BALANCE OF CONVENIENCE
30 On the balance of convenience the respondent contended that because what is sought by the applicant is in effect final relief, the applicant had to establish a stronger than usual case. In Bradto Pty Ltd v State of Victoria (2006) 15 VR 65 the Court of Appeal rejected a submission that because part of an interlocutory injunction required positive action, it was mandatory and not prohibitory, so that it should not have been granted unless there was a high degree of assurance that at trial it would appear that the injunction was rightly granted. Maxwell P and Charles JA said at [33]:
In our view, it is desirable that a single test be applied in all cases where an interlocutory injunction is sought. There is nothing in the body of authority to which we have referred, nor any consideration of principle, which requires a special test to be applied to one subcategory of such injunction applications, namely, those where mandatory relief is sought. On the contrary, as pointed out convincingly by Hoffman J in Films Rover, the grant of a mandatory injunction may be justified in a particular case notwithstanding that the court does not feel the requisite "high degree of assurance".
The correct approach, according to their Honours, whether the relief sought is prohibitory or mandatory, is to take whatever course appears to carry the lower risk of injustice if it should turn out to have been "wrong", in the sense of granting an injunction to a party who fails to establish his right at trial, or in failing to grant an injunction to a party who succeeds at trial: at [35].
31 The Court of Appeal also rejected a contention that where an interlocutory injunction is tantamount to awarding final relief, it should be granted only if the court feels a high degree of assurance that at trial it will appear that the interlocutory injunction was rightly granted. The Court said at [39]:
Once again, we see no necessity for the recognition of a special "rule" for this - different - subcategory of interlocutory injunctions. On the contrary, we think that it must be relevant on every application for an interlocutory injunction to consider the likelihood of the plaintiff succeeding at trial. Not only is such consideration a necessary part of deciding whether there is a serious question to be tried, but the plaintiff's prospects of success will almost certainly be a factor in the evaluation of the balance of convenience.
32 In view of the observations of Gray J in McGee v Sanders (No 2), recorded at [15], the two "special" rules rejected by the Court of Appeal in Bradto are even less appropriate in relation to interim orders under s 164 than they are in the conventional interlocutory injunction context. It is to be remembered that an order under s 164 is defined so as to include "directions for the performance" of any rules of an organisation by a person who is under an obligation to perform them. This will often be a mandatory order that results in the giving of final relief. An interim order under s 164(4) can plainly be an order of the same type as that granted at trial under subs (1).
33 Accordingly I adopt the approach in Bradto in the passages quoted at [30] and [31] of considering the likelihood of the applicant succeeding at trial rather than concentrating on the fact that the second order sought is of a mandatory character and may itself amount to final relief.
34 The respondent contended that there was no evidence, but only mere assertion, that there was any damage to the good order of the Branch as a result of the allegations of financial irregularities. In my view it can readily be inferred from the charges against Ms Fegan, the allegations against the respondent and Mr Hudson, and the court proceedings involving them, that the continuation of the current controversy is not conducive to the proper functioning of the Branch.
35 The respondent contested Ms Sakka's statement that it is in the best interests of the Branch and the members that Mr Whitchurch's report be available at a meeting of the Branch scheduled for 11 February 2009. He said first that although Ms Fegan's conduct may be raised at the meeting, there was nothing to suggest that the general issue of financial irregularities would be considered. The material before me does not disclose what issues will or may arise at the meeting. But whether the more general allegations are or are not considered, those present would surely benefit from whatever Mr Whitchurch may have uncovered before the meeting about Ms Fegan's conduct, and the allegations that are claimed by the respondent to have been made by way of revenge for the charges against her.
36 The respondent's second submission in relation to the 11 February meeting is that it is unlikely that Mr Whitchurch will have completed his report before then. If Mr Whitchurch is to be permitted to begin his investigation, I doubt whether a final report will be ready in time for the meeting. However, he may be able before then to prepare a preliminary report about the whole range of alleged financial irregularities or at least about those affecting Ms Fegan. The meeting would doubtless be assisted by such a preliminary report.
37 The respondent claimed that there was no evidence of prejudice to the applicant or the Union if interim relief is not granted. The material discloses that the National Executive has become involved, and wants an investigation of the alleged irregularities. The Branch wants an investigation. Since both bodies want an investigation to resolve the matter, I do not accept the submission that there is no prejudice to the applicant or the Union if relief is refused. The opposing contentions will fester on, to the detriment of the Branch and its members.
38 The respondent claimed that there is "no capacity for procedural fairness to be afforded" to him and Mr Hudson in the investigation process. I am not prepared to assume that Mr Whitchurch will not accord natural justice to those against whom allegations have been made. He is charged with carrying out an investigation into any financial irregularities and presenting a report. It seems to me unlikely that Mr Whitchurch could properly carry out his task of investigating irregularities alleged against the respondent without putting to him any concern he might have about his conduct, so as to enable him to deal with or dispel that concern. I do not go into the question whether Mr Whitchurch will be obliged to accord natural justice to those against whom allegations have been made, or if he is, what is the content of that obligation. That may well be a matter upon which Mr Whitchurch will seek legal advice.
39 The respondent complained of a lack of precision in the orders sought and that they contain a mandatory element. As to the latter, I refer to what I have said at [30] to [33]. Section 164 contemplates mandatory orders, both final and interim. Although the second order sought is mandatory, it amounts to no more than that the respondent allow Mr Whitchurch access to the Branch records. In a s 164 context, I reject the respondent's contention that the fact that the second order sought "does not involve a preservation of the status quo", but requires the respondent "to do something new", is a reason for not granting relief. Counsel did not identify any particular respect in which the orders suffered from a lack of precision. I do not think they do.
40 I do not accept that the grant of relief will unnecessarily distract the respondent from his duties as Secretary. This complaint was not developed, and I think it has no substance. The respondent will be able to go about his normal tasks. As Mr Borenstein SC for the applicant put it, all the respondent will be required to do is "get out of the doorway and let Mr Whitchurch in". Cf Bradto at [19]‑[22].
41 In reliance on s 164(3), the respondent said there was no evidence that the applicant has taken any steps to have the validity of the 7 January resolutions resolved internally. He drew attention to Rule 21(l) which confers power on the National Council "to interpret these Rules". I would not refuse to deal with the present application merely because the applicant has not sought to have the validity of the resolutions resolved by an interpretation of the Rules by the National Council. Section 164(3) speaks of "all reasonable steps". In Anderson v Taylor (1990) 22 FCR 326 at 335 speaking of what was "reasonable" in a precursor of s 164(3), Gray J said:
An applicant is not to be denied relief simply because there was open to him or her some steps under the rules which might conceivably have led to a resolution of the issue which he or she seeks to raise before the Court. An applicant is not required by s 209(3) to engage in conduct the result of which is purely speculative.
His Honour went on to say that a suggestion that the applicant there should have sought to persuade the national executive to reverse its earlier decisions was not reasonable because "the applicant would have had every right to regard himself as attempting to appeal from Caesar to Caesar if he had asked the national executive to reconsider".
42 In the present case the National Council is supporting the respondent. Mr Langmead, who appeared for the national body, intervened with leave in support of the respondent. It would not in my view be reasonable for the applicant to expect the National Council to interpret the rules in a way that would defeat the side with which it is aligned. In any event, whatever the Council's ruling on the meaning of the rules, the matter would return to the Court. An interpretation of the rules made by the Council cannot exclude the jurisdiction of the Court. To require the applicant to approach the Council would, in my view, simply consume time to no avail.
43 It is then said that the making of the investigation may prejudice the respondent. I accept the applicant's answer to this. It will only prejudice the respondent if he has done something wrong, which is not a reason for not making the orders sought. The investigation may exonerate him, in which case it will assist in the resolution of the conflict within the Branch.
44 Another balance of convenience factor relied on by the respondent is the likely cost of carrying out the investigation. The respondent's solicitor obtained estimates of the likely cost of carrying out the investigation entrusted to Mr Whitchurch. One accountant was unable to estimate the fee because the Union's financial statements did not give any indication of the number of transactions that had occurred over the period of the investigation. She estimated a standard annual audit fee for a second tier firm at around $11,200. Another accountant said that his fee for an annual audit for a union with 16,000 members and about 40 staff would be between $20,000 and $50,000 "but without further detailed instructions the costs related to a broad ranging enquiry would be impossible to provide". I do not derive much assistance from this material. I accept, however, that the cost of the investigation is likely to be considerable. As I have said at [37], it is common ground that there should be an investigation. It is also common ground that the investigation must be carried out by a qualified professional, and will cost real money. The dispute is about who is to give the instructions for the investigation and who is to be appointed to carry it out. The applicant has satisfied me, for the reasons I have given, that a strong case exists for upholding the validity of the Branch Committee resolutions of 7 January. The Committee directed itself to the cost of the investigation, committing the Branch to pay Pitcher Partners' reasonable costs. The investigator's fee is an obligation of the Branch, and not, as the respondent (and the Union) contended, a cost of the Union. See Rule 60(b). The Branch has initiated the process and appointed Mr Whitchurch. No attack has been made on his qualifications to undertake the task. He is ready to proceed.
45 On 27 January the National Executive passed resolutions dealing with the Branch. Resolutions 2 to 4 are as follows:
2. National Executive requests the National Secretary to obtain three quotations from audit firms for undertaking the function of National Auditor and report back to National Executive as soon as possible.
3. National Executive resolves that the National Auditor, when appointed, be required to make enquiries and come to a view as to whether the allegations in the letter from the Branch Secretary of the Victoria No 1 Branch of 24 December 2008, and the allegations in paragraph 11 and Exhibit SM‑8 of the affidavit of Ms McCormack of 7 January 2009 in relation to Messrs Jackson and Hudson, should be investigated. If he or she is satisfied there is a need for further investigation, he/she is to report to National Executive about the extent and likely cost of such investigation. The National Auditor is required to report to the National Executive as soon as possible.
4. National Executive resolves that in relation to any allegations of financial impropriety in the affairs of the Vic No 1 Branch, any person wishing to make such allegations shall put those allegations to the newly‑appointed National Auditor and that in relation to any such allegations the National Auditor is required to report to the National Executive as to whether the allegations should be investigated and the likely cost of such investigation. National Executive resolves that unless claims of financial impropriety in relation to No 1 branch are dealt with in accordance with resolution 3 (regarding enquiries by the National Auditor) no funds of the HSU shall be expended to investigate any such claims.
46 In my view the validity of resolution 4 is attended by serious doubt. Mr Langmead relied on Rule 27(a), which gives the National Executive power to conduct and manage the affairs of the Union, and Rule 21, which entrusts to the National Council the management and control of the affairs of the Union.
47 The respondent also relied on Rule 35(d) which requires the National Auditor to be appointed annually by the National Council or National Executive. Subrule (d) empowers the Auditor to examine all accounts and documents of, amongst other things, each branch, and to ask questions of any officer or employee of any branch.
48 Rules 21(l) and 27(a) are expressed to be "subject to these Rules". Rule 35(d) is not. However, all Rules are subject to the effect of other Rules even if that is not expressly stated. The applicant contends that the National Executive's resolutions are an intrusion into the autonomy of the Branch. Rule 44(a) makes all branches "completely and absolutely autonomous within the ambit of these Rules". They are "responsible for their own Government and administration". By Rule 49(a) the government, management and control of the affairs of each branch are vested in a Branch Committee. This vesting is expressed to be subject to "these rules and any proper direction of the National Council or the National Executive".
49 In Armstrong v Elliott [1997] IRCA 252 a Full Court of the Industrial Relations Court (Wilcox CJ, Moore and Madgwick JJ) considered the respective rule making powers of the National Council and the Branches of the Union in relation to branch elections. Because of provisions such as Rule 44 and what is now Rule 49, together with the limitation on the Council's rule making power precluding it from derogating from the power of a branch to make rules for its own internal management, the Court drew a distinction between a Council‑made rule applying to all branches, and a rule singling out a particular branch. The former was within power and the latter without. The Council's rules were of both varieties, and only those that applied generally to elections of all branches were valid.
50 The present case does not concern the rule making power of the National Council. However, if the National Council cannot make a rule which singles out a particular branch, it ought to follow that the National Executive cannot make binding resolutions to that effect. Resolution 4 deals exclusively with the Branch. It is expressed to forbid the use of "funds of the HSU" to investigate the claims other than an investigation under resolution 3. The words "funds of the HSU" are doubtless intended to cover funds of the Branch, because there is no need for union funds alone to be mentioned since they are under union control anyway. Resolution 4 is thus antithetical to Rule 60(b) which vests the funds of a branch in the Branch trustees who must deal with them as directed by the Branch Committee.
51 Further, the National Executive's resolutions lack any time frame for an investigation. They do not appoint an auditor, but just require the obtaining of quotations as to the cost of an appointment. The enquiries that are authorised by resolution 3 are conditional on an appointment. Until an auditor is appointed, there can be no enquiry. On appointment, the enquiry is limited to the preliminary question whether the allegations should be investigated. If the auditor thinks there should be an investigation, he or she must report to the National Executive about the likely cost. The resolution takes the matter no further. It is silent as to the next step. Resolution 4 requires any allegations to be put to the auditor, when appointed. The auditor is to report to the Executive as to whether the allegations should be investigated and the likely cost. Again the resolution takes the matter no further. Altogether, the resolutions have the hallmarks of a process which is not designed to get anywhere.
52 It is not appropriate on this application for interim relief to rule on the validity of resolution 4. All I say is that there is a serious question as to its validity. That, together with the form of resolutions 3 and 4 (see [51]), and their potential for the encouragement of further litigation and attendant delay in undertaking an investigation, causes me to attach little significance to the resolutions on the balance of convenience or for any other purpose. It follows that there is serious doubt as to whether resolution 4 is a "proper direction" for the purposes of Rule 49(a).
53 In my view the balance of convenience favours the grant of interim relief. Not only does the applicant have a strong case, which is relevant to the balance (see Bradto at [39]), but it is in the interests of the members of the Branch, and thus the Union as a whole, that the various allegations are investigated promptly, so that the Branch Committee can resume functioning properly and efficiently. The relief will thus further the resolution within the Branch of the matter the subject of the application. Cf s 164(4). The balance of convenience matters relied on by the respondent, canvassed at [30] to [52] come nowhere near outweighing those referred to above.