| Summary |
BREACH OF CONTRACT - GOOD FAITH - Applicants members of respondent (“Union”) - First applicant (“W”) charged with offences against Union, and disciplinary proceedings resulted in expulsion from Union - Second applicant (“K”) cautioned or censured following disciplinary proceedings - Applicants claimed disciplinary action breach of Union rules - Argued only National Council (“NC”) able to take disciplinary action against members, and Union had failed to have NC for many years - Claimed Union failed to comply with rules requiring financial statements or returns to be filed annually - Alleged Auckland branch of Union engaged in illegal money lending and misappropriation of funds - Claimed Union in breach of good faith obligations under s4(1) Employment Relations Act 2000 (“ERA”) - Fundamental issue whether governance and management structure formed and maintained by Union accorded with Union rules - Authority had jurisdiction to hear matter under s161 ERA - Employment relationship existed between parties by virtue of s4(2) and s5 ERA - Union rules last amended and recorded by Registrar of Unions in 1990 - Despite matter being raised at various annual general meetings of Auckland branch no proposed rule changes forwarded to Registrar of Unions - Union rules provided for NC - Authority found management and governance of Union required existence of NC in addition to any branches established - Under rules NC had authority to amend rules, determine policy, hear and determine grievances, assist and advise branches about various matters, discipline members, and decide financial matters affecting Union - Branches did not have express authority to amend rules or discipline members - Rules could only be amended in accordance with procedure in rule - Proposal to amend rules to be made in form of remit to NC - Amendment did not come into force until date on which recorded by Registrar of Unions - No express or implied ability for branches to exercise disciplinary powers under Rule 12 - W expressly advised decision to terminate membership made under Rule 12 - Authority found powers or functions under Rule 12 only exercisable by NC - W’s expulsion and K’s temporary suspension did not comply with rules - Authority declared W’s expulsion carried out in breach of contractual rights - Auckland branch assumed jurisdiction it did not possess and breached contractual right of W as member - Authority declared K’s suspension an act performed without authority under rules - Union relied on motion passed at Annual General Meeting in 1992 to justify actions - Motion purported to authorise branches to assume all responsibilities and functions of NC - NC did not meet after 1992 and no elections held - Mr Froggatt (“F”) last person to hold office as National Secretary of NC - Authority found F did not continue to hold office of National Secretary - Rule 21(c) provided national officers held position, subject to rules, until death, resignation or successors elected, whichever occurred first - Authority found holding position subject to rules meant holding position subject to all rules including holding elections every four years as required by rules - Rules could not be read as permitting National Secretary who had not held elections to benefit from omission - Rules did not permit NC to assign or delegate responsibilities or functions under rules to branches - NC could have amended rules to allow such an action but that was not what it did at meeting in 1992 - Last registered rules still in effect - Authority found F did not act in good faith when represented himself as National Secretary while acting on behalf of Union as knew did not hold position - F represented himself as National Secretary on Union’s returns filed with Registrar of Unions - Union members viewing returns could have considered F national officer of NC that was still in operation - That representation likely to mislead or deceive therefore breached good faith obligations - F’s actions those of Union - Union, as party to employment relationship, obliged to act in good faith - Section 4A ERA provided for penalty where deliberate, serious, and sustained breaches of good faith - Union not put on notice by applicants or Authority that penalty for breach of good faith sought - Therefore no penalty imposed - Authority unable to make order for removal from office of union officials found acting in bad faith - Failure to maintain NC led to failures in relation to financial reporting and recording under rules - Authority satisfied Union rules provided for Union to establish and operate welfare, legal aid, credit, and education fund for benefit of members - If applicants believed scheme improperly administered matter should be taken up within Union through branch management - No evidence Auckland branch or any officer had misappropriated funds - Remedies - Authority ordered Union to comply with rules in relation to requirement to provide NC as part of governance and management structure - Union to comply with Rule 21 in relation to election of officers and to do so in time for annual meeting of NC by end of year - Nominations to be called for as prescribed by Rules with Authority fixing closing date for nominations - Authority directed, pursuant to s221 ERA, certain Union members to act jointly as National Secretary to carry out functions required by Rule 21(d) and to appoint returning officer - Appointees to ensure nominations called for, and voting held in time for annual meeting - Union to consider approaching Council of Trade Unions and/or Registrar of Unions for assistance - Authority declared W’s expulsion from Union breach of rules and therefore of no effect - W to be regarded as having remained member of Union since date of purported expulsion - Restoration of W’s name to Union roll and entitled to all rights and privileges available to members ordered - W and K entitled to fully participate in Auckland branch elections - Union to refrain from representing to anyone that W not a member, and not to refer to him as expelled member - Union ordered to advise management of employer that W not lawfully expelled and remained member since joining - Union ordered not to take disciplinary action against W in relation to matters for which wrongly disciplined and expelled - No orders necessary in relation to K in addition to declaration given that suspension in breach of rules and of no effect |