registered both Federally and State" had been met. On the basis that the letter of the Federal Secretary of 25th September had sought to sever the South Australian Association from the Branch, Mr. Krantz then proceeded to pursue this distinction. He drew attention to differences between the eligibility rule of the Union and that of the South Australian Association, and to possible problems which some persons who were members of the South Australian Association might have had in being considered validly as members of the Union, by virtue of their non-employment in an "industry" for the purposes of the Constitution. Mr. Krantz declined to make any binding statement concerning compliance with the rules. With

this letter, the correspondence about the matter closed.

Apart from the mortgage loan from the Bank of Adelaide Provident Fund Incorporated, the purchase of the Newsagents' Association building was financed from funds available within the Branch or the South Australian Association. The overdraft facility was not called upon. Reference has already been made to funds made available by the Port Adelaide Shipping Clerks Section Funeral Benefit Fund. Other funds were made available from the

reserve funds of the Branch or the South Australian Association,

-~4l- which were invested to cover items like long service leave. These funds were treated as having been borrowed from the funds from which they were removed, and were repaid with interest. on 27th May 1975, Mr. Krantz reported to the Branch Council that all

The Newsagents' Association building was adjoined to the south by vacant land owned by the Adelaide City Council. On 9th June 1971, the Assistant Secretary reported to the Branch Executive on this land, suggesting that it may be available as a parking lease and was available for purchase. It was resolved hy the Branch Executive that enquiries be made as to the rental or purchase of this vacant land. Nothing seems to have occurred in relation to this idea for some four years. On 29th July 1975, Mr. Krantz reported to the Branch Executive that the vacant land was owned by the City Council, which had recently adopted a new development plan. Mr. Krantz had written to the City Council requesting discussions as to the use, development and possible purchase by the Branch or the South Australian Association of the land. The Branch Executive received the correspondence and endorsed the Secretary's action. On 26th August 1975, Mr. Krantz reported in similar terms to the Branch Council. He also raised the question of the possible purchase of land adjoining the Newsagents' Association building to the east. The Branch Council Gave authority to the Branch Executive to make enquiries

On 27th January 1976, Mr. Krantz reported to the Branch

Council the results of certain enquiries he had made of the City

• 42 - Council, with respect to both lots of adjoining land. The possibility existed that the land to the south of the Newsagents' Association building would be sold by the Adelaide City Council for $25,000.00, on condition that the South Australian Association commenced developing the land quickly. The Branch Council gave authority to Mr. Krantz to treat with those involved in the sale of the land with a view to its purchase, and requested him to prepare for the Branch Council a more detailed proposal. On 24th February 1976, Mr. Krantz reported to the Branch Council that the City Council had offered to sell the vacant land, and had sought an offer from the South Australian Association on price. The Branch Council authorized the purchase of the land and the making of an offer not exceeding $6.00 per

On 12th March 1976, the Bank of Adelaide approved in principle a loan of s100,000.00, expressed to be to "Federated Clerks' Union of Australia - South Australian Branch" for the purchase of the land and construction of a building. On 23rd March 1976, the Branch Council received a further report from Mr. Krantz, and resolved to approve the payment of up to $25,000.00 for the purchase of the land from the Adelaide City Council for a new building. By letter dated 25th March 1976, addressed to "The Secretary, Federated Clerks Union", the Corporation of the City of Adelaide confirmed the sale to "your Union" of the land concerned for a price of $23,232.00, subject to certain conditions as to development, and invited a formal application

for planning approval for the proposed development.

• 43 - In a letter dated 24th June 1976 to Hames Sharley Pty.

"Concerning the detailed plans being prepared for our new building, I make the following points:-

At this stage the plans should express the correct proprietary interest of the Union because they may become part of contract documents etc. Our registered name is:

"FEDERATED CLERKS' UNION OF AUSTRALIA, SOUTH AUSTRALIAN BRANCH"

There is no bracket of South Australian Branch, nor 15 South Australian Branch in lower case - the whole of the words are our registered and incorporated name."

The formal agreement for the sale of the land was dated

18th August 1976, and described the purchaser as "FEDERATED

CLERKS' UNION OF AUSTRALIA SOUTH AUSTRALIAN BRANCH a body

corporate under and by virtue of the provisions of the Industrial Conciliation and Arbitration Act 1972-1975 and having its registered office at 8-10 Regent Street Adelaide". The seal which I have already described was affixed to it, and it was signed by the President and Mr. Krantz, as Secretary. The

Memorandum of Transfer of the land was dated 28th August 1976. It described the transferee as "Federated Clerks' Union of Australia, South Australian Branch", and also bore the seal and the signatures of the President and Secretary. On 11th May 1977, "Federated Clerks' Union of Australia South Australian Branch"

Mr. Krantz prepared a feasibility study on the cost of the new building dated 25th January 1977. On the same day, the

Branch Council resolved to offer the Bank of Adelaide Savings

• 44 - Bank Limited a mortgage over the land and the building to be

erected on it, to secure a loan of $100,000.00, and gave to the

President and Secretary authority to execute the necessary documents and to place the seal thereon. An agreement was entered into with Messrs. Hames and Sharley, architects, for the erection of a two storey office building on the land. This agreement is dated 28th January 1976, but the probability is that the year indicated is incorrect, and it was executed on or about 28th January 1977. It was described as being between the architects and "Federated Clerks' Union of Australia (S.A. Branch)". It bore the seal which I have described earlier, and the signature of Mr. Krantz. By letter dated 7th February 1977, formal application was made to the Bank of Adelaide for a loan of $100,000.00, to be secured by registered first mortgage over the

On 14th February 1977, there was executed a contract note for the sale of the Newsagents' Association building to Australian Government Workers Association. In that document, the vendor was described as "Federated Clerks' Union of Australia - South Australian Branch". The contract note was signed by Mr. Krantz over the impression of a rubber stamp which bore the words "South Australian Branch" on the first line, and the words

"FEDERATED CLERKS' UNION OF AUSTRALIA" on the next line.

On 18th February 1977, a building contract was executed between "Federated Clerks' Union of Australia South Australian Branch" and Wm. Essery and Sons Pty. Ltd., for the construction

of an office building on the land. Hames Sharely Pty. Ltd. was

~ 45 - named as the architect for the project. The agreement was executed by the signature of Mr. Krantz over the stamp which I

On 23rd March 1977, there was executed a Memorandum of Mortgage in favour of the Bank of Adelaide Savings Bank Limited. The mortgagor was described as "Federated Clerks' Union of Australia South Australian Branch". The document bore the seal which I have described earlier, together with the signatures of the President and Secretary. Thereafter, various payments were made in discharge of the mortgage loan, some from the general account to which I have referred, some from the reserve and trust funds premium interest account to which I have referred, and some from the proceeds of sale of the Newagents' Association building. In due course the building was completed and occupied. Notice of practical completion was received from Hames Sharley Pty. Ltd.

One further document should be mentioned. Ry deed dated 13th April 1978, the South Australian Housing Trust granted to

"Federated Clerks' Union of Australia (South Australian Branch)"

a licence over an access lane adjoining the land on which the

On 21st July 1981, Mr. Krantz reported to the Branch Council on the investment of funds. He referred to the savings

bank premium interest account, and to the fact that thirty days'

-~ 46 - notice was necessary for withdrawals. This caused problems when it was desired to withdraw funds to invest in public utility loans, which were often advertised less than a month before they closed. It also caused problems in the case of staff members leaving and requiring their final payments of long service leave and provident fund benefits. Enquiries had been made of the Satisfac Credit Union, a large credit union operating in South Australia. If the South Australian Association were to become a share holder of this credit union, taking up a $20.00 share, and deposit funds in the credit union, the interest rate would be higher than that paid by a savings bank, and the funds would be available at call. The operation of the account would be on the same basis as a savings bank account. The recommendation was that the Branch Council approve such arrangement. The Branch

On 27th July 1981, an application was made to the Satisfac Credit Union for membership. This was made in the name of "Federated Clerks' Union of Australia South Australian Branch", the imprint of a rubber stamp bearing those words appearing in the relevant place on the application form for the name of the applicant, and underneath the signature of Mr. Hasel@ine. On the back of the application form were specimen signatures of various officers for the purpose of enabling the account to be operated, and also the imprint of the seal to whick

A membership card was issued bearing the name "Federated

Clerks Union of Aust. - S.A. Branch". Thereafter, funds were

• 47 - deposited with the Satisfac Credit Union, and various accounts

were operated on a regular basis. There remain substantial funds

invested in the Satisfac Credit Union at the present time. Regular statements are consistent in being addressed simply to

Tt is common ground that investment of monies in the Satisfac Credit Union is not an authorized trustee investment under the relevant legislation of South Australia. It is also common ground that no approval was sought of the National Council or National Executive for investment of funds in the Satisfac

Rule 3 of the rules of the Union contains the objects

"(k) to purchase, sell, mortgage, lease or otherwise deal with any land or other real estate;

(rv) to raise money by contributions, fines, levies, donations, loans or otherwise for the furtherance of these objects; "

By rule 7, entrance fees and contributions payable by members are to be fixed by branch rules. All contributions, fees fines or levies are to be paid in accordance with branch rules. Rule 8 provides for the striking of levies by the National

Council or National Executive, or by a branch. Rule 8(4)

"(4) A Branch may, from time to time, stike a levy on all or part of its members. Such levy shall not exceed

the sum of eight dollars ($8) per week, and shall not be struck except for the purposes of the Branch."

Rule 12 provides for branches. Sub-rule (1) provides that "All Branches shall conform to the Rules of the Union." The rule also

"(2) (a) Subject to those Rules and to the approval of the National Executive, a Branch shall have power to make Rules from time to time for its own internal management.

All Branch rules made pursuant to this sub-rule shall form part of and shall not be inconsistent with these rules. Such Branch rules shall be subject to these rules. The power given to the Branches by this sub-rule to make rules for their own internal management shall not be taken as a delegation of power to the Branches to make rules precluding the exercise by the National Executive of any of its powers under Rule 27 hereof.

(£) All Branch Rules shall comply in all respects with the requirements of the Commonwealth Conciliation and Arbitration Act and the Regulations made thereunder. They shall also comply in all respects with these rules. If at any time the National Council or National Executive is of the opinion that the Rules of any Branch do not comply with the said Act and Regulations and/or these rules it may calli on the Branch to bring its Rules into conformity with the said Act and Regulations and/or these rules within a specified time. If at the end of the time specified the Rules of the Branch in the opinion of the National Council or National Executive still do not conform with the said Act and Regulations and/or these rules the National Council or National Executive may make such alterations to the Rules of the Branch as will in its opinion bring them into conformity with the said Act and Regulations and/or these rules.

• 49 - (3) If a Rule of the Branch is inconsistent with any Rule of the Union the latter shall prevail and the

Branch Rule shall to the extent of such inconsistency be void." :

Rule 15 provides for payments by branches to the National Secretary of amounts called sustentation fees. These are calculated by dividing the total amount received by a branch as contributions by the adult male rate, to ascertain the number of membership units, and then paying the appropriate percentage,

Rule 16 sets up a National Council, consisting of four national officers and councillors representing branches, roughly

in proportion to the numbers of members in the branches.

Rule 27 provides for a National Executive, which is the committee of management of the Union. It consists of the four national officers already referred to, together with National Vice-Presidents, all of whom are elected by and from the National Council. Sub-rule (3) provides, in part, as follows:

"(3) The National Executive shall, subject to the review of its actions by the National Council, have the care, control, custody, superintendence, management and

administration in all respects of the affairs, business, funds and property of the Union..."

Rule 28 provides for a National Executive Committee, an even smaller body of officers, which has the powers of the

"(1) All funds and property held by any Branch shall be vested in the Union.

(2) The Executive of a Branch shall not invest any funds for the time being in its possession in other than authorised trustee investments without the approval of the National Council or National Executive.

(3) The funds of the Union may be disbursed for ordinary purposes by such officer or officers as may be authorised in that behalf and subject to such limitations as may be imposed. Funds may be disbursed

for extraordinary purposes by decision of the National Council or National Executive."

It is on this rule that some of the issues in the proceeding

Rule 45 contains definitions. Its ralevant provisions

"In these Rules unless the context otherwise requires -

(e) "Branch Council" shall mean the Council of a Branch and shall embrace the terms "State Council" and "Central Council".

(f) "Branch Executive" shall mean the Executive of a

Branch, and shall embrace the terms "State Executive" or "Central Executive".

With some exceptions, to which I shall refer, the rules of the Union which I have set out or described have remained the Same since early 1970. Some of the changes do not need to be set out in detail, as they do not affect the outcome of this case; instances are changes to the amount of the weekly limit on levies yaised by branches under rule 8(4), and changes in the method of

calculating sustentation fees under rule 15. There have been

-51- some changes to rule 12 since 1970, the effect of which has been to strengthen the provisions whereby the rules of the Union override, and can be made to override rules of a branch. All of rule 12(2)(a), except for the first sentence, has been added since 1977. The references in rule 12(2)(f) to the federal rules were first inserted in 1975, and have been amended since. In addition, throughout the rules, the references to the National Council and National Executive are recent; those bodies were previously called the Federal Council and Federal Executive

There have also been certified under the federal Act the rules of the Branch. In these rules, the terms "Association", "Branch" and "Union" are used interchangably; rule 5(d) of the Branch rules defines all these terms to mean the

"Federated Clerks' Union of Australia, South Australian Branch".

Rule 3 of the Branch rules sets cut "The objects for

which the association is established". These include the following: "(£) to raise money by entrance fees, subscriptions,

levies, donations, loans or otherwise for the furtherance of these objects;

(n) to purchase, sell, mortgage, lease or otherwise deal with any land or real estate;

(re) to establish funds for the general conduct of the association;"

• s2 - Rule 6 prescribes the procedure for admission to membership. Of some interest is paragraph (k) of this rule, which provides for an appeal on questions of admission or

rejection of membership "to the Federal Executive or Federal

Rule 12 provides for subscriptions and entrance fees. Sub-rule (e) provides that members shall pay their subscriptions etc. "to authorized representatives of the Union only". Specific provision is made for the payment of subscriptions in weekly or fortnightly amounts, pursuant to agreements between the Branch and the employer concerned for deductions of these subscriptions

By rule 14, it is laid down that the officers of the Branch are the President, a Deputy-President, a Vice-President, a Secretary and an Assistant Secretary. It is also provided that the Branch Council shall be the committee of management of the Branch and that the Branch Executive shall be the executive committee of the Branch Council. Rule 15 provides that the Branch Council shall consist of the officers together with councillors elected by the sections, according to the numbers of members of the sections. Rule 16(6b) gives the Branch Council general power to manage the affairs of the Branch and to decide questions of policy. The rule aiso provides that the Branch Council "shall have the care, control and custody of the funds and property of the association." Rule 16(t) provides that the Branch Council may demand, sue for and recover and keep

possession of all books, accounts and other property of the

Rule 16A provides for an annual conference of the Branch, consisting of the members of the Branch Council and representatives elected by the sections according to their numbers. Rule 17 provides for a Branch Executive, consisting of the five officers. Under rule 18(g) the Branch Executive is required to authorize expenditure and pass all accounts for payment but may not incur an extraordinary expense exceeding 20 pounds without the prior approval of the Branch Council. Rule 21

Rute 24 contains the powers and duties of the Branch

"(d) He shall be responsible for the proper carrying on of the Union and shall act as general supervisor for and on behalf of the Union.

(e) He shall personally, or by deputy, collect all Union dues, fines, or levies from members, and where necessary shall institute proceedings for recovery thereof.

Ch) He shall receive and bank all monies collected by and on behalf of the Union.

(3) He shall submit to the Branch Council not later than March in each year a duly audited Income and Expenditure account of the Branch for the year ended on 31st December preceding anda Balance Sheet at such date and not later than August in each year he shall submit to the Branch Council a duly audited Statement of Receipts and Payments for the six months ended on 30th June preceding.

(1) Subject to the directions and control of the Executive he shall have charge of all organising

undertaken on behalf of the Union and _ shall direct the activities of any organiser who may be appointed.

Under rule 25(b) the Assistant Secretary is to assist the Secretary in the discharge of his duties, and to carry out the

Functions and duties of the Secretary in the Secretary's absence.

"(a) The funds of the Union shall consist of all entrance fees, contributions, levies, fines payable to the Union and other revenue acquired. It shall be used only in furthering the objects of the Union as laid down in Rule 3.

(b) All accounts not exceeding, 20 Cpounds] in connection with the ordinary managements expenses of the Union shall be authorised by the Executive. All other accounts of Expenditure shall be authorised by the Council.

(c) The funds of the Union may be invested in such investments as shall be decided upon by the Council and the control of such investments be vested in Council.

(da) All cheques for the withdrawal of moneys from the bank shall be signed by either the President, Deputy President or Vice-President and countersigned by either the Secretary or Assistant Secretary and shall bear the seal of the Union.

(e) The Branch Council may where it deems necessary authorise Section banking and shall arrange for the opening of Section bank accounts and shall give and may withdraw or change the authority for persons, not being less than two, to operate such accounts. All funds to the credit of such accounts plus interest shall be the property of the Union as provided by this rule and shall only be expended for purposes authorised by the Rules.

The authority for Section Banking given by Branch Council in accordance with this rule may be ancluded in the rules of the Section."

Rule 37 gives the Branch Council power to impose levies, subject

With a couple of exceptions, there have been no substantial changes to the Branch rules which I have set out or described, since the beginning of 1970. The exceptions are the addition to rule 12 of provisions relating to payment of

contributions by payroll deduction, and the insertion of rule

There are also registered with the Industrial Registrar under the state Act rules for the conduct of the affairs of the South Australian Association. These rules are very similar in form and content to the Branch rules. They also use the terms "Association", "Branch" and "Union" interchangably, and define them in precisely the same terms as does rule 5(d) of the Branch rules. All of the provisions of the Branch rules to which I have referred or set out are duplicated in the rules of the South Australian Association, with a couple of exceptions to which I shall refer. It is interesting to note that rule 6, which relates to admission to membership, is in precisely the same terms as rule 6 of the Branch rules, even to the extent of including the provision allowing an appeal to the Federal

Executive or Federal Council in accordance with federal rules.

The exceptions to which I have referred include one which is minor, and one which is considerable. The minor one occurs in rule 18(g), where the expression "$40.00" is used instead of the reference to pre-decimal currency which appears in the Branch rules. The major difference lies in rule 36. Rule 36

of the rules of the South Australian Association provides as

The funds of the Union shall consist of all entrance fees, contributions, levies, fines payable to the Union and other revenue acquired. It shall be used only in furthering the objects

of the Union as laid down in Rule 3. Accounts shall be paid or authorised as follows:

(i) By the Executive, the Secretary or the Assistant Secretary within limits determined by the Council from time to time for ordinary management expenses or expenditure incurred implementing decisions

(ii) By the Executive for expenditure of a capital nature in excess of $500 and less than $1,000.

(iii) By the Council if the expenditure is of a Capital nature in excess of $1,000.

The funds of the Union may be invested in such investments as shall be decided upon by the Council and the control of such investments he vested in the Council.

All cheques for the withdrawal of moneys from the bank shall be signed by either the President, Deputy President or Vice-President and countersigned by either the Secretary or Assistant Secretary and shall bear the seal of the Union.

The Council may appoint two additional signatories whc shall be financial members of the Union who have been members of the Union for at least 5 years. One only of such additional Signatories shall sign any cheque in lieu of the President, Deputy President or Vice President. They shall be appointed for such period, not exceeding three years as the Council shall determine.

The Branch Council may where it deems necessary authorise Section banking and shall arrange for the opening of Section bank accounts and = shall give and may withdraw or change the authority for persons, not being less than two, to operate such accounts. All funds to the credit of such accounts plus interest shall be the property of the Union as provided by this rule and shall only be expended for purposes authorised by the Rules. The authority for Section Banking given by Branch Council in accordance with this rule may be included in the rules of the Section."

The provisions of rule 36(b) found their way into the rules of the South Australian Association in 1975 or early 1976. Prior to that time, rule 36(b) was in the same form as rule 36(b) of the Branch rules, with the exception that the money amount referred

to appeared in decimal currency. There are, of course, other differences between the Branch rules and the rules of the South Australian Association.

To some extent, these have been referred to already. It is

unnecessary to set out in detail all of the differences.

The essence of Mr. Heywood-Smith's argument was to distinguish between the Branch and the South Australian Association as legal entities. He directed attention to a number of factors in the history of the operation of the Branch and the South Australian Association, for the purpose of establishing that this distinction existed in fact, as well as in law. He drew parallels between this case and other reported decisions

where dual registration was involved, especially Moore v. Doyle

(1969) 15 F.L.R. 59, Steuart v. Oliver (1971) 17 F.L.R. 99,

Allingham v. Australian Workers' Union £19723 Qd. R. 218, Egan v.

Harradine (1975) 25 F.L.R. 336 and Allen v. Sideris (1984) 9 I.R.

~ 58 - Mr. Heywood-Smith contended that the land and building the subject of the proceeding 1s clearly and deliberately

registered in the name of the South Australian Association.

It was also put that, from some time in the 1960's until 1981, the Branch ceased to exist, and the South Australian Association was the only functioning body in South Australia. It followed that the monies used to purchase the land and building were the monies of the South Australian Association. A number of factors were said to point to the cessation of the Branch. The first was the expanded constitution of the South Australian Association; it was said that the evidence showed that the affairs of the members in South Australia had been conducted on the basis of this broader constitution. Secondly, the rules

registered with the Industrial Registrar under the state Act and

earlier corresponding Acts were used as working rules; these involved some differences, and at times some important differences, from the Branch rules, Thirdly, the South

ABustralian Association had consistently been chosen as the holder of property and as the appropriate body to deal with third parties in all financial dealings. Fourthly, the lack of compliance with the rules of the Union in the purchase of the Newsagents' Association building, and the present land, and the erection of the building thereon, was relied upon asa clear indication that it was the South Australian Association which was performing these acts. Fifthly, it was said that members had shown a clear indication that the South Australian Association was to be the significant body in South Australia; they had

consistently elected Mr. Krantz and Mr. Haseldine as Secretary

• 59 - and Assistant Secretary, with knowledge of the antipathy which existed between them and certain federal officers of the Union. Sixthly, it was argued that the conference of members of the Branch Council and section representatives which took place in 1970, and which approved the purchase of the Newagents' Association building, was clearly a conference of the South Australian Association, and clearly understood that that Association was to be the purchaser of that building. Lastly, periodical inattention to the filing of documents under the federal Act in respect of the Branch was pointed to as an indication that the Branch had ceased to function. Mr. Heywood-Smith did concede that some indications to the contrary existed. In particular, the form of application for membership was conceded to be appropriate for a person seeking to join the Union, rather than the South Australian Association. The information given to new members, telling them of the dual registration, was admitted to be an indication that the Branch continued to exist. On Mr. Heywood-Smith's argument, however, these indications were insufficient to outweigh the evidence that the South Australian Association continued to exist and function, and that the Branch went into oblivion, from which it emerged in

1981. It followed that all monies invested in land and buildings

If it were found that two bodies did exist and continue to function, and that each had funds during the relevant period, Mr. Heywood-Smith's argument was that the South Australian Association contributed more to the purchase of each property

than did the Branch. He relied on the divergence between the

• 60 - subscription rates in the Branch rules and the rules of the South Australian Association between 1963 and 1979. In addition, the building fund levy, which was used to purchase the Newsagents' Association building, was said to be a levy of the South Australian Association. The industrial service fees were also said to be monies of the South Australian Association. On this basis, the contributions of the South Australian Association to the purchase of the Newsagents' Association building far outweighed those of the Branch. As this building was sold, and the proceeds of sale were applied to the purchase of the land on which the present building was constructed, and to the construction of the building, those proceeds should be regarded as having been contributed in the same proportions by the two bodies as was the purchase price of the Newsagents' Association building. Similar submissions were then made with respect to industrial service fees, and subscriptions from members, as those applicable to the Newsagents' Association building. For these reasons, it was argued that by far the greater proportion of the

costs of the present land and building was contributed by the

Mr. Heywood-Smith submitted that, if there were two bodies, each contributing funds, a decision had been made to give

the funds of the Union to the South Australian Association for

the purchase of the building; this decision may have been in breach of rule 37 of the rules of the Union, but its validity was preserved by s. 171F of the federal Act, because it had been made more than four years ago. In addition, the decision was evidence

of an intention to rebut the presumption of resulting trust which

If the Union were entitled to any equitable remedy against the South Australian Association, Mr. Heywood-Smith argued that any such equitable remedy was barred hy the acquiescence and laches of the Union. It was put that the Union was on notice from the time of purchase of the Newsagents' Association building as to the events which had occurred, and did nothing to pursue any remedy available to it; this inaction had led to further expenditure by the South Australian Association, particularly in erecting the present building, which would not have cccurred if the Union had made a claim earlier. In addition, the Bank of Adelaide had lent money on the basis that

it was lending to the South Australian Association.

On Mr. Heywood-Smith's argument, no express resulting or constructive trust existed, and, if one of them did exist, the right to pursue it had been lost by delay on the part of the Union. Similar arguments, other than that relating to laches and

acquiescence, were put with respect to the investment in the

The primary argument on behalf of the respondents for whom Dr. Jessup appeared was that only one relevant body existed in South Australia. The registration effected in 1919 was that of the Branch of the Union which operated in South Australia, and

not of any separate association. The registration of a branch

• 62 - was expressly permitted by the South Australian legislation at

the time. No separate association had, therefore, ever been

created. The Branch, although registered under the law of South Australia, remained subject to the rules of the Union. It held property, and its appropriate officers were obliged by the rules

of the Union to deal with that property in a certain way.

In the alternative, Dr. Jessup argued that, aif the Branch and the South Australian Association were separate and distinct, their officials did not have a choice as to which hat they wore. The circumstances impressed on their actions a federal character. The primary factor on which Dr. Jessup relied was the form of application for membership; such a form was

appropriate to membership of the Union only, and its completion

and acceptance gave rise to a contract of membership with other members of the Union alli over Australia, not just with members in South Australia. There is no evidence of anyone having joined the South Australian Association. It followed that all monies belonged to the Union. The rules of the Union and of the Branch

prevented the Branch Council from giving monies to the South Australian Association validly. If they gave such monies

invalidly, a resulting or constructive trust existed.

The requirement of rule 37 that all property of the Union be "vested" in the Union required the respondents for whom Mr. Heywood-Smith appeared to ensure that the Union was the registered proprietor of any land purchased with funds of the Branch. Section 171F did not affect this position, because there

was a continuing failure by the members of the Branch Council and

• 63 - the Branch officers to comply with the rule, rather than a

specific decision more than four years old which was validated.

Dr. Jessup's primary argument involved the express contention that there was no barrier to the incorporation by state law of a branch of an organization registered under the

Dr. Jessup took issue with Mr. Heywood-Smith as to the breadth of the provisions of the rules of the South Australian Association relating to eligibility for membership. He referred to a number of authorities, indicating that the rule relating to eligibility for membership in the rules of the Union was broad in a number of respects. Even if there were persons who had purported to join the Union, without being eligible to do so, Dr. Jessup argued that such persons could not, by virtue of those facts, be taken to have joined the South Australian Association; any monies which they paid, even if not validly paid in respect

of membership, were paid to the Union and received by it.

The purchase of property by the Union in the name of the South Australian Association was, so Dr. Jessup argued, such as to create a resulting trust. So far as evidence existed of an intention to put the property in the name of the South Australian Association, this was inadequate to rebut the presumption of resulting trust. The question was whether the Union intended to

If the Branch Council did intend to benefit the South

~ 64 - Australian Association, a constructive trust arose, because the Branch Council had no power to confer such a benefit. Since the South Australian Association took as a volunteer, with notice of

the lack of power of the Branch Council, it had no claim to the

The equitable defences of laches and acquiescence were said by Dr. Jessup to be inapplicable to bar a proceeding by the holder of an equitable interest against the trustee, calling in the legal interest. In addition, Dr. Jessup argued that a claim for a declaration was not a claim for an equitable remedy, and

Save in one respect, Mr. Williams was content to adopt,

on behalf of the Applicant, the arguments put by Dr. Jessup. The one respect in which Mr. Williams put separate submissions was simply to argue that a branch of an organization registered under the federal Act could not validly become incorporated under state law. There was, as Mr. Williams put it, no reason why a branch should not become registered under a state Act, and participate in the system of industrial conciliation and arhitration set up by the law of a state, but any provision of the state law which purported to give it corporate personality would be invalid under

s. 109 of the Constitution, by reason of being inconsistent with

The first question which must be addressed is the nature of the body which was registered in South Australia in 1919. Did the Union, by its South Australian Branch, seek to obtain registration, or was a separate association formed with a view to

It can be said with some confidence that, in 1919, no legal difficulty was generally seen to stand in the way of a branch of an organization registered under the federal Act becoming registered under the law of a state. Difficulties which were perceived at a later time, in some of the authorities to which I shall refer, had not emerged in 1915. Indeed, the High Court of Australia in 1916 apparently saw no difficulty in an organization having as its branches a number of pre-existing associations formed under the laws of various states, and still continuing to exercise their separate functions: Waterside

Workers' Federation of Australia v. Burgess Brothers Ltd. (1916)

21 C.L.R. 129, especially at pages 135 and 138-9. In 1918, the rules of Union expressly provided for state associations to become branches of the Union. It is hardly surprising that this kind of federation was regarded as possible, when the nation in which it occurred was formed of states which, whilst being part

of the Commonwealth, remained sovereign states, each in its own

That registration of a branch of an organization under state law was regarded as an obvious and convenient course cannot be doubted; by such dual registration, an organization could act to better the terms and conditions of employment of those of its members who were the subject of industrial disputes extending beyond the limits of any one state, as well as those of its members who were not. Such a practice was expressly contemplated by the legislation of South Australia. There is no reason to suppose that anyone in the Union or the Branch at that time

In those circumstances, it is highly improbable that persons within or outside the Branch would take the trouble to form a separate association, with the aim of seeking registration in South Australia. The improbability becomes greater when it is seen that the registration was effected by the use of the name of the Union, with the addition of the words "South Australian Branch"; ain other words, the body registered had all the sutward appearances of the Branch itself. It is unlikely that a separate association, formed and given this name, would have succeeded in obtaining registration without some objection on the part 2fF the

Taking into account all these factors, it 15 more probable than not that what occurred in 1919 in South Australia was a purported registration of the Branch as an association under the South Australian legislation. The question then arises whether the law frustrates the intention of those who sought to

take the obvious and convenient course of taking advantage of the

• 67 - system of industrial conciliation and arbitration offered by the State of South Australia, whilst simultaneously participating in

As T have already stated, the legislation in South Australia has at all relevant times expressly permitted the registration of a branch. In attempting to determine the nature

of a branch, resort is invariably had to the comments of Fullagar

g., with whom Dixon C.d. and Kitto J. concurred, in Williams v.

Hursey (1959) 103 C.L.R. 20, at pages 54-55, with reference to

the Hobart branch of the Waterside Workers Federation of

"It has no separate identity - no existence apart from the registered organization, of which it is an integral and inseverable part. Its members are 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. The branches are permitted within limits to make rules of their own, but the rules which they make derive authority from the rules of the federation. It is contemplated that a branch may have "property and moneys", but, if r. 15 of the Hobart branch rules means that the beneficial ownership thereof is in the members of the branch, it is anconsistent with r. 10(A) of the rules of the federation which makes the "fund and property" of the organization and its branches subject to the "care, superintendence, management and administration of the governing body of the Organization for the carrying out of the objects of the Organization". The position is precisely analogous to that which was held by this Court to subsist in Hall v. Job C€(1952) 86 C.L.R. 639] and there is a passage in the judgment in that case which,

if we read "Federation" or "Organization" for "Institution" and "Branch" for "Lodge", is exactly applicable to the present case. The passage is as

follows: "...an individual cannot be a member of the Lodge except as a member of the Institution. The mutual rights and obligations of the members of the Lodge spring from the rules of the Institution, and cannot be altered except as those rules provide. The purposes which the members of the Lodge have in common are none other than the purposes for which they are members of the Institution. The Lodge does not exist as a society

• 68 - of persons who desire to associate exclusively with one another for agreed purposes; it exists as an integral part of a larger organization, of which all the members are associated for the pursuit of purposes common to them all in accordance with a constitution which governs them all. A subordinate Lodge is therefore not to be considered as if it were an association by itself; 1t 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 right and benefits, and for the performance of the obligations and functions, which are the incidents of their membership of the Institution."£(1952) 86 C.L.R., at p. 6501." Whilst it is true that a branch has no existence apart from the registered organization of which it is part, this is not to say that legislation cannot deal with a branch as if it were a definable body. There are instances in the federal Act at the

present time in which attempts have been made to deal with branches upon the footing that their existence is something which can be seen, See, for instance, s. 133A(1) and (3), and s. 140(1)(d). Nothing in the passage from the judgment of Fullagear J. set out above suggests that, if the Rules of the Supreme Courc of Tasmania had specifically permitted judgment to be enterec against a branch, such a provision would not have beer interpreted as encompassing the Hobart branch of the Waterside Workers Federation of Australia. There is no doubt that legislation can be framed so as to be applicable expressly to a4

There is then a question whether, assuming that a_ state law does expressly purport to clothe a branch of an organization with some capacity which it otherwise would not have, sucha law can have valid operation. This is really a question which is

answered by reference to s. 109 of the Constitution, under which

• 69 - a law of a state inconsistent with a law of the Commonwealth is, to the extent of the inconsistency, invalid. In Williams v. Hursey, after discussing the incorporation of organizations and the attributes given to them by the federal Act, Fullagar J.

"This being the position under the Commonwealth Act, and these being the powers which the incorporated organization has by virtue of its own registration and the registration of its rules under that Act, it must be beyond the power of any State to alter that position or to qualify those powers. No State could a priori forbid or €x post facto annul a power which is derived in this way from a law of the Commonwealth. Any attempt to do any such thing would involve a plain inconsistency within the meaning of s. 109 of the Constitution. No State Act could restrict the powers of the Commonweaith Bank or the Australian Broadcasting Commission. It is not merely that the State would be forbidding something which the Commonwealth permitted, as in Colvin v. Bradley Bras. Pty. Ltd. £(1943) 68 C.L.R. 1517) and O'Sullivan v. Noarlunga Meat Ltd. £(1954) 92 C.L.R. 565; (1956) 95 C.L.R. 2772. The State would be invading a territory which the Commonwealth has marked out as its own and for which it has made exhaustive and exclusive provision. It has laid down what is to be the law relating to the powers and functions of its own specially created corporations.

Organizations registered under the Commonwealth Act are simply no concern of the States. Any ather view would involve absurdity. The Commonwealth corporation could be put in the position of having mutually inconsistent objects and powers in each of the six States."

"I have thought further (apart from any decision on any Trade Unions Act) that, if a corporate body is created and empowered by or under Commonwealth law for Commonwealth purposes, its capacity cannot be cribbed or confined or in any way affected by any State law. Part VIII of the Act occupies the whole of the relevant field. The argument against this last view seems to rest basically on the conception that the Commonwealth Act takes up, so to speak, bodies which already exist under State laws, and must be regarded as taking them up subject to any disabilities which affect them by virtue of any State law. Iam quite unable to accept this idea. In the first place, a very general, but very

strong, reason for rejecting the suggested construction lies in the fact that the Parliament of the Commonwealth is legislating for the whole of Australia. It is surely not to be supposed that it intends that the system of registered organizations, which it 1s setting up, is to be at the mercy of the legislation of all or any of the States - that the capacity of the new persons, which it is, for its own exclusive purposes, creating, can be limited by existing or future State legislation. If it were so, a single Commonwealth-created corporation might, as has already been pointed out, have entirely different powers in each of the six States."

At first sight, it might appear as though Fullagar J. was pronouncing organizations registered under the federal Act to be

immune from state law altogether. Further thought, however,

makes it clear that this 1s not so. In Williams v. Hursey

itself, Fullagar J. upheld a judgment of the Supreme Court of Tasmania against the Waterside Workers Federation of Australia in respect of the tortious conduct of its members and officers. Such a judgment could only depend upon the common law of the State of Tasmania, as it applied ta the organization, as the basis of the judgment. It is plain that an organization which

seeks to conduct any of its affairs within a state will he

required to pay appropriate taxes and charges levied by the state

and bearing upon the conduct of those affairs. Compare West v.

Commissioner of Taxation (New South Wales) (1937) 56 C.L.R. 657.

Similarly, an organization operating within a state could not claim that it was entitled to ignore the provisions of state law relating to registration of motor vehicles and licensing of drivers, in relation to its own motor vehicles and their drivers. Compare Pirrie v. McFarlane (1925) 36 C.L.R. 170. As Fullagar J. put it, in the passage which I have quoted, the question is one of inconsistency within the meaning of s. 109 of the

• 7l1- By virtue of s. 132(2) of the federal Act, and reg. 115

of the Concilation and Arbitration Regulations, the rules of an

organization are required to make provision for certain matters. Regulation 115(1)(g) provides that the rules "may also provide for any other matter not contrary to law". Section 140(1)(a) of the federal Act provides that the rules of an organization shall not be contrary to a law. These provisions may operate to remove the rules of an organization from what might otherwise he an arsa of inconsistency with state law under 5s. 109 of the Constitution. Thus it may be seen that, in many respects, the operations of an organization within a state will be subject to restrictions imposed by state law. That is soa whether those operations are Carried out by the oarganization by means of a branch or

If the law of a state can restrict the operations of an organization, where such restriction does not involve any inconsistency with a law of the Commonwealth, there is no reason in principle why the law of a state cannot provide for an organization functions and capacities additional ta those given by its rules, where to do so does not involve any inconsistency with the law of the Commonwealth. In particular, there is no reason why the Jlaw of a state cannot permit an organization to participate in a system of industrial conciliation and arbitration, or some other system of industrial regulation, set up under state law. For many years, the systems of wages bcards which have operated in Victoria and Tasmania, have provided opportunities for participation by organizations registered under

the federal Act. The laws of those states have thereby conferred

• 72 - upon those organizations functions and capacities additional to those expressly conferred by the rules of the organization. It has never been suggested, to my knowledge, that the conferring of such additional functions and capacities involves any inconsistency with a law of the Commonwealth. Given this situation, there is no reason why the law of a state should not permit an organization to operate within some state industrial system by means of a branch. Provided that this involves no inconsistency with any provision of the federal Act, or of the rules of an organization registered under it, such a provision must be valid. If such a system involves the registration of a branch under state law, then a branch may become registered, unless there is found to be an inconsistency between the provision for registration and any provision of the federal Act or of the rules of the organization concerned. Similarly, any other provision of the law of the state which is consequential upon registration, will apply to the branch of the organization concerned, unless there is an inconsistency. To the extent that any provision of the state law is found to be inconsistent with a law of the Commonwealth, 1t will not apply to the organization or its Branch. Each provision of the state law will have to he examined against the provisions of the federal Act and the rules of the organization, to see whether there is any inconsistency, and accordingly to determine whether the organization by its branch is subject to that particular provision of the law of the state. If any inconsistency is found, for the purposes of dealing with the branch as registered under the state law, that

Tt is then necessary to ask whether, in 1919, the provisions of the law of South Australia for the registration of a branch of an association were themselves inconsistent with a law of the Commonwealth. This involves a number of subsidiary questions. Firstly, did the federal Act cover the whole of the relevant field, so as to prevent the operation of any state law which purported to give to an organization registered under the federal Act any additional capacity? Secondly, assuming that it did not, did anything in the rules of the Union, which derived their force and effect from the federal Act, operate so as to exclude the registration provisions of the South Australian law? Thirdly, did the fact that a consequence of registration cf a branch under the South Australian legislation was the creation of a corporate body give rise to any inconsistency with the federal Act? Fourthly, if incorporation did give rise ta an inconsistency, was it severable from registration, so that it could be disregarded, and there could be registration of the branch without incorporation? One final question remains as to the effect of the more recent provision in s. 136A of the federal

In one of the passages which I have quoted from Williams v. Hursey, Fullagar J. certainly expressed the view that what is now Part VIII of the federal Act occupies the whole of the relevant field. His Honour was, however, dealing with the question whether Tasmanian law could deprive an organization registered under the federal Act of a power which it otherwise had to raise a levy from amongst its members for the purpose of

supporting a particular political party. An examination of the

• 74 - case as a whole shows that the High Court was not dealing with

any question of Tasmanian law purporting to expand the capacities

and functions of an organization operating within that State. As Ihave already pointed out, the system of participation by federally registered organizations in the wages boards of Tasmania was well entrenched for many years. Nothing said by Fullagar J. amounted toa ruling that such participation could not continue. An examination of the federal Act, from its earliest inception until the present time, indicates very clearly that the field which it intends to cover is not large enough to exclude the operation of any state system of industrial conciliation and arbitration, or similar system. Indeed, the provisions which are now found in s. 41(1)(d}(ii) of the federal Act, under which the Australian Conciliation and Arbitration Commission may leave to a state industrial authority the whole or part of a dispute, had their counterpart from the very earliest days of the federal Act. In its present form, the federal Act contemplates in many provisions the continued existence cof state systems of industrial regulation. Reference should be made to ss. 65, 66 and 67 and Part VIIIB. The provisions to which I have already referred, which permit the rules of organizations to contain provisions, not contrary to law, about matters other than those specified, clearly leave it open to an organization to participate in a state industrial system, which, in turn, the federal Act plainly does not intend to override, except as specifically provided. There is, therefore, no covering of the field by the federal Act, which would exclude registration under state law by an organization, through its branch. If any

inconsistency is to be found which prevents such registration, it

There is along line of authority which is sometimes taken to support the proposition that a branch of an organization registered under the federal Act cannot become registered under the industrial legislation of any of the States of New South Wales, Queensland, South Australia and Western Australia. The legislation of these four States imparts to cegistered bodies a corporate or other form of legal personality, separate and distinct from the personalities of the members of the registered body. It will be necessary to examine the major decisions in this line of authority, for the purpose of ascertaining whether they really stand in the way of branch registration. In the first place, many of the decisions dealt with situations in which the relevant state union or association had become registered

prior to the registration of the organization concerned under the

federal Act. This was the situation in Moore v. Doyle (1969) 15

FL.L.R. 59, especially at pages 66-73, Amalgamated Soaciet or

Carpenters and Joiners of Australia v. Ship Joiners Society of Australia (1946) 56 C.A.R. 368, especially at page= 377-379, and

Egan v. Harradine (1975) 25 F.L.R. 336, at pages 382-390, with

respect to the Western Australian, South Australian and Newcastle and Northern branches of the organization there concerned (the

history of the Queensland branch not having been dealt with by

the court). Such prior registration of the state body makes impossible any suggestion that an organization registered under the federal Act has sought registration in the state by means of

a branch. In other cases, the order of events has been unclear,

but it has nevertheless been held repeatedly in relation to New

• 76 - ; South Wales that a state registered body and an organization, or

its branch, are separate legal entities. See Wheatley v.

Federated Iron Workers' Association of Australia £1960] S.R.

(N.S.W.) 161, Sercombe v. Hall (1955) 81 C.A.R. 160, Lasbies v.

Mackay £19457 A.R. (N.S.W.) 562, Re Benson and Electrical Trades

Union of Australia, New South Wales Branch (19621 A.R. (N.S.W.) :

516 and Re Electrical Trades Union of Australia, New South Wales

Branch £1963] A.R. (N.S.W.) 796. In the Benson case at page 528, the Industrial Commission of New South Wales in Court' session

"There is no reported case, so far as we are aware, which has decided whether or not a branch of a registered federal organization can apply in New South Wales for registration as a trade union."

After referring to some earlier decisions of the New South Wales

Industrial Commission, and to some decisions of the Commonwealth

Industrial Court, the Commission continued, at page 529:

"In each of those cases the court was faced with the concluded fact that the union before it was, at one and the same time, a registered trade union under New South Wales law and the New South Wales branch of a registered federal organization under Commonwealth law. Whether the union's registration as such trade union was valid or not was something to which the court did not give its mind."

The Commission went on to hold that the purported application on behalf of the branch was not validly made, hecause it purported to be made by the branch as a hody independent of the ' organization. In the subsequent case involving the Electrical Trades Union of Australia, New South Wales Branch, to which [I

have referred, a second application, made at the same time as

that which is the subject of the Benson case, was allowed by the

• 77- Industrial Commission. This application was made by seven

persons, as required by the Trade Union Act 1881 (N.S.W.). Tt

was conceded that those seven persons made their application on behalf of an organization registered under the federal Act, and that the association which was sought to be registered was a branch of that organization. One of the objections taken was that the application was not made on hehalf of a bona fide trade union of employees. This objection was rejected by the Industrial Commission, at page 812 of the report, in the

"It surely is perfectly legitimate and natural for a federal organization with members dispersed throughout the States to be zealous and active to gain for those members not only benefits available under Commonwealth law but also benefits available under the law of a State. It seems to us that that is just what the federal organization's attitude was in this case. Having reached the conclusion, as was said in the earlier proceedings it did and as we believe it did, that the affairs of what had been in reality a 'registered trade and industria union in New South Wales were in such a state that new registrations were called for, the federal organization, through its Federal Council, took what seems to us tas an obvious course. Clearly the simplest step in the course to obtain fresh registrations in New South Wales, provided it was a step that could be validly taken, was the step it took, namely, to seek to have its branch in New South Wales registered as a trade union, and later as an industrial union under the State laws. The branch was a ready-made association of employees associated together for their common industrial good. Why, if it was not necessary to do so, organize another association? That the organization failed in the step taken was the result only of what this Commission held to be the law that related to the application that was made. The federal body, however, had apparently been alerted to the possibility of failure of that first step on legal grounds, and its request, or for those who prefer it its direction, to seven of its New South Wales members to form a new trade union with themselves as the nuclei and to register that trade union under State law was no more than a prudent alternative. We think that this present application is not tainted by any mala fides emanating from the federal organization."

Further, the Industrial Commission said, at the same page:

"Viewing the situation as it now is, we find that the applicant union is a trade union of more than 7,000 employees in the electrical trades industry; that it has a lawful and adequate set of rules; that it has a bank account with a very substantial credit balance; and that it has appropriate machinery for functioning actively in the aunterests of its members as the Trade Union Act of this State implies a registered trade union should do."

These comments indicate that no legal barrier is seen to registration of a branch of a federally registered organization as a trade union in New South Wales. Such registration 1s a

pre-requisite to registration as an industrial union under s. 8

of the Industrial Arbitration Act 1940 (N.S.W.). The comments

which I have quoted were made by the Industrial Commission of New South Wales, in Court session, in the context of express recognition by that Commission that "a branch of a Federal organization is quite a separate and distinct entity from a trade union registered in this State under the Trade Union Act" (page

With respect to the possibility of registration of a branch under New South Wales law, some comments have been made from time to time in the High Court of Australia, which may be

instructive. In Australian Workers' Union v. Bowen (No. 2)

(1948) 77 C.L.R. 601, the court was called upon to recount the

history of attempts to register the New South Wales Branch of the

Australian Workers' Union (an organization of employees registered under the federal Act) under the Industrial Arbitration Act 1940 (N.S.W.). At page 612, Latham C.J. made

reference ta a decision of Roper J. (as he then was) in the

• 79 - Supreme Court of New South Wales that the rules which had been registered under the New South Wales legislation had not been duly authorized by the organization, and that the registration of the New South Wales Branch under the New South Wales Act was therefore invalid. The correctness of this decision was not canvassed by the High Court. At page 621, Dixon J. (with whom Starke J. concurred) expressed the view that valid registration in New South Wales would convert the branch inta an independent body. At page 636, Williams J. expressed the same view. Hach of Latham C.d., at page 609, Dixon J. at page 621 and Williams J. at page 635 referred to the fact that the organization had at one time itself been registered as a trade union under New South Wales legislation. Nowhere was it suggested that registration of a branch of a federally registered organization was legally

More recently, in Egan v. Shop Distributive and Allied

Employees' Federation of Australia, New South Wales (1979) 14?

C.L.R. 325, the High Court dealt with the question of the

validity of an amalgamation hetween certain bodies registerec

under the Trade Union Act 1881 (N.S.W.). At page 340, Barwick

"It was assumed in argument that a registered trade union could not be a branch of a federally organized organization. For my own part, I do not readily perceive why this should be so. We were referrad to What was decided by Roper d. in Australian Workers' Union, N.S.W. Branch v. Australian Workers' Union, CUnreported; llth September 19447, as to a situation which arose in 1942, and also to the decision of Moore v. Doyie £(1969) 15 F.L.R. 593, a decision of the Commonwealth Industrial Court in 1969. However, I have no need to form a definitive view on this occasion upon the conclusions expressed in those cases or to attempt to resolve any inconsistency between them in order to

dispose of this appeal." At: page 351, Gibbs J. (as he then was) said:

"Indeed it seems ta me that it was in fact intended that the executive of the state union should have only the same limited powers that were exercisable by the branch executive of the state branch, possibly because it was considered, notwithstanding judical[Csic.1 opinions as to the legal position, that for practical purposes the state branch and the state union were substantially identical and that both should be controlled by the federal union. In fact it does not appear to have heen unusual for trade unions registered under the Trade Union Act to have registered rules which were also the rules of an organization registered under the Conciliation and Arbitration Act (1904) (Cth). That practice was criticized as undesirable by McKeon J. in McOuillan ov. Bodkin £(1960) 59 A.R. 373, at Ppp. 383-3841, but there is nothing in the Trade Union Act that forbids it: The combined effect of s. 16 and the First Schedule is that the rules of a registered trade union must contain provision as to the manner of making, altering, amending and rescinding its rules, but there is nothing in the provisions of the Act that either enjoins or prascribes the adoption of any particular kind of provision for those purposes."

These comments tend ta indicate that no obvious barrier exists to registration under state law of a branch of a federally

Wath respect to states other than New South Wales, the

amount of authority existing on the subject of dual registration

is substantially less. In Allingham v. The Australian Workers'

Union £19727 Od.R. 218, Wanstall A.C.d. was called upon to decide whether certain fire fighters were members of the Australian Workers' Union. His Honour found that three separate registrations existed, the first under the federal Act, the second under the Trade Union Act 1915 (Qld.) and the third under

the Industrial Arbitration Act 1916 (Qld.). The registration

• Bl - under the federal Act was the first in point of time, having occurred in 1905. The other two registrations occurred in 1916

and 1917. At page 227, his Honour said: "The steps taken in Queensland in 1916 and 1917,

for reasons which I shall later develop, in my opinion

resulted in the registration of the Queensland Branch of

the Australian Workers' Union, firstly as a trade union

and secondly as an industrial union, 50 as to give the

branch legal identity." His Honour then contrasted this position with that in New South Wales, referring to Australian Workers' Union v. Bowen (No. 2), which I have cited abhove. Among his Honour's finding was a conclusion that a single application for membership gave rise to membership of all three registered bodies (see page 245). This was so, despite has Honour's recognition of the creation by Queensland legislation of legal entities and registered bodies.

In Steuart ov. Oliver (1971) %17 F.L.R. 99, the Commonwealth

Industrial Court had drawn attention to differences in the

eligibility rules of the Australian Workers' Union as a federal organization, and of the counterpart body or bodies registered in Queensland. It was held that, certain persons ineligible to vote in elections within the federally registered organization had voted invalidly in elections for delegates from Queensland to the federal executive council of the organization. The court did not discuss in detail the question of state registration, but rather

assumed the separateness in law of the state registered body and

recently by the Federal Court of Australia, constituted by Toohey

Jg., in Allen v. Sideris (1984) 9 I.R. 68. That case concerned

the question whether a particular body was the Western Australian Branch of the Building Workers Industrial Union, an organization of employees registered under the federal Act. There was in existence a state registered body, which was the result of an amalgamation between two earlier state registered bodies, and which purported to function as a branch of the federal

"In the light of the provisions of the Industrial Arbitration Act 1979 (W.A.), a branch of an organization may not become registered under that Act without becoming incorporated. No one suggested that this had happened and indeed Mr. Schapper relied upon s.136A 1n support of his submission that a branch could not be registered in Western Australia as a union. Equally, I take it, he would arque that the existence of a body incorporated under State legislation is inconsistent with the status of that body as a branch of a federal organizaticn.

Since Williams v. Hursey (1959) 103 CLR 30 1¢ as well established that the Branch of a federal organization has no legal existence as a juristic person separate from that of the organization itself. The difficulties referred to in Moore v. Doyle in the way of treating a state union as a branch of a federal organization have been increased by s.136A to the point where such a proposition cannot be maintained."

It should be noted that this case did not concern an attempt hy an organization, through its branch, to become registered under the law of a state. Rather, it concerned an attempt by an organization to take a pre-existing state registered body, and convert it to a branch. Anything said by Toohey J. which indicates the impossibility of the former course was not essential to his Honour's reasoning in deciding the case. Naturally, his Honour's remarks are entitled to very great

weight, and it is only with the greatest respect that I differ

• 83 - from them. As will appear hereafter, however, I do not accept the assumptions which his Honour appears to have made concerning

In 1974, the Australian Government instituted an inquiry into the question of dual registration of industrial bodies. The Committee of Inquiry was chaired by the late Mr. Justice J.B. Sweeney. The report of the Committee was tendered in eviderice before me. At pages 15 and 16 of the report, the Committee referred to a number of provisions of state legislation, and concluded that the provisions of the Acts of Queensland, South Australia, Western Australia and New South Wales were such that a purported registration cf a federal branch under them would be inconsistent with provisions of the federal Act, and would tend

to frustrate the policy and main purpose of the federal Act. At

no point was the possibility discussed that those provisions

state legislation which were so inconsistent might simply invalid, by virtue of s. 109 of the Constitution, insofar as they would otherwise have applied to a branch of a federally registered organization. In my view, the question whether state registration is possible depends upon a close examination of the particular state legislation and of the facts of the particular

There is no decision of any court which stands squarely against the possibility that an organization, by its branch, might have become registered in South Australia in 1919, So far as Egan _v. Harradine (1975) 25 F.L.R. 336 was concerned with

South Australia, it was concerned with a history which 1s very

One final comment should be mentioned. It is that of

"There seems tc me no reason why an association registered as an organization pursuant to federal law should not have capacities which it might be beyond federal authority to confer, and I instance the common practice fer an association to be registered as an organization under Commonwealth law and as a trade union under State law and for it, as a trade union, to take part in State industrial arbitration proceedings. Furthermore, it is well established that a registered organization can have powers beyond those necessary for its participation in the processes of that conciliation and arbitration for the settlement of industrial disputes which 1s the subject of Commonwealth pover,

©.g9., power to Erovide sickness, accident and unemployment benefits for members and power to publish a newspaper."

I have already referred to the provisions of the law of South Australia under which the 1919 registration was effected. Among those provisions was one which gave to every registered association the status of a corporate body. A difficult question arises whether the attribution of corporate personality to a branch of a federally registered organization by the law of a state 1s a legal possibility. It is this problem which has been at the heart of many of the decisions in which it has been held that bodies registered under the law of New South Wales were separate legal entitities from branches of federally registere

In Williams v. Hursey, at page 52, Fullagar J. said,

with reference to the Waterside Workers Federation of Australia:

"The Conciliation and Arbitration Act of the Commonwealth, under which it 1s registered as an

"organization", gives ta it what I would not hesitate to call a corporate character - an independent existence as a legal person. It 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: dumbunna Coal Mine No Liability v. Victorian Coal Miners' Association £(1908) 6 C.L.R. 30913 (per O'Connor J. £(1908) 6 C.L.R., at pp. 360, 3611). What is now s. 136 of the Act provides that every registered organization shall for the purposes of the Act have perpetual succession and a common seal, and may own possess and deal with any real or personal property. This provision alone is, in my opinion, quite enough toa give to a registered organization the full character of @ corporation. The words "for the purposes of the Act" cannot be given any effect by way of qualification of the personification. The notion of qualified legal capacity is intelligible, but the notion of qualified legal personality 1s not. Probably the words are intended to dca no more than explain the reason for the incorporation. Then s. 146 provides that "any organization may sue or be sued for the purpose of the Act in its registered or other name". It is difficult in this section to give any practical meaning to the words "for the purpose of the Act", and the use of the singular 15 curious. So is the reference to suing or being sued in an "other" name than the registered name: "organizatian" means "yegistered organizatican" (s. 6(1)). But it seems clear enovdh that 5s. 146 is complementary to 5s. 136, and that a true corporate character is obtained by registration. It has been held that an organization can sue in its registered name for & simple contract debt arising in the course of conducting aA newspaper to further its industrial interests: Australian Workers' Union v. Coles [£(1917) V.U.R. 3321; Australian Tramways Employees' Association v. Batten £(1930) V.L.R. 1303. Those two vases were, in

my opinion, correctly decided. A registered organization has legal personality, and may be sued in its corporate name in the proceedings now under

It should be noted that s. 136 of the federal Act does

held that incorporation followed from the conferment on

and deal with real and personal property, and the right to

organization of the essential characteristics of incorporation,

namely perpetual succession, a common seal, the right to possess

The provisions of the South Australian legislation in 1919 purported to confer these characteristics on a branch of an organization which became registered as an association in South Australia. In my view, such a law is inconsistent with the federal Act. A branch is part of an organization; the question of its continued existence lies in the hands of the organization. An organization may wish to abolish its branches, and to continue to exist as an organization without them. It may wish to change the nature of its branches, for example from geographical te occupational branches, or from branches consisting of ali members within a state to branches of larger or smaller geographical areas. If a branch were able to be given perpetual succession in its own right, this power of disposition which the organization has over its branch would be lost. The branch could continue tc exist, notwithstanding any decision of the oarganization to disband or abolish it. Such a result cannot be consistent with the capacities given by the federal Act to an organization. Similarly, a right of a branch to hold and deal in property separately from the cight given to the organization is inconsistent with the capacities and functions of the organization itself. The use of a common seal, to indicate the performance of a formal act by an organization through its branch Ray not necessarily involve such an inconsistency. Nor would the possibility that the organization might be sued in some name given to the branch under state law. These aspects of incorporation would, however, fall with the other aspects of

ancorporation, on the view taken by Fullagar J. that qualifiec

In the past, it has been assumed that the inconsistency involved in a purported attempt by the law of a state to confer incorporation upon a branch of a federally registered organization renders impossible the registration of a branch under a state law which provides for incorporation. In my view, however, this assumption is incorrect. There is no reason why the provision for registration in a state law should be regarded as inconsistent, along with the provision for incorporation. The two are severable, and registration without incorporation does not of itself involve any inconsistency with the fedeca Act. The provisions for incorporation in the respective laws of Queensland, New South Wales, South Australia and Western Australia are merely part of the many provisions which must be locked at separately to determine whether they involve any inconsistency with the federal Act. To the extent that inconsistency does occur, a severable provision is to be regarded as inapplicable to a registered branch of a federal organization. By this means, federal organizations may participate in the state systems of industrial conciliation and arbitration, by becoming reqistered, and by taking the benefit and burden of all state

In holding that the incorporation of a branch is inconsistent with the existence of a registered organization under the federal Act, I am not to he taken as saying that the

incorporation of a body under two separate laws is necessarily

impossible. My attention was drawn to the decision of the Full

Court of the Supreme Court of South Australia in R. v. Cawthorne;

Ex parte Federated Clerks' Union of Australia (South Australian

Branch) (1979) 22 S.A.S.R. 433. In that case, the court held that the Public Service Association of South Australia Incorporated could properly apply for registration, and therefore for incorporation, under the state Act, notwithstanding that it wes already incorporated by virtue of the Associations Incorporation Act 1956-1965 (S.A.). If simultaneous incorporation under two state Acts is possible, it may be that simultaneous incorporation of an organization under the federal Act and a state law is possible. In other words, if a federally registered organization itself, as distinct from its branch, applied for registration under a state law, it may be that dual incorporation could result without there being any inconsistency within the meaning of s. 109 of the Constitution. A double grant to precisely the same body of perpetual succession and the right to hold and deal in property differs froma purported grant of

The rules of a federally registered organization derive their force and effect from the federal Act. See s. 141 of the

federal Act and R. v. Commonwealth Court of Concilation and

Arbitration; ex parte Barrett (1945) 70 C.L.R. 141, at page 151

per Latham C.J. If there is present in those rules any express limitation on the right of the organization to register one of its branches under the law of a state, such right would not exist. There would, of necessity, be an inconsistency between

the registration provision of the state law and the federal Act

in the particular circumstances. As I have already indicated,

• B99 - the rules with which the Union was originally registered under the federal Act are in evidence. They make very little in the way of provision for branches. An examination of them reveals nothing that would prevent the registration of a branch under the law of a state. I have already set out extracts from the rules of the Union as they were shortly prior to the South Australian registration on 10th January 1919. The objects expressed in rules 3(a) and (b) indicated that the Union was not intended to be confined to establishing terms and conditions of employment for those of its members who might become the subject of interstate industrial disputes. At least one way in which the terms and conditions of employment cf other members might he regulated was by involvement of the Union in state systems of industrial conciliation and arbitration. The objects impliedly contemplated this. Rule 29 provided expressly for the involvement of a branch in proceedings in an industrial tribunal, whilst making it clear that involvement in an intra-state dispute was involvement by the Union itself. Rule 32 provided for existing state unions to become branches. Rule 33 made provision for the existence of a branch in each state. These rules were consistent with, and indeed favoured, the position that the Union should have branches registered in the states, and participating in state systems of industrial regulation. Nothing elsewhere in

the rules at that time was inconsistent with this notion.

It is necessary to mention s. 136A of the federal Act. That section is in the following terms: "136A(1) Where it is not contrary to the rules of an

organization to do so, it may participate in the systems of conciliation and arbitration or of wages boards or

like systems established under the law of a State, and for that purpose a branch of an organization may become registered under a law of a State so long as that registration does not involve the branch in becoming incorporated, or otherwise becoming a legal entity, under the law of a State.

rules may provide that the Secretary of the branch of the organization in the State shall be the person to sue

or to be sued under the law of the State in respect of

any acts or omissions arising from that participation." This provision was one of several recommended by the committee consisting of Mr. Justice J.B. Sweeney, to which I have already referred. That committee proposed a system under which state laws should permit the registration of branches of federally registered organizations, without incorporation, s0 as toa overcome the problems of dual incorporation. It should be noted that the section is prospective in its terms; it contemplates that organizations will adopt rules expressly permitting the non-corporate registration of their branches under state laws. Assuming that such non-corporate registration already existed, by the registration of 4 branch and the operation of s. 109 of the Constitution in relation to a purported grant of incorporation, the section does not, in its terms seek to set at nought such

From all that I have said, it follows that what was registered in South Australia in 1919 was the South Australian Branch of the Union, and that this registration was valid. Because of s. 109 of the Constitution, the South Australian Act and its predecessors have not conferred upon that Branch incorporation. The provisions relating to incorporation are

severable from the provisions relating to registration. There

• 91 - was nothing in the federal Act, or any regulations under it, or in the rules of the Union in 1919, to prevent such registration. No provision of the law of South Australia has purported to undo the registration, or to render it invalid. Nor has any provision

of the federal Act undone what was validly done in 1919.

These conclusions are entirely consistent with the obvious intention of those who effected the 1919 registration, and with the later conduct of those responsible for the operation of the Branch. In particular, the change of the registered name in South Australia in 1924, which followed hard upon the heels of a similar change on the part of the Union under the federal Act, is a stronq indicator that the Branch and the South Australian Association were regarded as one and the same entity. Ido nat regard minor differences in punctuation and the presence or absence of apostrophes in different documents as affecting this

conclusion, Had there been some consi differences, an argument that a different mame was intended tz signify a different legal entity might have heen stronger. The conclusion that the branch was itelf registered in South Australia is also consistent with the existence of a single forr of application for membership, used consistently over many years, and appropriate for membership of the Union, with the operation of the Branch and the South Australian Association as if they were in fact one and the same body, and with the attempts which have been made over the years to make the rules registered under the federal Act and the legislation of South Australia coincide, so far as possible. It also accords with the view expressed hy

Mr. Krantz in the witness box that the Union was a federation of

The same conclusion has also been accepted without apparent difficulty by the Supreme Court of South Australia on

two occasions. In Re Wages and Working Conditions of Persons

Employed as Clerks and Clerical Workers and Office Workers £19411

S.A.S5.R. 65, the Full Court of the Supreme Court of South Australia dealt with a case stated by the President of the

Industrial Court of South Australia. The central feature of the

case concerned the capacity or lack of capacity to seek an award an respect of office workers not employed in a clerical capacity or in any of the other occupations specified in the rule of the Union relating to eligibility for membership. The status of the South Australian Association, as set out in the case stated, was

described by Murray C.d. at pages 69-70 as follows:

"Tt 1s stated in the case that the Federated Clerks' Union of Australia, South Australian Branch, which is the applicant in the matter, 1s a registered association of employees within the meaning of secs. 5 and 17 (1) {b) v, inasmuch as having been registered under the Industrial Arbitration Act Amendment Act 1915, its registration is continued by virtue of the provisions of sec. 3 of the said Industrial Code (par. 6).

It is further stated that the same body is a branch

in South Australia of an organization of employees registered under the provisions of the Commonwealth Conciliation and Arbitration Act by the name of "Federated Clerks' Union of Australia.""

No member of the Full Court queried this statement. It is true that, at page 70, Murray C.J. described the applicant in that case as having become a branch of the Union in 1925; on the evidence before me, this was historically inaccurate.

Nevertheless, the point remains that the court did not seem to

• 93 - find any difficulty in the Branch being registered as an

association under the law of South Australia. In Ryan _v.

Federated Clerks Union of Australia (South Australian Branch)

£1951] S.A.S.R. 249, Napier C.J. held that purported rules of the shipping section of the Branch were inoperative, as they had not been certified under the federal Act or registered under the legislation of South Australia. Early in his judgment, at page

"The Federated Clerks Union of Australia (hereafter refecred to as "the Federal Union") is an organization

registered under the Commonwealth Conciliation and Arbitration Act 1304-1951. The defendant Federated Clerks Union of Australia, South Australian Branch (hereafter referred to as "the State Branch"), 1s a4 branch of the Federal Union, but it is alsa registered as an association of employees under the Industrial Code 1920-1950."

It is true that in neither of these cases is there any discussion of the possible complexities of dual registration or dual incorporation. The cases cannot be relied upon as authorities for the proposition which I hold to be true, that registration of the branch was a legal possibility. The views of the Supreme Court of South Australia do, however, show that judges of eminence found no obvious difficulty in entertaining the sensible view that the body registered under the law of South Australia was the South Australian Branch of the Union. I see no reason

why effect should not be given to this sensible view.

At one point ain the course of the trial, Mr. Williams suggested that the issue whether a branch of a registered

organization could become registered and incorporated under the

law of a state might involve a matter of the kinds deait with by

• 94 - s. 7BB of the Judiciary Act 1903, namely a matter arising under the Constitution or involving its interpretation. Mr. Williams undertook to ensure that the notices required by that section were given to the Attorneys-General of the Commonwealth and the states, in the event that such a matter appeared to arise. In the event, no such notice was given. At the conclusion of argument, all counsel were of the view that no such matter was involved; the questions raised were capable of determination by examination of the terms of particular statutes, to see whether

I have reached the conclusion that the Beanch was itself registered under South Australian law at all relevant times, and itself constituted the South Australian Association. In case I am wrong in that conclusion, and in deference to the detailed and careful arguments presented to the Court by Mr. Heywood-Smith and Dr. Jessup, I should deal with the case on the footing that the Branch and the South Australian Association were entirely separate in lav. Upon this assumption, each of them existed in law as an enlirely separate body (although the Branch could not have the status of a legal entity), each with its completely

In cases of this kind, the court is usually concerned to ascertain whether a particular act has been done on behalf of a branch of a federally registered organization, or on behalf of a

state registered union or association. In some cases, it may be

decided, inferentially or expressly, that one or other of these has so fallen into disuse that it has ceased to exist as a matter of fact. The logical possibilities, therefore, are that one or other of the Branch and the South Australian Association has ceased to exist, or that both continue to exist and function

Mr. Heywood-Smith argued that the Branch had become defunct during the 1960's, and remained so until 1981, when it was revived. I have already summarized the factors relied on by

Dr. Jessup suggested that, if anything had become defunct, it was the South Australian Association, because the forms used for applications for membership were appropriate only

In my view, the evidence does not disclose that either the Branch or the South Australian Association became defunct. Rather, it reveals a picture of consistent attempts to keep both alive and functioning. The fact that all members were treated as members of both, the information given to new members about registration, the payment of sustentation fees, the attempts made from time to time to keep the rules of the Branch and the South Australian Association consistent, the participation ain the Federal Council of the Union, and the existence and maintenance of both federal and state awards in South Australia all point te

The mere fact that rule books were produced over many years, bearing notations that they were the rules which were registered under South Australian legislation, and that these were the rule books which were consistently used in the conduct of business, suggests no more than that resort was had more frequently to the lecally registered rules than to, those registered under the federal Act, and may even indicate that it was thought necessary to clarify the limited operation of those rules. There were, in any event, a great many similarities between the two sets of rules. Nor is the existence of long term antipathy between officers in South Australia and those at the federal level of the Union of great significance. Members micht well have great loyalty for their South Australian officers, and a great dislike for particular holders of particular federal offices. There is a distinction to be drawn hetween this kind of feeling, however, and a dasire to destroy a branch of the Union, and to operate only a state registered association. Those same members were unlikely ta desire the destruction of the Branch, and their isolation from the Union, with the advantages and protections which it offered them, even if they cherished the hope that some or all of its federal offices would change hands as soon as possible. In evidence, Mr. Krantz conceded that it was possible for people with opposing political views tao work together on industrial matters, and that this occurred within the

In the context of the present case, the differences of wording between the eligibility rule of the Union, as repeated in

the branch rules, and the eligibility rule of the Scuth

• 97 - Australian Association are not of great significance. It is true that at least some of the changes in the eligibility rule of the South Australian Association were the results of decisions within the South Australian system that the South Australian Association was not entitled to seek awards covering certain categories of employees. Mr. Heywood-Smith mentioned in this context Re Wages

and Working Conditions of Persons Employed as Clerks and Clerical

Workers and Office Workers [19413 S.A.S.R. 65, in which the Full

Court held that the South Australian Association could not validly seek an award which covered "office workers", as some persons within that category did not fall within the eligibility rule of the Union. This determination was then reflected in a change to the rules of the South Australian Association. In a

subsequent case, Federated Clerks' Union of Australia, South

Australian Branch v. University of Adelaide Staff Association

(1979) Law Book Company Industrial Arbitration Service, Current

"There can be little doubt that the 1942 amendment had the effect of broadening the potential ambit of membership of the F.C.U. in an important aspect because, for the first time, persons who were not clerical

employees were brought in. For example messengers, telephonists, salesmen, meter readers, tracers and draughtsmen received specific mention. Moreover, a5

Morgan P. pointed out in his dictum in the Gas Co. Case (supra) the ambit was extended to embrace two broad categories of employee - namely those engaged in or about an office (who did not necessarily need to hbe clerical workers) and those engaged outside an office in any clerical capacity."

In Re an Application for an Inguiry into an Election in the

Federated Clerks Union of Australia, South Australian Branch

(Federal Court of Australia, Evatt J., 28th June 1¢83,

unreported) Evatt 7. compared the eligibility rules of the Urzion

• 98 - and the South Australian Association, and suggested that various categories of employees may not be eligible for membership of the

Union, although being eligible for membership of the South

There must inevitably be some doubt as to the differences between the two eligibility rules. Dr. dJessup referred to cases in which the width of the eligibility rule of

the Union has been discussed. The well know passages in the

gudgment of Sheldon J. in Re Federated Clerks' Union of

Australia, Wew South Wales Branch, and Australian Norkers' Union

[19713 A.R. (N.S.W.) 419 at page 421 have been quotec and followed in a number of cases, including Voigtsberger v. Council

of the Shire of Pine Ravers (1980) 49 F.L.R. 391, and Re an

Application by Prichard for an Inquiry into an Election in the

South Australian Branch of the Federated Clerks' Union of

Australia (Federal Court of Australia, Gray J., 2nd April 1985, unreported). It is unnecessary to set out those passages again. Subsequent cases which tend to show the breadth of the

constitution rule of the Union include Golden Bowl Sports Centre

Pty. Ltd. ov. Kingston (1979) Law Book Company Industrial

Arbitration Service, Current Review 176, at pages 179-181, which related to receptionists in a commercial health club, and Tucker

v. Rising Sun Towing Service Pty. Ltd. (1984) 7 I.R. 75, at pages

79-81, which concerned radio operators employed by a tow-truck

In examining eligibility rules, it must also be borne in

mind that the structure of the rules of the Union, and those of

-~ 99 - the South Australian Association, is such as to require a member to be eligible only at the time of joining. If an existing member changes his or her occupation to one which would not fall within the eligibility rule concerned, membership does not

automatically cease. This point was made in Prichard v. Krantz

(Full Court of the Federal Court of Australia, Smithers, Northrop

and Keely JJ., 21st Gctober 1983, unreported), Prichard v. Krantz

(1983) 6 I.R. 271, at page 273, Re Federated Clerks Union of

Austrailia (1982) 1 I.R. 217, at page 218 and Re Application by

Prichard for an Inquiry into an Election in the South Australian

Branch of the Federated Clerks Union of Australia (Federal Court of Australia, Gray d., 2nd April 19285, unreported). To the authorities cited at pages 13 and 14 of the last-wentioned

decision might be added Turner v. Australasian Coal and Shaieé

Employees Federation (1984) 55 A.L.R. 635, at page 651. The

evidence is that at least some of the changes which occurred in the eligibility rule of the South Australian Association were the

results of attempts to obtain award coverage for existing

menbers, who had been eligible to join at the time of joining,

and had remained members in significant numbers, despite

promotion or other changes of occupation. These persons coul validly remain members of the South Australian Association, Est no award could be sought for them unless the eligibility rule af

For these reasons, the mere existence of a potentially broader coverage on the part of the South Australian Associaticn than on the part of the Union is insufficient to indicate that

there were significant numbers of members in South Australia whe

• 100 - were members of the one but not the other. The practice of treating all who joined as members of both points against this. The question of eligibility to join could only be determined ina

particular case by detailed evidence of a particular person's

occupation at a particular time. No such detailed evidence was forthcoming from those who might be expected to bring it forward if it existed, namely the respondents for whom Mr. Heywood-Smith appeared. It is safe, therefore, to assume that no significant body of persons existed within the South Australian Association

The suggestion that the Branch was non-existent in the 1970's is entirely inconsistent with the evidence of Mr. Krantz's reaction to the proposition that the Branch should secede from the Union, when that proposition was put forward at the 15977

The existence of only one Branch Council and one set of officers, administering the affairs of both the Branch and the South Australian Association, at all relevant times does not assist in determining that one or other of these bodies became defunct at any time. So far as the Branch is concerned, the Court looking at these matters at the present time is entitled, and indeed obliged, to apply those provisions of the federal Act which automatically validate the operations of the Branch so far as they depended upon the acts of the Branch Council and the officers. Particular reference is made to ss. 171B and 171F of

Tt is not enough to show some failure to comply strictly with the rules of the Union, or some failure to carry out at the due time an obligation imposed by the federal Act or the regulations made under it, and to claim that those defaults lead to the conclusion that the Branch was defunct. If all that were required to prove that a Branch of a federally registered organization was defunct was evidence of some failure to comply with the rules of the organization, or some failure to carry out obligations under the federal Act, there would be very few live

The proposition that a defunct branch could be resurrected is also a startling one. It is difficult to see hovw a branch that hed ceased to exist in the 1960's could he resurrected by the efforts of persons who, upon this hypothesis, Were not officers or members of a branch at all. This is especially so when no consciocus decision to resurrect the Branch

has been shown to have been taken. In my view, the Branch never

Assuming the existence of both the Branch and the South

Australian Association, as separate bodies, e@ question arises as

to which of them was entitled to the monies received by way of subscriptions from members, building fund levy, sale of assets,

This sort of question was dealt with by the Full Court

in Egan v. Harradine (1975) 25 F.L.R. 336. At pages 386-387,

"Por some time prior to that there had been a hody Functioning which purported to be both the State registered industrial union and the branch of the organization. Each had a set of rules with some marked differences, for example, in the eligibility for membership provisions. Under each set of rules a contribution was payable, in the one case to the State union, in the other case to the branch. One bank acccunt only was operating.

It was first argued that one payment was sufficient to satisfy both debts. It was said that the rules of the branch which provided that "contributions shall be paid" was ambiguous in that it left open the question to whom the payments should be made and that as a consequence the rule should he interpreted having regard to the practice of treating members who have paid the one payment as financial in both the State union and the branch. If then there was an ambiguity in the rules they should be construed in the light of the conduct over many years. We are however unable to see any ambiguity in the rules and regard them as creating two @ebts, one to the branch and ane to the State union. This was rather a case where the practice was relied on to create an ambiguity in the rule and then to resolve it.

To which body then was the contribution paid? No evidence was given by the officers of the branch and the court is then left in the position that the evidence required to discharge an onus of proof is slight. There are several pointers which in our view are sufficient to discharge the onus of proof."

After examining the evidence available, their Honours held that the monies had been paid to the state registered association.

"In South Australia the federal branch and the State union had the same name and one bank account in that name. The contribution fee to hoth bodies was of an identical amount but the practice has been that only one fee is paid and not two fees, one in respect of each body. The effect in my opinion is that the member appropriates the fee he pays to the two bodies equally. As the money is received by the two bodies, it would appear to belong to them in equal amounts and so it is not material which body spends 1t."

His Honour concluded that members in South Australia had only

• 103 - paid half of their contributions to the South Australian branch of the federally registered organization. All members of the court reached the conclusion that the South Australian delegates

It is apparent from an examination of the report of the decision in Eqan v. Harradine that there was not a great deal of evidence as to the circumstances of payment, and that the court was left to infer much. In the present case, there is a good deal of evidence as to the manner of the receipt of money, and as to the way in which it was dealt with. There is still, however, a need io draw inferences from the facts as to the intentions of ths various parties. Assuming that there were two debts owed by each member in South Australia, one debt to the Union, and one to the South Australian Association, and an amount insufficient ts discharge both debts was paid, it is necessary to look first at the intention of the payer. In the case of subscriptions, the payers were all members who had heen told, upon joining, that they were joining a union which was registered under both the federal Act and South Australian legislation. It was never communicated to such members, on the evidence before me, that there were two separate bodies, or that they had become members of each. In those circumstances, it must surely have been the intention of the members paying that the monies which they paid should be applied by their elected representatives, in accordance with the rules registered under both the federal Act and the South Australian legislation, to the obligations which arose by virtue of both federal and state registration, and in pursuance

of any decisions made by those elected representatives under and

• 104 - an compliance with the rules which were given force and effect by federal and state registration. A member paying one sum of money, Which he or she believed was all that he or she was obliged to pay, would expect that all obligations arising under both sets of rules would be met from that sum of money, and that any further decisions made to spend that sum of money would he

With respect to doske J., I do not subscribe to the theory that the one fee paid was to be divided equally between the two bodies; such &@ conclusion seems to me to ignore what must have been the actual antention of the payer. J.B. Sweeney and Evatt JJ. did not expressly refer to the intention af the paying members, but their findings on the evidence must be taken to have amounted to an overall finding that the members in that

case intended to pay to the state registered association.

If no intention may legitimately be inferred on the part of the payers, then it may be proper to look at the intention cf the payees. These are, in effect, the elected officials, whose obligation it is to comply with both sets of rules. Their intentions in receiving monies from members must necessarily b= constrained by their duties to obey both sets of rules. They dia not simply have an unfettered choice as to how to apply the monies; they were bound to apply them in satisfaction of the obligations arising under both sets of rules, and in pursuance cf decisions properly made by them as to expenditure, in accordance

It is therefore necessary to look at the rules of the Union and the Branch, and the rules of the South Australian Association, to determine the effect of those rules on decisions which the elected officials could make. In the first place, it is to be noted that the rule under which investments are to he made in the rules of the South Australian Association is in identical terms to the rule relating to the same ratters in the Branch rules. Tt is rule 36(c), which I have already quoted. This rule has existed in both sets of rules for many years. So far as the Branch rules are concerned, however, it is subject to rule 37 of the rules of the Union, especially to rule 37(1), under which all funds and property held by any branch are required to be vested in the Union. The provisions of rules 12(2)(a) and (f) and 12(3) of the rules of the Union show clearly that the rules of a branch must be construed as subject to the federal rules. No rule of the South Australian Association conflicts with rule 37(1) of the federal rules of the Union in this respect; there is nothing which would oblige the elected officials to cause any property in which the funds they received were invested to be vested in the state registered Association, or in any other hody. If, as I have concluded, the monies paid by way of contributions were paid and received on the basis of compliance with both sets of rules, compliance with rule 37(1) in respect of all such investments was necessary. The structure of the rules deprived the elected officials of a choice as to the body on whose behalf they invested monies; they were required by rule 37(1) of the federal rules to invest in property to be

The same applies to other forms of monies received. The building fund levy, collected in 1970 for the purchase of the Newsagents' Association building, was paid and received on the same basis as were contributions. The provisions of rule 8(4) of the rules of the Union restricted the Branch Council as to the purposes for which moneys raised by means of a levy could be used. Soa far as industrial service fees aré concerned, they were no doubt received as compensation for the costs to the Branch and the South Australian Association of the provision of those services. To the extent that there was any profit, such profit was received in the same way as other monies, namely to be used in accordance with the rules of both bodies to discharge any obligations under those rules, and for expenditure pursuant to those rules in the interests cf the Union and the South

These conclusions render irrelevant much of the evidence which was relied on by Mr. Heywood-Smith, as indicating that an

express choice was made to purchase the Newsagents' Association °

building, and later the land on which the present building is constructed, in the name of the South Australian Association, and to open the account with the Satisfac Credit Union in the same name. The rules of the Union, particularly rule 37(1) operated to prevent a decision in favour of the South Australian Association in that way. The deliberate choice of the name, the use of the seal and the evidence as to consultation with the state Industrial Registrar cannot be relied upon to circumvent the rules. In any event, it is far from established that a clear

choice was made by the Branch Council with respect to any of

• 107 - these investments. The haphazard rendering of the name which was used in many of the documents does not indicate a careful decision to insist upon ownership by one body at the expense of another. In general, the evidence discloses that many variations occurred in the rendering of the name of the Branch or the South Australian Association. An apostrophe was used in many cases, even where the Branch was clearly intended to be described. And the use or omission of a comma, a dash or brackets indicates a lack of consistency in this regard. To some extent, these variations occur in the legal documents relating to the investments. It is, therefore, impossible to regard as

The conference which was held on 14th July 1970, and which passed a lengthy resolution authorizing the purchase of the Newsagents' Association building, was put forward by Mr. Heywood-Smith as the source of authority for the purchase of that Building, and as being unarguably a conference cof the South

Australian Association, and mot of the Branch. At that time, however, neither the rules of the South Australian Associetion nor the rules of the Branch provided for such a conference; rule 16A, which presently appears in both sets of rules, did not exist in either set at the time. Any authority which either the Branch rules or the rules of the South Australian Association contained for the purchase of the Newsagents' Association building musct

have been with the Branch Council. In any event, on the

evidence, the resolution of the conference was treated as

advisory only by the Branch Council, which expressly adopted it.

The use of the seal on numerous legal documents was urged by Mr. Heywood-Smith as being an important factor in determining that the investments in land and buildings were made on behalf of the South Australian Association. The rules of the Branch do not provide for a seal; nor could they, as a branch, not having any identity separate from the organization of which it is part, would not normally be entitled to have ai seal. Plainly, the law of South Australia must be invoked to justify the possession of a seal. This reasoning, however, does not lead to the conclusion that the purchase was that of the South Australian Association. The purported use of the seal was simply erroneous. As I have already pointed out, under the sets af rules which needed to be applied by the members of the Branch Council in deciding upon the investment of monies, there was no room for a choice to purchase land in the name of the South Australian Association. The purported attempt todo so was

argument, and indeed calculation, was the differences which existed from time to time between 1963 and 1979 between the levels of contributions fixed by the rules of the South Australian Association, and the level fixed hy the rules of the Branch. It will be recalled that the Branch rules provided for contributions in the sum of 4 pounds per annum for adult male employees, and lesser sums for other categories of employees, continuously throughout the period from 1963-1979, whereas the

amounts fixed by the rules of the South Australian Association

were increased from time to time. Mr. Heywood-Smith sought to

• 109 - argue that only 4 pounds, or, after February 1966, $8.00 per annum of each subscriptian collected could be treated as having been paid to the Union, and that the whole of the sustentation

fees paid to the federal office in any one year must be deducted

from the total of contributions so received on behalf of the Union. The balance, sao Mr. Heywood-Smith said, was all money of the South Australian Association. Since in each relevant year a surplus appeared in the accounts, and was carried forward to the following year, when 1t came to the purchase of the Newsagents'

Association building, and later the land on which the present

building is situated, and to the construction of the present

building, monies from the accumulated surpluses which were applied to these ends must be regarded as having been monies of the South Australian Association. This argument, however, ignores both the intention of the payers and the intention of the recipients. At no time were members informed of any difference in contributions; they were simply called upon to pay one contribution each year. At no time did the Branch Council or any officer treat any part of the funds received from members separately, or charge any specific payment against any specific sum in the way suqgested. For all that a member knew, he or she

was paying to a union registered under both the federal Act ard

South Australian legislation. For all tha the acts of th

elected officials shawed, they were receiving all monies frcez members in that manner. It may be true to say that there were times at which the debt owed by each member to the Union was less than the debt owed to the South Australian Association. There is, however, no rule of law which suggests that if a member of an

organization pays to that organization more than he or she is

• 110 - obliged to pay by way of contribution, the organization necessarily lacks entitlement to the excess. A particular member

may be able to recover a payment, on the ground that it was made under a mistake. As between the Union and the South Australian Association however, there is mo ground for saying that one was entitled to more than the other. Entitlements arose by reason of decisions of elected officials in accordance with the two sets of rules.

Any result other than this would be extraordinary. Tt would mean that, in a state in which a federally registered organization functions by means of a branch, a séparate association could be formed, and the members of the organization in thal state could be treated as members of that separate association. Monies collected from those members, which would otherwise have gone to the organization, could be channelled into the separate association. Years later, assets purchased with those monies could he Placed in the name of the association, and any entitlement of the organisation to such assets could he denied. Although Mr. Heywood-Smith put his argument ina much more learned and persuasive manner than this, when analyzed carefully the argument amounts to no more than this extraordinary result. I have already found that it was the Branch itself which was registered under fouth Australian legislation. If I am wrong in that conclusion, and the South Australian Association did exist as 4& Separate body, it can only have been created for the purpose of giving members of the Union 1n South Australia access ta the benefits provided by the system of industrial conciliation

and arbitration established under South Australian law. Such an

• lll - association, created for such a purpose cannot be used to deprive the Union of property purchased with monies paid by members of the Union, and which, but for the existence of the South

Australian Association, would clearly have belonged to the Union.

From the finding which I have made, that the Branch itself became registered in South Australia in 1919, and that na separate South Australian Association exists, it follows that all funds which were received by the Branch officers, and invested in land and buildings, or paid znto the Satisfac Credit Union, we-e funds of the Union. Even if that finding is incorrect, and the South Australian Association did exist as a legal entity separate from the Branch, all funds received by the Branch officers were 50 received subject to the obligations imposed by the federal rules, and the Branch rules, as well as the rules of the South BRustralian Assoaciation. In either case, it is necessary ts determine the effect of the rules upon what was done with the

In receiving monies, and banking them, the Branch Secretary was acting in accordance with the duty imposed on hir by rule 24(h) of the Branch rules. Tf the South Australian Association has separate existence, he was also subject to ar identical duty, imposed by rule 24(h) of the rules of the South Australian Association. On no view could such payment into a4

bank account be regarded as an allocation of the monies to the

South australian Association, even if a bank account had borne a4

• 112 - name which was unequivocally that of the South Australian Association. There is no evidence of any act that could amount to a decision to appropriate monies to the South Australian Association separately, at the stage when monies were banked. At all relevant times, the bank accounts have been kept in names which do not indicate clearly whether the accounts were those of

In deciding to purchase the land and to construct the building, and in deciding to deposit monies with the Satisfac Credit Union, the Branch Council was acting or purporting to act pursuant to rule 36(c) of the Branch rules, which gives the Branch Council power to invest funds and the control of such investments. That rule is, however, subject to rule 37 of the rules of the Union. Io have already quoted the terms of this rule.

A question arose as to the meaning of the term "vested" in rule 37(1), which provides that all funds and property held by any branch shall be "vested" in the Union. Associated with this question is a question whether rule 37(1) imposes upon any person any obligation capable of enforcement by an order made under 5.

Arbitration Requlations requires that the rules of an association seeking registration as an organization under the federal Act Must provide for "the mode in which the property of the

association is to be controlled and its funds invested". An

• 113 - unincorporated association is incapable of holding property; it

is no more than a collection of natural persons, and has no legal

personality at all. It is common for the rules of unincorporated associations to make provision for their property to be held by trustees for the members of the association for the time heing. Upon the registration of an association as an organization under the federal Act it becomes incorporated, and can hold property in its corporate name. Regulation 115(1)(d)(ix) continues to apply to the rules of an organization, by virtue of reg. 115(2) of the

Conciliation and Arhitration Requlations. In some cases, the

rules of organizations continue to make provision for the existence of trustees, either as holders of the property of th organization, or as guardians of property which is held in the name of the organization. In the case of the Union, a different

rule had been adopted in rule 37{1), namely a rule which makes it

clear that any property held by aay branch i the Union. This may mean no more than that the Union itself, in 1ts corporate capacity, is the mmer of the property, as distinct from the legal title to the property being held by trustees. on the other hand, Dr. Jessup azgued that the effect of rule 37(1) was to impose an abligation on al? branch officers to ensure that the legal title to any property held hy a branch was so held in

the name of the Union itself. Dr. Jessup relied on the decision

of the Court of Exchequer in The Queenshead Inéustrial Society

dGimited) v. Fickles (1865) 38 L.J.Exch. 1. In that case, the court dealt with a statute under which a society could becore registered, and, as a consequence, incorporated. The statute provided that the certificate of registration should vest in the

society all property that may at the time be vested in any persenr

• i114 - in trust for the society. An issue arose whether a society which had become registered could sue in its own name on a bond which had been given by trustees of the society before registration. The court held that such suit was competent, as the statute operated to give to the incorporated society the legal title in property, not simply the equitable interest under the trust. Dr. Jessup relied on this case as indicating that rule 37(1) requires the legal title of any property held by a branch of the Union toa be in the name of the Unicon. There is no doubt that the rule as capable of being so interpreted. Even if it were not, if any property were held in trust for the Union absolutely, it would be open to the Union as beneficiary to determine the trust, and to require the trustee to make over the legal title ta the property

The difficulty about rule 37(1) is that it does not, in its terms, impose any obligation on any member or officer. On one view, i2t may be no more than a provision indicating that legal title to property is not to be held by trustees. Alternatively, it may be construed as imposing some obligation on a "branch". It has been held that a rule which, in its terms, imposes an obligation on a branch to pay money cannot be enforced

under s. 141 of the federal Act against branch officers or

committee members. See Bowden v. O'Reilly (1975) 12 A.L.R. 307.

The rules of any organization must, however, be read as a whole, and the proper construction of any particular provision may depend upon the content of the rules generally. Having regard to

the fact that, under rule 36(c) of the Branch rules, the Branch

Council is given the express right to control investments, it is

• 115 - possible to read rule 37(1) as imposing an obligation on the members of the Branch Council at a time when property 15 acquired to ensure that the legal title to such property is in the name of the Union. For reasons which will become apparent when I discuss s. 171F of the federal Act, it is more difficult to regard this as a continuing obligation, falling upon successive Branch councils, with respect to any one item of property, particularly when more than four years has. elapsed from any decision as to the

Manner in which any particular asset is to he held.

BR problem arises in the construction of rule 37(2).

This rule is applicable to funds held by the "Executive of a

Branch", The investments the subject of this proceeding were all

made by the Branch Council, not by the Branch Execulive, and the .

funds concerned were not, at the time, in the possession of the

Branch Executive, in any seal sense. The question is whether the phrase "Executive of a Branch" is apt to include the Branch Council, or only the Branch Executive. In defining the terns

"Branch Council" and "Branch Executive", rule 45 of the rules of the Union makes a clear distinction between the council of a branch and the executive of a branch. The rules of the Branch set up both a Branch Council and a Branch Executive. Consistency in the reading of terms in the rules would seem to dictate tha

rule 37(2) applies only to the Branch Executive, and not to the

Branch Council. On the other hand, to read rule 37(2) as

applicable only to the Branch Executive would lead to strange results. It is the Branch Council which has power to invest, under rule 36(c) of the Branch rules. The restrictions imposed

by rule 18(q) of the Branch rules on the spending power of the

• 116 - Branch Executive are already significant. Under rule 16(b) of the Branch rules, it is the Branch Council which has the care, control and custody of the funds, that is, such funds as the Branch is entitled to retain under rule 15(1) of the federal rules. The words "funds for the time being in its possession" in rule 37(2) of the federal rules are inappropriate to apply to anything over which the Branch Executive may have dominion, but appropriate to apply to funds of the Branch, which are held in a real sense by the Branch Council. EZ therefore hold that the words "Executive of a Branch" in rule 37(2) of the federal rules

Otherwise, the meaning of rule 37(2) is reasonably Clear. It seemed to be common ground between the parties tha what were "authorized trustea investments" for the purposes of the branch were those which were permitted by the lav of Seuth Australia for trustees. As I have said, it is common fsround that, at no time was investment in the Satisfac Credit Union so

authorized. No real argument toar place upon whether the

purchase of real estate for use as an office amounted to an

authorized trustee investment; s. 5(1)(b) of the Trustee Act 1936 (S.A.) authorized trustees to invest in "real securities" in South Australia; this is the only provision of 5s. 5 of the Trustee Act 1936 which could have beer construed as permitting the purchase of the Newsagents' Association building, or the land on which the building presently occupied by the Branch office is erected. There may be some doubt as to whether even a power to invest in real estate by purchasing it permits a trustee to

purchase a building for use, as distinct from investment. See Re

Power £1947] Ch. 572, and In the Will oof Sherriff £19713 2

The construction of rule 37(3) depends primarily upon the meaning of the phrases "ordinary purpases" ard "extraordinary purposes". It is unnecessary for me to enter upon the controversy as to whether the purchase of a building for a branch office is an ordinary purpose or an extracrdinary purposes within the meaning of this rule. This question was not fully argued before me, and I do not need to answer it. What is clesr is that the purchase with funds of the Union of real estate, the title to which is held in a name other than that of the Unicnr,

From this examination cf the meaning of rule 37, the following conclusions can be reached. Firstly, the Branch

Council which authorized the purchase of the Newsagents

Association building on 28th July 1970 did not have the povver

disburse the funds of the Union for that purpose; under rut

37(3), a decision of the then Federal Council or Fed

Executive was required. In addition, insofar as the purchase <-f the building amounted to investment of funds otherwise than in authorized trustee investments, the approval of the then Federal Council or Federal Executive was required. Further, rule 37(21} required that the Branch Council enzure that the legal title ta the Newsagents' Association building was held in the name of the Union. Similarly, the Branch Council which, on 24th February 1876, authorized the purchase of the land on which the presert

Building 15 situated did not have the power to disburse the funis

• 118 - of the Union for the purpose of purchasing that land in the name of the South Australian Association, was required to obtain the approval of the Federal Council cr Federal Executive for the aunvestments cf funds in the purchase of that land, and was required to ensure that the legal title to the land was held in the name of the Union. The Branch officers whose signatures appeared on the relevant documents beside the seal which I have described were acting without proper authority in affixing ths seal and in signing those documents. The same conclusions apply to the contracts for the erection of the building on the land, and to the expenditure of funds on the erection of that building. Lastiy, in investing funds in ths Satisfac Credit Union, the

Branch Council has, from tine to time, acted in breach of rules

3741. and (2), although mot in breach of rule 27(3), as such investment would not be regarded as being disbursement cf funds

On the view which IT have taken, that it was the Branch itself which was registered under South Australian legislation, my conclusions az to the lack of authority of the respective Branch Councils and Branch officers really matters little. Properly has been purchased, and investments have'been made in a name which is not that of the Union, but which 15 also not the name of any other legal person. As no corporate antity, bearing the name of the South Australian Association, exists, no such entity can be said to be holding the title to the property. All that has occurred is that an error has been made in the expression of the name of the legal owner of the property. Ina

sense, the property is vested in the Union, although that may not

• 112 - be clear from an examination of the register kept under the Real

Property Act 1886 (S.A.), or of the documents of the Satisfac

Tt 1s only if my analysis of the situation is incorrect, and there are two separate legal entities, that problems can Le seen to arise: On that basis, the title to the property is held by the South Australian Association, but the property has in each case been purchased with monies which belonged, in law, to the

Union. As is well known, that situation gives rise to

presumption that a resulting trust exists. In other words, the law presumes that the South Australian Association holds the property as trustee for the Union. This principle was expressed by Aickin J., with whom the other members of the High Court

agreed, in Napier v. Public Trustee (Western Australia) (1580) 32

"The law with respect to resulting trusts is not in doubt. Where property is transferred by one person into the name of another without consideration, and where a4 purchaser pays the vendor and directs him ta transfer the property into the ame of another person without consideration passing from that person, 'there is a presumption that the transferee holds the property upon trust for the transferor or the purchaser as the case may be."

The judgments of the members of the New Zealand Court of Appeal

in Bateman Television Ltd. Cin izquidation) v. Bateman £19723

N.Z.L.R. 453, especially the judgment of Turner J. at page 462,

The presumption of a resulling trust 1s clearly capable

of being rebutted by evidence of an intention by the Union to

• 120 - benefit the South Australian Association. In the present case, such evidence can be found in the resolutions of the respective Branch Councils, and in the actions of the officers pursuant ta them. Those Branch Councils, and those officers were, for practical purposes, acting as the Union. Of course, their decisions and acts were not authorized by the rules of the Union. Had they been valid, or if they are validated, they would, in my view, amount to sufficrent evidence of intention to benefit the South Australian Association to rebut the presumption of

An allecnative analysis depends upon the law relating to constructive trusts. It was put by Dr. Jessup that the members of the Branch Council and the Branch officers had expended the funds of the Union, wrongfully and without authority under the rules, for the purchase of property which was placed in the "ame of the South Australian Association. Since they also constituted the Branch Council and were officers of the South Australian Association, the South Australian Association cannot be regardec as having taken that property in the capacity of innocent purchaser, but was a volunteer, with notice of the impropriety. The South Australian Association, so it was said, therefore holds the property as a constructive trustee for the Union. Again, this analysis depends entirely upon the validity, or subsequert validation of the decisions and acts of the members of the Branch

TIT have already held that the decisions end acts of the

Branch Council and Branch officers were not, at the time sher

• 121 - they were made or performed, valid under the rules. They were, however, Gone in purported reliance upon rule 36(c) of the Branch rules. It is therefore, necessary to see whether they have

The argument concerning laches and acquiesence stemmed from an underlying assumption that what was being sought in this case was equitable relief, or some relief which was akin or analogous to equitable relief. Thais in turn arose from the fact that much of the argument about the consequences of the use of the name of the South Australian Association turned on points of law relating to resulting and constructive trusts. Mr. Heywood-Smith assumed that it would be necessary for the Court to make at least a declaration as between the Union and the fouth Australian Association as to ownership of the property. He

contended that equitable defences bassd on delay in applying to

the Court, with knowledge of the facts, should bar such relief.

No part of the relief sought in this case is equitable. All that is sought in the Rule to Show Cause is relief of a sind contemplated by s. 141 of the federal Act. Whilst it may be necessary, upon one view of the facts, to investigate equitable concepts, such as resulting and constructive trusts, no orders which depend upon equitable jurisidiction are sought or need to

be made. It may be that, under s. 23 of the Federal Court of

Australia Act 1976, the Court would have power to grant remecies,

including equitable remedies, in aid of cther orders made. It

~ 122 - must be remembered, however, that the Union and the South Australian Association (if it exists) are only parties by virtue of an order of the Court designed to extend to them a right ta be heard when their respective rights to the property the subject of

the proceeding were in dispute. See Bailey v. Krantz: (1984) 55

A.L.R. 345, especially at pages 354-355. The power to grant a declaration under s. 723 of the Federal Court of Australia Act 1976 is to be exercised sparingly. See McLeish v. Faure (1979) 40 F.L.R. 462. In my view, no occasion arises for its exercise in the present case. If the Applicant is entitled to orders under s. 141, orders can be made. Their effect would he to regularize the positions of the Union and the South Australian

Association with respect to the property concerned.

The making of orders under s. 141 is, ultimately, a matter for the discretion of the Court. If the circumstances dc not warrant an order, no order need be made. The normal equitable rules as to the refusal of relief do not, however, apply. The considerations which led the Court to cefuse relief which would otherwise be justified are more closely connected with the objects of the federal Act and the purposes for which organizations exist than with general considerations of delay or clean hands. The nature of the discretion vas examined by the Full Court in Cook v. Crawford (1982) 62 F.L.R. 34, especially at pages 68-69 per Smithers J., 81-82 per Keely d. and 124 per

Sheppard 7d. Having regard to relevant considerations, it can

hardly be suggested that the Court should refuse to make orcere in the exercise of its discretion in the present case. It can

hardly be said to be coanducive to the fundamental role of

organizations in the system of conciliation and arbitration set up under the federa Act for their property to be capable of being alienated by Branch officials whoa also happen to Fe

officials of associations registered under state lav.

There is, however, one aspect of delay which must he

Section 171F(1) of the federal Act, so far as is relevant, provides as follows: "L7IF(L) Subject to this section and to section 171G, upon the expiration of 4 years from- (a) the doing of an act-

(2) by, or by persons purporting to act as, a collective body of an organization or brarich of an organization and purporting to exercise power conferred by or under the rules of the organization or branch; or

(ii) by a person holding cr purporting to hold an office or position in an organization or branch and purporting ta exercise

power conferred by or under the rules of the organization or branch;

organization ar branch." All relevant acts of the Branch Council and officers of the Branch, with respect ta the purchase of the land the subject of this proceeding and the construction of the building thereon, were done by those persons in purported exercise of the power

conferred by rule 36(c) of the rules cf the Branch, relating to

investments. All those acts were done more than four years ago,

• 124 - and more than four years prior to the commencement of this proceeding, if that were the relevant date (as to which see Cook v. Crawford (1982) 62 F.L.R. 34, especially at pages 102-105). Those provisions lacked validity because of the effect of rule 27 of the federal rules of the Union. They are, however, now deemed by s. 171F(1) "for all purposes" to have been done in compliance with at least the rules of the Branch. In my view, the effect af this provision is to give to those acts, by virtue of the passage of time, the validity which they did not have at the time when they were carried out. Since the only reason for their invalidity was their failure to comply with the rules, those acts must now be regarded as valid. If the cules had authorized the Branch Council to purchase the property, and to place it in the name of the South Australian Association, no complaint cculd hare been made if that had been done. It must now be assumed, because

of s. L7LF, thet that as what the rules authorized.

T have considered whether, because of the limitations in the extent of rule 36(c) of the Branch rules which arose from the effect of rule 37 of the rules of the Union, it might be saict that the Branch Council and the Branch officers were net "purporting to exercise power conferred by or under the rules'. It seems to me that, if those words require that an actual power exist under the rules to do an act, before validation cam occur, the occasions for the operation of the section will be few, if any. It is true that the section may not operate to validate acts performed without any semblance of authority under tte rules, but those which do rest ona purported exercise of power

under the rules are intended ta be validated. In my view, the

section comprehends acts of the kind now under consideration.

Dr. Jessup argued that s. 171F(1) should be read distributively, so that an act done in purported reliance on branch rules would only be deemed tc have been done in compliance with branch rules, and an act done in purported reliance on rules of an organization would only be deemed to have been done in compliance with those rules. Because the limitations on the Branch's power arose from the federal rules, he said, to deem the

acts of the Branch Council and Branch officers to have been done

in compliance with the branch rules left untouched th anvalidating effect of the federal rules upon those acts. This argument stems from an altogether too narrow approach to what is intendea toa be a veredial provision. The act of a branch is the

act of tlhe organization, wathin the area in which the Branch

operstes. Bee Williams v. Hursey (1959) 103 C.L.R. 30, at pages

81-82 per Fullacar dg. In the present case, the relevant power was given by the Branch rules, which were in turn to be read subject to the Federal rules. So read, they did not authorize the acts done. Those acts were, however, done in purported exercise of the power. The acts are, therefore, validated by s.

171F, after the lapse of four years, and they bind the union as a

The same does not apply to periodical payments to the Satisfac Credit Union. Even the earliest decision to apply for membership of that Credit Union, and the application itself, took place less than four years ago. All subseguent payments of

monies inte the Satisfac Credit Union have also been within the

~ 126 - period during which validation would occur. No other provision of Part IMA of the federal Act operates to validate any act with respect to investment in the Satisfac Credit Union. It is true that monies which were paid to the Satisfac Credit Union were, in effect, transferred from a bank account or bank accounts in a name which may be construed as the name of the South Australian Association. I have already pointed out, however, that no act of

allocation was involved in the payment of monies into any bank.

There is nothing upon which s. 1L71F could operate in that regard.

The operation of s. 171F of the federal Act is expre

to be subject tas. 171. Sub-section (1) of that section

provides as follows: "171G(1) Where, upon am agplication for an order undec this section, the Court is satisfied that the application of section 1718 or section l71F tou an act would do substantial ainzustice having regard to th interests of the orgamtzcation, menbers or creditors oa the organization or persons having dsalings with th organization, the Court shall, by order, deciar accoré@ingly end, where such a declaration is made, section 171B or section 171F, as the case may he, does not apply, and shall he deemei not to have applied, in relation toa the act referred to in the declaration."

By notice of motion, filed during the course of the proceedcinc,

Dr. Jessup sought a declaration under this sub-section.

Dr. dessup argued that a declaration under s. 1716(1) must be made if the Court is satisfied that sukstantial injustice would be done to any of the four categories of persons menticned in the sub-section, namely the organization, members of the organization, creditors of the organization or persons having

dealings with the organization. His argument was that, 1f it is

found that substantial injustice would result to the Union from the application of s. 171F, the Court should not proceed further to lock at the interests cf persons in the other categories. Section 171G(1) does not, however, speak of substantial injustice to those categories; 1t speaks of substantial injustice "having

regard to the interests of" those categories. This suggests that the existence of substantial injustice is to he determined hy balancing whatever prejudices may have been suffered by persons

in each of the four categories. In this regard, the provision is

to be distinguished from s. 171C(2)(b), which does speak of

substantial injustice "to" persons in any of those Tour categories. Section 171C borrows much of its terminology from provisions found in legislation relating toa companies. tn

relation ta those provisions, the view has been taken that a

fanding of injustice can only be made after balancing the

Cetvriments which have ocecvrred to persons in each of the specified categories, and upon finding a significant balance of Getriment to one or more of such persons. It may be that a

Similar view will be taken az to s. 171C(7)(b). Gee Plumbers and

Gasfilters Employees' Union of 2ustralia and Ors. v. Cook ©& Ors.

(Federal Court of Australia, Evatt Jd., i Sth Tune 1984, unrepcrted) and the cases there cited. All the stronger reasoning exists for an examination of the whole of the circumstances, in determining whether substantial injustice within the meaning of s.171G would result. See Rolph v.

Transport Workers Union of Australia (Federal Court of Australia,

Neaves ¢., 17th April 1984, unreported) and on appeal (1984) 8

The other important matter to bear in mind is that s. 171G 15 concerned net with substantial injustice which might he said to flow from the original act validated by s. 171F, but with substantial injustice which might be said to flow from the operation of s. 171F after the lapse of four years. See Rolph v. Transport Workers Union of Australia (1984) B I.R. 145, at page 147. The guestion is not whether substantial injustice flows from the original acts of the Branch Council and Branch officers in purchasing land in the name of the South Bustralian

Association, but whether substantial injustice flows from thes

validatiztn of those acts after the lapre of four years. The concentration of the Court must be upon the effect of the four year periad. Tf it had been shown that responsible persons at

the federal level of the Union were unacquainted with the facts, or thal some other good ceason existed for their failure to take action, a finding of substantial injustice might be made, in 'he absence of detriment to other parties outweighing the detrirert suffered by the Union. No such case vas made out in the prezert peoceeding. In fact, the federal officials of the Union vere well acquainted with the true facts surrounding the pucchase cf the Newsagents' Association building. This was enough to put

them on notice with respect to the subsequent purchase of the

land on which the present building is constructed. No evidence

was led to show any ignorance on the part of federal official

or any other bar to their pursuing the matter within the fous year pericd. This proceeding itself was not brought by any federal official, but originally by two members of the Branch.

The federal officials who were named as respondents then decidet

to support the application, and eventually, in effect nad the

Mo case, therefore, was made out for saying that substantial injustice results from the application of 5. I171F. The result is that the acts of the Branch Council and the Branch officers which resulted in the title to the land being registered in the name of the South Australian Association, or the Branch,

are deemed by s. 171F "for all purposes" to have been done in compliance with the rules. This weans that no couct could now treat those acts as giving rise to any constructive or resulting trust, and as leading to any right on behalf of the Union to make

any claim in respect of the land and building against the South

I am constrained by s. 171F not to make any orders against any of the respondents with respect to the land ant building the subject of this Application. So far aS investment in the Satisfac Credit Union is concerned, s. 171F does net apply. Dr. Jessup indicated clearly, however, that his clients did not press for an order with respect to investment in the Satisfac Credit Union. Mr. Williams was content to adopt Dr. Tessup's submissions. This reluctance to press for an order may havc resulted from the view that 1t would be sufficient if the Court indicated to the Branch Council and Branch officers that they had acted otherwise than in accordance with the rules by investing in the Satasfac Credit Union. Alternatively, it might

have been thought unjust that an order should be made while

investments are held, which order might have the effect of making

those the subject of it instant offenders under s. 141(4) of the : y

federal Aci. Whatever the reason, the making of an order was not

pursued. Ih those circumstances, there is no reason why the u

r Court should, make an orde 4 ' { y conduct of the affairs of organizations; it only acts if invited

Seme of the orders sought in the Rule to Show Cause,

which aré summarized in Bailey v. Krantz (1984) 55 A.DL.R. 345 at

page 2347, are in general terms, vrequiring certain of the

Respondents to comply with the rules. It is undesirable that

orders in these gener terms be made; the federal Act does 10 seek to make failure to comply with rules generally a criminal

offence. Orders should only be mede with respect ta specific

occasions of past or likely future non-compliance. See Sentt v.

dvess (1984) 3 F.C.R. 263, especially at pages 276-278 anc 251-292

The proper course is to discharge s: Show Cause as was mot discharged in the order made on 23rd July 1984, and to @ismiss the motions referred to in the two Notices

I certafy that this and the 114% preceding paves ace a true copy of the Reasons for Judpment herein of bis Honour