Newcastle Master Builders' Association, Re [2007] NSWIRComm 57

Australia Building Construction Employees & Builders' Labourers' Federation (1978) 46 FLR 488 CASES CITED: Food Preservers' Union, Re (1998) 79 ALR 138 Liquor, Hospitality and Miscellaneous Union, New South Wales Branch [2006] NSWIRComm 244 Seamens' Union of Australia New South Wales Branch, Re [2001] NSWIRComm 151

HEARING DATES: 26 February 2007 EXTEMPORE JUDGMENT DATE: 26 February 2007

APPLICANT LEGAL REPRESENTATIVES: Mr David Eric Collinge Solicitor Gillis Delaney Lawyers

Application by The Newcastle Master Builders' Association for determination of question of invalidity and consequential orders pursuant to s 288 of the Industrial Relations Act 1996

1 On 22 December 2006 the Newcastle Master Builders' Association, an organisation registered pursuant to the provisions of the Industrial Relations Act 1996, made application pursuant to s 288 of that statute, firstly, for a declaration of invalidity in respect of an election held by the applicant organisation in 2006, and, secondly, for consequential orders validating the election and the actions and decisions of the Board of the applicant organisation since that purported election. 2 Accompanying the original application was an affidavit of Leonard Frederick Blakeney, the Executive Director of the applicant, sworn 21 December 2006. Mr Blakeney has held that position since July 2004 and, as such, is responsible for the day-to-day management of the organisation's affairs under the policy direction of the organisation's Board and responsible for the implementation of the decisions of the Board. Understandably in that role he also attends all Board meetings.

3 Also, in the affidavit, Mr Blakeney deposed that in approximately March 2006 he was directed by the organisation's Board to make arrangements for an election for members of the Board, in accordance with the rules of the organisation, such election being required under the rules to be held every two years and the last election having been held in 2004.

4 Between the 2004 election and 2006 election the then Executive Director of the organisation left its employ and the former Director had made all the arrangements for elections in the period he held office between approximately 1992 and 2004. Mr Blakeney, at the time of the 2004 election, was employed as the Business Manager of the Association but had no involvement in or direct knowledge of the electoral process.

5 Upon receiving the Board's direction in 2006 he consulted the rules of the Association and in order to comply with the rules, as he understood them, he approached Mr Gregory Kerr, a Newcastle based industrial relations consultant, who had been engaged by the Association in regard to several matters over the years, and asked him to act as an independent returning officer for the election. Mr Kerr agreed to the request and conducted the election process and provided a report for the President of the Association dated 11 August 2006 declaring the result of the election. A copy of that report was annexed to Mr Blakeney's affidavit. Certain positions, which were the subject of the election, had been declared elected somewhat earlier because in respect of these positions there were more candidates than offices to be filled, so the electoral report dated 11 August 2006, was in respect of only those offices, for which there were more candidates than positions to be filled and for which an election was required.

6 Mr Blakeney also in his original affidavit deposed that he was not aware of the statutory provisions which require the prior approval of the Industrial Registrar to be sought for the conduct of an election and the appointment of a returning officer other than the New South Wales Electoral Commission or certain other returning officers. He only became aware of those requirements in mid October 2006 when the solicitor acting for the Association in relation to the preparation of the amendments to the organisation's rules, brought to his attention a query that had been raised by staff in the Registrar's office following the submission of a draft amended set of rules to that office for review. 7 That led to Mr Blakeney reviewing some historical files of the organisation and this showed him for the first time the steps that had been taken in accordance with the Act in 2004 to obtain certain approvals or exemptions from the Industrial Registrar concerning the election at that time.

8 In the affidavit of December last year Mr Blakeney deposed: Since the declaration of the ballot by the Returning Officer, the persons elected have assumed office as Board Members and the Board so constituted has carried out its role of management of the Association. Through carrying out the duties described at paragraph 3 above I am in position to know that the Board so constituted has been treated by the officers and members of the Association as properly being members of the Board and holders of their respective offices in the Association. I have not received any communication from any officer or member of the Association querying the result of the election or the right of the persons declared to have been elected to hold office as members of the Board of the Association and manage the affairs of the Association.

9 The matter came before me for directions on 30 January 2007. Mr Collinge, solicitor, appeared for the applicant, there being no appearance for any other interested parties or persons. At that time directions were made with the full co-operation of the applicant to ensure that members and creditors of the organisation were advised of the application and given an opportunity to raise any concerns in relation to the making of the orders sought in it. At the time directions were also made providing for an amendment to the application, if that was thought to be appropriate.

10 On 23 February 2007, in accordance with the directions made, a number of documents were filed by the applicant, these documents were; (a) Amended application for declaration of invalidity and validation of election;

(b) A further affidavit of Mr Blakeney sworn 22 February 2007;

(c) An affidavit of David Eric Collinge, solicitor, a partner in the firm Gillis Delaney, solicitors for the applicant. 11 Turning briefly to the amended application, most of the amendments contained in this application are by way of minor or typographical clarification. The only substantive change is that the original application referred only to an election which occurred in July 2006, whereas the amended application refers to an election, or perhaps more correctly, stages in the election which occurred, firstly, in June 2006 and, secondly, in August 2006 and which were respectively declared on 19 June and 11 August 2006.

12 The most recent affidavit of Mr Blakeney indicates that he caused to be produced from records maintained by the applicant organisation a list of its members. A copy of that list in an abbreviated form is annexed to the affidavit. Mr Blakeney also deposed that on 6 February he caused to be produced from records maintained by the organisation a list of its creditors at the time of the Board elections in 2006 and a list of creditors at the present time. Lists of creditors at those respective times were also annexed to his second affidavit.

13 On 12 and 13 February 2007 Mr Blakeney caused to be sent, respectively to creditors and members identified in the respective lists, notices advising them of the application before the Court and informing them of their right to appear. It is unnecessary to set out the terms of the notices. It is sufficient to note they comply with the letter and spirit of the directions the Court made on 30 January 2007.

14 Mr Blakeney deposes that no members of the organisation or creditors had served a copy of a Notice of Appearance on the organisation, or otherwise indicated an intention to appear (it should be noted that the directions required any person intending to appear today to file a Notice of Appearance and the notice to the members and creditors made clear that that was a requirement of an appearance today).

15 The affidavit sworn by Mr Collinge indicates that his firm had received no communication from any person in respect of the application, nor had he been served with any Notice of Appearance.

16 I should record here findings which I consider appropriate to be made in the course of determining the application. The first finding is that, notwithstanding any invalidity which has occurred, to which I will refer in some short detail later, I consider that there was no intention on the part of any relevant person that such an invalidity occur and that the organisation and the relevant officers have acted bone fide in all relevant respects.

17 I also conclude that all the relevant persons who, at pertinent times, have had dealings with the organisation, whether as a member or creditor or otherwise, have been made aware of the proceedings and the orders sought. To the extent there are any divergences between the original application and the amended application, I consider that they are minor and do not affect the substance of the original application. Nothing turns upon the possibility that a member or creditor may not be aware of the precise terms of the amendment as proposed to the original application.

18 I also find that no injustice, and certainly no substantial injustice, would occur to the organisation or any person having dealings with the organisation, including members or creditors thereof, if the Court decided to make the orders sought.

19 Mr Collinge, solicitor, who appeared for the organisation throughout the proceedings and helpfully provided assistance to the Court, in terms of the documentation provided, written submissions and also reference to earlier decisions of the Court, submitted that the Court could and should properly make the orders sought. The authorities provided are two judgments of his Honour the Vice-President firstly, in Re Seamens' Union of Australia New South Wales Branch [2001] NSWIRComm 151 and Liquor, Hospitality and Miscellaneous Union, New South Wales Branch [2006] NSWIRComm 244. I do not wish to say a great deal further about the approach that should be adopted to the relevant statutory provisions over and above what is contained in those judgments, except to say that I agree with the approach adopted by his Honour.

20 I also add that the relevant part of the Act, that is Division 10 (entitled Validating provisions) of Part 4 of Chapter 5 of the Industrial Relations Act, contains very important provisions which date back to the report of the late Justice J B Sweeney of the Federal Court when he conducted an inquiry in relation to the legal difficulty which had confronted registered organisations in the federal sphere and also, to an extent, in State jurisdictions.

21 The present sections, although not frequently used in this jurisdiction, still seem to bear a significant resemblance to the provisions enacted following his Honour's report as to the then Conciliation and Arbitration Act 1904 (Cth). 22 It is perhaps appropriate to put the section under which the applicant has moved (that is, s 288) in its context. Section 284 is the definitions section of the relevant Division and defines the key word and concept of "invalidity" in very wide terms, as including not only the concept "nullity" but also, without limiting the generality of that notion, as including "any invalidity resulting from an omission, defect, error, irregularity or absence of a quorum" or caused by (amongst other things) an invalidity in an election.

23 Section 285 relates to the validation of certain acts done in good faith and has the general effect, subject to other orders which may be made under the statute, of validating all acts done in good faith by a collective body of an organisation, or by persons purporting to act as such a collective body, notwithstanding any invalidity that may be later discovered in the election or appointment of the collective body or in the making, alteration or rescission of a rule of the organisation.

24 Section 286 provides, but again is expressed to be subject to other orders which may otherwise be made under the statute, that after the end of four years from the doing of any act, including an act carried out by persons purporting to act as a collective body, the act or other similar action of the organisation or collective body is taken to have been done in compliance with the rules of the organisation. The section under which the applicant moves, as earlier indicated, s 288, is in the following terms:

288 Commission may make orders in relation to consequences of invalidity (1) An organisation, a member of an organisation or any other person having a sufficient interest in relation to an organisation may apply to the Commission for the determination of the question whether an invalidity has occurred in: (a) the management or administration of the organisation, or (b) an election or appointment in the organisation, or (c) the making or alteration of the rules of the organisation. (2) On an application under subsection (1), the Commission may make such determination as it considers appropriate.

(3) If, in a proceeding under subsection (1), the Commission determines that an invalidity of a kind referred to in that subsection has occurred, the Commission may make such order as it considers appropriate: (a) to rectify the invalidity or cause it to be rectified, or (b) to negative, modify or cause to be modified the consequences in law of the invalidity, or (c) to validate any act, matter or thing rendered invalid by or because of the invalidity. (4) Where an order is made under subsection (3), the Commission may give such ancillary or consequential directions as it considers appropriate.

(5) The Commission must not make an order under subsection (3) without satisfying itself that such an order would not do substantial injustice to: (a) the organisation, or (b) any member or creditor of the organisation, or (c) any person having dealings with the organisation. (6) The Commission may determine: (a) what notice, summons or rule to show cause is to be given to other persons of the intention to make an application or an order under this section, and (b) whether and how the notice, summons or rule should be given or served and whether it should be advertised in any newspaper. (7) This section applies: (a) to an invalidity whenever occurring (including an invalidity occurring before the commencement of this section), and (b) to an invalidity occurring in relation to an association before it became an organisation.

25 I agree with what has been said by his Honour the Vice-President in the two decisions earlier quoted, that what is a jurisdictional prerequisite for the making of validation orders, is a finding of invalidity (see s 288(3)) and that, in the exercise of its discretion, the Court may not make an order rectifying the invalidity unless it makes a finding of the kind set out in s 288(5), that the order made would not do substantial injustice to the organisation, any person having dealings with the organisation or members or creditors of the organisation.

26 In Mr Collinge's helpful submissions he points to the circumstances which led to the invalidity identified in the application. In that regard he refers to clause 31(2) of the Industrial Relations Commission (General) Regulations 2001, which provides that the provisions of ss 442 to 451 of the Industrial Relations Act 1991 apply in this case as does the regulations made under s 249 of the 1996 Act because specific regulations under the later Act have not been made. Clause 31(2) applies the earlier provisions on a transitional basis until such provisions are made.

27 He further pointed to s 444(1) and s 446(1) of the 1991 Act which require that, when an election is to be held in a registered organisation, the organisation must apply in writing to the Registrar, asking that the Registrar arrange for the conduct of an election, in accordance with the organisation's rules and, also, that an organisation may apply to the Registrar for approval to engage persons or bodies to conduct an election for an office in the organisation, other than the person referred to in the statute, that is, for example, the Electoral Commission of New South Wales.

28 It is clear on the evidence of Mr Blakeney that the election conducted in 2006 was not conducted in accordance with ss 444(1) and 446. It follows that there was an invalidity in the election which occurred which might, subject, of course, to the statutory provisions earlier referred to, such as s 285, result in significant invalidities in the functioning of the organisation.

29 I, therefore, make the requisite finding under s 288(3), that respective invalidities have occurred in the 2006 election in the organisation and, secondly, in the management and administration of the organisation.

30 I have earlier in these reasons made findings as to the bona fides of the relevant officers of the organisation and findings which satisfy the requirements of s 288(5) of the statute. It seems to me that there is a clear case, and a proper basis, for making the orders sought.

31 Before concluding, however, I should refer to a number of the cases referred to in the 2001 judgment of the Vice-President which have been noted earlier. His Honour in that judgment referred to a number of the decisions as to the counterpart provisions in the then Conciliation and Arbitration Act, including the judgment of J B Sweeney J in Australia Building Construction Employees & Builders' Labourers' Federation (1978) 46 FLR 488, and the judgment of Gray J in Re Food Preservers' Union (1998) 79 ALR 138.

32 In both judgments there are references to the detailed and broad powers conferred by the relevant statutory provisions and emphasis on the consideration that in deciding whether to exercise its discretion to make orders of validation, it is appropriate for the Court to have regard to the objects of the relevant statute. In that regard it was concluded that orders made with a view to enabling an organisation to function and operate effectively and legally will assist in achieving those objects and it would be appropriate to make such orders if the Court can satisfy itself that such an order would not do substantial injustice to the organisation, any member or creditor, or to any person having dealings with the organisation. Indeed, Gray J in the Food Preservers' case put the matter even more highly when he said: In determining whether to exercise its discretion in favour of making an order, the Court should bear in mind the beneficial and enabling nature of the section. Unless there are sound reasons to refuse an order, it should be made. 33 I consider that their Honours' views as to the approach to be adopted in the interpretation and application of the Commonwealth legislation equally applies here to the 1996 New South Wales statute. 34 I, therefore, propose to make the validating orders subject to some short discussion with the solicitor for the applicant.

[short discussion ensued with the solicitor for the applicant]

35 Having now clarified one particular matter with respect to the form of the orders with Mr Collinge, I now make the following orders: 1. The Court grants leave to amend Schedule A to the application for declaration etc in terms of the amended application filed on 23 February 2007.

2. The Court makes the declarations and orders sought in Schedule A to the amended application subject to the substitution of the word "validated" for the word "negatived" in Order (2)(b) thereof.

   ---

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.