Maritime Union of Australia & Ors v Patrick Stevedores No.1 Pty Ltd (under administration) & Ors [1998] FCA 378

FEDERAL COURT OF AUSTRALIA MARITIME UNION OF AUSTRALIA & Others v PATRICK STEVEDORES NO.1 PTY Ltd & Others No VG 152 of 1998 SUMMARY INTRODUCTION In accordance with the practice of the Federal Court in some other cases of public interest, North J has prepared this brief summary to accompany the reasons for judgment, delivered today. It must, of course, be emphasised that the only authoritative pronouncement of the Court's reasons is that contained in the published reasons for judgment. This summary is intended to assist in understanding the principal conclusions reached by the Court, but is necessarily incomplete. 1. The Maritime Workers Union of Australia (the Union) and employees of companies in the Patricks group of companies (Patricks) who are members of the Union have brought proceedings in the Federal Court alleging that Patricks and others have acted unlawfully by taking steps to replace the employees with non-Union workers. 2. An urgent situation arose on 6 April 1998, when the Union and the employees believed that Patricks were about to dismiss the entire workforce over Easter. 3. The Union and the employees applied to the Court immediately on 6 April 1998 and asked for temporary orders to keep the employees in work until the main application is heard by the Court. The Court listed that urgent matter for hearing on 8 April 1998. 4. The following night, on 7 April 1998, the Patrick companies which employed the employees (the Patrick employers) appointed administrators to companies on the ground that they were insolvent. 5. Part of the cause of the insolvency was that other Patrick companies which owned the stevedoring operation (the Patrick owners) cancelled a contract for the supply of labour by the Patrick employers to the Patrick owners. That contract was the way the Patrick employers obtained stevedoring work to employ the employees. 6. On the same night, the Patrick owners engaged contractors to provide a new workforce. Under these contracts, the Patrick owners committed themselves to substantial financial obligations. 7. The Court has now been asked to make orders to return the situation to the pre-7 April 1998 position. The Union and the employees seek orders that the Patrick employers continue to employ the employees and the Patrick owners use only those employees to do the work which has always been done by the employees. 8. The orders are only to last until the case is heard in full. 9. The approach of the Court to such temporary orders is well settled. It involves two considerations. One is whether the applicants have raised a serious issue to be tried or, in other words, that they have an arguable case, and the other requires the Court to balance the interests of all parties to determine whether it is more convenient or just that orders be made. 10. When making temporary orders, the Court is usually dealing with urgent matters on much less material than at the final hearing. The Court must form views on that material, to decide whether to make temporary orders. But the views are made only for that purpose. The picture might look quite different after all the evidence is heard at a final hearing. 11. Going now to the issue whether the Union and the employees have raised a serious question to be tried. In my view, they have demonstrated an arguable case that the Patrick employers acted in breach of s 298K(1) of the Workplace Relations Act. This section provides: "An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following: (a) dismiss an employee; (b) injure an employee in his or her employment; (c) alter the position of an employee to the employee's prejudice". 12. The cancellation of the labour supply contract and the appointment of administrators on 7 April 1998 were made possible by a complex inter-company transaction which occurred in September 1997. By dividing the functions of employing workers and owning the business between two companies, the Patrick group put in place a structure which made it easier to dismiss the whole workforce. It is arguable, on the evidence, that this was done because the employees were members of the Union. So there is an arguable case that the Patrick employers acted in breach of s 298K(1) of the Act. 13. There is also an arguable case that these acts amounted to a breach of the employees' contracts of employment. 14. There is also evidence that the Patrick owners and other companies in the Patrick group, together with others, agreed on these unlawful acts as part of an overall plan to replace the workforce with non-Union labour. This means that there is an arguable case that the Patrick owners and Patrick employers have engaged in an unlawful conspiracy. 15. Next, the Court balances the interests of the parties to determine whether orders should be made. Some of the considerations are: (a) Section 298K(1) of the Workplace Relations Act gives an important protection of the individual rights of employees to belong to a Union if they choose. The Court should perhaps be more ready to protect such rights than merely financial interests. (b) The employees have an interest in returning to the work they did before 7 April 1998. (c) If temporary orders are not made, the Patrick owners and Patrick employers will have to make more and complex arrangements to conduct the business. This will confer rights on other parties which will be impossible to untangle if the Court decided to make orders in favour of the employees after a trial of the action. (d) Patricks argued that they already have obligations to a new workforce. They will have to honour those obligations. However, they entered into them the night before this application commenced. They took the risk that orders would be made. (e) Patricks say that the Patrick employers are insolvent. This is an important issue. Ordinarily, the Court would not force a company to trade if it is insolvent. However, if the Court orders that the Patrick owners use the Patrick employees for stevedoring work, one reason for the insolvency is removed. Further, the employees have agreed not to claim wages to the extent necessary for the employer companies to trade profitably. As the labour expense is the major operating expense, this unusual concession reduces the argument based on the insolvency of the Patrick employers. (f) Another reason for the insolvency was the inability of the Union and employees to co-operate with the Patrick employers. The control of the Patrick employers is now in the hands of the administrators. They are independent, neutral and professional in their approach. The previous problems of co‑operation will be much reduced by the role of the administrators. In another unusual development, the Union and the employees have undertaken to the Court that they will not take industrial action while the orders are in force. This also increases the chance of successful trading. 16. After balancing all the factors for and against the making of orders, I have concluded that the orders should be made. I will now formally pronounce the orders and then hand down my detailed written reasons for making the orders.