Consideration
69 The appellant's grounds of appeal allege, in summary, that the primary judge erred by failing to hold that the Rules impose conditions, obligations or restrictions upon members allocated to the VLD that are oppressive, unreasonable or unjust. More specifically, the appellant complains that:
(a) the Rules fail to make specific provision for funds to be provided to the VLD to enable the VLD to carry out its prescribed functions under the Rules;
(b) the Rules do not contain any requirement that the VLD be provided with a sufficient proportion of membership contributions to enable the VLD to effectively discharge its prescribed duties and functions under the Rules.
70 Section 142(1)(c) of the Act provides, relevantly, that the rules of an organisation:
…must not impose on…members, of the organisation, conditions, obligations or restrictions that, having regard to Parliament's intention in enacting this Act (see section 5) and the objects of this Act and the Fair Work Act, are oppressive, unreasonable or unjust;
71 Where the rules of an organisation contravene s 142(1)(c), the Court retains a discretion whether to make a declaration under s 163(2) or s 164B(3): see R v Spicer; Ex parte Foster (1958) 100 CLR 163 at 168; Cook v Crawford (1982) 43 ALR 83 at 156-158.
72 Section 142(1)(c) requires that regard must be had to the objects of the Fair Work Act. Section 3 of the Fair Work Act refers, inter alia, to recognition of the right to freedom of association and the right to be represented.
73 Section 142(1)(c) also requires that regard must be had to Parliament's intention in enacting the Act. That intention is stated in s 5(1) and (2) to be to "enhance relations within workplaces" and "reduce the adverse effects of industrial disputation" by specified means, including by requiring organisations to meet the standards set out in the Act. Under s 5(3), those standards include ensuring that organisations are able to operate effectively; encouraging the efficient management of organisations; and providing for the democratic functioning and control of organisations. The expression "having regard to" requires that Parliament's intention be taken into account, considered and given due weight: see R v Hunt; Ex parte Sean Investments Pty Ltd (1979) 25 ALR 497 at 504, 508; Municipal Officers' Association of Australia v Lancaster (1981) 37 ALR 559 at 578-579.
74 The first question is whether the absence of any rule requiring funding of the VLD would amount to the imposition of any "condition, obligation or restriction" on members allocated to the VLD. The appellant identifies the "condition" imposed by the Rules on such members as that their industrial representation is to be provided by the VLD but is to be provided without any allocation of funding. The asserted "obligation" is that the members' elected representatives are to provide representation and administration of the VLD, but without any allocation of any funding. The asserted "restriction" is that the members are deprived of any source of revenue for the VLD to provide its representational functions. As was the case before the primary judge, the respondents do not dispute that the Rules may impose a relevant condition, obligation or restriction. Like the primary judge, we will proceed on the basis of the respondents' apparent concession.
75 The second question is whether the primary judge erred in holding that the condition, obligation or restriction imposed by the Rules was not "oppressive, unreasonable or unjust".
76 There is a lengthy history of provisions similar to s 142(1)(c) of the Act in Commonwealth statutes. Such provisions appeared in s 60(1)(d) (and then s 140(1)(c)) of the Commonwealth Conciliation and Arbitration Act 1904 (Cth); s 196(c) of the Industrial Relations Act 1988 (Cth); and s 196(c) (and then s 142(1)(c)) of Sch 1 to the Workplace Relations Act 1996 (Cth). The objects of such legislation, like the objects of the Act, included encouraging democratic control of registered organisations. In that context, the Court has consistently cautioned against too readily interfering with the rules of a registered organisation determined democratically by members and their elected representatives.
77 Accordingly, in Imlach v Daley (1985) 7 FCR 457 at 462-463, Evatt and Northrop JJ emphasised that:
[A]n organisation, provided it complies with the requirements of the Act, the regulations and its rules, is able to mould its internal structures as it thinks fit. It is not for the court to mould those structures to a form which the court considers desirable.
(See also Wright v McLeod (1983) 6 IR 203; 51 ALR 483.)
78 In McLeish v Kane (1978) 22 ALR 547, the Full Court observed at 557:
Our task, as we see it, is to have regard to rules and their reasonableness in the light of the manner they affect democratic control and the manner they may affect the viability of an organization. This is a task to which it is not possible to apply a formula.
79 In Municipal Officers' Association of Australia v Lancaster, Deane J held at 589:
The constraints and restrictions imposed, by positive and negative requirements of the Act and Regulations, upon the freedom of the members of an organization to select, for themselves, the rules which they consider appropriate for their particular organization, are real and significant. It cannot, however, be too strongly stressed that, subject to those constraints and restrictions, the content of the rules of a registered organization is primarily a matter for the members. This Court has no authority generally to supervise the content of the rules or to require that the rules comply with what those constituting the court might see as preferable, desirable or ideal. To put the matter differently, it is for the members, or those entrusted by the members in that regard, to decide the content of the rules. The function of this Court is to determine, in accordance with ordinary judicial procedure, whether some provision or provisions of the rules adopted by, or on behalf of, the members can properly be described not merely as undesirable but as oppressive, unreasonable or unjust.
(Citations omitted.)
80 In Doyle v Australian Workers' Union (1986) 12 FCR 197, the Full Court held at 205:
The starting point of any s 140 [Conciliation and Arbitration Act] case is the right of an organisation to choose its own rules and internal structures, within the framework provided by the Act.
81 In Municipal Officers' Association of Australia v Lancaster, Deane J went on at 589-590 to consider when conditions, obligations or restrictions provided for by an organisation's rules might be "oppressive, unreasonable or unjust":
There is nothing in the context of s 140(1)(c) which would justify giving an expansive construction of the requirement that the conditions, obligations or restrictions imposed by the rules of an organization upon applicants for membership or members not be "oppressive, unreasonable or unjust". Those three words are used objectively in the clause and each of them is to be given its ordinary strong meaning. Plainly, their meanings overlap and definition is liable to adulterate the strength which the words possess. Nonetheless, it seems desirable that I indicate the meaning which I ascribe to them. To be oppressive, a condition, obligation or restriction must be burdensome, harsh and wrongful. To be unreasonable, it must be immoderate and inappropriate. To be unjust, it must be contrary to right and justice and to ordinary standards of fair play.
(Citations omitted.)
82 These observations have been cited with approval in Imlach v Daley at 463 (Evatt and Northrop JJ); Moffitt v Vehicle Builders Employees' Federation of Australia (1985) 11 IR 174 at 175 (Smithers, Keely and Wilcox JJ); Pearce v Vickers (No 2) (1995) 130 ALR 385 at 395 (Wilcox CJ and Moore J); Brown v Health Services Union (2012) 205 FCR 548 at [83]-[85](Flick J).
83 In Doyle v Australian Workers' Union, the Full Court at 205-206 explained the importance of context in determining whether a rule is oppressive:
The primary justification for the existence of a rule of an organisation is simply that the organisation has adopted that rule. It is then necessary to apply s 140(1)(c) to the particular provision, measuring its effect. The Act assumes that the rules of an organisation may impose conditions, obligations or restrictions which are not oppressive, unreasonable or unjust. The mere imposition by the rules of conditions, obligations or restrictions is not evidence that those conditions, obligations or restrictions, are oppressive, unreasonable or unjust. Their effect must be examined, in the particular circumstances of the organisation, and by reference to both the objects of the Act, and the purposes of the registration of organisations under the Act. … In undertaking this process, it may be that the Court will look for some rational explanation for the presence of a particular rule, or some such explanation may be advanced in justification of a rule.
84 The rules must also be examined in the context that the fundamental purpose of a registered organisation is to promote the interests of its members, and the rules of an organisation are intended to allow the organisation to operate effectively and viably towards achievement of that objective. In Allen v Townsend (1977) 31 FLR 431, Smithers J observed at 437-438:
The rules of the federation deal in considerable detail with the organization of the federation and the mutual relationships of the organization and the branches and the administrative authority of their managing councils and committees and officers. They thus provide the administrative machinery for the organization to carry on its business. That business is the promotion of the interests of the members as set out in the statement of its objects. It is the performance of that business which is the raison d'être of the existence of the federation. It is the purpose of the rules to establish an organization every part of which is to engage in the promotion of those interests. Each administrative section of membership created by the rules is thus concerned with a dual aspect of union life, namely administration of union government according to the rules, and conduct of a substantive kind for promoting the industrial and other interests of the members specified in the statement of objectives. This conduct is not particularized in the rules. There is no need to do so.
85 The appellant summarised his case in the following way in his written submissions in reply:
…the issue on appeal is whether the Rules are oppressive, unreasonable or unjust because they do not guarantee any funds to the VLD in the circumstances where the Rules impose obligations on the VLD to administer the affairs of its members.
86 In his oral submissions, the appellant contended that:
[The VLD] is given functions to perform, but there's no provision for the funding to perform those functions. Now, that's the essence of our complaint.
87 The appellant also submitted that, "the Rules should provide a prescription that funds be provided"; and, "where you have a governing body higher up in the hierarchy, which has, effectively, an uncontrolled discretion to dole out money or not dole out money, that's not satisfactory".
88 These passages reveal several interrelated difficulties with the appellant's argument.
89 First, the appellant's argument proceeds upon a premise that the Rules do not require the Victorian Branch to fund the VLD when, as will be seen, that premise is not established.
90 Second, the Act and the Rules provide for democratic control of the Union, its Branches and Divisional Branches, including over the Union's funds and the content of the Rules. That includes hierarchies of decision-making power by officers who have been elected by members. When considering whether the Rules are oppressive, unreasonable or unjust, the objective of democratic functioning and control of organisations is required to be considered as part of the standards mentioned in s 5(3) of the Act, but that matter was glossed over in the appellant's submissions.
91 Third, the appellant does not assert that the provisions of the Rules which impose obligations on the VLD are themselves oppressive, unreasonable or unjust. Rather, the appellant's complaint is about the absence of any rule requiring the provision of funding, or sufficient funding, for the VLD. An assertion that the Rules are oppressive, unreasonable or unjust because of the absence of a rule naturally calls for identification of what the content of the missing rule might be (see also s 163(7) of the Act which deals with alteration of rules after the Court has made a declaration they contravene s 142) and consideration of whether it would provide a practicable solution to the asserted problem. However, what such a rule might look like was only outlined by the appellant in the most general way.
92 Fourth, the appellant's argument proceeds upon an assumption that it is only necessary to consider how the Rules may affect members within the VLD. However, the defect asserted to exist in the Rules would affect not just the VLD, but all Branch Divisions (and, for that matter, Sub-Divisions), and therefore all members of the Union. This is not the more usual type of case where the rules of an organisation are alleged to discriminate against a particular class of members: see, for example, Bramich v Transport Workers Union of Australia at [36]; Municipal Officers' Association of Australia v Lancaster; Doyle v Australian Workers' Union. As the appellant seeks to effectively require the imposition of a uniform basis for calculating funding to the various Branch Divisions, consideration is required to be given to the effect of such a change upon the Branch Divisions and members as a whole.
93 In assessing the appellant's argument, an appropriate starting point is to identify the obligations imposed by the Rules upon each Branch Divisional Committee and, therefore, upon each Branch Division. Rule 58(1) provides:
Each Branch Division shall have a Branch Divisional Committee. Subject to these Rules and the policies and decisions of the National Council, the National Executive, the Branch Council and the Branch Executive, the Branch Divisional Committee shall have management of those aspects of the Branch's operations which affect members of the Branch Division only.
94 The Branch Divisional Committee's function is to manage, "those aspects of the Branch's operations which affect members of the Branch Division only". The objects of the Union listed in rule 5 are as broad as improving, protecting and fostering the best interests of members; taking all necessary steps and actions for the purpose of securing satisfactory industrial and working conditions, remuneration and other conditions; obtaining preferential treatment for members in their employment; and assisting members to address grievances. The extensive array of objects demonstrates that the operations of a Branch, and consequently a Branch Division, are potentially very broad.
95 Rule 8(1) provides that every member is to be allocated to a Branch Division. The Rules envisage that the Branch Divisional Committee will, at least substantially, undertake or arrange the representation of members allocated to the Branch Division (rule 58(1)); and that each Branch Division will retain a degree of autonomy in the management of their operations (rules 58(1), 21(8), (11) and (12)). That is a reflection of the history of amalgamation of the four organisations which formed the Union. It can be accepted that the Rules envisage not only a broad range of operations by Branch Divisions, but a need for funding to allow them to carry out their operations.
96 However, the extent of the responsibilities of Branch Divisions fall for consideration in the context of the overall organisational and decision-making structure established under the Act and the Rules. Under s 27(a) of the Act, a registered organisation is a body corporate. A Branch or Branch Division has no separate corporate character but is, "an integral part or section of the whole federation having that degree of autonomy which is permitted to it by or under the constitution of the federation": see Williams v Hursey (1959) 103 CLR 30 at 81 (see also 89, 130). While members "belong" to a Branch (rule 7(1)) and are "allocated" to a Division (rule 8(1)), the members are members of the Union, not a Branch, Division or Branch Division: see s 166 of the Act; rules 10 and 17 of the Rules; Williams v Hursey at 130. Further, under rule 21(1), "Branch Funds" and "Branch Divisional Funds" are part of "[f]unds of the Union". While such funds are administered by a Branch or Branch Division, they do not belong to a Branch or Branch Division. The degree of autonomy of any Branch Division is confined within and by the hierarchy of decision-making authority established by the Rules.
97 The Rules do not provide for a Branch Division to be directly funded by members who are allocated to that Branch Division. Instead, rule 11(1) requires that members pay subscriptions, entrance fees and levies, "to the relevant Branch Secretary". Under rule 21(4)(ii), a Branch Fund includes, "the amount of subscriptions received by the Branch less any amount payable to the National Organisation by way of capitation fees".
98 The appellant's submission that the Rules make "no provision" for funding by Branches to Branch Divisions for the discharge of their duties cannot be accepted. Rule 21(4) requires that the Branch Fund, "shall be used for the administration and management of the Branch…". A "Branch Division" is defined in rule 3 as a National Division "operating within a Branch" and is a constituent part of a Branch. The "administration and management of the Branch", accordingly, encompasses the administration and management of a Branch Division. The respondents concede that rule 21(4) requires a Branch Council and Branch Executive to use Branch Funds for the administration and management of Branch Divisions.
99 However, the appellant submits that on its proper construction, rule 21(4) only requires that Branch Funds be used for the administration and management of "the Branch as the Branch", but not for the administration and management of Branch Divisions. In support of that construction, the appellant relies on rule 21(9), which provides that, "[a]ll liabilities arising out of the administration and management of the Branch Division…shall be the responsibility of the Branch Division". The appellant argues that rule 21(9) would not be needed if rule 21(4) provided for funding of Branch Divisions.
100 In response, the respondents point out that under rule 21(8), a Branch Divisional Fund includes, "any monies received from the Branch", and submit that rule 21(4) envisages that a Divisional Branch is to be funded by the Branch in one of two ways: either the Branch may make payments to a Branch Division and the Branch Division is then responsible for meeting its expenses pursuant to rule 21(9); or the Branch Division pays the expenses it incurs and then recovers the amounts from the Branch.
101 As has been observed, the Rules allocate each member to a Branch Division (rule 8(1)) and impose obligations on each Branch Division (rule 58(1)), but require the members to pay subscriptions, entrance fees and levies to a Branch (rule 11(1)), which become part of the Branch Funds administered by the Branch Council and Branch Executive (rule 21(4)). It can be accepted that if the Rules failed to require the Branches to provide funding to any Branch Division to carry out its operations, the Rules would be productive of oppression, unreasonableness or injustice to members within that Branch Division. However, as the Rules are intended to facilitate the effective governance of the Union in pursuance of the best interests of its members, it should not readily be inferred that the Rules are intended to operate in a way that is oppressive, unreasonable or unjust to its members. The respondents' construction of the relationship between rule 21(4) and rule 21(9) is the preferable one. The proper construction of rule 21(4) is that a Branch is required to use Branch Funds for the administration and management of the Branch as whole, including its constituent Branch Divisions.
102 It should be observed that rule 21(9) is only relied on by the appellant for an argument that rule 21(4) applies to funding of "the Branch as the Branch". The appellant concedes that it is not part of his argument that any conditions, obligations or restrictions on members arising under rule 21(9) are themselves oppressive, unreasonable or unjust.
103 Accordingly, the appellant's submission that the Rules, "do not guarantee any funds to the VLD", cannot be accepted.
104 A second aspect of the appellant's argument is that Rules are oppressive, unreasonable or unjust because they fail to guarantee a level of funding for the VLD that is adequate for the conduct of its operations. However, the appellant's submissions failed to explain precisely how a rule could be drafted that would provide for a guaranteed minimum level of each Branch Division (and, for that matter, each Sub-Division with responsibilities under the Rules). The appellant submits that a rule could fix the amount of funding for each Branch Division at a particular percentage of a Branch's income, but did not suggest what that percentage should be, or how it ought to be determined. The appellant submitted, alternatively, that there could be a rule requiring that a Branch, after deducting its expenses from the subscriptions, distribute the surplus to its Branch Divisions in proportion to their number of allocated members.
105 There are difficulties with either model suggested by the appellant which may themselves be productive of oppression, unreasonableness or injustice. Self-evidently, the need for funding will vary from time to time within a Branch Division and will also vary amongst Branch Divisions. The number of members for whom each Branch Division is responsible will be different. The need for representation of members by each Branch Division will change, depending upon all manner of factors such as economic conditions, technological changes, redundancies, bargaining for enterprise agreements and legislative and regulatory changes. So, for example, where an industrial issue arises affecting the members attached to a particular Branch Division, there may be a substantially greater need for greater funding of that Branch Division and a consequential need to reduce funding to other Branch Divisions from the Branch's finite resources. There may be, from time to time, a need for more funding for a particular Branch Division than can be provided from the subscriptions of members attached to that Branch Division, suggesting that the appellant's suggestion of a model by which the Branch must pay to each Division a fixed proportion of the subscriptions paid calculated according to the number of members attached to each Division may be impracticable.
106 Further, a Branch Divisional Committee's operations are expressed in rule 58(1) to be, "[s]ubject to these Rules and the policies and decisions of the National Council, the National Executive, the Branch Council and the Branch Executive". Such policies and decisions can affect the nature, extent and cost of services provided by a Branch Division to members, which may in turn affect the funding needs of a Branch Division. It is readily understandable, for example, that policies may be implemented to limit wastage of resources through inefficiency or extravagant spending. It is unnecessary to consider the precise extent to which the Rules may allow such policies and decisions to affect the functions of a Branch Division: cf Bramich v Transport Workers' Union of Australia at [36]. It is enough to observe that the expenses of a Branch Division and its need for funding may change from time to time in accordance with policies and decisions made by the relevant governing bodies.
107 The adoption of models of the type suggested by the appellant which fix funding at a particular percentage or by a particular formula would lack the flexibility that the Rules presently provide by entrusting the decision-making concerning funding under rule 21(4) to each Branch Committee and Branch Executive. While the respondents do not carry any onus of justifying a challenged rule by reference to the good governance of the organisation (Doyle v Australian Workers' Union at 205-206), the fact that they have demonstrated a clear, logical and cogent basis for the present rules for the making of funding decisions means that the failure of the Rules to adopt a different model is unlikely to be oppressive, unreasonable or unjust.
108 The appellant submits that even if rule 21(4) requires the provision of funding, it confers a discretion on the Branch Council and the Branch Executive as to the amount and terms of funding and the potential for misuse of that discretion makes the Rules oppressive, unreasonable or unjust. The appellant relies on Hodder v Australian Workers' Union (1985) 9 FCR 498, where Pincus J held at 502:
To some extent the argument before me proceeded on the assumption that it was the practical operation of the rules, as demonstrated by past experience, which had to be considered, rather than the operation of which they are capable…Like the constitution of a nation, the rules of a union, whatever their content, may from time to time be applied in a fair or unfair way. It is not their mode of application, as it may appear to the Court at the date of a hearing, which section 140(1)(c) requires to be examined, but their true effect.
109 The appellant submits that it is necessary to examine how the Rules may operate, not how they have been applied from time to time. The appellant argues that, "the Rules should provide a prescription that funds be provided, not that they might be provided depending on what side of the bed you got out of on a particular day or the political alignment of the branch people with the divisional people and so on".
110 However, r 69(1) provides:
A person holding an Office within the Union shall carry out his/her role in an honest, competent and diligent manner. He/she shall abide by these Rules and the policies and decisions of the Governing Bodies of the Union.
111 Further, s 287(1) of the Act expressly prohibits an officer of an organisation or a branch from improperly using their position to cause detriment to the organisation or to another person. Further, s 286(1) of the Act requires that officers of an organisation or a branch exercise their powers and discharge their duties: (a) in good faith in what they believe to be the best interests of the organisation; and (b) for a proper purpose. It may be noted that s 283 restricts the application of s 287 to the exercise of powers and duties related to the financial management of the organisation or branch. Section 286(1) makes express what was held by Evatt and Northrop JJ in Scott v Jess (1984) 3 FCR 263 at 269 to be implicit:
Officers of an organisation are under a duty to exercise powers conferred upon them by the rules of the organisation bona fide for the purposes for which the powers are conferred. That is a statement of principle having general application to officers of organisations.
(See also Allen v Townsend at 483 (Evatt and Northrop JJ).)
112 The appellant's argument that the Rules are deficient by their failure to provide protection against the potential for misuse of the power to make funding decisions cannot be accepted.
113 The appellant's argument fails to acknowledge that the decision-making structure of the Union is ultimately determined by the members under a democratic process. A concept that lies at the heart of any employee organisation is protection of the interests of all its members through collectivisation of resources. The decision-making model adopted under the Rules recognises that allocation and application of the Union's resources will involve value judgments. Two things necessarily flow from that: first, the considerations informing those judgments will vary from time to time; and, second, some group of persons must make those judgments. Under the Rules, such judgments are to be made by the Branch Council and Branch Executive.
114 The Branch Council is the highest deliberative body in a Branch, but its powers are subject to the policies or decisions of the National Council or the National Executive (rule 42(1)). The functions of each Branch Divisional Committee are also subject to the policies and decisions of the National Council and Executive and the Branch Council and Executive (rule 58(1)). Each Branch Sub-Division has such operations as are determined by a Branch Divisional Committee (rule 59(1)). Each of these offices is determined by election (rule 70 and s 182(1) of the Act). The Rules accordingly establish democratic structures and processes to determine who are the persons entrusted with making decisions in the best interests of its members. The Rules entrust to each Branch Council and Branch Executive the power and responsibility to make decisions about the allocation of resources to Branch Divisions that fulfill the objects of the Union.
115 The National Council has power (rule 87(1)) to rescind, alter or amend the Rules. The members of the National Council are ultimately subject to democratic election by the members (see rules 28 and 29). The legislative intention expressed in s 5 of the Act makes it plain that it is generally for the members of a registered organisation and their elected representatives to decide the content of the rules.
116 As Deane J explained in Municipal Officers' Association of Australia v Lancaster at 589, the words "oppressive, unreasonable or unjust" are to be given their "ordinary strong meaning". It is not enough for the appellant to merely point to some alternative form of model for funding of Branch Divisions that might be seen as desirable or even preferable.
117 The appellant has not demonstrated any error on the part of the primary judge in determining that the Rules do not impose on members of the Union conditions, obligations or restrictions that are oppressive, unreasonable or unjust.
118 The appeal must, accordingly, be dismissed.
I certify that the preceding one hundred and eighteen (118) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Rangiah, Wheelahan and Raper.