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Monday, 23 December 2013

Omnia praesumuntur rite esse acta. The importance of union rules. Ethical lawyers would simply observe them.

This case involving a claim made by an AWU organiser for the AWU to pay some legal fees he had incurred in the course of his employment.   It was afoot, with appeals, during 1990, 91 and 92 and a diligent lawyer acting for the union would have kept abreast of the issues raised in the matter.

http://www.austlii.edu.au/au/cases/cth/FCA/1990/442.html

His Honour Justice Von Doussa made these points in the original hearing.

 2. The Union is an organisation of employees registered under the Act. It comprises six branches. Under r.36 and r.38 of the Constitution and General Rules ("the Rules") there is an Executive Council which is vested with the primary power of management of the affairs of the Union: see Hodder v. Australian Workers' Union (1986-1987) 70 ALR 489 at 492-496. Under r.43 the management of each branch of the Union is vested in a Branch Executive which is subordinate to the Executive Council.

 

13. Rule 3 bears the heading REGISTERED OFFICERS, RIGHT TO SUE AND LAW SUITS. It is a lengthy rule which it is unnecessary to set out in full. Rule 3(a) empowers the General Secretary to act on behalf of the Union and to sue and be sued under relevant industrial legislation and in respect of matters touching the property and industrial rights of the Union. Rule 3(b) gives a more restricted power to each Branch Secretary to act for similar purposes on behalf of the Union or the respective Branch in matters concerning the Branch. Rule 3(c) empowers organisers, other than employed organisers, to act on behalf of the Union or their respective Branch for the purpose of proceedings in connection with the recovery of contributions, subscriptions, fines, levies or penalties incurred by members as the result of a failure to comply with the provisions of the Rules.

Rule 56, in part, is of importance. It reads: 
"FUNDS - HOW HELD AND WITHDRAWN 
(a) All property and funds of the Union shall vest in The 
Australian Workers' Union directly without the intervention 
of Trustees. 
(b) All property and funds of the Union held for the use 
of the Union shall vest in the Union for the benefit of 
members generally and the Executive Council shall have power 
in their absolute discretion to control, invest, expend and 
otherwise deal with the same.

ENDS

In 1991/92 a 3 judge bench of the Federal Court heard this appeal to do with the interpretation of the AWU's rules as to its powers to fire its officers.   I raise it here to demonstrate the complexity of the various levels of decision making and authority in a relatively straightforward matter like hiring and firing.

 

Re: NEVILLE WILLIAM THOMPSON 
And: W. LUDWIG and OTHERS 
No. V I43 of 1991 
FED No. 459 
Industrial Law 

COURT

IN THE FEDERAL COURT OF AUSTRALIA 
VICTORIA DISTRICT REGISTRY 
INDUSTRIAL DIVISION 
Black C.J.(1), Northrop(1) and Lee(1) JJ.

http://www.austlii.edu.au/au/cases/cth/FCA/1992/285.html

ENDS

In this matter, involving allegations of fraud and the misuse of union money, Ms Gillard herself acted for Bruce Wilson.   The judgement is self-explanatory, but in reading it you will get some sense of the effect of the union's rules and the importance - at law - of strictly adhering to them.   All of the matters on this page were heard in the Federal Court of Australia!!

FEDERAL COURT OF AUSTRALIA

Re: ANGELO PALMA 
And: BRUCE WILSON; ROBERT SMITH; FRED PHILLIPS; JIM COLLINS; MICK WALSH; JOHN 
CLARENCE; MICK MOLONEY; BOB HUTTON and MAX WARNECKE 
No. V I61 of 1992 
FED No. 821 
Industrial Law 

COURT

IN THE FEDERAL COURT OF AUSTRALIA 
VICTORIAN DISTRICT REGISTRY 
INDUSTRIAL DIVISION 
Gray J.(1)

http://www.austlii.edu.au/au/cases/cth/FCA/1992/519.html

ENDS

This matter is a 3 judge hearing of the appeal that arose from the first case on this page - the payment by the AWU of an officer's legal fees.

Think of Craig Thomson (and Bill Ludwig with his role as a director of the Queensland horse racing board) as you read - but also try to see this matter through the eyes of an ethical lawyer who is asked by her boyfriend to set up a separate legal entity with the AWU's name in the title.

http://www.austlii.edu.au/au/cases/cth/FCA/1991/258.html

5. It is well established that the controllers of a trade union or association, as fiduciaries, are bound to use the powers and resources given to them by their union or association in good faith and for the purposes for which they were conferred; that is to say, for purposes honestly and reasonably believed by the controllers to be in the interests of the members of the union or association as a whole (see, e.g., Allen v Townsend [1977] FCA 10; (1977) 31 FLR 431; Williams v Hursey [1959] HCA 51; (1959) 103 CLR 30 per Fullagar J. at p 70). In the context of the powers of the Executive Council, it cannot be said, in my opinion, that the payment now under challenge travelled beyond what could fairly and reasonably be regarded as an expenditure incurred in the interests of the members as a whole: the subject matter of the previous litigation was the affairs of the union and the operation of its rules; these were plainly matters of legitimate concern for the members of the union as a whole, in the same way as employment relations were seen to be properly a matter of concern for all union members in Stevens v Keogh and Hill v Archbold.

 

3. The "Constitution and General Rules of the Australian Workers' Union" commence with rules 1 and 2, setting out the name and head office of the union. Rule 3 then makes a series of provisions for the bringing of legal proceedings on behalf of the union - by the general secretary in respect of a wide range of causes of action, by branch secretaries, also in a wide variety of cases, and by organisers in more confined circumstances. There is a special provision which appears to be directed to certain proceedings in respect of breaches of orders or awards, the precise scope of which and the relationship of which to the other provisions of the rule it is unnecessary to consider here. Paragraphs (e) and (f) then provide: 

"(e) No member of this Union shall be entitled to pecuniary 
assistance in any legal proceedings unless the interests of 
the Union are directly or indirectly involved. The District 
Secretary shall submit particulars of all matters of this 
nature to the Branch Secretary as soon as possible. 
Provided that in case any member shall sustain any injury 
through the negligence of the employer, and a claim for 
damages on the member's behalf shall be made, the Executive 
of the Branch operating in the district where the cause of 
action arose may afford the member legal assistance to 
enforce such claim against such employer. 
(f) Legal proceedings shall be taken on behalf of any 
member (at such member's request) discharged for refusing to 
shear sheep which in the member's honest opinion were so wet 
as to be likely to injure the member's health, or which were 
adjudged too wet to shear by a majority of the shearers by 
vote on a secret ballot, provided the Branch concerned has 
secured legal opinion favourable to such action." 

4. Curiously, it is only when rule 4 is reached that the document turns to the topic of the objects of the Union. That rule is headed "OBJECTS", and continues: 

"The objects for which the Union is established are, by the 
provision and distribution of funds and by all other lawful 
means, whether industrial, political, municipal, or 
otherwise: 
(a) To regulate and protect the conditions of labor, the 
relations between workers and between workers and 
employers. 
(b) To regulate conditions on the conduct of the trade, 
business, or industry of the members; 
(c) To promote the general and material welfare of the 
members; 
(d) To provide legal assistance in defence of members' 
rights where deemed necessary; 
(e) To endeavour by political action to secure social 
justice; 
(f) To establish and maintain a Union Newspaper; 
(g) To assist by federation or otherwise kindred 
organisations in upholding the rights and privileges 
of workers, and generally to assist in the 
emancipation of Labor; 
(h) To establish One Big Union for Australian Workers; 
(i) To abolish the contract system in all industries; 
(j) To replace the present competitive system by the 
collective ownership of the means of production, 
distribution, and exchange; 
(k) To advocate and fight for a six-hour day and five days 
of six hours each to constitute a week's work; 
(l) To oppose the Australian Communist Parties and the 
industrial, political and municipal aims and 
objectives of the said Parties and/or their members 
acting jointly or individually; 
(m) To oppose any body or persons incorporated or 
unincorporated which in the opinion of the Executive 
Council by its constitution, aims, objectives, 
conduct, propaganda or otherwise advocates, assists or 
encourages the overthrow by force or violence of the 
established Government of the Commonwealth of 
Australia or of a State or of any civilised country or 
of organised government; 
(n) To uphold the authority of constitutional government 
and the Constitution of the Commonwealth of Australia 
and the States and to oppose the growth of doctrines 
and groups or organisations of persons incorporated or 
unincorporated which in the opinion of the Executive 
Council advocate, assist or encourage the overthrow by 
force or violence of the established Government of the 
Commonwealth of Australia or of a State or of any 
civilised country or of organised government. 
Disbursements in furtherance of any of the above objects 
shall be deemed to be part of the ordinary expenses of the 
Union." 

5. By rule 36 it is provided that "(t)he general management of the affairs of the Union," subject to a presently irrelevant qualification, "shall be vested in the Executive Council". Rule 56(b) provides: 

"All property and funds of the Union held for the use of the 
Union shall vest in the Union for the benefit of members 
generally and the Executive Council shall have power in 
their absolute discretion to control, invest, expend and 
otherwise deal with the same."

ENDS

This matter deals with the Federal structure of various organisations and the rights to establish branches or subsidiaries.

http://www.austlii.edu.au/au/cases/cth/FCA/1977/10.html

It's a very lengthy judgement - as you read it imagine the chutzpah of a group who, knowing the rules, just decide to set up their own little subsidiary of the federal body, the AWU for their own purposes.   And then say they did nothing wrong.   Give me a break!

ENDS

The notion of Federal entitities, or sub-branches of larger organisations is by no means new.   This High Court case from 1959 sets out some legal notions with a clarity that's stood the test of time.   In essence, if you belong to a Federal entity, don't knock off its name and think you own it.

http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1959/51.html?query=

The difficulties involved in this subject matter, and the attempts which have been made to overcome them, are explained and discussed in Dr. H. A. J. Ford's very recent book entitled Unincorporated Non-Profit Associations (1959). But I need not pursue the matter further, because, whatever the rules may do or fail to do, they have, in my opinion no application to the present cases for the reason that the "Hobart Branch" of the federation is not an "unincorporated society, fellowship, club or association". It has no separate identity - no existence apart from the registered organization, of which it is an integral and inseverable part. Its members are merely a section of the total membership of the federation - locally organized for the sake of convenience, but in no respect independent of the federation, and in all respects subject to the control of the federation. The branches are permitted within limits to make rules of their own, but the rules which they make derive authority from the rules of the federation. It is contemplated that a branch may have "property and moneys", but, if r. 15 of the Hobart branch rules means that the beneficial ownership thereof is in the members of the branch, it is inconsistent with r. 10 (A) of the rules of the federation which makes the "fund and property" of the organization and its branches subject to the "care, superintendence, management and administration of the governing body of the Organization for the carrying out of the objects of the Organization". The position is precisely analogous to that which was held by this Court to subsist in Hall v. Job (1952) 86 CLR 639 and there is a passage in the judgment in that case which, if we read "Federation" or "Organization" for "Institution" and "Branch" for "Lodge", is exactly applicable to the present case. The passage is as follows: ". . . an individual cannot be a member of the Lodge except as a member of the Institution. The mutual rights and obligations of the members of the Lodge spring from the rules of the Institution, and cannot be altered except as those rules provide. The purposes which the members of the Lodge have in common are none other than the purposes for which they are members of the Institution. The Lodge does not exist as a society of persons who desire to associate exclusively with one another for agreed purposes; it exists as an integral part of a larger organization, of which all the members are associated for the pursuit of purposes common to them all in accordance with a constitution which governs them all. A subordinate Lodge is therefore not to be considered as if it were an association by itself; it is in truth a branch of the Institution, a section of its membership, which provides, for those who belong to it or may be admitted to its meetings, machinery for the enjoyment of the rights and benefits, and for the performance of the obligations and functions, which are the incidents of their membership of the Institution." (1952) 86 CLR, at p 650 . It follows that the judgments in the first and second actions cannot stand as against the "Hobart Branch". This is of small importance in the first action, but it may prove to be of considerable importance in the second action. (at p55

ENDS

Here is a link to a certified set of the AWU's rules as at 1995.   I can't imagine they changed a great deal from the rules quoted in some of the cases above by the learned judges - ie the rules of the union as at 1992 when Julia Gillard wrote out the words Australian Workers Union Workplace Reform Association Incorporated.

  Gillard did it

I'd defy you to read these rules and think that anyone, let alone a partner in an industrial relations legal practice, could believe they had any right to set up an entity bearing the name described in Rule One.

Awu rules front page

Omnia praesumuntur rite esse acta.   Unless a devious lawyer is involved.
Every touch leaves its trace.


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Where it Started

Gillard & the AWU scandal

Interview with Bob Kernohan