CARLO FRIZZIERO v FREDA BOGAR

The contentions of counsel In their submissions both Mr Haylen and Mr D Staindl of counsel, who appeared at the hearing for Ms Bogar, referred to decisions in which the courts have stressed the importance of organisations complying punctiliously with rule requirements in amending their Rules. Some of those decisions discuss the situation in terms of the mandatory/directory dichotomy developed by administrative law. It is not necessary to consider whether that is a useful dichotomy for present purposes. If, as contended, compliance with the relevant rules was mandatory, in relation to the amendment of rule 47.12, that only means non-compliance would result in the amendment being invalid. But Mr Haylen concedes the amendment is affected by invalidity. That is why he seeks validating orders pursuant to s 258 of the Act. It is pointless spending time discussing the juristic nature of the relevant rules; the question is whether the Court should exercise its discretion to make orders under s 258. That section relevantly reads: "(1) An organisation, a member of an organisation or any other person having a sufficient interest in relation to an organisation may apply to the Court for a determination of the question whether an invalidity has occurred in: (a) the management or administration of the organisation or a branch of the organisation; (b) an election or appointment in the organisation or a branch of the organisation; or (c) the making or alteration of the rules of the organisation or a branch of the organisation. (2) On an application under subsection (1), the Court may make such declaration as it considers proper. (3) Where, in a proceeding under subsection (1), the Court finds that an invalidity of the kind referred to in that subsection has occurred, the Court may make such order as it considers appropriate: (a) to rectify the invalidity or cause it to be rectified; (b) to negative, modify or cause to be modified the consequences in law of the invalidity; or (c) to validate any act, matter or thing rendered invalid by or because of the invalidity. (4) Where an order is made under subsection (3), the Court may give such ancillary or consequential directions as it considers appropriate. (5) The Court shall not make an order under subsection (3) without satisfying itself that such an order would not do substantial injustice to: (a) the organisation; (b) any member or creditor of the organisation; or (c) any person having dealings with the organisation. (6) ... (7) ..." Mr Haylen identifies four possible invalidities: (a) The decision of the National Conference to substitute a new para (n) in rule 47.12 was not approved within 30 days by a majority vote of the Food and Confectionery Division Conference. There is no doubt this invalidity occurred. (b) Rule 47.9(f) provides for the Federal Secretary of the Division to call a special meeting of the Federal Executive at the request of the Federal President or on receipt of a request from two or more Regions. The meeting of 6 March was called by Mr Trehearne at Mr Frizziero's request. Mr Trehearne was not the Federal Secretary, although he had acted as such in the past. There is a question about Mr Trehearne's capacity to call the meeting. (c) Rule 47.9(g) requires that each member of the Federal Executive receive at least three clear days notice in writing of a meeting of the Federal Executive and of the business to be dealt with at that meeting. The telephone meeting of 6 March was convened on the preceding afternoon. Apparently there was no written notice of the meeting or the business to be transacted. (d) Rule 47.8(i) requires that each member of the Food and Confectionery Division Conference receive a notice in writing at least 14 days before the date of a special meeting with advice as to the business to be dealt with at the meeting. This did not occur in relation to the postal ballot. However, rule 47.8(j)B permits the Federal Executive, "where the matter is urgent", to direct a postal ballot or telephone hook-up "and dispense with or shorten the period of notice required by paragraph 47.8(i)". On 6 March the Federal Executive resolved on an immediate postal ballot with completed ballot slips to be returned by 16 March. Although Mr Staindl submits there had to be a specific resolution of Federal Executive on the subject, I think it must be inferred the Federal Executive regarded the matter as urgent and decided to dispense with the notice required by para 47.8(i). Where a collective body has power to take a particular course only if it is of a particular opinion, it is to be presumed from a decision to take that course, in default of reason to conclude to the contrary, that the body held that opinion: see Western Stores Ltd v Orange City Council [1971] 2 NSWLR 36 at 46-47 and the cases there cited. I would not regard the Federal Executive's failure expressly to dispense with notice as an item of invalidity separate from items (b) and (c) above. If the apparent invalidities in the convening of the meeting are validated, that validation will cover this item. In addition to these invalidities, Mr Staindl refers to the lack of satisfactory evidence about Ms Bogar being given notice of the Federal Executive meeting of 6 March. Ms Bogar gave evidence that she received no notice of the meeting. Mr Frizziero was only able to say he had "a vague recollection that Mr Trehearne informed me or informed the meeting that contact or communication was made with Freda Bogar's office in respect to that meeting". Mr Trehearne did not give evidence. Mr Staindl cites Joske's Law and Procedure at Meetings (7th ed, 20) for the proposition that "(f)ailure to give notice of a meeting to a person entitled to be present at it will, unless that person happens to be present, invalidate the meeting and any resolutions passed at it". I accept this is so and the lack of proof that notice was in fact given leads to a further invalidity in connection with this meeting. Mr Haylen argues all the invalidities originated in Ms Bogar's refusal to take any steps to have the Division Conference delegates consider the rule change adopted by National Conference. Ms Bogar failed to obtain support for maintaining the Federal Secretaryship as a full-time position; two Regions within the Division sought the rule change, it was overwhelmingly adopted by National Council (70 votes to 16) and by the seven (out of ten) delegates to Division Conference who returned their ballot papers by 10 March 1998. Mr Haylen suggests that "at every level in the rule altering process Ms Bogar's position was resoundingly rejected"; so Ms Bogar used her position to frustrate adoption of the alteration. Mr Haylen concedes the rule change will affect Ms Bogar personally, if she is successful in the 1998 election. However, he says: "(t)he rule change is beyond mere personalities: Ms Bogar may not win the 1998 election and there were other full time positions for which she could have nominated. She did so [in] 1994 when she nominated for the full time position of Victorian Regional Secretary as well as the position of Federal Secretary of the Division. There was nothing stopping her from doing the same thing in this election." Moving to a suggestion of mala fides made by Mr Staindl, Mr Haylen argues any such suggestion necessarily involves an attack on the members of all the bodies within the Union that voted in favour of the rule change, including (within the Division) the Tasmanian Regional Council, Victorian Regional Executive and Federal Executive and (within the wider Union) National Council and National Conference. Mr Haylen suggests the task of establishing such an allegation is enormous and Ms Bogar has failed to produce any evidence to support it. Moreover, although Mr Staindl vigorously cross-examined Mr Frizziero, he did not suggest to him he was actuated by improper motives or had sought to influence others to act improperly. Mr Haylen says: "This failure to put the suggestion to the person that Ms Bogar regarded as one of her main opponents, the Federal President of her own Division, is a stunning omission. It is quite clear that there was no acceptable evidence available or cross-examination which could be conducted on this matter and the allegation by Ms Bogar was probably no more than a tactic adopted as part of her election campaign." Mr Haylen says the evidence discloses there has been debate within the Union since 1994 about the issue of a full-time Federal Secretary for the Food and Confectionery Division. Under cross examination Ms Bogar conceded she had known, ever since her election in 1994, that a number of members of the Federal Executive of the Division believed there is insufficient work to justify a full-time position. The fact that the debate had not dissipated in four years, Mr Haylen says, shows "there was a live and proper debate within the Union as to how this office was to be treated. It also strongly suggests that there was no lack of bona fides on the part of those who participated in that debate and in the decision making process which led to the alteration of the rule". Mr Haylen concedes an important factor for the Court to consider, in determining whether to exercise the power given to it by s 258, is "whether the organisation and its offices have acted honestly": see Re Food Preservers' Union of Australia (1988) 79 ALR 138 at 144 per Northrop and Ryan JJ. But he says that, on a proper approach to the evidence in this case, there can be no suggestion that the Union and its officers have not acted honestly. Mr Haylen goes on: "Also of relevance is the number and nature of persons who have appeared in the proceedings to oppose the application for validation. In this case despite notifications in the union's journal no other person other than Ms Bogar (who has a personal interest in the matter), has appeared to oppose the application. On the evidence no Regional Council or other meeting of members has passed any resolution opposing the rule alteration or has otherwise supported Ms Bogar's position. The Court is then left in the situation that the union has demonstrated, by large majorities of its peak representative bodies, that the rules should be altered and none of the other representative bodies of the Division have apparently adopted any stance, resolution, or petition, or aired any other view against the rule change. In such circumstances the Court can comfortably come to the view that the making of an order would not do substantial injustice to any member let alone to the union, a creditor or any person having dealings with the union." Mr Staindl responds to Mr Haylen's submissions by emphasising the importance of the requirement of rule 4.1A(b) for approval by the Division Conference within 30 days. He says this requirement "is of great significance: it aims to ensure that the Food and Confectionery Division of the Union retains a degree of autonomy and independence and that for a rule change which affects that Division to be passed, it must be passed within the 30 day period. The Division must therefore act promptly following a National Conference vote if such a vote is to be approved. The National Conference cannot rely upon resolutions passed a long time beforehand which can be reactivated and voted upon by the Division when it is politically expedient". Mr Staindl argues Mr Cameron's request to Ms Bogar of 16 January to "now take the necessary steps to implement the above Rule" was ineffective to create any obligation; under rule 47.7 the Food and Confectionery Division Conference had management and control of the affairs of that Division. He spells out the problems surrounding the convening of the Federal Executive meeting of 6 March. Dealing with the cause of the invalidities, Mr Staindl says: "The applicant seeks to blame the respondent for failing to take any steps to have the Federal Conference consider the rule change. This issue was obviously a contentious one and the respondent was entitled to rely on the Rules. If a proper request had been made to the applicant to call a meeting of the Federal Executive or Federal Conference and she had failed to do so then the application would have more substance. The respondent is entitled to expect that the rules will be observed by others while she is obliged to follow the rules herself. There was no power for the respondent to call a meeting of Federal Executive 'off her own bat'. She could only do so pursuant to a request by the Federal President or 2 or more regions or act in conjunction with the Federal President. To say that this was 'disingenuous' ignores the Rules. The applicant seeks to be rewarded for his failure to act in accordance with the Rules and to penalise the respondent for acting according to the Rules." Mr Staindl submits Ms Bogar would suffer substantial injustice if validity orders were made: "The evidence of the respondent reveals that she is a candidate in the current election and that she is the incumbent in the position of Federal Secretary of the Food and Confectionery Division. She also says that the other candidate is ineligible and an election inquiry has been instituted in the Federal Court in respect to the other candidate's eligibility. Thus, it is apparent that the respondent has a real interest in the position. Accordingly, the Court cannot be satisfied that making an order would not do substantial injustice to the respondent because she would then be required (if successful in the current election) to carry out on an honorary basis the duties which she has formerly carried out on a full-time basis." Conclusions The first task for the Court, when confronted with an application under s 258(1) of the Workplace Relations Act, is to determine whether an invalidity has occurred in respect of any of the matters described in the subsection. In the present case it is apparent that invalidities have occurred in "the alteration of the rules of the organisation" (para (c)); and possibly also in "the management or administration of the organisation" (para (a)). It will be appropriate to make declarations to that effect: see subs (2). The next question is whether it is appropriate to make any of the orders described in subs (3): "(a) to rectify the invalidity or cause it to be rectified; (b) to negative, modify or cause to be modified the consequences in law of the invalidity; or (c) to validate any act, matter or thing rendered invalid by or because of the invalidity." In the present case, the applicant seeks an order under para (c) validating the rule change. That order may be made only if I am first satisfied that the order would not do substantial injustice to the Union, any member or creditor of the Union or any person having dealings with the Union. There is no suggestion of prejudice to any creditor of the Union or to any person having dealings with it. Nor has it been argued that validation would prejudice the Union itself. The only suggested injustice is to Ms Bogar; validation would result in her position becoming an honorary position. It is true the change will not take effect until the expiration of her current term of office and she may not be re-elected. But she is a candidate for re-election and it is appropriate to consider the matter of substantial injustice on the supposition she may be adversely affected by the rule change as from 1 September 1998. On that supposition, there is no doubt the rule change operates to the serious disadvantage of Ms Bogar. It has the effect that she is no longer entitled to payment of a full-time salary for her work as Federal Secretary of the Division. She may, perhaps, receive some reward for her work but any payment is bound to be substantially less than the remuneration she now enjoys. Although there is no evidence before the Court as to Ms Bogar's means, it is reasonable to assume she would need to seek other employment; and this may force her to resign her position as Federal Secretary. Under these circumstances, I can understand Ms Bogar feeling, as she obviously does, that the rule amendment does her a substantial injustice. However, despite Mr Staindl's contrary submission, this is not the issue the Court has to address. The issue for the Court is whether the order would do substantial injustice to Ms Bogar; in other words, whether it would be a substantial injustice to Ms Bogar to validate what has been done invalidly. It is not to the point that Ms Bogar would have been better off if nobody had ever proposed the rule-change. The Court it is not concerned with the substantive merits of the rule alteration; the issue for the Court is whether it should make good the defects in process. In considering that question, the Court is primarily concerned with the nature of those defects and the way they occurred. In considering how the invalidities occurred, I think it is fair to say, with Mr Haylen, that, "having failed to obtain any substantial support for her position, Ms Bogar quite deliberately set about frustrating the intentions of the overwhelming majority of members of the Union". There is no other explanation for her failure to comply with Mr Cameron's request on 16 January to "take the necessary steps to implement (Rule 4.1A(b)) as a matter of urgency". No doubt it is correct to say Mr Cameron had no power to direct what action should be taken by the Division. Possibly he had no power to give any direction at all. But the request he made was no more than was Ms Bogar's responsibility: to take whatever steps were necessary (subject to the view of Federal Executive) to provide an opportunity for Division Conference delegates to approve the National Conference decision, if they saw fit. It is true, as Mr Staindl points out, that Ms Bogar did not have the power, acting alone, to convene a special meeting of the Federal Executive of the Division, at which it could be determined whether to hold a postal ballot of delegates to the Division Conference. Ms Bogar was empowered to call a special meeting of the Federal Executive only at the request of the Federal President or of two or more Regions. But Ms Bogar had no reason to doubt Mr Frizziero would request a meeting if she advised him this was the appropriate course to take; and after she received his letter of 6 February, this must have been abundantly clear. If Ms Bogar had responded to Mr Frizziero's letter of that day by pointing out it was necessary to have a Federal Executive meeting, and this would require a formal request by him, I have no doubt he would have made the request. If Ms Bogar had advised that the Federal Executive should meet urgently, so as to ensure ballot papers could be returned by 15 February, I have no doubt Mr Frizziero would have been prepared to join with her in a direction under rule 47.9(h)B that the Federal Executive deal with the matter by a telephone hook-up and dispense with the three clear days notice required under rule 47.9(g). And, when Federal Executive met, it could have resolved under rule 47.8(j)B to have the Division Conference deal with the matter by postal ballot or telephone hook-up and, for that purpose, dispense with or shorten the notice required under rule 47.8(i). In short, even by 6 February, it was not too late to procure a decision regarding approval of the rule change within the 30 day period specified in rule 4.1A(b). No doubt it is true to say, as Ms Bogar did in evidence, that Mr Frizziero might have worked out for himself what to do about organising a Division Conference ballot. He also had access to the Union's Rules. But Ms Bogar was the Federal Secretary of the Division, occupying a full-time paid position in which her prime responsibility was the efficient management of the Division. It was her obligation to tender appropriate advice to her President, who was not employed full-time by the Division, especially when he asked for information. However, Ms Bogar did not tender any advice. Despite Mr Frizziero's announced concern about the delay, she contended herself with writing a meaningless response, "all steps will be taken in accordance with the rules of the union", and then doing nothing at all. So the 30 day period elapsed without a decision of the Division Conference concerning approval of the rule change. This was the first invalidity and it occurred because of the deliberate obstruction of Ms Bogar. The other invalidities arise out of the method of convening the Federal Executive meeting. They would not have occurred if Ms Bogar had tendered appropriate advice to Mr Frizziero in January or early February; and he had acted on it, as I think probable. These other invalidities arose because of two factors: the desire of those who supported the rule change to resolve the matter promptly and Ms Bogar's failure to respond appropriately to the National Council resolution of 3 March 1998. The evidence does not spell out the reason why the proponents of the change desired, in March, to proceed so promptly. There may have been a measure of impatience in their attitude, perhaps exacerbated by annoyance with Ms Bogar. They may have been alive to the desirability of resolving the issue before closure of the ballot for the subject office. To the extent these were factors, they arose out of Ms Bogar's inaction in January and early February. The National Council resolution of 3 March called on Ms Bogar to convene a special meeting of the Federal Executive of the Division two days later, at 4pm on 5 March. With Mr Frizziero's concurrence, this could have been done, in which case the remaining invalidities would not have occurred. But Ms Bogar chose to ignore this directive; preferring instead to call a meeting for a date two weeks later and then depart for Melbourne, from where she refused to speak to Mr Cameron. The situation then comes down to this: the only person who is said to suffer injustice by a validation order is the person whose omissions were the very cause of the invalidities. As I say, Ms Bogar may be disadvantaged by the substance of the rule change. But it is no injustice to her to validate procedural invalidities that would not have occurred at all, absent her own breaches of duty. On the contrary, a refusal to make a validating order would have the effect of rewarding her intransigence and breach of duty. Moreover, a refusal would derogate from the principle of democratic control of a registered organisation. As Ms Haylen stresses, the proposed rule change has received strong support from each of the bodies within the Union that have given consideration to it. This consideration would not justify a validation order that imposed a substantial injustice on a member. But it is a relevant factor in determining how the Court should exercise its discretion. In writing the above, I have not overlooked that one of the invalidities surrounding the convening of the Federal Executive meeting of 6 March is the apparent failure of Mr Trehearne to give notice of the meeting to Ms Bogar. The opportunity to be heard on an issue is an important aspect of membership of a deliberative body in a registered organisation. Under most circumstances, I would be loathe to make a validating order that absolves a deprivation of that opportunity. But in the present case it is apparent Ms Bogar had ample opportunity to express her view about the rule alteration to her fellow members of the Federal Executive. She could have stayed for the debate on the item at the meeting of 20 October. She could have responded to the memorandum of 18 February. She could have maintained the scheduled meeting of 20 February. She could have obeyed the National Council instruction to convene a Federal Executive meeting on 5 March. In any event, as Mr Haylen points out, Ms Bogar's view was already well known to her fellow Federal Executive members. Moreover, the step of the Federal Executive meeting of 6 March was the purely procedural purpose of authorising a Division Conference ballot. Federal Executive had already made its substantive decision about the rule-change, on 20 October 1997. Its concern on 6 March was the intent of rule 4.1A(b); that there be a prompt decision of Division Conference whether or not to endorse the alteration adopted by National Conference. Refusal of a validating order would not rule out the possibility of the Rules being altered in the manner contemplated by the National Conference resolution. But it would mean the rule amendment process would have to start all over again. The issue would remain unresolved at the time of the declaration of the ballot for Federal Secretary, possibly even at the commencement of the new term of office. Such a situation would be undesirable at least; depending on the precise facts, possibly a source of further invalidity. There is no evidence of mala fides on the part of anyone associated with the proposal to alter rule 47.12. Mr Frizziero, perhaps with others, obviously has a strong view that the alteration is desirable. But there is nothing to suggest this view arises out of any consideration other than what he (and they) think is in the best interests of the Union, and the Division, in particular. Subject to one qualification, the case for a validation order is compelling. The qualification I have in mind arises out of a submission of Mr Staindl concerning the evidence put before the Court as to the results of the Division Conference ballot. The evidence about both the National Conference and Division Conference ballots comes from copy letters annexed to affidavits. In the case of the National Conference ballot, the relevant letter was that from Mr Cameron to Ms Bogar of 16 January. In that letter Mr Cameron stated: "The results of the ballot have endorsed a rule change to implement the Federal Executive's decision by the following figures: Endorse 70 Not endorse 16" Mr Staindl did not object to the admission of this letter into evidence and does not suggest any lack of probative evidence about the result of the National Conference ballot. I think his attitude was, and is, correct; the letter was clearly a "business record", within s 69(1) of the Evidence Act 1995. Accordingly, the hearsay rule does not exclude receipt into evidence of the previous representation (of Mr Cameron) I have quoted. It is also strongly arguable that the hearsay rule is excluded by s 60, the letter being relevant for a purpose other than proof of the fact intended to be asserted by the representation; namely proof of the history of the rule alteration process. The evidence about the Division Conference ballot is a copy letter from Mr Trehearne to Mr Cameron of 10 March 1998 that is annexed to the affidavit of Lachlan Neil Riches of Taylor and Scott, solicitors. In that letter Mr Trehearne informed Mr Cameron that "seven out of ten Delegates have responded to date with three votes outstanding" and that "there is a clear majority in favour of the Rule changes". When Mr Riches' affidavit was read, Mr Staindl objected "to the majority of it because of its hearsay nature". After discussion with counsel, I upheld Mr Staindl's objection to the extent Mr Ritchie retailed hearsay information he had received, but I admitted the affidavit to the extent it placed documents before the Court. One of these documents was the copy letter from Mr Trehearne to Mr Cameron of 10 March. In his written submission Mr Staindl argues there is no proper evidence of the conduct of the ballot of Division Conference delegates or the result. "All we know", he says "is that by 10 March 1998 Mr Trehearne purported to declare the result of the ballot". I think it is strongly arguable Mr Trehearne's letter is in the same category as Mr Cameron's letter of 16 January; that is, it is both a business record and covered by s 60 of the Evidence Act. However, the argument is complicated by the dispute between the parties as to Mr Trehearne's status. If he had no authority to conduct the ballot, it is at least faintly arguable the letter is not, and never was, part of the official records of the organisation. If this case was merely inter partes litigation between Mr Frizziero and Ms Bogar, I would resolve the question about the admissibility of Mr Trehearne's letter and determine the application accordingly. However, the case concerns the organisation as a whole. The Court is asked to validate something that is incontestably invalid and it has a discretion whether or not to take that course. One of the arguments for doing so is to uphold the principle of democratic control of the organisation, but that principle will only be upheld if it is certain that a majority of the Division Conference did vote to endorse the rule change. Although the material before me suggests this was the case, I think I should insist on certainty before making any validating order. Accordingly, I will not make a validating order unless and until a person with direct knowledge of the Division Conference ballot, presumably Mr Trehearne, makes an affidavit detailing its conduct and result. The affidavit should identify the ballot documents that were sent to delegates, and the persons to whom they were sent, and it should reveal the result of the ballot; both the number of votes cast and the numbers for and against endorsement. I propose to stand over the matter until Friday, 12 June 1998 at 9.30am. If the applicant proposes to provide an affidavit of the kind I have described, it should be filed and served not later than Tuesday, 9 June. If the respondent seeks to challenge the affidavit, notice of the nature of the challenge should be given to the applicant's solicitors not later than noon on Thursday, 11 June. If there is no challenge to the affidavit, and I find it satisfactory, I am likely to make validation orders on Friday, 12 June. If there is a challenge, I will determine on 12 June what course to take. I certify that this and the preceding twenty-two (22) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox

Associate: Dated: 29 May 1998 _ Counsel for the Applicant: W Haylen QC