Australian Workers Union v Stegbar Australia Pty Ltd [2001] FCA 367

FEDERAL COURT OF AUSTRALIA

Australian Workers' Union v Stegbar Australia Pty Ltd

[2001] FCA 367 INDUSTRIAL LAW – lockout – notice of lockout – service on union – notice given to shop steward – authority to accept service on behalf of union – service on employees – employees given notice by shop steward – compensation – unpaid wages Workplace Relations Act 1996 (Cth) ss 170MO(3), 170MU, 170NH

Newby v Colt's Patent Firearms Co (1872) LR 7 QB 293 cited Mackereth v Glasgow and South Western Railway Co (1873) 8 Ex 149 cited T J Carr v School District of Belton, 42 Mo App 154 (Court of Appeal, Missouri, 1890) cited Ex parte Palmer (1912) 12 SR(NSW) 756 cited Heatons Transport (St Helens) Ltd v Transport and General Workers Union [1973] AC 15 discussed Concrete Constructions Pty Ltd v Plumbers & Gasfitters Employees' Union (No 2) (1987) 15 FCR 64 referred to National Workforce Pty Ltd v Australian Manufacturing Workers' Union (1997) 75 IR 200 applied Hanley v Pease & Partners Ltd [1915] 1 KB 698 discussed Warburton v Taff Vale Railway (1902) 18 TLR 420 cited Marshall v English Electric Co Ltd [1945] 1 AllER 653 cited Browne v Commissioner for Railways (1935) 36 (SR)NSW 21 cited AUSTRALIAN WORKERS' UNION v STEGBAR AUSTRALIA PTY LTD V 667 of 2000 FINKELSTEIN J MELBOURNE 5 APRIL 2001

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V667 of 2000

BETWEEN: AUSTRALIAN WORKERS' UNION

Applicant

AND: STEGBAR AUSTRALIA PTY LTD

Respondent

JUDGE: FINKELSTEIN J

DATE: 5 APRIL 2001

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 The respondent, Stegbar Australia Pty Ltd (Stegbar), has an aluminium assembly plant at Rowville, Victoria. Between 29 August and 4 September 2000, employees who worked at the plant were locked out and not paid any wages. The applicant, Australian Workers' Union (AWU), alleges that by locking out its employees Stegbar contravened s 170MU and s 170NC of the Workplace Relations Act 1996 (Cth). Section 170MU(1) relevantly provides that an employer must not injure an employee or alter the position of an employee to the employee's prejudice because the employee is engaging in industrial action which is protected action. Note that s 170MU(1) does not apply in respect of action taken by an employer that is itself protected action: s 170MU(2)(c). Section 170NC(1) prohibits a person from taking industrial action with intent to coerce another person to agree to make an agreement under Div 2 or Div 3 of Pt VIB. AWU seeks the imposition of penalties under s 170NF for the alleged contraventions. It also asks that compensation (loss of wages) be paid to the locked out employees under s 170NH(1)(b). 2 The relevant facts are not controversial. In 1998 Stegbar entered into an agreement to settle an industrial dispute. The agreement, known as the Stegbar Pty Ltd Rowville Aluminium Assembly Plant Enterprise Agreement 1998, was certified under s 170LT of the Workplace Relations Act which is to be found in Div 4 of Pt VIB. The agreement applied to employees of Stegbar who were employed at Rowville. The nominal expiry date of the agreement was 30 June 2000. 3 In March 2000 AWU and Stegbar began negotiations for a new agreement to replace the 1998 agreement. On 4 April 2000 AWU initiated a bargaining period under s 170MI in respect of those negotiations. The purpose of initiating a bargaining period was so that AWU could organise and engage in industrial action (as defined in s 4(1)), for which there would be immunity from suit (so called "protected action") save in limited circumstances: see s 170ML and s 170MT. 4 David Routley is an employee of Stegbar who had been elected shop steward in accordance with the rules of AWU. Mr Routley was involved in the negotiations for a new agreement. He acted on behalf of AWU, which was a negotiating party (see s 170MI(3)(a) for a definition). He also represented the employees. 5 On 22 August 2000 AWU gave notice that it intended to take industrial action. The notice was given under s 170MO. In the absence of such a notice, the proposed industrial action would not be protected action. The notice advised that on 28 August 2000 at 1.30pm all employees would stop work for two hours to attend a union meeting and thereafter would impose and respect a ban on orders so that they would only work up to 80 per cent of the completion of an order, and would refuse to meet urgent orders. 6 Section 170ML provides that during a bargaining period an employer is entitled to respond to industrial action by locking out its employees: s 170ML(3). A lockout will be protected action only if the employer gives the notices required by s 170MO. Relevantly, s 170MO(3) requires written notice of the intended lockout to be given to the negotiating party, in this case the AWU, (s 170MO(3)(a)), and to every employee the subject of the proposed lockout (s 170MO(3)(b)). An employer will satisfy the obligation to give notice to its employee by taking "reasonable steps to notify the particular employee of the intended lockout" (s 170MO(3)(b)). 7 Stegbar decided to respond to the industrial action threatened by the union. Mr Vaughan, a manager at Stegbar, handed a notice of the company's intention to employees as they completed their shift on 23 August 2000. The notice was given to every employee except those who were absent from work. Six employees were absent. The notice stated that employees would be locked out on 29 August 2000 at 6.30am. The notice explained that the action was taken to support and advance claims made by Stegbar that were the subject of industrial disputation and in response to industrial action taken by the employees. The notice indicated that the lockout would be suspended "if industrial action taken by the employees and union is lifted and meaningful negotiations with Stegbar Pty Ltd are resumed." 8 Mr Routley was given the notice. He immediately telephoned Mr Lineham, an organiser with AWU who was responsible for the members of AWU employed at the Rowville plant by Stegbar. Mr Routley advised Mr Lineham of the contents of the notice. He did not discuss the matter with anyone else at AWU. Nor did Mr Lineham. 9 On the following morning, Mr Routley went to Mr Vaughan's office. There is minor disagreement about what occurred. Mr Routley says he asked Mr Vaughan for a copy of the notice so that it could be photocopied and handed to those employees who had not received it on the previous day. Mr Vaughan recalls that he gave Mr Routley sufficient copies of the notice to give to those employees. Whatever be the correct position, Mr Routley assured Mr Vaughan that he would give a copy of the notice to the employees. And he recalls giving the notice to a number of the employees. It is likely that he gave a copy to everyone, apart from those who were on leave and not affected by the proposed lockout. 10 On 28 August 2000 AWU and its members took industrial action in accordance with the union's notice. There was a stop work meeting attended by thirty members. On the following day Stegbar locked out the employees. 11 I now turn to consider whether there was a breach of s 170MU(1) (injuring employees for engaging in protected action). Subject to one matter, it is accepted that Stegbar must be found to be in breach of this provision if its lockout was not protected action. It will be protected action if Stegbar gave the notices required by s 170MO. Here there are two questions. First, did Stegbar give written notice to AWU? Second, did Stegbar give notice to all affected employees? 12 So far as service on the AWU is concerned, Stegbar concedes that it did not post or deliver to the union a notice of its proposed lockout. It contends that it satisfied the obligation imposed by s 170MO(3)(a) by giving the notice to Mr Routley. 13 First, some general propositions. The rule of the common law for the service of a document upon a corporation was summed up by Blackburn J in Newby v Colt's Patent Firearms Co (1872) LR 7 QB 293 at 296: "[T]he service of a writ on a corporation aggregate, which from the nature of the body could not be personal, was [done successfully] by serving it on a proper officer, so as to secure that it came to the knowledge of the corporation … The clerk or other officer must be in the nature of a head officer, whose knowledge would be that of the corporation." In this context "clerk" refers to a head or principal clerk, not one performing ministerial duties: see 9(2) Halsbury's Laws of England (4th ed, 1998) at par 1191, referring to Mackereth v Glasgow and South Western Railway Co (1873) 8 Ex 149 (disallowing service on an administrative clerk in Liverpool of a Scottish rail company). See also T J Carr v School District of Belton, 42 Mo App 154 (Court of Appeal, Missouri, 1890) where it was held that the "president of the board is plainly a 'head officer' of the body corporate [in that case a school board], and … there is an implied authority, at common law, in this head officer to receive service of process in a suit against the corporation." In Ex parte Palmer (1912) 12 SR(NSW) 756, a notice to quit addressed to the secretary of a union instead of to the trustees was held to be good service only because the notice came to the attention of one trustee. 14 To effect service on a corporation according to the common law is not easy. To overcome the difficulty there are many statutes that allow for constructive service. Section 28A of the Acts Interpretation Act 1901 (Cth) is an example. It provides that when any Commonwealth statute "requires or permits a document to be served on a person, whether the expression "serve", "give" or "send" or any other expression is used, then, unless the contrary intention appears, the document may be served on a body corporate by leaving it at, or by sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate": s 28A(1). 15 Stegbar does not rely on s 28A. Nor does it rely on the common law rule. It says that Mr Routley, as agent of the union, had authority to accept service of a lockout notice on the union's behalf. 16 Assuming, without deciding, that service on an agent may be good service under s 170MO, it is necessary to consider the position of a shop steward, for that is Mr Routley's role with the union. Under the rules of AWU, a shop steward (referred to in the rules as a representative) is given certain powers. He can call meetings of members on the job to discuss union affairs. He is required to keep in communication with the relevant branch of the union. In the discretion of the secretary, he may be issued with a receipt book and pay-in book in which he will record money received by way of contributions, levies, fines or otherwise, on behalf of the union. The rules do not specifically authorise a shop steward to accept notices on behalf of the union. 17 While the rules confer few powers on a shop steward, he does play an important role. Lord Denning MR provided a description in Heatons Transport (St Helens) Ltd v Transport and General Workers Union [1973] AC 15 at 47: "On the one hand, a 'shop steward' is the representative of his work group, that is, his fellow workers in a particular place of work, such as a factory, depot or wharf or a section of it. He is one of them. He works alongside them. He is employed by the same employer as they are. He is their leader. He speaks for them. If any of them has a grievance with the management, he takes it up. He negotiates on their behalf with the employers on any point specially connected with that particular shop, such as, who is to do this piece of work or that, whether they should work overtime and so forth. He is often appointed by the workers unopposed, but, in case of difference, they hold an election to decide who it shall be. … In all this, he is essentially the representative of his own work group. … On the other hand, a 'shop steward' is also a representative of the trade union. He is accredited to the union. He collects the men's contributions to the union or sees that they are collected. He sees that new men join the union. He keeps his fellow workers informed of the policy of the union and of the decisions of branches. If the union decides to take action of one kind or another, he would be responsible for carrying it out in his shop. But he is not paid by the union. He is not an 'officer' of the union. He is only an 'official'. He is paid by his employers and is the servant of his employers: but they allow him to spend part of his time – and sometimes the whole of it – on his shop steward duties." 18 This description cannot in all respects be applied to this country. For a discussion of the role of the shop steward (or "job delegate") in Australia, see Concrete Constructions Pty Ltd v Plumbers & Gasfitters Employees' Union (No 2) (1987) 15 FCR 64 at 78 per Wilcox J. But it is true that a shop steward will, for some purposes, be the representative of the employees and for other purposes a representative of the union. The question is in what respects is he the representative of the union and when is he the representative of the employer? In particular, for the purposes of this case, the question is whether the shop steward represents the union for the purpose of receiving a notice under s 170MO. 19 In National Workforce Pty Ltd v Australian Manufacturing Workers' Union (1997) 75 IR 200 at 203 Harper J explained the importance of a notice under s 170MO. He said that the notice is not merely of symbolic importance. He said it has a significant part to play in the progression of an industrial dispute. He said that parties are entitled to proceed upon the basis that their dispute cannot proceed beyond a certain point, unless the notice is given and, when given, will provide the recipient with information of importance to the future conduct of the dispute. I agree with all these comments. 20 The source of power of an agent such as Mr Routley to bind his principal can arise in a variety of ways. The agent may have been given express authority to do a particular act. Alternatively, his authority may be implied, if it be shown that the act in question is ordinarily or necessarily incidental to the due performance of his express authority or if acceptance of the act is usually done by persons occupying the position. Also, an agent also has implied authority to act in accordance with customs and usages, if they be proved, provided those customs and usages are reasonable. Finally, an agent may have ostensible authority to bind his principal, as the product of the principal's conduct; this is a branch of estoppel. 21 According to the facts, there is no express authority. Nor is there evidence, or anything else, to prove implied authority, either as an incident of the office of shop steward or according to custom and usage. Finally, no estoppel has been shown to exist. Indeed Stegbar did not attempt to make out such a case. Service of the notice on Mr Routley was not service on the union. 22 Did Stegbar fail to comply with s 170MO(3)(b) by not giving notice to the employees who were absent from work on 23 August? AWU's argument that it did proceeds upon an erroneous analysis of the facts. True it is that Mr Vaughan did not hand out copies of the notice to the absent employees. However Mr Routley told Mr Vaughan that he would do so. Accordingly, when Mr Routley gave the notice to those employees, he was acting on behalf of Stegbar. 23 As a result of the failure to comply with s 170MO(3)(a), the lockout was not protected action. Nevertheless, Stegbar argues that its lockout did not contravene s 170MU(1). It relies upon s 170MU(2)(b) which provides that subsection (1) does not apply where an employer is "refusing to pay the employee where, under the common law, the employer is permitted to do so because the employee has not performed work as directed." 24 This provision will protect Stegbar if it has the right to stand down an employee who indicates he will not work in accordance with his contract of employment. However, under the common law, in the case of threatened misconduct, an employer has no right to suspend an employee without pay. The employer may dismiss the employee, or it must permit the employee to carry out his duties, albeit otherwise than in performance of his obligations. In Hanley v Pease & Partners Ltd [1915] 1 KB 698 at 705 Lush J said: "[a]fter declining to dismiss the workman – after electing to treat the contract as a continuing one – the employers took upon themselves to suspend him for one day; in other words to deprive the workman of his wages for one day, thereby assessing their own damages for the servant's misconduct at the sum which would be represented by one day's wages. They have no possible right to do that. Having elected to treat the contract as continuing it was continuing. They might have had a right to claim damages against their servant, but they could not justify their act in suspending the workman for one day and refusing to let him work and earn wages." 25 A right to suspend or stand down an employee without pay may be granted by contract (Warburton v Taff Vale Railway (1902) 18 TLR 420), including by a term implied by custom or usage (Marshall v English Electric Co Ltd [1945] 1 AllER 653) or by statute (Browne v Commissioner for Railways (1935) 36 (SR)NSW 21). But no such right has been asserted here. 26 In the result, AWU has established that the employees who were stood down were injured or had their position altered to their prejudice, in breach of s 170MU(1). 27 I now move to s 170NC. I can be brief. To establish a contravention of this section AWU must establish that the intention of the lockout was to coerce the union to make a new certified agreement. In the context of this case it is not necessary to consider again the troublesome question of what is meant by "coerce". Here we have evidence of Stegbar's intention. In its notice of proposed industrial action, Stegbar stated its purpose. It said that the lockout was in reaction to the employees' threat of industrial action. The notice went on to state that it would be withdrawn if the employees ceased their industrial action. This evidence has not been contradicted. In the result, I cannot conclude that it was Stegbar's intention to force the union to make a new certified agreement. If industrial action by the employees had come to an end, so would the lockout. 28 Finally, I must consider the question of penalty and compensation. Section 170NF(2) provides that in the case of a contravention a penalty of not more than $10,000 can be imposed on a body corporate. Should any penalty be imposed? Earlier I explained the importance of s 170MO in the scheme of industrial disputation. So far as the union and its members are concerned, they should be informed of what the employer proposes to do, so they can take appropriate action. Here, both the affected employees and the union (through Mr Routley and Mr Lineham) had been advised of Stegbar's intention, albeit informally. The union was not under any disadvantage for not having received written notice. There was certainly a slip-up so far as Stegbar was concerned. In other cases the omission might be important. But not in this case. I think it would be wrong to impose a penalty for what is plainly inadvertent conduct with no harmful consequence. 29 On the question of compensation (s 170NH(1)(b)) different considerations arise. The scheme of the legislation is such that an employer may lock out its employees without pay, if the lockout is protected action. If it is not protected, then the employees have been wrongly denied their pay, by reason of the employer's breach of contract. There is no reason in that circumstance why the injured employees should not receive compensation, equivalent to lost pay. If the employees had brought proceedings in a court of competent jurisdiction to recover that amount, there would be no defence, at least to an action in damages for breach of contract. It is convenient and fair that such an order for compensation now be made. 30 AWU should bring in short minutes of orders, within 14 days, to give effect to these reasons. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.