Health Services Union v Asmar [2024] FCA 1168 | Case summary

Health Services Union v Asmar [2024] FCA 1168 | Case summary | Zoe

[10]

UPON THE FIRST RESPONDENT BY HER COUNSEL UNDERTAKING: a) That until the hearing and determination of the Originating Application or further order, she shall not authorise the external transfer or disbursement of any funds held or controlled by the Victoria No. 1 Branch of the Applicant (the Branch) unless the cash reserve of the Branch is at least $100,000, and the transfer or disbursement: (i) is to an existing external goods or services provider of the Branch for an amount less than $3,000, and is not a payment for the benefit of the First Respondent or the Third Respondent; or (ii) is a payment of the following scheduled business expenses of the Branch: rent, telephone, road tolls, electricity, water, internet and any other utilities, tax payments, worker's compensation payments, and remuneration for employees and officers; or (iii) is authorised in accordance with the resolution of the Committee of Management of the Branch dated 3 September 2024 which is titled "Resolution - Interim Measures"; b) That a copy of all the material provided pursuant item 4(b), of the resolution of the BCOM dated 3 September 2024 entitled "Resolution - Interim Measures", will be copied to the National Secretary of the HSU at the same time as it is provided to the BCOM members and Connect National Audit. c) That until the hearing and determination of the Originating Application or further order, she shall not give any direction to the Second, Fourth, Eighth, Ninth and Tenth Respondent other than in their capacity as employees of the Applicant who are employed in the Victoria No. 1 Branch. d) That until the hearing and determination of the Originating Application or further order, she shall: (i) not give any direction to any employee of the Applicant employed in the Victoria No. 1 Branch other than to direct the employee as to the manner in which he or she performs the duties and functions of the employment that he or she has been employed to perform; and (ii) not: a. act on the resolution passed at the Branch Committee of Management on 8 April 2024 directed to the Third Respondent; b. take any disciplinary action (including dismissal) against any employee of the Victoria No. 1 Branch; c. direct an employee of the Victoria No. 1 Branch to work from home (unless requested by the employee); d. not alter the duties or functions of an elected official or an employee's employment; e. direct that an employee or elected official perform no duties; and f. procure or direct another to take any of the actions or directions referred to in subparagraphs (a.) to (e.) above. e) That until the hearing and determination of the Originating Application or further order, she will: (i) by 9am on Wednesday, 25 September 2024, reinstate the Third Respondent's IT access including access to all Victoria No. 1 Branch servers and to his Victoria No. 1 Branch email address; (ii) communicate to the Third Respondent the date, time and location of any future Branch Committee of Management (BCOM) meeting; (iii) upon reasonable notice before a BCOM meeting, provide to the Third Respondent all relevant agendas, minutes, draft resolutions and any other document to be placed before or considered at the BCOM meeting; and (iv) not procure any process under Rule 54 of the HSU Rules in relation to any allegation of misconduct made against the Third Respondent where such conduct is alleged to have occurred in the period 1 January 2024 to 20 September 2024. f) That until the hearing and determination of the Originating Application or further order she will provide the following to the National Secretary of the HSU within 24 hours of receipt: (i) a copy of any report provided to BCOM by the Branch Secretary or Assistant Branch Secretary, in accordance with Direction 2 of the resolution on 3 September 2024 entitled "Resolution - Interim Measures". (ii) A copy of any report provided to them by Connect National Audit.

[13]

INTRODUCTION 1 The applicant, the Health Services Union, seeks a declaration that its Victorian No. 1 Branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively. The Union also seeks the approval of a scheme of administration to enable the Branch to function effectively. Pending the hearing and determination of its application for that relief, the Union seeks interlocutory orders directed at Ms Diana Asmar, the Branch Secretary, and members of the Branch Committee of Management. Those interlocutory orders seek to restrain Ms Asmar and other respondents in their transfer and disbursement of Union funds, and in their direction and control of Branch employees. Interlocutory orders are also sought requiring the Branch to provide certain information to the Union, and to restrain the BCOM from giving effect to a resolution to pay the legal costs incurred by Ms Asmar and four other respondents in a separate proceeding commenced by the General Manager of the Fair Work Commission alleging breaches of the Fair Work (Registered Organisations) Act 2009 (Cth) (the FWC proceeding). 2 The Union contends that the Branch has ceased to function effectively for three main reasons. First, because of the allegations of impropriety made by the General Manager of the FWC in FWC proceeding. The Union accepts those allegations are so far unproven but says they create a material risk of harm. Second, the Union points to the Branch's failure to take effective action in response to those allegations. Third, the Union relies upon threats and reprisal action alleged to have been taken towards Branch officers and employees for their role in raising or tabling allegations, or participation in this and other proceedings. 3 The third respondent, Mr David Eden, the Branch Assistant Secretary, supports the Union's interlocutory application and says that he has suffered reprisal action for his plans to table, before the BCOM, the allegations made by the General Manager of the FWC. He says the Branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively. 4 Ms Asmar and the second, fourth, seventh and ninth to fifteenth respondents now offer certain undertakings which they say include mechanisms under the rules to respond to the matters raised by the Union. Those undertakings are directed to the transfer and disbursement of branch funds, the cooperation with, and provision of materials to, the Union, and the control, direction and entitlements of Branch employees. Consequently, they say no further interlocutory orders should be made because the Union has not established, to the requisite degree, that the Branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively. 5 The remaining three respondents, Ms Jacks, Mr Hargreaves and Ms Mitchell did not appear at the hearing of the application for interlocutory orders. Consequently, the Union did not seek orders against them. The Union submitted that if orders are made, or agreed to, against the other members of the BCOM that will effectively enjoin the BCOM. 6 I shall hereafter refer to Ms Asmar and the second, fourth, seventh and ninth to fifteenth respondents as the respondents; noting that expression will not include Mr Eden, Ms Jacks, Mr Hargreaves and Ms Mitchell. 7 The undertakings provided by the respondents (which are explained and detailed below), have the effect of reducing the dispute over the interlocutory orders to one order directed at restraining the BCOM from giving effect to a resolution of 3 September 2024 to pay the legal costs incurred by Ms Asmar and four other respondents in the FWC proceedings (the legal costs resolution). That order sought by the Union was as follows: Pursuant to section 23 of the Federal Court of Australia Act 1976, until the hearing and determination of the Originating Application or further order, the Respondents be restrained from giving effect, or further effect, to their resolution dated 2 September 2024 by paying from Victoria No. 1 branch funds the legal costs incurred by the First, Second, Third, Fourth, and Ninth Respondents on and from the date of this order in respect of Federal Court proceedings commenced against them by the General Manager of the Fair Work Commission (VID 835/2024) and any other related proceeding, with the exception of VID917/2024 and VID876/2024. (the legal costs injunction) 8 The Union accepted that, despite the contest being narrowed to that order, it was still necessary for it to establish a serious question that the Branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively. That is the requisite test under s 323 of the Act. Further, the Union must establish that the balance of convenience favours the grant of that order. 9 At the hearing of the interlocutory application the respondents accepted that the Union has established a prima facie case that the Branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively. However, they say that it is a weak serious question, which combined with the balance of convenience means the order should not be made. 10 For the reasons that follow I make the interlocutory order sought by the Union restraining the BCOM from giving effect to the legal costs resolution.

[14]

JURISDICTION, POWER AND PRINCIPLES 11 Section 323(1) of the Act relevantly enables an organisation registered under the Act to apply to the Federal Court for a declaration that a branch of the organisation has ceased to function effectively and there are no effective means under the rules of the organisation to enable it to function effectively. Section 323(2) provides that where such a declaration has been made, the Court may approve a scheme for the taking of action to enable the branch to function effectively. 12 There is no dispute that the Union's application properly invokes the jurisdiction of the Court under s 323 of the Act. 13 The Union seeks its interlocutory order pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth). Section 23 relevantly empowers the Court to make orders of such kinds, including interlocutory orders, as the Court thinks appropriate. The respondents accept that s 23 of the Federal Court Act empowers the Court to make the legal costs injunction set out at [7] above. 14 As to the relevant tests for interlocutory relief, the Union must demonstrate that there is a serious question to be tried that they are entitled to relief and that the balance of convenience favours the grant of an injunction: Australian Broadcasting Corporation v O'Neill [2006] HCA 46; 227 CLR 57 at [65]-[72] per Gummow and Hayne JJ (with whom Gleeson CJ and Crennan J agreed at [19]). 15 The Union must establish that their case has a sufficient likelihood of success to justify the preservation of the status quo pending the trial. The strength of that likelihood depends upon the nature of the rights asserted and the practical consequences likely to flow from the order sought: O'Neill at [65]. 16 When considering the grant of an interlocutory injunction, the issue of whether the Union has made out a serious question and whether the balance of convenience favours the grant of an injunction are related inquiries. The question of whether there is a serious question should not be considered in isolation from the balance of convenience: Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238 at [67] (Dowsett, Foster and Yates JJ), citing, with approval Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2009] FCA 595; 81 IPR 339 at [15] (Sunberg J). 17 In Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 Woodward J (with whom Smithers and Sweeney JJ agreed), in considering the serious question together with the balance of convenience, explained (at p 472) that an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even. Whilst a more doubtful claim (which nevertheless raises a serious question to be tried) may still attract interlocutory relief if there is a marked balance of convenience in favour of it. 18 In this case it is also relevant to consider the choice expressed by the Victorian Court of Appeal in Bradto Pty Ltd v Victoria [2006] VSCA 89; 15 VR 65 at [35] (per Maxwell P and Charles JA). The Court of Appeal described the choice in determining an application for injunctive relief as taking whichever course appears to carry the lower risk of injustice if it should turn out to have been wrong.

[15]

THE AFFIDAVIT EVIDENCE 19 The Union read and relied on the following affidavits in support of their application for interlocutory relief: (a) First affidavit of Geoffrey Borenstein dated 10 September 2024; (b) Second affidavit of Geoffrey Borenstein dated 12 September 2024; (c) Third affidavit of Geoffrey Borenstein dated 20 September 2024; (d) Fourth affidavit of Geoffrey Borenstein dated 24 September 2024. 20 The affidavits of Mr Borenstein detail: the information provided to the Union by the FWC about its investigation; the relevant resolutions of the National Executive and the Branch's responses to them; the resolutions of the BCOM in early September 2024; and the evidence of reprisal conduct against Mr Eden, Ms Brianna Macks and Mr Jake McGuinness and correspondence from the FWC about their investigation into that alleged reprisal conduct. 21 The third respondent, Mr Eden, read and relied on the following two affidavits to support the Union's application for interlocutory relief: (a) Affidavit of David Eden dated 16 September 2024; and (b) Affidavit of Peter Vitale dated 20 September 2024. 22 Those affidavits were also relied upon the Union. The affidavits of Mr Eden and Mr Vitale set out Mr Eden's evidence of the reprisal conduct he says he was subjected to by the respondents, particularly Ms Asmar. 23 The respondents read and relied on the affidavit of Antonia Sakkas dated 18 September 2024. The affidavit of Ms Sakkas set out: resolutions of the National Executive and the Branch's response; details of the appointment of an independent financial administrator by the Branch; details of the investigation into Mr Eden; details of the investigation into the Branch by the FWC; Ms Brianna Macks' complaint and resignation; and Ms Asmar's role as Branch Secretary. The affidavit also detailed the deeds entered into by the respondents to the FWC proceeding requiring repayment of the money paid to them by the Branch if they are found to have engaged in wrongful conduct.

[17]

Authorisation of transfer or disbursement of branch funds 25 The Union complains that it may be unable to prevent, and may be unable to recover, Union funds expended until the Court is in a position to determine the substantive application. Ms Asmar agreed to give the following undertaking to address that complaint. The undertaking regulates the authorisation of external transfer or disbursement of any funds of the Union: a) That until the hearing and determination of the Originating Application or further order, [Ms Asmar] … shall not authorise the external transfer or disbursement of any funds held or controlled by the Victoria No. 1 Branch of the Applicant (the Branch) unless the cash reserve of the Branch is at least $100,000, and the transfer or disbursement: i. is to an existing external goods or services provider of the Branch for an amount less than $3,000, and is not a payment for the benefit of the First Respondent or the Third Respondent; or ii. is a payment of the following scheduled business expenses of the Branch: rent, telephone, road tolls, electricity, water, internet and any other utilities, tax payments, worker's compensation payments, and remuneration for employees and officers; or iii. is authorised in accordance with the resolution of the Committee of Management of the Branch dated 3 September 2024 which is titled "Resolution - Interim Measures"; 26 That undertaking must be read with the resolution of the BCOM of 3 September 2024 which also provides for financial governance in the following ways: (a) BCOM, through their delegate Mr Aleksandros Ioanidis, will appoint a financial administrator, with appropriate expertise, who will be briefed with the Branch's financial management policies and provide independent oversight of the Branch Secretary's and the Branch Assistant Secretary's performance of financial management duties; (b) The Financial Administrator will report monthly to the BCOM regarding their oversight activities; (c) The Branch Secretary and the Branch Assistant Secretary were directed to not authorise certain payments without two BCOM members (who do not hold financial authorisation tokens) and the Financial Administrator providing written notice they do not object. The payments that require pre-approval are: (i) Reimbursement payments to the Branch Secretary and Assistant Secretary; (ii) Payments made to external providers above $3,000 except scheduled Branch business expenses including rent, electricity, water, internet and any other utilities; (iii) Decisions to incur a total liability over $3,000; and (iv) Decisions to procure goods or services from any new external provider. (d) If any of the two BCOM members or the Financial Administrator do not provide the requisite written notice, the matter will be referred to the next BCOM for further consideration and determination. (e) At each BCOM meeting, the Branch Secretary or Assistant Secretary will provide a report to the BCOM containing certain financial information.

[25]

SERIOUS QUESTION UNDER SECTION 323 33 The Union says its serious question is strong. The respondents concede that the Union has established a serious question but they say it is weak. Despite the respondents' concession of a serious question it is necessary for me to make an assessment of the strength of the serious question. That is necessary because the strength of the serious question is weighed together with the balance of convenience. 34 In Re Gallagher (1983) 79 FLR 26 a Full Court of this Court considered s 171D of the Conciliation and Arbitration Act 1904 (Cth). That section is a predecessor to s 323 of the Act. Smithers J described s 171D as stemming from the intention of parliament to revive the effective management and administration of organisations when governing bodies have become defunct or impotent or are unable to function effectively because the rules fail to speak effectively in the circumstances. His Honour said, therefore, the provisions of s 171D should be liberally construed. His Honour's observations were adopted as applicable to s 323 of the Act by Tracey J in Re Health Services Union [2009] FCA 829 at [12] and by Flick J in Brown v Health Services Union (2012) 205 FCR 548 at [32]-[33]. That liberal construction may be relevant to: (a) the considerations to establish that the branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively; (b) the steps that may be taken by the Court in approving a scheme to ensure that the Branch functions effectively; and (c) the interlocutory orders that the Court might put in place to preserve the position of the Branch pending the hearing and determination of substantive application. 35 I will address each of the Union's submissions directed at the serious question. Namely, (1) the allegations of impropriety made in the FWC Proceeding; (2) the Branch's failure to take effective action in response to those allegations; and (3) the threats and reprisal action alleged to have been taken against Mr Eden, Ms Macks and Mr McGuinness. I then address the submissions directed specifically at the legal costs injunction.

[26]

The allegations made by the General Manager of the FWC 36 The allegations made in the FWC proceeding can be summarised as follows: (a) Ms Asmar was illegitimately reimbursed for over $120,000 worth of payments by the Union either deliberately or in contravention of the Union's reimbursement policy. Mr Nick Katsis and Ms Kerry Georgiev (the Branch Finance Manager and not a respondent in this proceeding) knew that Ms Asmar was claiming expenses that were not incurred for legitimate business expenses. (b) Between 30 June 2016 and 30 June 2021, the Branch bank account made a number of payments totalling more than $2,700,000 to Southern Publishing, a printing company. Southern Publishing did not provide any goods or services to the Union or the Branch as consideration for those payments. Then, Ms Asmar and Mr David Asmar (Ms Asmar's husband and not a respondent to this proceeding) received cash back from Southern Printing. The cash back was deposited into Ms and Mr Asmar's personal bank accounts. 37 The Union says, first that the allegations are "prima facie credible, albeit as yet unproven". Second, it says that the reimbursement allegations (those in [36(a)] above) were first notified to the Union by correspondence from the FWC on 26 March 2024 (the FWC 26 March 2024 letter). It says I can infer from the conduct of the Branch officers since that time that (a) they have not cooperated with the FWC investigation, or may have obstructed it; and (b) they have been unable to provide information to the FWC that explained the documentary discrepancies that it identified. Third, it says it is telling that when Mr Eden (the Branch Assistant Secretary) sought to table the allegations contained in the FWC 26 March 2024 letter, allegations were made against him and he was directed to work from home and not contact Branch officials or employees. Fourth, it says that those Branch officers that are a respondent to the FWC proceeding have a material interest in the Branch's decisions on the subject matter of the allegations. 38 The respondents say that the allegations made in the FWC proceeding are merely allegations and there is not yet any evidence in support of them. 39 The allegations are serious. They are unproven. There has been no meaningful response to the allegations, although I accept that the respondents to the FWC proceeding have not yet been required to file a defence and they seek to stay those proceedings on the basis of possible criminal proceedings. 40 On the material before me I accept the Union's submission that there was a lack of cooperation by the Branch with the FWC's investigation. The evidence of Mr Borenstein was that when he, Mr Williams, the Union National Secretary, and Mr Hayes, the Union National President, met with Mr Enright and Mr Coyle of the FWC, the information provided to him was that: (a) no real response was provided by the Branch to the FWC 26 March 2024 letter; and (b) that the FWC had not received any audit report from the Branch. 41 I also accept the Union's submission that there were efforts to prevent the tabling by Mr Eden at the BCOM of the FWC 26 March 2024 letter. Those circumstances are set out in more detail below.

[27]

The BCOM failures to take effective action 42 The evidence before me was that the FWC 26 March 2024 letter was brought to the attention of BCOM on 8 April 2024. One of the BCOM resolutions passed on that date was a resolution that solicitors Maurice Blackburn be instructed to engage a forensic auditor as soon as possible to examine the matters raised in the letter and provide legal advice to the Branch. In correspondence to Mr Williams dated 24 June 2024, Ms Asmar said that the BCOM resolved to instruct Maurice Blackburn to engage BDO to prepare a report in relation to the FWC 26 March 2024 letter. 43 On 1 July 2024 Mr Williams, and Mr Hayes, met with Ms Asmar and the BCOM members. The Union says that at that meeting Ms Asmar told Mr Williams and Mr Hayes that the Branch would undertake a forensic audit which would be used to assist with responding to the FWC. Ms Asmar said that she had engaged BDO. The Union says there is no evidence that was done. 44 There was no evidence before me that BDO was engaged or that they produced any report. There was evidence that Baumgartner Audit Pty Ltd were instructed to conduct an investigation into the allegations. However, that occurred on 16 September 2024, six days after the Originating Application and Concise Statement were filed in this matter. There is an unexplained delay between: the FWC 26 March 2024 letter outlining some of the allegations; that letter coming to the attention of the BCOM on 8 April 2024 and its resolution to engage BDO; Ms Asmar's advice of 1 July that BDO had been engaged; the apparent failure to engage BDO; and the appointment of Baumgartner on 16 September 2024. 45 On 30 August 2024, Mr Williams, at the direction of the Union National Executive, wrote to the BCOM. That correspondence explained that the Union had serious concerns about the FWC General Manager's decision to commence proceedings against Ms Asmar and others, and set out the effect that would have on the operation of the Branch. That correspondence, in summary, proposed the following action by the BCOM: (a) That it consent to declarations and orders being made by the Court to approve a scheme of administration and appoint Matthew McGowan as administrator; (b) That it resolve not to provide any financial assistance to the respondents in the FWC proceeding; (c) That pending Court approval of the scheme of administration, it resolve to comply with measures decided by the National Secretary with respect to authorising the expenditure of Branch funds and comply with the requests made by the National Secretary for information about Branch funds and expenditures. 46 Those steps were rejected by the BCOM. Instead on 2 September 2024 the BCOM delegated to Mr Ioanidis the task of implementing an investigation into the allegations made by the FWC. 47 On 3 September the BCOM passed a resolution which implemented some restrictions on the transfer and disbursement of Branch funds. The details of that resolution were outlined in a letter from Mr Ioanidis to Mr Williams on 4 September 2024 and are summarised at [25] above. 48 I am satisfied that the delay in the appointment of an auditor to examine the allegations raised by the FWC contributes to a serious question that the Branch has ceased to function effectively. On the material before me that delay was between 8 April 2024, when the allegations first were raised with the BCOM, and the appointment of Baumgartner on 16 September 2024. 49 I am satisfied that the delay in implementing financial measures imposing restrictions on the transfer and disbursement of Branch funds contributes to a serious question that the Branch has ceased to function effectively. On the material before me that delay was between 8 April 2024, when the allegations first were raised with the BCOM, and the BCOM resolution of 3 September 2024.

[29]

Mr Eden 51 Mr Eden says that he informed Mr Lee Atkinson, Senior Vice President of the Branch, that he proposed to table the FWC 26 March 2024 letter before the BCOM. Mr Eden says that Mr Atkinson responded by saying that he did not think the FWC 26 March 2024 letter needed to be tabled. 52 Mr Jake McGuinness, Chief Communications Officer for the Union, told Mr Eden that on 31 March 2024 he attended a meeting at Ms Asmar's home. Mr McGuinness says that meeting included Ms Asmar, Mr Katsis, Mr Atkinson and Mr Ioanidis. He says as that meeting, Ms Asmar said she would not table the FWC 26 March 2024 letter at the BCOM meeting, that Mr Eden must be stood down immediately, and that Mr Eden would be investigated for bullying. 53 Mr McGuinness says to Mr Eden that he attended a further meeting involving many of the members of the BCOM at the Keilor Hotel on 7 April 2024. Mr McGuinness says at that meeting Ms Asmar said: Mr Eden must be stood down; that the Branch would look to investigate Mr Eden for his recent conduct at work; the Branch will look to dismiss him from employment at the end of the investigation; and that Mr Eden has betrayed Ms Asmar and been disloyal. Ms Asmar said Mr Eden would be stood down and a motion would be moved at the BCOM the following day. 54 On 8 April 2024, a BCOM resolution was carried that: the Branch will appoint an investigator to investigate complaints made against Mr Eden and provide a report to BCOM; until the report was finalised Mr Eden was to work from home; and Mr Eden was not to contact any employees or officers of the Branch without first seeking permission from Ms Asmar. Mr Eden was then asked to leave the BCOM meeting. Mr Eden gave evidence that he has been excluded from all BCOM meetings since that time and is not told the scheduling and location of those meetings. 55 The allegations against Mr Eden were not provided to him until 18 June 2024. 56 On 22 July 2024, Mr Eden received a letter from Ms Asmar stating that his IT access was to be revoked. Mr Eden was then unable to access his union email account and the union server.

[32]

Conclusions on conduct towards Mr Eden, Ms Macks and Mr McGuinness 60 The respondents did not deny any of the allegations of the conduct directed at Mr Eden, Ms Macks and Mr McGuinness. They did not put on any responsive evidence. I consider the alleged conduct to be serious. 61 In 2009 Tracey J declared, with consent of all parties, that the No. 1 Branch of the Union had ceased to function effectively and that there were no effective means under the rules of the Union to enable it to function effectively. His Honour set out some of the circumstances relied on by him in making that declaration. They included: allegations and counter allegations of misconduct between office holders; and suspension of various officers of the Branch: see Re Health Services Union [2009] FCA 829; (2009) 187 IR 51 at [3]. 62 Those allegations have some parallel with the allegations made in this proceeding. 63 In 2012 Flick J declared that HSU East Branch of the Union (and the State registered organisation HSUEast) had ceased to function effectively and that there were no effective means under the rules of the organisations by which they could be enabled to function effectively. His Honour relied upon a statement of agreed facts filed by the parties under s 191 of the Evidence Act 1995 (Cth). That statement included circumstances where: the General Secretary took leave from his role as General Secretary of the HSU East Branch (and HSUEast) following allegations of misconduct including financial impropriety; the Executive Committees and Union Councils of the HSU East Branch and HSUEast had split along partisan lines and antagonism between the two groups meant that they were unable to function effectively; and meetings of the union bodies were disrupted, disorderly and sometimes abandoned: see Brown and others v Health Services Union and others [2012] FCA 644; 205 FCR 548 at [61]. 64 I consider the reprisal conduct supports a finding that there is a serious question that the Branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively.

[34]

The submissions on serious question and the legal costs injunction 67 The Union says the following about the resolution of the BCOM directed at the payment of legal costs for Ms Asmar and the other respondents in the FWC proceeding. 68 First, where the BCOM had, and has, decided to appoint an auditor to investigate the allegations, and where they had little or no information about the veracity of the allegations, it was premature of the BCOM to resolve to pay the legal fees of the respondents in that proceeding. As I understand it, the Union says that not only points to some ineffective functioning of the Branch but also supports the need for the BCOM to be enjoined from relying on that resolution. Second, and related, they say that in all of the circumstances there is some doubt about the bona fides of the resolution (by reliance on Allen v Townsend [1977] FCA 10; 31 FLR 431 at pp 485-486) and that supports the need for the legal costs injunction. Third, they say whilst the individuals who will receive their legal costs offer deeds obliging repayment if BCOM or the Court find that the respondents engaged in wrongful conduct in the FWC proceeding. There is some doubt about the ability to recover under those deeds. They say given r 35(a) of the rules of the Union provides for the autonomy of the Branch, and r 48 of the rules of the Union provides that the Branch Secretary has charge of the general conduct, administration and business of the Branch as chief executive officer. There is doubt about how and whether those deeds might be enforced should Ms Asmar refuse to do so. 69 The respondents say first that the National Secretary has the authority to sue to enforce the deeds and that the deeds sufficiently protect the assets of the Branch and Union. Second, that the financial administrator appointed under the BCOM resolution of 3 September will have oversight of the payment of disbursements that includes oversight of the legal fees paid in accordance with the legal fees resolution. Third, they say that the legal fees injunction is premature where the Court is to determine on 22 November 2024, whether the FWC proceeding should be stayed given the prospect of criminal proceedings. 70 Further, in support of the submission that the National Secretary has power to enforce the deeds the respondents filed and served an amended undertaking. That amended undertaking added an undertaking by the respondents that: …until the hearing and determination of the Originating Application or further order, she shall not raise or support any objection to the National Secretary initiating legal proceedings on behalf of the Health Services Union for the re-payment of funds to the Health Services Union pursuant to any of the deeds… 71 The Union says that undertaking is still inadequate because: it does not resolve the question of who has power under the rules of the Union to enforce the undertaking; it is not binding on other members of the Union who may object (under s 164 of the Act) to the National Secretary seeking to enforce the deeds; and it is uncertain and liable to result in further dispute because it includes an undertaking to not "support" any objection to the National Secretary enforcing the deeds. 72 Whilst the respondents contend that the financial administrator has oversight of the legal fees, the starting point for that oversight is the BCOM's resolution that the fees should be paid. The respondents contended that the financial administrator in assessing the legal fees would be concerned for the solvency of the Branch. However, if the Branch is solvent it might be expected that the financial administrator would act consistently with the BCOM resolution. In those circumstances the oversight of the financial administrator might not be a sufficient safeguard. 73 Further, I accept the Union's submissions that there remains some doubt about the National Secretary's ability to enforce the deeds. There is no doubt that rules intend that the Branch shall be "completely and absolutely autonomous within the ambit of" the rules of the Union: see rule 35(a). The government, management and control of the affairs of the Branch (subject to any proper direction of the National Council or the National Executive) is vested in the BCOM: see rule 39(a). Rule 48 provides that Ms Asmar, as Branch Secretary, is the officer to "to sue and be sued on behalf of the Branch", and that she otherwise has charge of the general conduct, administration and business of the Branch. Whilst rule 26 provides the National Secretary with the ability to sue on behalf of the Union, there remains some doubt about the National Secretary's ability to do so in the circumstances of the Branch's complete and absolute autonomy. It is not necessary for me to finally determine that issue but rather to weigh it with the other considerations relevant to injunctive relief. 74 I also see force in the Union's contention that the resolution appears (on the material before me) to have been passed at a time when the BCOM had no information from an auditor or other source about the veracity of the allegations made by the General Manager of the FWC. 75 I am satisfied that, together with my conclusions about the existence of a serious question to be tried about the Branch ceasing to function effectively (and there being no effective means under the rules to enable it to function effectively), and the balance of convenience matters considered below, that it is appropriate to enjoin the BCOM from giving effect to the legal costs resolution pending the hearing and determination of the application.

[36]

CONCLUSIONS ON SERIOUS QUESTION UNDER SECTION 323 78 I am satisfied that there is a serious question to be tried and that it is much more than weak for the following reasons. 79 First, the allegations made by the General Manager of the FWC are serious allegations. On their face they raise serious matters that must be answered. Whilst they are unproven and cannot by themselves weigh too heavily, I weigh them together with the failure to take immediate action, the lack of cooperation with he FWC, and the reprisal conduct directed at Mr Eden for seeking to table those allegations. 80 Second, as to the failure to take immediate action, whilst the Branch was aware of some of the allegations raised by the General Manager of the FWC as early as 26 March 2024 it appears, on the material before me, that an auditor was not appointed until 16 September 2024. Whilst the BCOM was aware of the FWC correspondence on 8 April 2024 and resolved to appoint an auditor, and Ms Asmar said she had appointed BDO as an auditor by 1 July 2024, there was no evidence of the appointment of BDO or any report produced as a consequence of any appointment. 81 Third, I view the reprisal conduct as particularly serious. The conduct directed at Mr Eden was, on the material before me, directed at preventing him from tabling before the BCOM the correspondence from the FWC detailing at least some of the allegations now made by the General Manager. The conduct directed at Ms Macks was, on the material before me, reprisal for her making a complaint under rule 54 of the Union Rules against Ms Asmar. The conduct directed at Mr McGuinness was, on the material before me, reprisal for the information given by him to the Union's solicitor Mr Borenstein and to Mr Eden and then put in evidence in this proceeding. There was no response to those allegations. That reprisal conduct, or part of it is now the subject of further investigation by the FWC. The respondent's counsel noted that the relevant persons had a right to silence if the matter generally ended up in criminal proceedings. Even accepting that, the conduct directed to Mr Eden, Ms Macks and Mr McGuinness is conduct that establishes, to the threshold of a serious question, that the Branch has ceased to function effectively. I am also satisfied, particularly with respect to that conduct, that there is a serious question that there no effective means under the rules to enable the Branch to function effectively. 82 Fourth, it is also telling that Mr Eden, the Branch's Assistant Secretary, submits to the Court that the Branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively. 83 Fifth, for the reasons explained above there remains doubt about whether the legal costs resolution was prematurely made, in circumstances where the Branch had no information from an auditor or other source about the veracity of the allegations. 84 Combining all of those matters I am satisfied that there is a serious question to be tried that the Branch has ceased to function effectively and that there are no effective means under the rules of the Union to enable it to function effectively.

Health Services Union v Asmar

At a glance

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Decision date

Before

Source

Judgment (43 paragraphs)

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Legislation Cited (5)

Cases Cited (11)

Cited By (1)