Nimmo, in the matter of an application for an inquiry relating to an election for an office in the Australian Education Union (NT Branch) (No 2) [2011] FCA 728

Nimmo, in the matter of an application for an inquiry relating to an election for an office in the Australian Education Union (NT Branch) (No 2) [2011] FCA 728 - FCA 2011 case summary — Zoe

[19]

FACTUAL BACKGROUND 2 As I recorded in my reasons for decision in relation to the inquiry, on 1 October 2010 Mr Nimmo, in his capacity as a member of the Union, filed an application under s 200(1) of the Act seeking an inquiry into certain irregularities he alleged had occurred in relation to the election of Mr Clisby as the Branch Secretary of the Union which, he claimed, resulted in 48 members of the Union not receiving their ballot papers. That election was conducted in July/August 2010 and declared on 12 August 2010. 3 In his original application, Mr Nimmo claimed three categories of irregularities had occurred, as follows (see [2011] FCA 38 at [4]): 1. The ballot papers of certain members were posted to them and either returned unclaimed by Australia Post, or not received at all. 2. Certain members received their ballot papers too late to allow them to cast their ballots before the ballot closed on 11 August 2010. 3. Certain financial members were removed from the membership roll of the Union and were not included in the ballot. 4 On 4 November 2010, I decided that I was satisfied that there were reasonable grounds for the application and, accordingly, I ordered that the inquiry be conducted in Darwin to commence on 13 December 2010. 5 My conclusions in relation to the three categories of irregularities raised by Mr Nimmo may be summarised as follows: (a) Mr Nimmo needed to, and did not show, on the balance of probabilities, that the non-receipt of the 21 ballot papers involved in the first category of alleged irregularity was linked to, or involved, a departure from some norm or standard: see [2011] FCA 38 at [36]. (b) The second category of alleged irregularity disclosed that the 23 day period that was chosen for this election (see [2011] FCA 38 at [39]) was shorter than for comparable elections conducted for the Union and may have involved a breach of rule 110 of the Northern Territory Federal Branch rules of the Union ("the NT rules"). However, without re-convening the inquiry, I could not be satisfied, on the state of the evidence before me, whether this constituted an irregularity: see [2011] FCA 38 at [46]-[51]. Nonetheless, I decided not to re-convene the inquiry to further investigate this issue for the reason given in (d) below. (c) On the third category of alleged irregularity, I found that approximately 20 financial members of the Union had been removed from the membership roll of the Union without the power or authority of the relevant rules of the Union: see [2011] FCA 38 at [63]. However, I also concluded Mr Nimmo needed to show that the removal of those members had occurred in relation to the election and, on the evidence as it stood, I could not be satisfied, on the balance of probabilities, that he had established this fact: see [2011] FCA 38 at [65]-[67]. As with the second category of alleged irregularity, I decided not to re-convene the inquiry to allow this evidence to be produced for the reason given in (d) below. (d) Finally, even assuming that the second and third categories of alleged irregularities were made out, whether considered separately, or together, they could not have affected the result of the election as a real possibility as required by s 206(5) of the Act: see [2011] FCA 38 at [90].

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The two provisions of the Act 6 Section 325(1) of the Act provides: Where a person has applied for an inquiry into an election but the Federal Court does not find that an irregularity happened, the Court may certify for the purposes of this Division that the person acted reasonably in applying. 7 Section 325(1) (and subss 325(2) and (3)) is linked to s 324(1) of the Act, which provides: (1) Subject to this Division, the Minister may, on application made by a person under subsection (2), authorise payment by the Commonwealth to the person of financial assistance in relation to the whole or part of the person's relevant costs, if the Minister is satisfied: (a) that hardship is likely to be caused to the person if the application is refused; and (b) that in all the circumstances it is reasonable that the application should be granted. Then, relevant to the present matter, s 324(2)(d) to (f) provide: (2) An application may be made to the Minister for financial assistance under this Division by the following persons (other than organisations) in the following circumstances: … (d) a person who applied for an inquiry into an election, where the Federal Court found that an irregularity happened; (e) a person who applied for an inquiry into an election, where the Federal Court certified under subsection 325(1) that the person acted reasonably in applying; (f) a person who incurred costs in relation to an inquiry into an election, other than a person who applied for the inquiry; 8 It can be seen that a certification under s 325(1) is not a prerequisite to an application for financial assistance under subs 324(2)(d) or (f), where the Court finds an irregularity happened, or the application is made by a person other than the person applying for the inquiry, respectively. 9 Section 329 of the Act provides: (1) A person who is a party to a proceeding (including an appeal) in a matter arising under this Act must not be ordered to pay costs incurred by any other party to the proceeding unless the person instituted the proceeding vexatiously or without reasonable cause. (2) In subsection (1): costs includes all legal and professional costs and disbursements and expenses of witnesses.

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The section 325 application 10 Section 325(1) of the Act essentially sets two pre-requisites: that the Court did not find that an irregularity had happened; and that the person applying for the inquiry acted reasonably in doing so. 11 It can be seen from the summary of my decision above, that Mr Nimmo failed to establish that the first category of alleged irregularity had happened and, without reconvening the inquiry and receiving further evidence, I could not be satisfied whether the second or third categories of alleged irregularities had happened. In the end result, I did not find that any of Mr Nimmo's three categories of alleged irregularities had happened. It follows that the first prerequisite of s 325(1) has been met. 12 As to the second prerequisite, the approach to assessing reasonableness under s 325(1) of the Act (or its predecessors) has been considered in a number of decisions of this Court. Those decisions show that what is required is an assessment whether it was "sufficiently arguable" that an irregularity had happened, or whether there is sufficient reason to believe that an irregularity had happened, even if that belief is based on rumours or hearsay: see Re Bragg and Australasian Society of Engineers (South Australian Branch) (1985) 60 ALR 136 at 154 and Re Australian Workers' Union (Application pursuant to s 159 of Conciliation and Arbitration Act 1904 (Cth)) (1985) 13 IR 223 at 224. Conversely, it is unreasonable to apply for an inquiry where there is no substance to the allegations of irregularity at all: see Carney v Dennis Matthews [1995] IRCA 212 ("Carney") per Wilcox J. 13 Before applying these principles in this matter, I need to deal with a threshold issue that was raised by both Mr Clisby and the Union. It was to the effect that, in deciding whether to make an order under s 325(1) of the Act, I could, and should, take into account Mr Nimmo's conduct after he applied for the inquiry, including in the lead-up to, and during the inquiry itself. In my view, this contention must be rejected. By its language, s 325(1) requires the Court to consider Mr Nimmo's conduct "in applying" for the inquiry. Subsections 325(2) and (3), which deal with inquiries into candidate eligibility (under s 215(5)) and amalgamation ballots (under Ch 3 Pts 2 and 3), use similar terminology. If these subsections were intended to require an examination of the conduct of the person after he or she applied for the inquiry, I consider all of them would have included words such as: "in pursuing the inquiry", in addition to applying for it. Further by its terms, ie where the "Court does not find that an irregularity happened", s 325(1) makes it clear that the outcome of the inquiry is not relevant to the question whether a certification should be provided. If ultimate success in the inquiry is not a relevant criterion, it is difficult to see how the applicant's conduct in the lead-up to, and during the inquiry, could be one. 14 Furthermore, on this aspect, I do not consider the decision of Wilcox J in Carney (relied upon by Mr Clisby) affects this conclusion. There, the applicant applied to have the inquiry terminated shortly before it was due to commence. Wilcox J described that case as one: "where there was material of such a nature as to cause legitimate initial concern for a member of [the] organisation but where, through the process of discovery which attend[ed] an inquiry, it [became] clear that any irregularity was unlikely to have affected the election result." His Honour eventually ordered a certification for Mr Carney even though he observed that his decision to apply to terminate the inquiry had the obvious effect of undermining the reasonableness of his decision to seek the inquiry in the first place. That decision involved an entirely different situation to the present one. In this case, Mr Nimmo did not ever propose that the inquiry should be terminated or abandoned. Furthermore, while the question whether he should have sought to terminate the inquiry is irrelevant to the question I have to determine (see [13] above), I do not consider this inquiry ever reached a stage where, to put it in the words of Wilcox J, it was clear "there [was] no substance in the allegations at all". 15 For these reasons, in determining whether a certification should be ordered under s 325(1), I propose to limit my inquiry to the reasonableness of Mr Nimmo's conduct at or about the time when he applied for the inquiry. Before turning to examine that conduct, I need to deal with some other submissions made by Mr Clisby. 16 Mr Clisby submitted that I should take into account various surrounding circumstances in assessing the reasonableness of Mr Nimmo's conduct. They included: that, as he was an official of the Union, Mr Nimmo must have known that at least six of the 48 members concerned were not financial members of the Union at the time of the election; that Mr Nimmo had not made any attempt to contact many of the members concerned to establish whether they had, indeed, not received their ballot papers; and that Mr Nimmo had misled some of the members as to the use he intended to make of the information they provided to him. 17 First, there is little, if any, evidence before me to support most of these submissions. Beyond the assertions contained in Mr Clisby's written submissions, there was, for example, no evidence before me that all members of the Union were easily contactable by email, or that Mr Nimmo was in daily contact with Mr Lampe and therefore had access to information about the Union's membership. Secondly, even if there were such evidence before me, I do not consider the question whether Mr Nimmo misled some of the members in the way alleged, is relevant to the reasonableness of his conduct in applying for the inquiry. I hasten to add, this should not be taken as a finding that Mr Nimmo did mislead any members. Nor do I accept the proposition that Mr Nimmo should, in effect, have carried out more detailed inquiries within the Union before applying to the Court to have the inquiry conducted - once there were reasonable grounds for an inquiry, these more detailed inquiries were the purpose of that inquiry. Finally, even if one were to exclude the six persons who Mr Clisby claimed were later found not to be financial members of the Union (I found there were five: see [2011] FCA 38 at [23]), that still left approximately 42 members on Mr Nimmo's list. This figure was far in excess of the winning margin of 22 votes and, therefore, could reasonably have been considered sufficient to affect the result of the election, if their failure to receive their ballot papers was brought about by some irregularity in the election. 18 I return now to Mr Nimmo's conduct in applying for the inquiry. In support of his application, Mr Nimmo filed an affidavit to which he annexed a schedule marked "SN3". That schedule set out the details of the 48 members of the Union who Mr Nimmo claimed had not received ballot papers in the election: see [2011] FCA 38 at [23]. Since Mr Clisby's winning margin in the election was 22 votes, it is self-evident, at least on a prima facie basis, that those 48 votes could have been sufficient to affect the result of the election. 19 More importantly, I consider that each of Mr Nimmo's three categories of alleged irregularities raised either genuine factual disputes, or arguable questions of law, or both, as to whether those 48 members failed to receive their ballot papers because of some irregularity in the election. The first alleged irregularity raised the application of the decision in Pullen: see [2011] 38 at [25]. While I ultimately concluded that decision was distinguishable on its facts, I do not consider that means the point was not reasonably arguable. The second alleged irregularity disclosed that the 23 day period that was chosen for the election (see [2011] FCA 38 at [39]) was shorter than for comparable elections conducted for the Union and may have involved a breach of rule 110 of the NT Rules: see [2011] FCA 38 at [45]-[46]. Ultimately, I concluded that it was unnecessary to further inquire into this issue because, even if this alleged irregularity were established, it could not affect the result of the election as a real possibility: see [2011] FCA 38 at [51]. However, this alleged irregularity did uncover an anomalous election period and, whilst there may have been a simple explanation for that, the fact that an explanation would, in other circumstances, have been required, demonstrates it was a sufficiently arguable claim, at the very least, judged from the perspective of Mr Nimmo at the time he applied for the inquiry. The same applies to the third alleged irregularity where I concluded that approximately 20 members of the Union had been removed from its membership roll without proper power or authority: see [2011] FCA 38 at [63]. I decided it was unnecessary to further investigate whether this had occurred in relation to the election (see at [2011] FCA 38 at [66]-[67]) because, even if that were so, it could not affect the result of the election as a real possibility: see [2011] FCA 38 at [68]. However, that does not mean that if this issue had been further investigated, the necessary connection with the election would not have been made out. Finally, it may also be noted that, even in relation to the question whether all, or any, of the alleged irregularities could affect the result of the election, there was an arguable question on the authorities as to whether, given the closeness of the result, I could take into account participation rates and voting patterns in the election: see the discussion in [2011] FCA 38 at [72]-[77]. 20 For these reasons, I consider it was reasonable for Mr Nimmo to apply for the inquiry. Accordingly, I certify for the purposes of s 325(1) of the Act that Mr Nimmo acted reasonably in applying for the inquiry.

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The section 329 application 21 As I indicated at the outset, the Union has sought an order for costs of the inquiry against Mr Nimmo. Under s 329 of the Act, any costs of a proceeding under the Act can be ordered if the party concerned acted without reasonable cause in instituting the proceedings. The Union submitted that such an order should be made against Mr Nimmo because there was no proper foundation in fact for the allegations in his application and therefore that he instituted these proceedings for an inquiry without reasonable cause. The Union does not rely upon the alternative exception under s 329(1) that Mr Nimmo instituted the proceedings vexatiously. 22 Before considering these submissions, I would make three observations. First, because it is an organisation under the Act, it appears that the Union is not entitled to apply for financial assistance for its costs under s 324(2). This appears to be so because of the words in brackets: "other than an organisation", appearing in the introductory words of that subsection: see at [7] above. 23 Secondly, the Union was not made a party to these proceedings in the traditional way, viz by Mr Nimmo naming it as a respondent in an originating application and seeking relief against it. Instead, after I decided under s 201 of the Act to conduct the inquiry, the Union sought leave to appear at the inquiry under s 205(1). Once that leave was granted, it was taken to be a party to the proceeding under s 205(2). 24 Thirdly, and further to the observation I have just made about the circumstances in which the Union became a party. Before I decided to conduct the inquiry, I allowed each person present at the preliminary hearing, including Mr Merrell on behalf of the Union, to make submissions as to whether there were reasonable grounds to do so. Mr Merrell's submission on that question was as follows: Your Honour, in relation to the question of whether an inquiry should be instituted the submission on behalf of my client, the Australian Education Union, is that on the material currently before the court there is a real possibility that an irregularity occurred in the election such that the test proposed by Mr White would be met. Can I say, your Honour, that my client, the Australian Education Union, has no interest in who may succeed, at the end of the day, if an inquiry is instituted whether it be Mr Clisby or Mr ….. . However, on the point on whether an inquiry should be instituted my submissions are that on the material there is a real possibility that an irregularity occurred. 25 Mr White appeared for Mr Nimmo at that preliminary hearing. Earlier in the transcript, he summarised what he said was the applicable test as follows: But, your Honour, we say that the evidence suggests that there is a real possibility that an irregularity has occurred, sufficient at this stage for the court to fix a time and place for the determination of that question and, hence, the institution of the inquiry. 26 Given this background, I have considerable difficulty with the proposition that, a person who has elected to become a party to an inquiry ordered by the Court, and who submitted there were grounds upon which the Court should order the inquiry, can later seek to claim its costs of that inquiry against the person who originally applied to the Court to have the inquiry conducted. However, because this issue was not raised or argued in submissions before me, I do not consider it is appropriate to decide the Union's application on this ground. Instead, I will proceed to consider it on the basis of the submissions that were made (see at [21] above). 27 The principles relevant to an application to which s 329 of the Act applies are not dissimilar to those applying to an application for a certification under s 325(1) of the Act (see [12] above), albeit that they are more authoritatively established, particularly in relation to the predecessor sections to s 329. Those principles are as follows. The purpose or policy behind s 329 is to free parties from the risk of having to pay the costs of an opposing party in proceedings under the Act while at the same time protecting parties who are forced to defend proceedings that have been instituted vexatiously, or without reasonable cause: see Heidt v Chrysler Australia Limited (1976) 26 FLR 257 ("Heidt") at 272, Hatchett v Bowater Tutt Industries Pty Ltd (No 2) (1991) 28 FCR 324 ("Hatchett") at 325 and Re Ross; Ex parte Crozier (2001) 111 IR 282; [2001] FCA 1665 ("Crozier") at [10] per Gray, Branson and Kenny JJ. It follows from the protection offered by this provision, that a person will only rarely be ordered to pay the costs of a proceeding in exceptional circumstances: see Thompson v Hodder (1990) 21 FCR 467 ("Thompson") at 470, Hatchett at 325, Bostik (Australia) Pty Ltd v Gorgevski (1992) 108 ALR 254 ("Bostik") at 262, Crozier at [11] and Spotless Services Australia Limited v The Hon Senior Deputy President Jeanette Marsh [2004] FCAFC 155 ("Spotless") at [12]. 28 In determining an application to which this section applies, the relevant question is whether the proceedings had reasonable prospects of success at the time they were instituted, not whether they ultimately failed: see R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J, Thompson at 471 and Bostik at 262. I might add that this principle must apply with even more force in the present type of inquiry where an applicant may succeed in showing a number of irregularities happened in the election and yet fail to persuade the Court they could have affected the result of the election as a real possibility under s 206(5) of the Act. 29 It is also relevant to consider whether the application for the inquiry depended upon the determination of the disputed facts, or the resolution of arguable points of law: see Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-265 and Spotless at [10]. This has to be established as a matter of objective fact: see Spotless at [13] and Automotive, Food, Metals, Engineering, Printing and Kindred Industry Union v Nestle Australia Limited [2005] FCA 717 at [3]-[4]. 30 Finally, the test to be applied in relation to the expression "without reasonable cause" is similar to that adopted in an application for summary judgment, viz "so obviously untenable that it cannot possibly succeed", "manifestly groundless" or "discloses a case which the Court is satisfied cannot succeed": see Heidt at 272-273; Geneff v Peterson (1986) 19 IR 40 at 87-88; Hatchett at 327 and Crozier at [12]. I might add that these statements express the test for a summary judgment before the introduction of s 31A of the Federal Court of Australia Act 1976 (Cth). However, I consider they are apt under s 329 of the Act because s 31A of the Federal Court of Australia Act 1976 (Cth) uses the expression "no reasonable prospects of success", rather than "no reasonable cause" and, more importantly, s 31A also contains an express statutory exclusion (not present in s 329) of the need to show the proceedings are hopeless or bound to fail: see s 31A(3). 31 Applying these principles and based on the reasons I have given in considering Mr Nimmo's application under s 325(1) (see [19] above), I consider Mr Nimmo had reasonable cause to make his application for the inquiry. Those reasons show that Mr Nimmo's application raised a number of genuine disputed facts and arguable points of law. Furthermore, they show that, while he had a measure of success in relation to many of them, he ultimately failed because he could not show that, even if some of the irregularities happened, they could not have affected the result of the election as a real possibility. Thus, it could not be said that, at the point of commencement Mr Nimmo's application, it could not possibly succeed, or was manifestly groundless. It follows that this is not one of those rare and exceptional cases where Mr Nimmo should lose the protection offered by s 329 of the Act. 32 For these reasons, I find that Mr Nimmo did not institute these proceedings for an inquiry without reasonable cause. Accordingly, I dismiss the Union's application that he be ordered to pay its costs of the inquiry. I certify that the preceding 32 (thirty-two) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.

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