In the matter of the Conciliation and Arbitration Act 1904 and in the matter of an application under section 141 of the said Act between Cleworth, Joseph Robert v Barrow, J. & Ors [1978] FCA 37

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IN THE MATTER of the Conciliation and Arbitration Act, 1904 as amended

AND IN THE MATTER of an appvlicatic under Section 141 of the said Act.

14 November 1977 pursuant to s.141 of the Conciliation

and Arbitration Act 1904 (the Act) wherein the claimant

a member and Federal Secretary of the Australian Institute of Marine and Power Engineers (the organization) an organization registered under the Act seeks orders to the effect that the respondents, six members of the Committee of Management of the organization ( the C.0O.M.), treat as null and void

two resolutions of the C.O.M. carried at its meeting on

10 October 1977, first that the cla:mant was guilty of a 'charge of misconduct as a result of his non-compliance

with a direction of the C.O.M. and secondly that he accordingly be suspended from office for a period of three months.

The direction of the C.O.M. referred, to was a resolution of the committee carried at its meeting on 8 October 1975 "that the Federal Office administer the above budget and furnish branches with a monthly summary of individual branch expenditure, cumulative total expenditure, remaining budget amounts and the individual variances in each budget account. The Federal office to also supply details on a monthly basis of balances held in all functioning accounts and income received by the institute". The budget referred to was a budget outlining the estimated income and expenditure of the Branches and the Federal Office during 1976 which had been adopted earlier at the meeting of 8 October 1975.

Thereafter and up until October 1976 there had apparently been clashes between the claimant and various members of the C.O.M. relative to his failure to administer the budget and furnish monthly summaries as directed. At its meeting held between 4 and 8 October 1976 the C.O.M. after discussion during which the claimant was present resolved "that the Federal Secretary be censured for failing to comply with the terms of item 59 C.O.M. meeting October 1975". That item refers to the resolution set out above.

At its meeting in October 1976 the C.O.M. further resolved that the responden*~ Brophy as President of the organization carry out an investigation of the financial affairs of the organization and present a budget for 1977. At a special meeting of the C.O.M. held in January 1977 the recommended budget for that year was adopted and it was further resolved that the Branches in addition to forwarding their monthly statements to the Federal office, were to forward copies of such returns to Mr Brophy. Each Branch Secretary was a member of the C.O.M. Thereafter the Federal office should have prepared and circulated statements showing the monthly expenditure

-3-+ and income and budget variances of the organization with

a break down for the Federal office and each Branch. None was circulated by the Federal office for each of the months of February, March, April, May or June 1977. In July 1977 a composite statement for those months was prepared under circumstances later referred to herein.

Between 4 April 1977 and 27 May 1977 the respondent Brophy as Federal President wrote four letters (dated as shown) to the claimant. These letters which were copied to all members of the C.O.M. are as follows :-

Could you please advise as to when the budget report for-February 1977 will be available.

Whilst speaking to Mr Sims today, he advised that we may now be in a positicn to invest part of the General Fund in interest bearing deposits. Could you please advise if this can be done.

Further to my earlier letter dated 4th April, 1977, could you please ensure that the February, March reports, and if possible the April report, are made available to the C.O.M. before it's next meeting so that informal discussion can take place at that meeting.

Could you please forward to the C.0.M., statements of fund balances as at the end of April 1977, together with the budget reports for the project accounts and Branch expenditure.

Since the Sydney property was not sold, it will be necessary in my opinion to revise our current deficiency budget with a view of reducing expenditure and if necessary increasing income.

Further to my letter of the 17th May, 1977, could you please forward to the C.O.M., as a matter of urgency, airrent budget reports.

As I have stated earlier, the present $83,000 deficit budget must be revised in light of our failure to sell the, Sydney property and re-invest the proceeds.

' Consequently, the C.O.M. must as a priority issue, determine how we can finance our expansion costs into the Hospital Award, Fishing Industry, Sewerage Industry and Tasmania. It world be futile to embark on our expansion programme unless we have a firm assessment of our current financial status. I therefore urge you to provide the financial information so that the C.O.M. can make the necessary decisions re the Institute's future financial expenditure.

The claimant did not answer the first and second of these letters and there was no evidence that the third letter was answered. The claimant answered the fourth letter as follows :-

FROM: FEDERAL SECRETARY 31 May 1977 TO: FEDERAL PRESIDENT - c.c. C.O.M. SUBJECT: BUDGET REPORTS

Further to my previous memo, the decision should not be very difficult to reach and should be as follows :

1. Stop playing games with budgets and the like
2. Defer Fisheries and Sewerage until next year
3. Slow down activity in Hospitals

The "previous memo" referred to was not in evidence.

On 29 June 1977 the respondent Brophy again wrote to the claimant - copied to all members of the C.O.M. - as

Further to my earlier correspondence on this matter, could you please advise as to when the C.O.M. will receive the budget reports and fund statements.

You will appreciate that this information is of vital importance to the Institute, particularly now that the Finance Committee reports that we face a minimum deficit of $127,000.

On 4 July 1977 the claimant wrote to the respondent Brophy - copied to all members of the C.O.M. -

as follows : * SUBJECT: BUDGET 4 July 1977 AS AT MAY 31st

• General Fund $34 390
• Insurance Fund (since an I.B.D. 30 000) 30 787
• Reserve Fund 4 000
• Contingency 753.

These figures have already been given to you at tle Finance Meeting.

Budget reports with any accuracy cannot be prepared as there is no figure for Institute expenditure foc the purpose of comparison and the branches are not furnishing variance details in all cases.

A budget based on an accurate foundation may serv=2 its' purpose fully.

The accounting from the branches has been discussed with our auditor and necessary changes are to be introduced in the new financial year.

Your reference to the $127,000 deficit at this stage

is purely a figment of your imagination and the report

12 July 1977 ~- copied to all members of the C.0.M. - as follows

Federal Secretary 12 July, 1977 c.c. C.O.M., Federal Treasurer, Bill Wright and Peter Bourke BUDGET

Your brief report contained in your letter of the 4th instant is completely unacceptable and provides no information of use to the C.O.M.

Accurate budget reports can be prepared given a little knowledge of arithmetic and a little application on your behalf. Uf the Branches do not supply the information you require, it is your responsibility to see that they do - Mr. Dunn cannot be blamed. I must remind you that Mrs Lawrie had no trouble in producing these reports in January, perhaps you wish to blame her?

The projected deficit is not a figment of my imagination. With a little research you will

find that my draft report to the Finance Committee made no reference to the Institute's future financiel position. This point was raised by Mr Inglis and debated by the Committee. The estimated minimum @eficit was calculated after considering information supplied by Mrs Lawrie and Mr Sims, and was agreed to unanimously by the members of the Committee.

Mr Cleworth, it should be as plain to you as the beard on your face and the odour under your arm, that facts are facts. All your ranting and raving will not change this. Stop evading your responsibilities and carry out the instructions of the C.0.M.

The Mr Dunn and Mrs Lawrie referred to in this letter were Account Clerks employed by the Federal office at different periods during 1976 and 1977.

It is clear that the finances of the organization since at least 1975 were, to say the least, unhealthy and that the C.0O.M. had endeavoured to exercise some control of expenditure for that year and for the year 1976. "Nevertheless a levy on the mebers each year had been required. The correspondence of the respondent Brophy, as President of the organization, during the first half of 1977 clearly shows his concern that the financial statements of the branches and the Federal office of the organization were not being furnished by the Federal Secretary to the C.O.M. and that

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of the C.O.M. by the Federal Secretary in accordance with the direction of October 1975.

-~-7- : he felt obliged to persist in his request that such statements and budget variances be taken out and circulated to members The claimant attended en International Labour Organization meeting in Europe in June/July 1977. During his absence the respondent Sims, Secretary of the Sydney Branch became the Acting Federal Secretary. During this period or shortly after Mr Sims produced with the assistance of Mrs Lawrie the budget statements as far as possible from the figures available at the Federal office for all branches and the Federal office for the months of February, March, April, May and June 1977. These were prepared by Mr Sims for a special Finance Committee consisting of the respondents Brophy, Sims and Burge the Victorien Branch Secretary which was appointed to examine and report on the financial position of the Institute and to bring down a supplementary budget for the balance of 1977. Thereafter and up to 10 October 1977, the date when the claimant was suspended from office, no further monthly financial statements were compiled by the Federal i Office in accordance with the October 1975 resolution. The claimant again travelled(at his own expense) to England in September 1977 returning to Australia on 29 September 1977.

The above is a brief history of the background to events commencing on 14 September 1977 with the respondent Burge as Victorian Branch Secretary sending a telegram

"to the respondent Sims as Acting Federal Secretary of the

"Thus/I request that you submit as a matter of urgency, the following rule 11 resolution to the C.O.M. by telegram. That the Federal Secretary be suspended under rule 28(v) for misconduct by his non-compliance to AGM resolution to produce finance reports. This suspension of 3 months to become effective if a satisfactory answer is not given at the 10/10 C.O.M. Meeting.

The Committee of Management shall consist of the Federal Secretary, together with the Secretary of each Branch of the Institute. The voting on business before the Committee of Manajyement shall be by show of hands, provided however that a motion in writing may be submitted to all members of the Committee of Management by the Federal Secretary and if signed by a majority of them shall be valid and effectual as if the same were made in meeting assembled. At meetings of the Committee of Management five (5) officials shall form a quorum.

There are six branches of the organization namely Sydney, Victorian, Adelaide, Western Australian, Queensland

and Newcastle, the respective Secretaries being the respondents Sims, Burge, Brophy, Boorman, Reid and Barrow.

28 - Qualifications and Election etc. of Federal Secretary

(i) The Federal Secretary shall .......2.0.eeeceaee

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(v) He shall be liable to suspension by Committee of Management for any misappropriation of funds, misconduct or insobriety whilst on duty, for a period not exceeding three (3) months. The Committee of Management shall if so desired submit the question of his reinstatement to a general ballot of the financial members of the Institute and during such suspension and whilst on authorised leave, the Committee of Management shail appoint an Acting Federal Secretary to fulfil the duties of Federal Secretary.

On receipt of Mr Burge's telegram of 14 September 1977 the respondent Sims telegraphed each member of the C.O.M. informing them of the so called rule 11 "resolution" and requested telegraph replies as a matter of urgency.

Tendered in evidence were telegrams 'in answer to such request from the respondents Boorman, Brophy, Burge and Reid in the following terms :-

"Re Mr Cleworth suspension under rule 28(5) I agree. «+. MS Boorman WA Secretary "

"Agree Mr Burges rule 11 resolution of 15 Sept 77 .-»- Brophy Adelaide "

"Re rule eleven resolution proposed suspension of Federal Secretary. I support resolution «es P E Burge Victoria Branch Secretary "

"Agree to Committee of Management hearing charges against the Federal Secretary during October COM Meeting.

A further telegram was ~eceived by the Acting Federal Secretary from the Federal Treasurer N.B. Demeral, purporting to be sent on behalf of the claimant, as follows :-

"Rule 11 re Cleworths suspension. I disagree. -»- N.B. Demeral for Cleworth "

On 23 September 1977 Mr Demeral spoke by telephone to the claimant whilst he was in Lcndon saying "I thought you had better know that Burge has put a rule 11 resolution out to have you suspended for non-compliance with A.G.M. resolution 1975 and it is to be dealt with by the C.O.M. on 10 October."

The claimant gave evidence (which was not contested) that the respondent Barrow had not replied to the telegram of the Acting Federal Secretary of 14 September 1977 and that the respondent Sims had abstained. Thus if the "resolution" set out in Mr Sims" telegram to each member of the Committee was a motion in writing within the meaning of r.1l1 there was no majority affirmative vote and accordingly the motion was not valid or effective. The effect (if any) that this may have had is discussed later herein.

Of the six respondents only Messrs. Brophy and Sims gave evidence. A lengthy affidavit sworn by Mr Brophy was tendered. He was called to confirm his affidavit but was not cross-examined at all. No information was given to the Court as to whether the other four respondents

The minutes of the Annual C.O.M. meeting for the first day Monday, 10 October 1977 were tendered in evidence. The claimant agreed that such minutes though not a verbatim report correctly set out the matters discussed and the resolutions passed at the meeting that day. Such minutes show that the meeting opened at 10.30 am and adjourned apparently for lunch at 12.30 pm resuming again at 1.30 pm. No formal agenda had been prepared for the meeting and the minutes show that at the commencment of the meeting an agreed agenda was adopted as a guide. Such agenda consisted of eight items, the first three being :

1. Election of honorary officials,
2. Previous minutes of the C.O.M.,
3. Rule resolutions.

Motions were either moved or seconded by the claimant under items 1 and 2. In addition the claimant spoke on various matters raised under item 2. On resuming at 1.30 pm after the luncheon break the meeting dealt with the minutes of the C.0O.M. meeting held on 19 and 20 July 1977. This matter appears to have taken only a shor« time. Item 3 was then dealt with. The minutes show a heading "Rule 11 Resolutions" with the following "The C.O.M. confirmed the following Rule 11 resolutions" as an introduction to a list of fifteen subject matters with a date and the word CARRIED against each matter.

The fifteenth subject matter is set out thus; "15. Suspension of Federal Secretary - dated 14/9/77 CARRIED"

Thereafter is set out detailed minutes concerning the discussion of what is termed the charge against the claimant and the two particular resolutions. Such minutes covernearly three feolscap pages of single-line space typing and show that these proceedings concluded at 4 pm.

The minutes show that when the rule 11 "resolution" concerning the claimant's suspension was first raised debate ensued wherein the claimant "expressed the view that the motion was out of order." In his oral evidence he stated that the view there expressed was based on the fact that the motion put by Mr Sims to the members of the C.O.M. by telegram on 14 September 1977 had not been signed by a majority of the committeemen and was therefore of no effect. The minutes then read : "Mr Reid stated that he had only agreed to the charge being heard and had agreed to nothing beyond that."

The view expressed by the claimant tends to support a submission made by Mr Kenzie who appeared for the respondents that, as the rules of the organization do not make provision for the preparation and the circulation of an agenda for Annual C.O.M. meetings, a procedure to have matters placed before any such meeting by way of a written rule 11 "resolution" had been adopted. No direct evidence was given that it was the practice to use such a procedure in the past but the submission seems inconsistent with Mr Reid's reply to the telegram.

After Mr Reid had pointed out that he had only agreed to the charge being heard the minutes show that "the Chairman (Mr Brophy) ruled that the charge be heard" and asked the respondent Burge "to speak to the charge". The minutes up to this point do not indicate that a specific charge was read or circulated to the meeting. Thereafter are set out statements of facts alleged by Mr Burge.

These include the October 1975 resolution, the resolution of C.O.M. censuring the claimant in October 1976 and the reading of the correspondence set out above.

Mr Cleworth pointed out to the meeting that the facts as outlined by Mr Burge included references to periods of time before October 1976 and that he had in October 1976 given the then C.O.M. his reasons for his then failure to comply with the 1975 direction and that he had then been censured. Thereupon Mr Reid asked Mr Burge to indicate the extent of his complaint against the claimant. The minutes then read: "Mr Burge stated that he was concerned with the period sirce January 1977" and asked the claimant "if staff had been the problem." Mr Cleworth stated "there was no problem with staff but Mr Dunn had caused considerable

Further discussion ensued during which the respondents Sims, Boorman, Reid and Brophy spoke. During such discussions Mr Cleworth gave certain explanations and reasons for the failure to produce the financial

These reasons were then succinctly summarised by Mr Reid when (according to the minutes) he stated that "he understood Mr Cleworth's answer to the charge was that :

• Federal Office staff has been asked to prepare budget reports
• Federai Office staff had not been able to do this because -

~ some reports did not arrive on time

• the bookkeeping mess left by Mr Dunn had had to be

Mr Reid then asked the claimant "whether Mrs Lawrie or any other person should be invited to comment and answer questions on the business related to the charge" but "Mr Cleworth declined to call/Mrs Lawrie.". The Court was informed that Mrs Lawrie was at the relevant time working in the same office building in which the C.O.M. meeting was held.

A motion was then put by the respondent Burge and seconded by the respondent Boorman "that the charge of misconduct against the Federal Secretary for his non-compliance with the C.O.M.'s direction to provide financial reports, be upheld". The minutes show the voting on this motion to be : For 4, Against 1, Abstained 2. The claimant's evidence was that the four voting for the motion were the respondents Burge, Brophy, Boorman and Reid; the two abstainers being the respondents Sims and Barrow whilst the claimant voted against the motion.

The minutes then show that it was moved by Mr Burge and seconded by Mr Boormar, "that the Federal

Secretary be suspended pursuant to r.28(v) for misconduct for non-compliance with the C.0.M. resolution for a period of

During the ensuing discussion on this second motion the claimant "expressed the opinion that the motion was out of order because there was no misconduct and some of the members of the C.0.M. were biased and natural justice had been denied him."

"-~ The Chairman then asked Mr Cleworth to indicate who was biased as this would influence his decision as to whether the motion was in order. Mr Cleworth declined to name those persons but indicated that he may do so after the motion had been voted on. The Chairman subsequently asked Mr Cleworth in what way had natural justice not been afforded him. Mr Cleworth replied that he was not prepared to discuss this now.

The motion relating to penalty was then put and carried on the vote of 4 for one against and 2 abstaining.

In his oral evidence Mr Cleworth stated that the members whom he claimed were biased at the time of the meeting were the respondents Brophy, Boorman and Reid. As has been earlier stated Mr Brophy was not cross-examined at all when he was called as a witness before the Court. Further, it is of interest to note that the claimant did not allege that Mr Burge wes biased but submitted to the Court that as Mr Burge was in effect the prosecutor of the charge he should not have deliberated on and voted as to the guilt or otherwise of the claimant and should not have been in attendance while such deliberation and voting took place.

By letter dated 11 October 1977 the claimant's solicitor wrote to the respondent Brophy as President of the organization. Such letter includes the following : "We are instructed that on 10 October charges were brought against (Mr Cleworth) and the Committee of Management purported to suspend him persuant (sic)to r.28(v)".

The letter goes on to claim that misconduct had not been

proved and that Mr Cleworth had been denied natural justice

in that (inter alia) the members of the C.O.M. proceeded

to examine and consider the issues with impartiality

and that members of the Committee who were instrumental

in formulating or presenting the charges had voted upon

the issue. It was further claimed that the penalty, being

the maximum provided for under the rules was in the circumstances

relevant times a full time officer of the organization he was entitled to have the rules of natural justice observed

Further, certain evidence was led at the hearing before the Court which appeared to be an attempt to have the charge re-heard by the Court. On any hearing by a Court of proceedings such as the present the Court considers whether reasonable men acting honestly could have come to the Gecision that the domestic tirbunal did (Australian Workers Union v. Bowen (No.2)(1948) 77 C.L.R. 601 at 615.) If the domestic tribunal could have so found, then the Court will not interfere with the finding of that tribunal unless there has ».een a denial of natural justice.

We are of the opinion that the C.O.M. in this case acting reasonably and honestly could have found that the conduct of the claimant between January 1977 and 10 October 1977 in failing to compile and circulate the financial seports in question was miaconduct within the meaning of r.28(v) and that the suspension from office for 3 months was in the circumstances a penalty that the committee so acting could reasonably have imposed.

This finding does not of course conclude the matter. The applicant was entitled to have the C.O.M. when dealing with the charge under r.28(v) act in accordance with the rules of natural justice. This indeed was not denied.

Under these rules he was at least entitled to a hearing and an opportunity of being heard in his own defence and to an unbiased tribunal. It is this latter point which causes difficulty.

'Rule 11 provides two methods by which a C.O.M. may deal with a matter, . First by voting at a meeting and secondly by submitting a motion in writing to members

of the Committee. If signed by a majority of members the written

motion is as effective as if carried at a meeting. In this case the motion by Mr Burge was submitted to members.

Messrs Brophy, Boorman and Burge voted in favour of it. This means that a least they then reached conclusions, first that the applicant was guilty of misconduct, secondly that it was misconduct which warranted suspension and thirdly that it warranted suspension for a period of

True it is that this was only to become effective if he failed to give a satisfactory answer at the October Committee meeting but this effectively reversed the onus

and showed prejudgment by the three members of the Committee.

It was put to us that there was in fact no prejudgment but that the resolution was merely a way of having an item placed on the agenda for a meeting of the C.O.M. The rules provide no method of placing matters on the agenda but as we have pointed out, r.11 deals with two alternative methods of the C.O.M. reaching a decision. Moreover such a view seems inconsistent with Mr Reid's reply to the telegram in which he limited his agreement in terms to the matter being discussed at the Committee meeting. The other three members did not. If their intention was no more than to have the item placed on the agenda it may be they hac not prejudged to any material extent. As they were of course entitled to act on their own knowledge and as a body with administrative, legislative and indeed judicial powers, it would be unreal to think they had not formed any tentative cpinions.

No attempt however was made to lead evidence from them 'before us that they regarded their telegraphic vote as only Placing an item on the agenda or that they had indeed applied themselves to giving a fair hearing to the applicant.

Mr Brophy swore an affidavit but did not touch on this matter. He was placed in the witness box but no evidence was led from him or obtained in cross-examination. The other two members did not give evidence.

-17- In these circumstances we feel we are unable to

depart from the terms of the telegrams and the replies

and that these clearly show a judgment and considered

opinion reached by the three members on the very matters

they were required to inquire into and reach a decision

We therefore think that there was a denial of natural justice in this aspect. Accordingly it is not necessary to consider further whether the claimant was given proper notice and so given an opportunity of being heard in his defence of whether Mr Burge was the accuser or prosecutor of the charge and consequently should not have deliberated upon and voted on the motions or indeed have remained in attendance whilst such motions were discussed and voted upon.

During the course of the hearing the question was raised whether the claimant had waived his rights to have the rales of natural justice applied. Ultimately written submissions were made by both parties. The respondents' submission was that circumstances vould and in fact had arisen in which

a. Either the rights of the person affected to complain of a breach of the rules of

natural justice can be said to have been waived, or alternatively,

b. By virtue of the conduct of the person atfected by the deliberations of the tribunal, either prior to or during the tribunal's deliberations, a situation is reached in which it is true to say that there has been no breach of the rules of natural justice notwithstanding the fact that, in the absence of such conduct, it would be true to say that the rules of natural justice had not been observed.

Having regard to the nature of organizations, the importance and the role they play and their incorporation for the purposes of the Act, we think there is some doubt

whether there can be waiver. It would seem that it is no less important that justice be seen to be done than 2. .-/18..

-18- that it be done in the case of these organizations. However we are satisfied that nothing the claimant did can be said to be a waiver of his rights.

The proceedings were conducted somewhat informally taking the form of a committee meeting rather than any sort of hearing. The committee was of course quite entitled so to do. The claimant objected to the matter being considered at all and at a relatively late stage of the proceedings but well before their completion he objected to the continuance on the ground that some members of the committee were biased against him. In reply to questions

however he refused to name the persons so concerned.

However the matters constituting bias which could have been present to his mind and which we have held did show bias were all well known to all members of the committee. We think then that the fact that he did not immediately raise the question of bias and that he refused to name the persons concerned are not sufficient

In these circumstances we would make an order that the respondents perform and okserve the rules of the organization by treating as null and void the resolutions of the Committee of Management carried at its meeting on 10 October, 1977 finding the claimant guilty of a charge of misconduct and suspending him from office for a period of three months.