WESTERN AUSTRALIAN INDUSTRIAL APPEAL COURT. CORAM: KENNEDY J (President). DELIVERED: 1 DECEMBER 1995. FILE NO/S: APPEAL IAC 12 of 1995. BETWEEN: THE WEST AUSTRALIAN LOCOMOTIVE ENGINE DRIVERS’ FIREMEN’S and CLEANERS’ UNION OF WORKERS Appellant AND EDGAR SCHMID and OTHERS Respondents. Catchwords: Industrial law (WA)—Appeal to Industrial Appeal Court— Application for stay of order of President of Commission for institution of proceedings—Order for institution of proceed- ings to recover sums paid to General President and General Vice Presidents of appellant in excess of amounts fixed by registered rules—Stay ordered. Representation: Counsel: Appellant : Mr J O Kennedy Respondents : The first respondent appeared in person Solicitors: Appellant : Minter Ellison Northmore Hale Respondents : The first respondent appeared in person Case(s) referred to in judgment(s): The West Australian Locomotive Engine Drivers’ Firemen’s and Cleaners’ Union of Workers v Hathaway (1995) 75 WAIG 1785 Case(s) also cited: Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 7 76 W.A.I.G. The Australian Coarse Grain Pool Pty Ltd v The Barley Mar- keting Board of Queensland (1982) 57 ALJR 425 Barker v Lavery [1885] 14 QBD 769 Cox v Simeon, unreported; FCt SCt of WA; Library No 5063; 7 September 1983 Deputy Commissioner of Taxation v Fontana [1989] WAR 262 Federal Commissioner of Taxation v Myer Emporium Lim- ited (No 1) (1986) 160 CLR 220 Federated Liquor and Allied Industries Employees Union of Australia Western Australian Branch, Union of Workers v Federated Miscellaneous Workers Union of Australia Western Australian Branch, Union of Workers (1993) 52 IR 1 Professional Officers’ Association of New South Wales v New South Wales Teachers’ Association (1993) 50 IR 404 Waller v Todorovic, unreported; Ct of Appeal (New South Wales); 21 December 1979 Water Industry Salaried Officers’ Union v Professional Offic- ers’ Association (NSW) (1987) 22 IR 178 KENNEDY J: Mr Edgar Schmid and 18 other members of the appellant made an application to the President of the Industrial Com- mission under s66 of the Industrial Relations Act 1979, com- plaining of the failure to observe certain of its rules. They claimed that Mr K Campbell, Mr M Ryan and Mr K Jarrett, who were at the material times the General President and the General Vice Presidents of the appellant, had in the years 1991, 1992, 1993 and 1994 received payments by way of honoraria of amounts in excess of those authorised by the rules of the appellant. A resolution had in fact been passed increasing the permissible amounts payable by way of honoraria, but the changes had not been registered and they were therefore inef- fective. The learned President found that the President and the Vice Presidents of the appellant had been paid honoraria that they were not entitled to be paid, and which the appellant was not authorised to pay in accordance with rr16 and 17 of its rules. He further found that the General Committee, the President and the Vice Presidents knew or ought to have known of this. He then found that there had been a “misappropriation” of funds, in that funds were put to use in a way which the rules did not authorise. After further argument, the President made an order that the appellant, through its General Committee, should forthwith order its trustees to institute legal proceedings in a competent court, within 14 days of 21 September 1995, to recover the sums paid, should any such amount not be paid to the appel- lant within seven days of 21 September 1995. His Honour further ordered that, in the event that the moneys were not repaid, or such proceedings were not so instituted by the trus- tees, then the appellant should itself institute such proceed- ings within 21 days of 21 September 1995, and further that the appellant should at all times, in any event, take all steps and do all things necessary to recover such moneys from the General President and the General Vice Presidents as expedi- tiously as is possible. By r22(j) of the Rules of the Association, members of the General Committee (in the interim between Delegate meet- ings) have the power to “[d]irect the General Trustees to take legal proceedings against any officer or member of the Union guilty of misappropriating any of its funds”. On 10 October 1995, the appellant filed a notice of appeal against the orders made by the President. It contended that the President erred for the reason that r22(j) did not allow the President to make an order for its enforcement without a find- ing of misappropriation being made against the individuals specified in the order, and that there was no finding of misap- propriation made against those individuals. Further, it was contended that the President erred in law in his interpretation of the rule, in that he incorrectly construed “misappropria- tion” to exclude any element of intention to deprive and/or fraud, and that the President exceeded his jurisdiction in mak- ing the orders which he did. Thirdly, it was contended that the President erred in law and exceeded his jurisdiction in pur- porting to make an order that the appellant commence proceedings against individuals who were not respondents to the application, when they had a legitimate expectation to be heard, and thus the President did not exercise the Commis- sion’s powers in accordance with the principles of natural jus- tice and, further or alternatively, contrary to s26(1)(c) of the Industrial Relations Act. Whatever may be said as to the justification for the three office bearers retaining moneys paid to them, as the President has found, in excess of the maximum amount permissible under the registered rules of the appellant, a finding which has not been challenged, I have no doubt that the appeal raises seri- ous questions of law. I have reached this conclusion having regard to the unusual wording of cl 22(j). Particular issues must arise as to the meaning of “misappropriating” in this context, the significance of the expression “guilty” in the rule and by whom any such finding should be made. The appellant has sought a stay of proceedings on the ground that, if its appeal is successful, and the stay application is un- successful, the commencement of proceedings against the of- fice bearers will cause prejudice to the appellant for the following reasons – (i) the commencement of legal proceedings against the specified individuals will involve considerable le- gal costs to the appellant; (ii) the institution of legal proceedings will involve a considerable time and administrative burden for the appellant; (iii) the institution of legal proceedings against the speci- fied individuals will cause considerable disunity amongst members of the Union; and (iv) legal proceedings against the specified individuals may be concluded by the time that this matter is con- cluded. In addition, it was contended that the granting of a stay merely delayed the commencement of action against the speci- fied individuals. In my view, there is substance in the appellant’s general contentions and a stay should be granted. As I have already indicated, it does appear to me that the appeal raises serious questions for argument. Furthermore, in my view, it would be undesirable, while there are issues still to be finally deter- mined, to have proceedings instituted against three individu- als who were not formally parties to the original application. Unquestionably, if proceedings are instituted, costs would be incurred by the organisation and by the individuals concerned which, in the end, if the appeal succeeds, will be wasted. I am influenced in reaching this decision by the fact that the appeal is listed for hearing on 1 February 1996, and accordingly not a great deal of time will elapse prior to its determination. No prejudice on the part of the respondents by reason of a rela- tively short postponement has been pointed to. Counsel for the appellant raised a question as to whether, in order to obtain a stay, it was required to demonstrate “special circumstances” justifying the stay, or whether the balance of convenience test was the appropriate test. Murray J, in The West Australian Locomotive Engine Drivers’ Firemen’s and Cleaners’ Union of Workers v Hathaway (1995) 75 WAIG 1785, was of the view that the special circumstance test was applicable. It is not necessary to resolve that interesting ques- tion because, in my view, both tests are clearly satisfied in the instant case. In the circumstances, I would grant a stay of the orders made by the learned President until the determination of the appeal herein or until further order. Liberty will be reserved to the respondents to apply to vary or discharge the stay in the event that circumstances change. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 8 76 W.A.I.G.