The validity of r 5(A)(2)
33 As I have said, there is an issue as to the validity of r 5(A)(2) of the Division Rules. That rule is set out above. It relates to the composition of the Divisional Conference. Each branch having 500 financial members or less is entitled to one representative. A branch with more than 500 but less than 1000 financial members is entitled to two representatives. A branch receives one additional representative for each additional 2000 financial members.
34 In the first place, a question of construction arises. It should be noted that the provision of the rule relating to an additional representative for each additional 2000 financial members does not include words such as "or part thereof". The intention appears to be that a Divisional Branch is entitled to an additional representative only in respect of each complete 2000 financial members additional to the range of more than 500 but less than 1000. In reality, therefore, the rule provides for one representative from a Divisional Branch with 500 members or less, two representatives from a Divisional Branch with more than 500 but less than 3000 financial members, three representatives from a Divisional Branch with 3000 or more but less than 5000 financial members and four representatives from a Divisional Branch with 5000 or more but less than 7000 members. There appears to be no warrant for implying words such as "or part thereof". No party to the proceeding contended for such implication.
35 By s 208 of the WR Act, a member of an organisation may apply to the Court for an order declaring that the whole or a part of a rule of the organisation contravenes s 196 or that the rules of an organisation contravene s 196 in a particular respect. Section 209 relates to applications for orders giving directions for the performance or observance of the rules of an organisation by any person who is under an obligation to perform or observe those rules. Section 209(7) provides:
"Where the Court, in considering an application under this section, finds that the whole or a part of a rule of the organisation concerned contravenes section 196 or that the rules of the organisation concerned contravene that section in a particular respect, the Court may, by order, make a declaration to that effect."
36 Section 196 provides relevantly:
"The rules of an organisation:
...
(c) shall not impose on applicants for membership, or members, of the
organisation, conditions, obligations or restrictions that, having
regard to the objects of this Act and the purposes of the registration of
organisations under this Act, are oppressive, unreasonable or unjust."
Similar provisions were to be found in s 140(1)(c) of the C&A Act and s 196(c) of the IR Act.
37 Ever since McLeish v Kane (1978) 22 ALR 547, it has been recognised that s 196(c) may impact upon the rules of an organisation whose members are divided into branches, or other aggregations, the members of which are entitled to elect representatives to a decision-making body. The rules of such an organisation will impose on members conditions or restrictions that contravene s 196(c) if they fail to provide for representation of the branches or other aggregations bearing some proportion to the numbers of members in the respective branches or aggregations. The organisation with which McLeish v Kane was concerned had a single branch in each State. The branches were of varying sizes, so that the biggest had 43.1 per cent of the members of the organisation and the other branches had 20.7 per cent, 16.3 per cent, 9.0 per cent, 7.1 per cent and 3.6 per cent respectively. The organisation had a national council consisting of its general secretary and delegates elected by each branch. The number of delegates was between one and four, depending on the number of members of the branch. The delegates had rights to exercise votes according to the membership of their respective branches. The number of votes to which a branch was entitled varied from two to ten. The effect of this rule was to give the largest branch only 22.7 per cent of the vote and the other branches respectively 20.4 per cent, 18.1 per cent, 15.9 per cent, 13.6 per cent and 6.8 per cent. The result, therefore, was to dilute significantly the influence of the members of the largest branch in the national affairs of the organisation. In holding this rule to contravene the provision equivalent to s 196(c) of the WR Act, the Court directed its attention particularly to the objects that were then found in s 2(e) and (f) of the C&A Act. At 555 - 559, the Court said:
"It is to be observed that the particular relevancy of these two objects to this consideration is that the question of oppression etc is to be determined having regard to the objects of the Act and the purposes of the registration of organizations under the Act.
...
The court in exercising its present jurisdiction is concerned with all the objects of the Act and clearly it is fundamental to those objects that there be not only democratically controlled organizations but that these organizations should be viable. In other words, we must take care to ensure not only that democratic control is encouraged but also that the organization remains viable. This means that questions of balance must arise. On the one hand, the objects include the encouragement of democratic control, but in having regard to that object we clearly cannot disregard the need for the organization to be a viable one. It is a feature common to federations with component parts of different strength and sizes that there must be a system of checks and balances. That, of course, is quite clearly illustrated in the Constitution of the Commonwealth of Australia with its provision for two Houses of Parliament in one of which the component States have, generally speaking, equal numbers of representatives and in the other of which regard is had to the number of electors in determining the number of representatives. Like provisions are a feature of federations elsewhere.
The importance of this consideration is that branches of organizations are probably necessarily of unequal membership and of unequal strength. Industry and production have developed at different rates and in different ways in the different States and, generally speaking, there is necessarily a greater number of workers available for union membership in the larger States. Again, generally speaking, branches of organizations conform with State boundaries. They are generally defined by geographic features although there are some organizations with branches defined by the industry or the occupation of its members. In both cases there will inevitably be branches of different size. What we are concerned with is the encouragement of democratic control.
It is not to be thought that this democratic control is to be achieved in one sweep. Our concern is to see that it is encouraged. So when considering the reasonableness etc of a rule having regard to this object we must consider it against this background. In a union structure there seems no place for two policy making bodies. We know of no attempt which has been made to have two such bodies and the system of checks available between a Senate and a House of Representatives is not present here.
None the less there clearly will exist fears on the part of smaller branches or workers in the smaller State that if they join with a federation they and their members may be swamped by the larger branches. To insist then on types of rules where the democratic ideal of one person one vote existed would, in our view, operate to prevent viable national bodies being formed.
...
If the objects of the Act are seen to both encourage viable organizations and to encourage the democratic control of them, in determining the reasonableness of a rule it is necessary to look at what is practicable even though it may be something less than, for example, a complete democracy.
...
When one comes to consider the present organization it may be said at once that if the rules provided for an equal representation from each branch that would mean that the smaller branches dominated the larger and such rules would, in our view, not encourage democratic control and would be unreasonable. On the other hand if the rules provided for votes in strict accord with membership then in our view the smaller branches would feel swamped by the larger and the organization might well cease to exist or be viable. Some balance between these two extremes is necessary."
38 At 559, the court referred to two earlier authorities and pointed out that, at the time when they were decided, the objects of the C&A Act did not include the object in s 2(f), which came into existence in 1973. At 559, the Court said:
"Since the 1973 amendment we think that the considerably added emphasis has been given to the object of encouraging the democratic control of organizations and the full participation by members in the affairs of the organization."
39 Two themes are prominent in McLeish v Kane. One is that the ascertainment of the outcome of an attempt to argue that a rule of the kind considered in that case contravenes a provision like s 196(c) cannot be predicted with certainty. As the Court, constituted by the same judges, in McLeish v Faure (1979) 25 ALR 403 at 416 said, there is a:
"spectrum over which rules dealing with the weighting of the voting power at meetings of branch delegates to or members of federal bodies of organizations might validly range".
40 A particular rule must be examined in the context of the particular organisation's rules. A number of factors may be relevant. These may include the history of membership numbers in the various branches or other aggregations existing within the organisation. See McLeish v Kane at 557. They will certainly include other provisions of the rules of the organisation that may compensate for the lack of proportion between the membership of a branch or other division and its relative voting power on the decision-making body. Prominent among such other rules will be any rule that offers the possibility of a plebiscite or referendum of members. Such a rule might afford the majority of members the means to assert their authority over the decision-making body and, in turn, cause those exercising their voting power on the decision-making body to refrain from acting against the perceived interests of the majority. The more readily available such a plebiscite or referendum is under the rules of the organisation, the more likely it is that the Court will hold that a disproportion between voting power on a decision-making body and membership numbers in various branches or other aggregations does not contravene s 196(c). The nature of the function and powers of the decision-making body concerned will also be relevant.
41 The principles enunciated in McLeish v Kane and McLeish v Faure were applied in a number of significant cases in the years immediately following these leading cases. In some of those cases, it was held that the relevant rule of the organisation concerned contravened the provision equivalent to s 196(c), because of failure to provide sufficient voting power to a larger branch or larger branches. See, for instance Luckman v Australian Postal and Telecommunications Union (1978) 28 ALR 393; Sherriff v Townsend (1980) 30 ALR 223; Willingale v Australian Federated Union of Locomotive Enginemen (1982) 62 FLR 129. Other cases made it clear that some imbalance between numerical strength and voting representation was tolerable. See Scott v Rolfe (1979) 36 FLR 249; Cook v Crawford (1982) 43 ALR 83; and Willingale v Australian Federated Union of Locomotive Enginemen (1983) 68 FLR 149. It has also been held that the principles are not restricted to the composition of national decision-making bodies. They were applied in Lawley v Transport Workers' Union of Australia (1987) 22 IR 114 at 119 to the representation of sub-branches on the committee of management of the Queensland Branch of the Transport Workers' Union of Australia.
42 The second important theme emerging from McLeish v Kane is the relevance of the objects of the legislation. As is apparent from the passages quoted above, the Court in that case placed great weight on the objects then found in s 2(e) and (f) of the C&A Act. Those objects were in the following terms:
"(e) to encourage the organization of representative bodies of employers
and employees and their registration under this Act; and
(f) to encourage the democratic control of organizations so registered
and the full participation by members of such an organization in the
affairs of the Organization."
43 Among the widespread amendments that produced the WR Act was a complete recasting of the objects. There is no longer to be found any equivalent of the former s 2(e). Rather than encouraging the organisation of representative bodies and their registration, the WR Act now aims, as part of the "principal object" in s 3, at:
"(f) ensuring freedom of association, including the rights of employees and
employers to join an organisation or association of their choice, or not
to join an organisation or association".
44 The "principal object" contains no reference to "democratic control". The equivalent provision is directed to:
"(g) ensuring that employee and employer organisations registered under
this Act are representative of and accountable to their members, and
are able to operate effectively".
45 Any reference to "democratic control" is relegated to s 187A of the WR Act, which provides:
"As well as the objects set out in section 3, this Part has these objects:
(a) to encourage the democratic control of organisations; and
(b) to encourage members of organisations to participate in the
organisations' affairs; and
(c) to encourage the efficient management of organisations."
46 Section 196(c) still requires that regard be had to the objects of the WR Act, in assessing whether a rule or rules contravene s 196(c). It makes no reference to the additional objects of Pt IX. Instead of encouraging democratic control, the emphasis in applying s 196(c) is now on the organisation being representative of and accountable to its members and on its effective operation. In many cases, the differences may be subtle, but it seems no longer possible simply to apply the McLeish v Kane principles in a simplistic way. Regard must now be had to the changed emphasis in the objects of the WR Act.
47 The abandonment of the object in s 2(e) of the former legislation is no mere slip. The amendments that led to the WR Act brought about a fundamental change in the role of registered organisations. From the inception of the C&A Act, registered organisations were given a major role in the system of conciliation and arbitration established by the C&A Act. They were principals, and not mere agents of their members, in the creation, usually by written logs of claims, of disputes and in the resolution, usually by awards, of those disputes. See Burwood Cinema Ltd v Australian Theatrical and Amusement Employees' Association (1925) 35 CLR 528, especially at 551 per Starke J. Since 1996, organisations are no longer given such a prominent position in the operation of the WR Act. The constitutional basis of the WR Act has been expanded beyond the legislative power with respect to conciliation and arbitration. Awards no longer have the central position they had in the system for many decades. The powers of the Australian Industrial Relations Commission with respect to arbitration are curtailed severely. Employers are empowered to enter into collective agreements with their employees, as an alternative to agreements with unions representing those employees. Provision is now made for individual agreements. As that part of the principal object of the WR Act referred to in s 3(f) demonstrates, the intention is that the decision whether or not to join an organisation is intended to be a purely voluntary one. Employees may, if they wish, make use of other bargaining agents in attempting to reach agreements with their employers.
48 Relative to other comparable countries, Australia has a history of a high level of external control of the internal affairs of trade unions. The provisions of the WR Act relating to the content of rules, and the jurisdiction given to the Court by ss 208 and 209, and earlier corresponding provisions, are significant aspects of that high level of control. The price of being given a pre-eminent role in the system of conciliation and arbitration was that organisations were required to bring their rules into a state of conformity with the legislation, and to maintain them in that state. They were liable to have their rules enforced at the suit of individual members, often aided by legal aid under a special scheme under which aid was granted significantly more generously, both as to means testing and as to the nature of the cases aided, than was the case with legal aid for most other forms of legal proceeding. With the change in the role of organisations since 1996, the case for such stringent regulation is less persuasive. If trade unions are to be regarded as service providers, competing with other entities in a marketplace for the provision of negotiating and other skills, and if membership of them is to be truly voluntary, there is a stronger case for the control of the internal affairs of organisations by market forces. A potential member can decline to join an organisation, or a member can leave, if the rules of the organisation are thought to be too restrictive, or the management of the organisation is conducted in a manner that does not earn their approval.
49 The change in the role of organisations since 1996 has not been accompanied by the repeal of any of the statutory provisions relating to the control of the internal affairs of organisations. Section 208 and s 196(c) are in the same form as they were for some years prior to 1996. When s 196(c) requires the Court to have regard to the purposes of the registration of organisations under the WR Act, however, it may be that the Court will take a different view as to the validity of the rule or rules in question because of the changes in those purposes. Authorities decided prior to 1996 may no longer be definitive of the result.