Barnes v Oliver 16 FLR 366

Industrial Relations Commission (NSW)|2005-10-18|Before: Sams DP

CITATION: Ferry and Broken Hill Town Employees' Union [2005] NSWIRComm 358

APPLICANT Ms Rosslyn Ann Ferry PARTIES: RESPONDENT Broken Hill Town Employees' Union

Threatened dismissal of union secretary in Broken Hill - applicant also SDA organiser - Rules of the Union - whether elected Secretary an employee of the union - joint positions held by applicant - termination of employment from one position - funding arrangements between two organisations - whether Secretary's position a paid position - Union's Committee of Management and meeting of members decides to make position unpaid - applicant withdraws Union's funds - allegations of misappropriation of Union's funds - applicant suspended from duty - proposal to convene a meeting to consider removing applicant from her position - whether applicant threatened with dismissal - whether Rules of the Union complied with - whether threatened dismissal harsh, unreasonable or unjust - interference in Union's processes - notice of motion - agreement on interim arrangements pending hearing - appropriate relief. CATCHWORDS: Held, applicant an employee for the purposes of Pt 6 ch 2 of the Act - applicant threatened with dismissal - reluctance to interfere in Union's processes - rules of natural justice - suspension of applicant procedurally unfair - orders made to restore applicant to former position pending compliance with Union's Rules - applicant not to undertake any duties of Secretary - no orders as to repayment of Union's funds.

LEGISLATION CITED: Industrial Relations Act 1996

Barnes v Oliver 16 FLR 366 Humphries v Cootamundra Ex-Services and Citizens' Memorial Club Ltd 128 IR 37 CASES CITED: Loty and Holloway v Australian Workers' Union (1971) AR 95

APPLICANT Mr R Ferry, Solicitor Ferrys Law Firm LEGAL REPRESENTATIVES:

RESPONDENT Mr S H Milazzo of counsel

22 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 18 October 2005 Matter No IRC05/4177

Rosslyn Ann Ferry and Broken Hill Town Employees' Union Application by Rosslyn Ann Ferry re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

1 The background to these proceedings has unfortunately led to much anguish, controversy and discontent within the trade union movement in Broken Hill. Regrettably, this decision is unlikely to end the matter. The circumstances surrounding this case have had a profound impact on many people in Broken Hill, most of whom, I am sure, would have wished the matter had never come to this. Moreover, I venture to say that the union movement in Broken Hill has not experienced anything like this for many, many years; and doubtless, hopes not to again. 2 That having been said, leads me to observe that I have found very little authority of this Commission which has considered the effect of the unfair dismissal jurisdiction of the Commission in the circumstances of the threatened removal (dismissal) of an elected union official. In most cases involving the removal of a union official from office, proceedings are invariably taken under the relevant provisions of the Federal or State industrial legislation which deal with the rules of registered organisations. In this jurisdiction, the seminal case of Loty and Holloway v Australian Workers' Union 1971 AR 95 of course, readily springs to mind, although that case did not involve the dismissal of elected Union officials. Nevertheless, I shall return to this case later. 3 For now, I begin the present story. These proceedings have been brought by Ms Rosslyn Ferry ('the applicant') the Secretary of the Broken Hill Town Employees' Union ('the TEU'). They follow upon her being charged with misappropriation of Union funds and her suspension by the Union's Committee of Management ('the Executive'), pending a meeting being convened of the Union's members to consider her removal from office. 4 Prior to her suspension on 22 July 2005, the applicant was performing the dual roles of Organiser of the Shop, Distributive and Allied Employees' Association (South Australia) ('the SDA') and Secretary of the TEU. The applicant was appointed an Organiser of the SDA on 1 December 1999 and became the elected Secretary of the TEU around the same time. She was re-elected unopposed to a three year term in May 2004. 5 For financial reasons, the TEU and the SDA had entered into a joint funding arrangement in 1999 whereby each of them would contribute half of the salary of the applicant and secretarial support. At all times however, the applicant was paid directly by the SDA and all of her employment benefits, including superannuation, motor vehicle etc, were met directly from the SDA. This arrangement required the TEU to periodically reimburse the SDA for its half of the funding agreement. I note that the TEU's payments were not always made on time. 6 The applicant's employment with the SDA came to an end on, or about 9 May 2005. The applicant subsequently filed a claim against the SDA, pursuant to Pt 6 ch 2 of the Industrial Relations Act 1996 ('the Act') (Matter IRC2796/05). That claim, while failing to be resolved at conciliation proceedings, was eventually resolved during the arbitration proceedings in Broken Hill on 14 September 2005. That being so, it is unnecessary for me to comment on those proceedings or draw any conclusions as to the reasons for the applicant's termination of employment with the SDA. 7 Notwithstanding the settlement of that matter, the end of the applicant's employment with the SDA was the effective trigger for the sorry chain of events which has led to this decision. 8 When the applicant's employment with the SDA ended, the SDA severed the financial arrangement which had supported the dual roles previously performed by her. It was not put in dispute that the applicant continued as the Secretary of the TEU and would seemingly remain so, at least for the balance of her three year term until May 2007. However, without the financial backing of the SDA, it was highly problematic that this position could be sustained in the short term, if at all. 9 The evidence disclosed that at the end of May 2005, the TEU had about $4800 in the bank, but owed $10,585 to the SDA. A number of Executive meetings were held in May and June 2005 to discuss the growing crisis and at a meeting on 11 June the following resolution was carried with three votes in support and with three abstentions: That due to the current financial position of the TEU and no clear or concise direction, this meeting decides that the position of Secretary shall become an unpaid role. This meeting also decides that the President and/or Vice President attempt to negotiate a financial settlement of not less than six months pay from the SDA for the Secretary. 10 The Executive then proceeded to convene a mass meeting of its members on 14 July 2005 in accordance with the TEU's rules. This meeting resolved that the Secretary's position would be "reaffirmed" as being voluntary. During these proceedings, the applicant maintained that in order for such a resolution to have legal effect, it required a rule change to be approved by the Industrial Relations Commission under the relevant sections of the Act. It is to be observed that this has not occurred. 11 On the same day as the mass meeting, the applicant signed a cheque from the TEU's bank account made out to herself representing an outstanding amount of seven weeks' wages at $814.34 gross per week, plus motor vehicle allowance. Mr Val Berzins, the TEU's Vice President became aware of this payment shortly thereafter and contacted the President, Mr Brett Campbell who, by this time, had moved residence from Broken Hill to Wagga Wagga. 12 When learning of this payment, Mr Campbell immediately initiated steps to have the TEU Executive suspend the applicant from office pending a vote of the membership for her removal from office. It is relevant to quote, in full, the letter of 22 July informing the applicant of her suspension: Dear Ms Ferry It has come to our attention that on 14 July 2005 you have written a cheque making an unauthorised substantial payment to yourself under the notation of wages. The TEU executive has never authorised you to make wage payments to yourself and given your knowledge that you have always been paid by the SDA as part of the shared costs arrangement that has been the practice for in excess of five and one half years, the executive find it difficult to comprehend why you have chosen this course of action given the decision of that same dates mass meeting. The executive requires you to return the monetary amount that you have remunerated yourself that is indicated on the TEU cheque number 539621. We draw your attention to the Broken Hill Town Employees' Union rules, specifically rule 9(b)(i). Your above actions are an offence under this rule, and under rule 12, the executive are suspending you pending the hearing of a resolution for your removal from office because of the above offence at the next or special general meeting of members. You shall be advised of the date, time and place of this meeting. This correspondence formally informs and directs you that you are immediately suspended as the TEU Secretary, we require you to immediately return all keys in your possession to the TEU/SDA office inclusive of TEU safe keys; you are no longer authorised to sign or 'authorise' TEU cheques; you are no longer allowed to carry out any of the duties specifically indicated in rule 12, or generally any of the rules relating to the office of TEU Secretary; you are to immediately return any TEU property that you may have in your possession or know the whereabouts of, and you shall be permitted to collect any personal effects that you may have in the TEU/SDA office. This shall occur only after you have returned keys and any TEU property and the collection shall be supervised by a TEU executive member. You shall then not be allowed to physically enter the office without the direct permission of the President, until this matter has been finalised. There shall be no exception or tolerance in the above directions unless directly authorised by the President. If there is any aspect of this correspondence that you require clarification on, you were directed to discuss directly with the President. Your cooperation in the above matters would be appreciated. Yours sincerely, Brett Campbell President 13 As foreshadowed in the letter, a mass meeting of TEU members to consider the Secretary's removal from office, was scheduled for 9 August and subsequently rescheduled for 16 August. However, on 10 August the applicant filed the present claim of threatened unfair dismissal and sought, by way of notice of motion filed on 15 August, to restrain, or otherwise prevent the mass meeting from considering removing her from the position of Secretary of the Union. 14 In urgently listed proceedings before the Commission on 15 August, an agreement was reached whereby the TEU agreed not to proceed with the resolution at its scheduled meeting on 16 August, provided the applicant, inter alia, return the office keys and not seek to raise any issue concerning her dismissal at the meeting. Her claim of threatened unfair dismissal was programmed for urgent hearing together with her claim in matter 2796/05 commencing on 13 September 2005. 15 This brings me then to the arbitration proceedings in Broken Hill and the evidence which emerged during the case. Before detailing the witness evidence, it is necessary, as a background, to identify the relevant rules of the TEU which were referred to during the proceedings. The Union's Rules

16 Rule 5 provides for the banking and withdrawal of the TEU's funds: All monies of this union shall be placed (sic) such banks as the union may determine from time to time, to the credit of a General Fund. All current expenses shall be paid from the general fund, and the three members elected by the union as trustees for the same shall insert their names in the bank books. No funds shall be drawn except by cheques, to be signed by the President, or either Vice-President and any one of the trustees, and countersigned by the Secretary. 17 Rule 9(b) refers to the term of office of the Secretary and the grounds for the removal of "a person elected to an office": The Secretary shall be elected three yearly, the first such election under these Rules to be held within 12 months of the registration of the union as an industrial organisation of employees and upon election shall hold office for a term of three years or until a successor is duly elected and shall be eligible for re-election. A person elected to an office may be removed from office if found guilty by a general meeting of members of which due notice has been given to the person concerned of (i) misappropriation of the funds of the union; (ii) a substantial breach of the rules of the organisation; (iii) gross misbehaviour or gross neglect of duty; or (iv) has ceased, under these rules, to be eligible to hold office. 18 The duties of the Secretary are found at Rule 12: The duties of the General Secretary shall be to keep a correct account of all moneys received and expended; to attend all meetings, and to take minutes of same. He or she shall zealously attend to all correspondence, and answer such questions as may be asked in accordance with the rules and regulations of the union. He or she shall file and date all correspondence received. He or she shall insert his or her name and address in all letters and returns; enter in his or her account book detailed account of all moneys received from all sources with the date of receipt; also a detailed account of all expenditure. He or she shall write all correspondence as instructed and do any other thing for the advancement of the Union that the President may direct. He or she shall regularly pay into the bank appointed by the Union, all moneys, and shall in no case hold in his or her possession a larger sum than $1000 for a period longer than 24 hours (Sundays and Holidays excepted), and shall produce the bank deposit book written up for inspection at each monthly meeting. He or she shall hold office for three years, but the Committee of Management shall have the power at any time to suspend him pending the hearing of a resolution for his or her removal from office at the next or special general meeting of members and he or she shall in all meetings be allowed to speak or both. He shall find a guarantee policy for the sum of 500 dollars and the Union paying a premium. He or she shall be entitled to four weeks holiday annually on full pay, and the Committee of Management may grant an extension not exceeding two weeks. He or she shall keep a register of the members of the Union. He or she shall be a member ex officio of all committees. The custody of the minutes of proceedings, records and all other documents whatsoever, shall be in him or her, and he or she shall neither take, or permit to be taken from the office, any such minutes, records or documents without the express leave or order of the Committee of Management or resolution of General or Special Meeting. 19 The rule dealing with the calling of a special meeting is found at Rule 20: Seven days' notice of motion must be given for the purpose of rescinding or altering resolutions previously carried, rules, levies, money votes or any special business requiring notice of motion. A resolution for the amendment of the rules of the Union shall require 14 days notice of motion.

20 Ms Rosslyn Ferry has been a union member for over 30 years and prior to taking up the Secretary's position with the TEU, she was a union delegate in the Club industry. Since 1978 she has held various other Executive positions in the TEU. 21 The applicant maintained that the position of Secretary of the TEU is a paid position and has always been a paid position. She said that after her termination of employment with the SDA, she continued to work for the TEU, albeit under some difficulties. The applicant said that on 14 July she drew a cheque for her own wages for the period 10 May to 13 June and 5 July to 18 July. She was on unpaid leave from 14 June to 4 July. 22 The applicant said that at the meeting of the Executive on 14 June she had requested to be paid for the past five weeks. Mr Campbell had indicated that she would be paid "as a matter of priority". A junior Vice President in attendance, Mr Watts confirmed this conversation. 23 The applicant said it had not been necessary to speak to Mr Campbell before writing the cheque for her wages. She agreed she had written wages cheques before, but not for herself. She did so, because she had been told by Mr Campbell on 14 June that she would be paid as a matter of priority. The applicant acknowledged that she had no express authority from the Executive to make payments to herself, but as Secretary, she believed it was her duty to pay expenses, including wages. She also agreed she had always received her wage from the SDA, despite being employed by both organisations. She explained that she had not responded to Mr Campbell's 22 July letter, because her wages had been due to her. However, she did respond verbally to Mr Berzins when he handed her the letter. 24 The applicant claimed she had never been informed of the special meeting called for 9 August 2005. She further believed that no meeting of the Executive had been held to consider suspending her, in accordance with the Union's Rules. She believed that the TEU, through its President, wanted her removed from office as her continued employment hindered the possibility of a merger between the TEU and the SDA. The applicant deposed that she had separate conversations with Mr Campbell and Mr Farrell, the SDA Secretary, and had been told that the SDA would offer her two months' pay provided she resigned from the TEU.

25 In oral evidence, the applicant accepted that as the SDA Organiser, she had been expected to recruit new members for the SDA, attend SDA conferences and otherwise be directed by the Secretary of the SDA. In fulfilling both commitments, she had not preferred one position over the other. 26 The applicant said that, notwithstanding she had been seeking reinstatement to the SDA position, she should still be paid by the TEU, as she hadn't been paid for eight weeks.

27 Mr Brett Campbell is the President of the TEU. Mr Campbell offered three examples of circumstances in which the applicant had failed to comply with directions he gave pursuant to Rule 12 of the Union's Rules. Mr Campbell agreed however, that he had not formally counselled the applicant on these matters, although he did not regard them as minor matters. 28 Mr Campbell insisted that the applicant had never been paid by the TEU and there was no contract of employment between her and the TEU. He agreed however, that the previous Secretary and office assistant had been paid by the TEU. 29 Mr Campbell said that the applicant was not authorised to draw from the Union's funds monies for wages for herself or anyone else. The arrangement was that the SDA would pay the applicant and the TEU would reimburse the SDA for half of their expenses in Broken Hill. 30 Mr Campbell referred to the meeting of the Union's Executive in June where it was determined not to offer the applicant full-time employment. When the applicant claimed she was owed five weeks' wages, Mr Campbell told her that her claim would be considered and given priority. He clarified this in cross examination, by deposing that her pay would have been given priority, subject to the TEU's financial position. On this matter he had sought advice from Mr Milazzo (the SDA counsel). 31 Mr Campbell said he was informed by the Vice President, Mr Val Berzins, that the applicant wrote herself a cheque for wages from the TEU's bank account on 14 July. She was not authorised to do so and had not consulted any other member of the TEU's Executive. In addition, Mr Campbell had believed that no tax was taken out of the amount withdrawn; although he later accepted that tax had been taken out. 32 As Mr Campbell regarded the applicant's actions as serious, he then consulted with members of the Executive and composed a letter to the applicant which she received by hand and by registered post. 33 Mr Campbell had understood from Mr Berzins that the applicant would not comply with the directions in the letter, as the directions came from the President and not the Executive. Mr Campbell informed the applicant that the TEU intended to hold a general meeting of members to allow them to decide if her actions warranted removal from her position of Secretary. 34 In cross examination, Mr Campbell was asked about the TEU's finances and the budget presented by the applicant to the Executive on the 11 June 2005. He said this meeting became aware that the arrangement with the SDA did not include rental, electricity and office equipment. These were hidden expenses, which had not been budgeted for. 35 Mr Campbell deposed that he had not been aware of the details of the arrangements with the SDA and did not know the details of the applicant's salary or employment conditions. He said the reimbursement to the SDA was usually on a monthly basis, or as funds became available. The monthly amount owing was not always paid on time. 36 Mr Campbell was asked about the minutes of the TEU Executive meeting of 24 May which records him as referring to the applicant as "our employee". In cross examination, Mr Campbell denied that she was an employee of the TEU. However, he agreed he had the authority to direct and criticise the applicant and he was not required to consult with, or seek the approval of the SDA. 37 Mr Campbell agreed that the cheque for the applicant's wages was an amount payable up to the meeting which had decided her position would be unpaid. Mr Campbell further agreed that he had not spoken to the applicant about the cheque, nor did he convene an Executive meeting to discuss the matter. Nevertheless, Mr Campbell believed the applicant had received fair and due process according to the TEU's Rules.

In reply 38 The applicant responded to Mr Campbell's affidavit by challenging his right to remain an official of the TEU when he no longer resides in Broken Hill. In any event, the applicant had explained all of Mr Campbell's trivial complaints against her. 39 The applicant insisted that one of her duties was to pay all the expenses of the TEU. The applicant also said that income tax had been taken out of the amount she paid herself for wages. The applicant said she received the suspension letter from Mr Berzins while she was on sick leave and she had told him she didn't believe it was valid, as it was not from the Executive.

40 Mr Ferry submitted that there was an employment contract between the TEU and the applicant for a period of three years, according to the Rules of the TEU. He said it was not good enough for the respondent to hide behind a cost sharing arrangement with a third party to escape its employment obligations. 41 Since 1917, the TEU Secretary's position has always been a paid position. While the applicant's workload may not have been as great as for former secretaries, the uncontested evidence was that she performed work for the TEU and was subject to the directions of the TEU Executive and its President. In doing so, she operated completely independently of the SDA. 42 While acknowledging the Rules of the TEU did not specify the Secretary's position as being paid, Mr Ferry said that there is reference to four weeks annual leave on full pay. It would be a nonsense, Mr Ferry suggested, that the Rules didn't comprehend payment for the time the Secretary was at work, but did when she wasn't at work. 43 Moreover, the fact that the TEU passed a resolution proposing the position was to be unpaid, must mean the Union itself regarded the position as being previously paid. In any event, Mr Ferry submitted that for the decision to have legal effect, it would require an amendment to the TEU's Rules, approved by the Industrial Relations Commission. 44 Mr Ferry further put that the TEU did not follow its own procedures necessary to suspend the applicant. The Commission was therefore entitled to intervene to prevent an unfair procedure leading to a dismissal. 45 Mr Ferry sought to preserve the applicant's position as Secretary of the TEU given the Rules of the TEU as they presently stand. He noted that the respondent's position was that the Commission should not interfere with the internal processes of the TEU in relation to the suspension of the applicant. However, these processes were unfair. The applicant's suspension was not considered by the Executive, but unilaterally decided by the President without him even speaking to the applicant, or to other members of the Executive. Further, there had been no preliminary investigation and the Executive was simply presented with a fait accompli by the President. For the respondent

46 Mr Milazzo of counsel, submitted that there was no warrant in the Act for the Commission to interfere with the due processes under the TEU's Rules. In any event, a valid suspension was not a prerequisite to the calling of a meeting to consider the Secretary's conduct. In this regard, Mr Milazzo referred to Rule 9(b) which provides that any officer may be removed from office on stated grounds. However, there was no requirement for the officer to be suspended before a meeting is called. There was therefore no improper procedure, because the procedure was not necessary. 47 Secondly, there was no contract of employment between the applicant and the TEU. She was not an employee because she was not paid by the TEU and hadn't been since 1999. The applicant's terms and conditions were negotiated with the SDA. All her employment rights arose from her employment with the SDA. The TEU had never negotiated a rate of pay and didn't even know the details of her employment arrangements. 48 Mr Milazzo submitted that there had been no reasons advanced by the applicant as to why a meeting of the Union's members should not be convened to consider her removal from office. In reply

49 Mr Ferry submitted that because the TEU unfairly suspended the applicant this would of itself create an atmosphere which prejudiced the applicant's position and standing at any future meeting. CONSIDERATION

50 In turning my mind to resolving this matter, it seems to me that the following issues arise:

Whether the applicant was an employee for the purposes of Pt 6 ch 2 of the Act.

Whether the applicant was threatened with dismissal.

Whether the Commission should intervene in the process of removing an elected officer of the Union in accordance with the Rules of the Union.

If the applicant was threatened with dismissal, was the threatened dismissal harsh, unreasonable or unjust within the meaning of Pt 6 ch 2 of the Act?

If the applicant was the subject of an unfair threatened dismissal, what relief should be awarded by the Commission? 51 I propose to deal with each of these issues in turn.

1 Whether the applicant was an employee the purposes of Pt 6 ch 2 of the Act? 52 There can be no doubt that the financial arrangement between the SDA and the TEU was a mutually convenient and practical one for both organisations; particularly in light of the proposed amalgamation of the two bodies. The arrangement seemingly worked well for a number of years, but became difficult and confused when the SDA no longer wished to continue the arrangement, as a consequence of the applicant ceasing to be employed by the SDA. There was no argument that she continued to be the elected Secretary of the TEU. 53 As I said earlier, it is unnecessary for the purposes of this decision, to comment on the reasons for the applicant's termination of employment with the SDA, most particularly as the matter was settled during the course of the proceedings. The question remains however, as to the ongoing nature of the relationship between the applicant and the TEU. 54 Before developing my conclusions on this question, it must be said that this case raised a number of unique and complicated matters of fact and law which require careful examination in order to identify the true nature of the relationship between the applicant and the TEU. I need to refer firstly to the relevant provisions of the Act. 55 The definition of an 'employee' is found at s5: 5(1) General definition. In this Act, employee means a person employed in any industry, whether on salary or wages or piece-work rates. 5(2) [ Included in definition ] a person is not prevented from being an employee only because: (a) the person is working under a contract for labour only, or substantially for labour only, or (b) the person works part-time or on a casual basis, or (c) the person is the lessee of any tools or other implements of production, or (d) the person is an outworker, or (e) the person is paid wholly or partly by commission (such as a person working in the capacity of salesperson, commercial traveller or insurance agent). 56 Section 83(1) identifies who can bring an unfair dismissal claim: This part applies to the dismissal of: (a) any public sector employee, or (b) any other employee, except an employee for whom conditions of employment are not set by an industrial instrument and whose annual remuneration is greater than $62,200 (or such greater amount as is prescribed by the regulations). 57 A dismissal is defined as including a threatened dismissal at s83(5). 58 It follows as a matter of law that if the applicant was not an employee for the purposes of the Act, there can be no jurisdiction under Pt 6 ch 2 of the Act for her to bring a threatened unfair dismissal claim. 59 Mr Milazzo submitted that because there was no agreement between the TEU and the applicant as to what the applicant was to be paid (and indeed the TEU didn't even know what she was paid), means the TEU was not the employer. This proposition might point to a conclusion that the applicant was not an employee of the TEU. However, this submission does not take account of the following pertinent circumstances:

In 1999, the TEU entered into an agreement to reimburse the SDA 50 per cent of the applicant's salary. The TEU, albeit sometimes belatedly, had honoured this agreement for over five years.

The applicant performed work for, and on behalf of the TEU.

The applicant was bound by the Rules of the TEU as an elected officer and was required by the Rules to take direction from the Committee of Management and the President.

The SDA had no control over, or right to intervene in the applicant's performance of her duties as Secretary of the TEU.

The Rules of the TEU provide that the Secretary shall be entitled to four weeks holiday annually on full pay (Rule 12). It would be a curious result indeed, if the Secretary was to be paid for four weeks annual leave, but not paid at any other time when she worked. Mr Campbell seems to have acknowledged this conundrum in his fax to the SDA Secretary, Mr Farrell on 15 June 2005.

Since 1917, all secretaries of the TEU had been paid by the TEU. However, what they were paid was not disclosed by the evidence. 60 Added to these indicia, it is also relevant, in my view, to consider how the TEU's conduct itself evinced a clear intention that it (through its President and Executive) considered the Secretary to be its employee. The evidence disclosed the following:

The President directed the applicant to perform certain duties and he expected her to comply with his directions.

The President instituted disciplinary proceedings based on the applicant's performance as Secretary and her alleged failure to comply with his and the Executive's directions.

In the minutes of the Executive meeting of 24 May 2005 it is recorded that " B Campbell pointed out to Mr Farrell the position of TEU Secretary; i.e. our employee carries out the tasks of the office ".

On 11 June 2005, the Union's Executive determined to "reaffirm" that the Secretary's position was unpaid. It hardly needs to be said that if she was not a paid employee there was no logical basis for the TEU to pass a resolution to say she wasn't to be paid. I do not accept Mr Campbell's explanation that this resolution had been a " clarification " of the true position. It was, in truth, an alteration to the existing position.

Mr Campbell's fax to Mr Farrell of 15 June 2005 disclosed that he had real doubts over whether the Secretary's position was unpaid. 61 In applying these various indicia of whether the applicant was an employee of the TEU, it is my judgement that the applicant was concurrently employed by both the SDA and the TEU from 1999 until 9 May 2005 and thereafter by the TEU. 62 Accordingly, I would answer the first question in the affirmative. 2 Whether the applicant was threatened with dismissal? 63 I do not apprehend any of the parties to quibble with the fact that the letter of 22 July 2005 from Mr Campbell (per Mr Berzins) to the applicant in which she was purportedly suspended and charged under the Union's Rules, was anything but a threat to remove her from office in accordance with Rule 9(b). 64 It is manifestly plain that removal from office is analogous to dismissal from the position of Secretary of the TEU. Thus, having been threatened with removal from office is equivalent to being threatened with dismissal from employment. It is obvious therefore that the answer to the second question must be, an unqualified, yes. 3 Whether the Commission should intervene in the process of removing an elected officer of the Union in accordance with the Rules of the Union.

65 This question is one which I have agonised over and I proceed to answer it with some caution. Ordinarily, the Commission would be most reluctant to intervene in a process to remove an officer of a registered organisation in accordance with the rules of that organisation. That reluctance is due, in part, to the following matters. 66 The registered rules of an organisation are presumed to include the procedure for the removal of an officer on stated grounds, based on the principles of natural justice. The TEU's Rules, in this regard, are closely modelled on s237(2) of the Act which provides as follows: The rules of a State organisation may provide for the removal from office of a person elected to an office in the organisation only if the person has been found guilty, under the rules of the organisation, of: (a) misappropriation of the funds of the organisation, or (b) a substantial breach of the rules of the organisation, or (c) gross misbehaviour or gross neglect of duty, or has ceased, under the rules of the organisation, to be eligible to hold office. 67 In addition, there is a comprehensive suite of statutory provisions in Pt 4 ch 5 of the Act dealing with the rules of registered organisations. The applicant has made no application under these provisions. These provisions, in my judgement, would have provided the applicant with an avenue of relief in respect to her complaints about the process of her suspension and possible removal from office. For example, s248 provides as follows: 1) A member of a State organisation may apply to the Commission for an order giving directions for the performance or observance of any of the rules of an organisation by any person who is under an obligation to perform or observe those rules. 2) Before making an order under this section, the Commission must give any person against whom the order is sought an opportunity to be heard. 3) The Commission may refuse to deal with an application for an order under this section unless it is satisfied that the applicant has taken all reasonable steps to try to have the matter the subject of the application resolved within the organisation. 4) At any time after the making of an application for an order under this section, the Commission may make such interim orders as it considers appropriate and, in particular, orders intended to further the resolution within the organisation concerned of the matter the subject of the application. 5) An order under subsection (4) continues in force, unless expressed to operate for a shorter period or sooner discharged, until the completion of the proceedings concerned. 6) An order must not be made under this section that would have the effect of treating as invalid an election, or purported election, to an office in a State organisation or a step in relation to such an election. 7) The Commission, when considering an application under this section, may make an order under section 247. 68 Putting these matters to one side, a more fundamental question then arises - should an elected officer of a registered organisation be denied the rights to relief for threatened unfair dismissal which all other employees in New South Wales (save for the relevant exemptions for certain classes of employees) have available to them? Put another way, should an elected officer of a Union be treated any differently to any other employee when faced with possible dismissal for misconduct? I think not. In Loty and Holloway v Australian Workers' Union, Sheldon J discussed whether a Union, as an employer, had any different obligations to other employers when considering the dismissal of its employees. At p 99 His Honour said: I do not agree with the submission of Mr Riordan that a union, because of its general concern with the welfare of employees, has a peculiar duty to act fairly and considerably towards its own permanent employees. As I said, its rights and duties in this regard are identical with those applying to any employer. If this is so, in order to justify, in its discretion, intervention by the Commission by way of reinstatement, it must be shown in this case that the branch executive exercised its right of dismissal unfairly even though it was perfectly legal and this should be determined by standard neither more strict nor more relaxed than those applicable to any employer. 69 As I said earlier, I am most reluctant to interfere in the internal disciplinary process initiated by the TEU against its Secretary, particularly having regard for the seriousness of the charges made against her and certain admissions made by her during these proceedings in respect to those charges. 70 For example, it was accepted that the applicant, without referral to the President or Executive of the TEU, made out a cheque to herself on 14 July for seven weeks' outstanding wages. This withdrawal left less than $1000 in the TEU's bank account. Her actions deliberately coincided with the same day as the mass meeting which resolved to "confirm" her position as being unpaid. The applicant conceded that she had no express authority to pay herself her own wages. Moreover, she did so with the knowledge that her wages had been paid directly by the SDA for over five years. 71 Nevertheless, the applicant may very well have had a legal entitlement to her wages up to the point of the mass meeting of the TEU on 14 July which resolved to make the Secretary's position unpaid; assuming there was not a legal requirement to obtain a rule change to that effect. Whether a rule change was required was not sufficiently developed in argument during the proceedings. That being so, I make no findings on this submission. 72 On the other hand, the applicant was most certainly not entitled to withdraw funds from the Union without authority, bearing in mind how she had been paid for over five years and also in view of the following context:

Mr Campbell had told her in June that her outstanding wages would be given priority.

The applicant had taken two weeks unpaid leave soon after her termination of employment with the SDA.

All parties were cognisant of the fact that the TEU's financial position was precarious, to say the least.

73 Accordingly, I think it can be correctly held, that the applicant's conduct was serious and required full and proper explanation and careful consideration by the Union according to due process under the Rules. 4 If the applicant was threatened with dismissal, was the threatened dismissal harsh, unreasonable or unjust within the meaning of Pt 6 ch 2 of the Act?

74 There was however, one matter which I believe constituted a denial of procedural fairness to the applicant. Before turning to the details, it is necessary to appreciate that the dismissal (or threatened dismissal) of a Union Secretary must be attended by the same principles of natural justice as is afforded to the dismissal of any other employee. 75 In Barnes v Oliver, 16 FLR 366, the Full Court of the Commonwealth Industrial Court held that on the true construction of the rules of an organisation, the branch executive, in exercising its power to remove a branch secretary for neglect of duty, was bound to observe the principles of natural justice. Kerr J (with whom Spicer C J and Sweeney J concurred) said at page 377: Once it becomes clear that an appeal from a dismissal of a district secretary by a branch secretary under r 88(J) attracts the principles of natural justice and that they are also attracted in respect of identical issues in respect of a district secretary arising in the exercise of original jurisdiction by the branch executive, it would be a very unexpected result indeed if a branch secretary could be removed from office by the branch executive for neglect of duty or misappropriation of money or goods without the principles of natural justice being applied. This is so whether the person holding the office of State secretary is also in law an employee or not.

At pp389-390 Sweeney J continued: The considerations which have led me to conclude that the Branch Executive, in purporting to exercise the power conferred by r67, was bound to observe the principles of natural justice may be summarised as follows: (1) the great importance of the duties of the Branch Secretary; (2) the elective nature of the office; (3) the fact that, 'subject to removal as provided in these rules', he is to hold office for a term of five years; (4) the nature of the investigation necessarily involved in ascertaining the facts relevant to the existence and the exercise of the power; (5) the relevance of any reason which led the Secretary to follow a particular course of conduct whether that consisted of the decision to act in a particular way or refrain from acting; (6) the value judgments to be made in deciding questions whether that course of conduct should be characterised as 'neglect of duty' and should lead to removal from office; (7) the fact that matters relevant to the existence and the exercise of the power might be within the knowledge of the Secretary but not known to the executive; (8) the importance of the consequences of the exercise of the power of removal to the Secretary and the members generally. 76 While the term 'natural justice' is not found in Pt 6 ch 2 in respect to unfair dismissals, the notion of affording the principle of natural justice to the procedure of dismissing (or threatening to dismiss) an employee, is, to my mind, entirely synonymous with the concept of procedural fairness. I observe of course, that this later term is similarly not found in the relevant sections of the Act. However, it is now well accepted that the statutory provisions embodied in s88 of the Act, amount to a requirement to ensure that a dismissed employee is afforded procedural fairness and a failure to do so, may be a consideration in the Commission's determination of whether a particular dismissal is unfair. As the Full Bench said in Humphries v Cootamundra Ex - Services and Citizens' Memorial Club Ltd, 128 IR 37: The obligation upon parties to ensure procedural fairness is not a hollow one and must not be construed as having only technical significance. As the circumstances in this case demonstrate and the provisions of s88 of the Act establish, such considerations may have a very real impact on unfair dismissal proceedings and are of significance in identifying whether a termination was harsh, unreasonable or unfair. (para 118). 77 I turn now to the Union's Rules and the procedure adopted for suspending the applicant. Rule 12 gives the Executive the power to suspend the Secretary pending the convening of a meeting of members to consider her conduct and her removal from office. Notwithstanding that the applicant refused to accept the validity of her suspension, there was no doubt that she was, in reality, suspended on 22 July and all parties acted and continue to do so, as if she had been suspended. 78 Even so, I have serious doubts as to the fairness of the process of suspension adopted by the TEU. Mr Campbell, as President, had prepared the letter of suspension. He asked Mr Berzins to give it to each member of the Executive and seek their approval for its terms. After doing so, Mr Berzins informed Mr Campbell that all Executive members had agreed to the terms of the letter. I interpose at this point to say that it is a matter of some regret that Mr Berzins made himself unavailable to give evidence in these proceedings. There was no explanation for his non attendance. As a result, there was no direct evidence that each Executive member agreed with the course proposed as, for example, by way of circulating a resolution which was to be signed by each member of the Executive. 79 It seems to me that as the issue before the Executive was a matter of grave importance, and bearing in mind the curious result of the vote to make the Secretary's position unpaid, (three in favour, three abstained), the Rules required consideration by, and approval of the Executive members, through a formal meeting specially convened for that purpose. 80 Moreover, the process adopted by Mr Campbell, did not even involve the applicant. He acknowledged that he made no attempt to speak to her about the cheque issue before preparing the suspension letter. As Secretary of the TEU and a member of the Executive, she was entitled to attend an Executive meeting and defend her position as to whether or not she should be suspended. These were matters which, in my opinion, constitute a denial of natural justice and which rendered the decision of the Executive unfair. 81 Notwithstanding this conclusion, it must be said that the allegations against the applicant were most serious and, on a prima facie view from what was known at the time, may have been such as to warrant severe disciplinary action, including removal from office. It was appropriate therefore, that she be suspended and the matter be fully investigated and concluded in accordance with the TEU's Rules and subject to the principles of natural justice. 82 Mr Milazzo made a rather novel submission on the Union's Rules. He submitted that in any event, the provisions of Rule 9(b) and Rule 12 operate independently and the TEU was, in fact, not required to suspend the Secretary at all before convening a meeting (by the giving of seven days' notice) to consider her removal from office (see Rule 9(b), 12 and 20). 83 On a strict literal reading of the two rules, Mr Milazzo's interpretation has some attraction. However, it was apparent that the TEU President relied on Rule 12 to suspend the applicant when he said in the letter of 22 July: We draw your attention to the Broken Hill Town Employees' Union rules, specifically rule 9(b)(i). Your above actions are an offence under this rule, and under rule 12, the executive are suspending you pending the hearing of a resolution for your removal from office because of the above offence at the next or special general meeting of members. You shall be advised of the date, time and place of this meeting. 84 In my opinion, it is not an available defence to now submit that Rule 12 need not have been invoked and so, even if it was applied unfairly, the Rule was irrelevant. Accepting such a proposition would have the effect of undoing what, in fact, had been done. Mr Milazzo's submission is therefore rejected. 85 Accordingly, I find that the failure of the President to convene an Executive meeting to discuss the applicant's suspension rendered her threatened dismissal procedurally unreasonable within the meaning of Pt 6 ch 2 of the Act. 5 If the applicant was the subject of an unfair threatened dismissal, what relief should be awarded by the Commission?

86 The orders usually sought from the Commission in matters of threatened unfair dismissals are found at s89 (7). In determining a claim relating to a threatened dismissal, the Commission may order the employer not to dismiss the employee in accordance with that threat.

87 The Commission has been troubled by considering what relief, if any, should be ordered in this case. As I have earlier opined, the applicant's purported suspension on 22 July 2005, not only rendered her threatened dismissal unfair, but was probably invalid. It would follow that the applicant was not actually suspended as the decision purporting to do so was nugatory. If this be right, then the applicant may be entitled to an order that she be able to perform her usual duties as Secretary of the Union until the Union's Rules are properly complied with. However, in my view, such a result would not serve the interests of justice or the public interest. Returning her to normal duties may cause further unrest and instability. In so concluding, I have been motivated by the following matters. 88 It seems unlikely that the applicant would be paid having regard for the resolution of the mass meeting of the TEU on 14 July 2005 to have the Secretary's position as an unpaid position and in light of the state of the Union's finances. I note that the actual state of the TEU's finances is less than clear. However, I don't believe it could be argued that the TEU can sustain the previous arrangement without the contribution from the SDA, or from some other source of financial assistance. 89 In any event, the practical reality of the situation is that the applicant has met the terms of her purported suspension; save for returning the payment she made to herself on 14 July. It would be impractical and unwise for her to resume her duties as Secretary of the TEU having regard for the events of the last few months. 90 Bearing these factors in mind and having regard for the Commission's discretionary powers under s89 of the Act, I propose to make the following orders:

Pursuant to s89(7) and (8) of the Industrial Relations Act 1996, the Commission orders that:

The respondent, the Broken Hill Town Employees' Union (the TEU), is to take no further steps to dismiss the applicant, Ms Rosslyn Ferry unless, or until the respondent: a) Convenes a special meeting of the TEU's Committee of Management to consider the suspension of the applicant, pursuant to Rule 12 of the Union's Rules; or b) Convenes a special meeting of the TEU's members after the giving of at least seven days' notice in accordance with Rule 9(b) of the Union's Rules.

The applicant remains the Secretary of the TEU unless, or until the respondent takes the action referred to in (1) above.

The applicant is not to undertake any of the duties, functions or responsibilities as Secretary of the TEU and is to comply with the existing arrangements entered into between herself and the President of the TEU in conciliation proceedings before the Commission on 15 August 2005.

91 The Commission makes no orders as to whether the applicant should return the sum of money withdrawn by her from the Union's account on 14 July 2005. That matter may be appropriately addressed through the TEU Rules, or otherwise addressed according to law.

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Judgment (51 paragraphs)

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