Butler v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

REASONS FOR JUDGMENT 1 This is an application for interlocutory relief. The interlocutory order that is sought is that pending the determination of the substantive application in this proceeding or until further order of the Court, the respondent, by itself, its servants or agents, refrain from convening and/or holding a meeting, by any method, of the Divisional Council of the Electrical, Energy and Services Division (the Federal Division) of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU). 2 The interlocutory application is brought in the context of the substantive proceeding which, in effect, seeks an order pursuant to s 163 of the Fair Work (Registered Organisations) Act 2009 (Cth) (the Act); in particular, that rule 7.3.3 of the Rules of the Electrical, Energy and Services Division (the rules) of the CEPU contravenes s 142 of that Act as the rule imposes upon members of the CEPU conditions, obligations or restrictions that are oppressive, unreasonable or unjust.

BACKGROUND 3 In order to understand the context in which both the substantive proceeding and the interlocutory application are brought, it is necessary to refer to the decision of Perram J in Gray v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2012] FCA 380, the reasons for decision in respect of which were published by his Honour on 17 April 2012. It is not necessary for me to explain the details of the decision other than to note that, insofar as relevant to the present matter, in the course of resolving the dispute Perram J observed at [35] of his reasons for decision that the difficulties which had been thrown up by the case before him could now be seen in clearer outline, and as follows: If the 15,000 or so members of the Federal NSW Branch [the NSW Branch of the Federal Division of the CEPU] have not paid their dues to the Federal NSW Branch but to the State Union [the Electrical Trades Union of Australia, New South Wales Branch] (a factual matter to which I turn below) and are therefore exempted from having to pay dues by r 5.2.6 then, although they will be financial members and entitled to take part in a plebiscite under r 17.1 and the election of the Divisional Secretary and Assistant Secretary under rr 9.4.1 and 9.5.1, they will not be counted under r 7.3.3. The immediate consequence is that the members of the Federal NSW Branch, regardless of their number, will be entitled to elect only one delegate to the Divisional Council (r 7.3.2) but this delegate will have no votes at Divisional Council (r 7.4.1); they will be entitled to be represented by one person on the Divisional Executive and that person will be entitled to vote (r 8.2). 4 Suffice to say that subsequently Perram J found that, in fact, membership fees were paid to the State Union rather than to the Federal NSW Branch. The consequence of the decision is that if this be correct then in accordance with [35], the 15,000 or so members of the Federal NSW Branch are not counted for voting purposes under rule 7.3.3 of the rules. Rule 7.3 provides a mechanism by which divisional branch delegates to the Divisional Council (the Divisional Council being the supreme governing body of the federal organisation) shall be elected. The crux of the matter is that in rule 7.3.3, for the purpose of determining the number of members of a Divisional Branch at meetings of the Divisional Council, which governs the potential number of Divisional Council delegates, the receipts of such divisional branch for the preceding year from entrance fees and contributions are to be divided by a particular dollar amount. However, as Perram J found, there were no relevant receipts in relation to the members of the Federal NSW Branch because the State Union, rather than the Federal Division, received the relevant fees. 5 In accordance with the rules, there is to be an annual meeting of the Divisional Council. Rule 7.5.1 provides that: The Divisional Council shall meet annually, either during the week commencing on the fourth Monday in July or at any time determined by an affirmative vote of two-thirds of divisional executive members. 6 In the present case, the evidence before me is to the effect that it is intended to hold the meeting of the Divisional Council on 23 July 2012. Under rule 7.5.2, the first order of business of the Divisional Conference is the election of divisional executives in accordance with the rules governing elections. 7 The application for interlocutory relief is supported by affidavit material. The application is brought by Mr Steven Butler, who, according to his affidavit, is a member of the CEPU, and he is also the branch secretary and secretary of what he describes as the T&I, which is the State Union, having been elected to those two positions in March 2012. Mr Butler explains in his affidavit that pursuant to the national rules the CEPU, being the organisation registered pursuant to the Act, is divided into three divisions, one of which is the Electrical, Energy and Services Division. Pursuant to divisional rules, the division is further divided into branches, being the New South Wales and Australian Capital Territory branch, the Queensland and Northern Territory branch, the South Australian branch, the Tasmanian branch, the Victorian branch and the Western Australian branch. As is plain from the divisional rules, which are also in evidence, the supreme governing body of the division is the Divisional Council. In between meetings of the Divisional Council, the divisional executive is vested with certain powers of the Divisional Council to ensure the running of the division. 8 The decision of Perram J makes good paragraph 9 of Mr Butler's first affidavit, which discloses that pursuant to an arrangement between the CEPU, the Federal NSW Branch and the T&I, members in NSW and the ACT are eligible to belong to both the branch and the T&I, and they pay one membership subscription, which was collected by the T&I and banked into a pool fund. The fund was used to pay the day-to-day operational and administrative costs of both the branch and the T&I, including the payment of what is known as sustentation fees payable to the CEPU by the branch, and at the end of each financial year any surplus was divided between the branch and the T&I on an agreed formula. According to paragraph 10 of Mr Butler's first affidavit, and as is demonstrated by other evidence before me, the members who paid membership subscriptions in this manner were for all purposes treated as financial members of both the CEPU and the T&I. The practical consequence of the decision of Perram J is that those persons will no longer be treated as financial members of the CEPU and, accordingly, the elections that are proposed to take place would take place on the basis that their financial membership is not counted in order to determine the required number of delegates. 9 After the decision of Perram J, the evidence discloses that two steps in particular were taken in an attempt to rectify the situation, at least from the point of view of the Federal NSW branch and the Federal Division. Perram J allowed for this possibility because his Honour adjourned the proceeding pursuant to s 163(5) of the Act in order to permit the respondent, being the CEPU, to alter its rules so as to comply with s 142(1)(c) of the Act. Although Perram J's decision related to a different rule, the opportunity was also taken to attempt to rectify the position in which the NSW members were left by proposing an amendment to the rules. However, consistent with the decision of Perram J, the NSW members in substance were not given voting rights and, accordingly, the proposed amendment to the rules was defeated. 10 The second step that was taken was that an agreement was entered into on 15 June 2012. This agreement was intended to ensure that the arrangements in relation to the payment of fees to the Federal NSW Branch would not have the effect of meaning that there were no receipts within the meaning of rule 7.3.3. The agreement was between T&I and the Federal NSW Branch, the most important provision of which for present purposes at least is clause 6, which provides that "the T&I undertakes to collect as a collector for the branch entrance fees and subscriptions for joint members and to pay those entrance fees and subscriptions to the branch", otherwise, under clause 3, "[t]he T&I will not collect for itself entrance fees or subscriptions from a Joint Member for the period that a Joint Member maintains his or her financial membership of the CEPU, is attached to this branch and this agreement remains in place". It might be thought that this agreement, in effect, solved the problem with which the Federal NSW Branch was confronted, but that is not so because of the wording of rule 7.3.3 which specifically refers to "the receipts of such divisional branch for the preceding year from entrance fees and contributions". Consistent with Perram J's decision, there are no such receipts for the preceding year pursuant to the agreement. At best there will be such receipts for the year looking ahead from the date of the agreement of 15 June 2012. In other words, the agreement may well have the effect of resolving the problem from 15 June 2013 onwards, but has no impact on the situation as it presently exists and will exist as at the date of the proposed meeting on 23 July 2012. 11 There is evidence that the CEPU, which has apparently taken legal advice on the effect of Perram J's decision, intends to act in accordance with the decision, the practical consequence of which is that the NSW members, who have paid dues to the State branch, will not be counted for the purpose of working out Divisional Council delegates. This will occur, although it is also apparently the case that the Federal NSW Branch takes a different view of the legal and practical consequences of Perram J's decision. 12 In this regard, the only order which Perram J has made is for an adjournment of the proceedings and those proceedings are listed before Perram J again on 17 July 2012. It is also apparent that an application for leave to appeal and an appeal against the decision of Perram J has been listed for hearing before the Full Court on 17 August 2012. In these circumstances, according to Mr Butler, assuming that the same position is taken in relation to the effect of Perram J's decision, the Federal NSW Branch will not be entitled to any votes at the meeting and I infer that, as the elections are the first item of practical business on the agenda, the elections will take place without the involvement of the Federal NSW Branch. Mr Butler describes this as a result of Perram J's decision, which has a legal effect contrary to what Mr Butler described as a "long established belief" that the arrangements which were in place meant that the receipts by the State Union were receipts of the divisional branch, as provided for in rule 7.3.3. The effect is described by Mr Butler as leading to a situation where some 15,000 of the approximately 50,000 total membership of the CEPU, or about 30 per cent, will be disenfranchised for at least 12 months, even though in fact they have paid union dues. 13 Mr Butler also notes that the Federal NSW Branch has itself contributed approximately $16 million to the Federal Division by way of capitation fees over a lengthy period of time. In his second affidavit Mr Butler noted that the meeting of the Divisional Council, which is planned to be held at Jupiter's Hotel in Townsville over three days, will be expensive to organise and conduct and it is his understanding that it will cost in the order of $50,000 of members' money to hold the meeting. Mr Butler expressed the view that this is a significant amount of members' money, and as he put it: To incur that expense in circumstances where members of the Branch being the largest or second largest branch of the Division, will have no, or negligible representation, (one delegate instead of 28 delegates) and no vote, demonstrates the oppressive nature of the rules as they are currently being applied by the Division.