Background
In June 2025, the Federal Court found that the Victorian No.1 Branch of the Health Services Union had ceased to function effectively and approved a scheme of administration. The court appointed Charlie Donnelly as Administrator with obligations to restore the branch’s operations, manage its finances, and issue a certificate when the branch was functioning effectively. The scheme contemplated that administration would end upon declaration of elected office holders following elections scheduled for June 2026.
On 2 June 2026, Donnelly issued a certificate certifying the branch was functioning effectively. In response, the union sought urgent interlocutory relief to nullify that certificate, prevent elections, and extend the administration under a new amended scheme that would replace the single administrator with a three-member Administration Committee supervising Donnelly as “Executive Administrator.”
The Court’s Holding
Justice Dowling dismissed the union’s application for interim relief, finding no serious question to be tried on two grounds. First, the proposed amendments constituted a new scheme of administration, not permissible amendments to the existing scheme. The court noted that Donnelly had complied with all scheme obligations, nothing remained to implement, and the proposed changes fundamentally restructured governance (replacing a single administrator with a committee, introducing new reporting obligations, extending timelines beyond any uncompleted tasks, and transferring election management to the union). These changes exceeded the scope of cll 11 and 14 of the original scheme, the liberty to apply for implementation difficulties, or ancillary powers under s 323 of the Fair Work (Registered Organisations) Act 2009 (Cth).
Second, there was no serious question that Donnelly failed to consider an auditor’s report (the Hall Chadwick report) recommending continued administration. Although the scheme did not require him to consider the report, the court found he had in fact done so, disagreed with its conclusions, communicated his position to the union’s National Secretary, and attended meetings discussing the report before issuing his certificate. The Administrator had assessed that the branch would meet the report’s financial benchmark of $500,000 in total equity.
The court found the balance of convenience to be fairly even and did not grant the interim relief sought.
Key Takeaways
- Schemes of administration approved by courts are final orders; subsequent amendments must address implementation difficulties, not constitute fundamentally restructured schemes.
- An administrator who has complied with all scheme obligations may issue a certificate of effective functioning, and courts are reluctant to second-guess that determination without a serious legal question.
- Even where an administrator receives critical external reports, the absence of a scheme requirement to consider them does not constitute a failure of duty, and consideration of such reports does not require adoption of their recommendations.
- Democratic principles weigh heavily in union administration cases: members’ interest in timely elections and elected governance is significant in balancing interim relief considerations.
Why It Matters
This decision clarifies the scope of court powers to amend schemes of administration for registered organizations. Courts cannot use administrative flexibility doctrines to approve wholesale restructuring of approved schemes. Once an administrator has substantially completed the scheme’s objectives, courts will not extend administration or fundamentally alter governance structures based on external auditor recommendations alone, particularly where the scheme does not require their consideration.
The judgment also emphasizes the countervailing weight of democratic principles in union administration. Brennan J’s concerns about prolonged denial of members’ rights to elect their representatives—expressed by multiple union members who spoke to the court—played a meaningful role in refusing interim relief. This suggests that courts will resist extending administration schemes beyond their contemplated lifespan absent clear evidence that the organization cannot yet function effectively, notwithstanding external advice to the contrary.
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