http://au.news.yahoo.com/thewest/a/-/national/13887955/hsu-failure-is-outrageous...

A failure by the Health Services Union (HSU) to launch proceedings over claimed misappropriation of union funds could be seen as "totally outrageous", a judge says.

Justice Geoffrey Flick said it was equally unfathomable as to why an internal investigation was not conducted to see if there was any substance to the allegations.

He made the comments on Wednesday in the Federal Court while discussing whether an administrator would be able to institute proceedings against past officers to recover allegedly misappropriated money.

The judge is hearing applications to place the state union, HSUeast, and the HSU East branch of the federal union into administration.

As the parties, which include HSU acting national president Chris Brown, NSW Finance Minister Greg Pearce and federal Workplace Relations Minister Bill Shorten, have agreed to a statement of facts relating to the HSU problems, the judge is not required to make findings about the claims.

The issues for him include who will be appointed administrator, the question of a demerger and if all the official positions should be vacated.

Lawyers for national secretary Kathy Jackson have submitted she would suffer an injustice if she had to vacate her position as executive president of the federal branch.

But Adam Hatcher SC for Mr Brown, said there has been "a collective" failure by the officers of the two organisations and "they all bear collective responsibility for the outcome".

All positions should be declared vacant and be subject to new elections, he said.

He said Ms Jackson's national secretary position had an annual $150,000 salary, while the executive president's was $270,000 - the amount she actually received.

If her president position was vacated, she would still receive the lower salary.

"Ms Jackson has stated in the media she regards her ($270,000) salary as excessive and she was prepared to take a $100,000 salary cut," he said.

Earlier, David Rofe QC - representing Ms Jackson's partner Fair Work Australia vice-president Michael Lawler - said "highly defamatory" references had been made to his client in affidavits in the HSU case, even though he was not a party to the proceedings.

If tested under cross-examination, they would be proven to be "utterly false and fabricated", Mr Rofe said.

"This litigation has occupied considerable space in the newspapers all over Australia, and it is very harmful for malicious defamatory matters to be allowed to be in the public domain."

But Justice Flick said the parties could remove parts of the written evidence before it was made public.

The names of former Federal Court judge Michael Moore and Work Place Review editor and barrister, Jeffrey Phillips, have been put forward as administrator candidates.

In proposing Mr Moore, Mr Hatcher referred to an article in which Mr Phillips opined "right or wrong, that Ms Jackson is an innocent whistleblower who has been badly treated by persons from the other faction".

The hearing is expected to finish on Thursday

Wow a union issue