FEDERAL COURT OF AUSTRALIA Hayman Reese a Division of Trimas Corporation Pty Ltd v AFMEPKIU [2001] FCA 1279 INDUSTRIAL LAW – application for interlocutory injunction alleged breaches of s 170MN and s 170NC of Workplace Relations Act 1996 (Cth) – whether serious question to be tried – whether Union engaging in industrial action. Workplace Relations Act 1996 (Cth): ss 170NC, 170NF, 170NG, 170 MN Australian Paper Ltd v Communication, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (1998) 81 IR 15 considered Kilpatrick Green Pty Ltd v The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing, & Allied Services Union of Australia & Anor (unreported, Ryan J 28 May 1998), considered The Original Juice Co Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2001) FCA 675 referred to ACI Operations Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2000) FCA 393 followed HAYMAN REESE A DIVISION OF TRIMAS CORPORATION PTY LTD v AUTOMOTIVE, FOOD, METALS, ENGINEERTING, PRINTING AND KINDRED INDUSTRIES UNION V 981 of 2001 GOLDBERG J MELBOURNE 5 SEPTEMBER 2001 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 981 of 2001 BETWEEN: HAYMAN REESE A DIVISION OF TRIMAS CORPORATION PTY LTD APPLICANT AND: AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION FIRST RESPONDENT JUDE GERARD REBEIRO SECOND RESPONDENT ROBERT WAUGH THIRD RESPONDENT JOHN D'COSTA FOURTH RESPONDENT JUDGE: GOLDBERG J DATE OF ORDER: 5 SEPTEMBER 2001 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: UPON the applicant by its Counsel undertaking: A. To submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order made hereunder or any continuation, with or without variation, thereof; and B. To pay the compensation referred to in (A) to the person there referred to. THE COURT ORDERS THAT: 1. The first respondent be restrained (whether by its officers, delegates, employees, agents or howsoever otherwise) until 4.30 pm on 7 September 2001 from directing, inducing, encouraging or procuring any employee of the applicant at 20‑50 Waterview Close, Dandenong South, Victoria to stop work or fail to work other than in accordance with the terms of the certified agreement between the applicant and the first respondent certified on 27 November 2000 for the purpose of supporting or advancing claims in relation to a guarantee of job security and in relation to the outsourcing of products for manufacture or partial manufacture by contractors. 2. The first respondent be restrained (whether by its officers, delegates, employees, agents or howsoever otherwise) until 4.30 pm on 7 September 2001 from preventing, hindering or interfering with access to and egress from the applicant's premises at 20‑50 Waterview Close, Dandenong South, Victoria by any person or vehicle. 3. The first respondent is to supply a copy of this order to each of the employees of the applicant who is a member of the first respondent as soon as practicable and in any event no later than 12 noon on 6 September 2001. 4. The further hearing of the application for interlocutory relief is adjourned to 9.30 am on 7 September 2001. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 981 of 2001 BETWEEN: HAYMAN REESE A DIVISION OF TRIMAS CORPORATION PTY LTD APPLICANT AND: AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION FIRST RESPONDENT JUDE GERARD REBEIRO SECOND RESPONDENT ROBERT WAUGH THIRD RESPONDENT JOHN D'COSTA FOURTH RESPONDENT JUDGE: GOLDBERG J DATE: 5 SEPTEMBER 2001 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The applicant has filed an application seeking penalties under s 170NF of the Workplace Relations Act 1996 (Cth) ("the Act") for contravention by the first respondent ("the Union") and three employees of the applicant for contravention of ss 170MN and 170NC of the Act and seeking injunctive relief under s 170NG of the Act, and also by virtue of the accrued and associated jurisdiction of the Court, to restrain contravention of ss 170MN and 170NC. The applicant has applied for urgent interlocutory relief. Only the Union was served in sufficient time to enable it to appear on that application. 2 I was informed that the second and fourth respondents had been served shortly before the time fixed for the hearing of the urgent application and I indicated at that time that I was not disposed to consider urgent interlocutory relief against the personal respondents in their absence. The applicant did not persist with the application for urgent interlocutory relief against the personal respondents. 3 The application arises out of recent events when a number of the applicant's employees stopped work and commenced a picket line outside the applicant's premises, obstructing the movement of vehicles into and out of the premises. The facts are set out in detail in an affidavit of Mr Damian Cooke, the manufacturing manager of the respondent. I paraphrase the relevant circumstances which have particular relevance to the matters before the Court. 4 The applicant manufactures towbars and towing accessories at its premises at 20‑50 Waterview Close, Dandenong South. It operates three shifts five days a week and employs approximately 130 employees of whom approximately 90 are production employees whose terms and conditions of employment are governed by the Hayman Reese Enterprise Based Agreement 2000 and the Metal Engineering and Associated Industries Award 1998 Pt I. Most employees of the applicant are members of the Union. The agreement was certified on 27 November 2000 to come into force on that date and its nominal expiry date is 30 June 2003. 5 The applicant manufactures approximately 1100 different product types and the manufacturing process consists of three processes - preparation, welding and finishing. Over a period of time the applicant has outsourced to outside contractors some of its manufacturing processes. In or about February and May this year the applicant extended its outsourcing arrangements in relation to its manufacturing processes. 6 In all cases of outsourcing, contractors perform only part of the manufacturing process and the balance of the production work is carried out by the applicant's employees at its premises. The decisions by the applicant to outsource part of its manufacturing operations have been discussed with employees from time to time and there have been briefing sessions which Mr Cooke has told the employees that the partial outsourcing would not impact on their job security and that no‑one would lose their job because of the decision of the company to outsource functions, provided that the market conditions did not dramatically change and provided there was not industrial disputation. 7 On Monday 27 August 2001, Mr Cooke met with an employee Mr Brian Douglas and other persons. Issues had arisen in relation to the operation of the forklift in the factory for which Mr Douglas was responsible. The applicant decided that it would no longer have a forklift in the factory and it offered Mr Douglas three options: a position in preparation, a position in stores or a redundancy package. 8 On 29 August 2001 there was a further meeting with Mr Douglas and an organiser of the Union Ms Linda Pope. Ms Pope said that she did not consider that Mr Douglas was a genuine redundancy situation. A meeting of employees was organised at which the personal respondents, who were shop stewards, were present. After the meeting, Ms Pope told the applicant that there would be a ban on working on outsourced products and that no employee would receive any goods using a crane or other materials handling equipment whilst Mr Douglas was absent. On the following day, 30 August, employees refused to unload a truck, and the offer made to Mr Douglas of redundancy was rescinded. Mr Douglas returned to work on Friday, 31 August and the crane was placed back in service. 9 During 31 August some employees refused to work on products that had been partially manufactured under outsourcing arrangements. A meeting of all employees was held at 5.30 pm at which Ms Pope was present. She raised the issue that the matter of concern was the issue of outsourcing. A shift supervisor, the fourth respondent, Mr D'Costa, had refused to work on outsourced products and he had been relieved of his supervisory duties. 10 Ms Pope informed Mr Cooke that the employees would not return to work until Mr D'Costa went back to his supervisory role. Mr Cooke advised Ms Pope that Mr D'Costa would return to his supervisory duties when he came to work and performed his duties. Ms Pope then informed Mr Cooke that the employees would not return to work until there was no outsourced products on site. 11 On Sunday night 2 September, the three night shift employees did not turn up for work and when Mr Cooke arrived at work at around 7.30 am the next morning 3 September, he found approximately twenty of the day shift employees standing outside the main entrance to the factory. Around 8 am, Mr Cooke met with Ms Pope and the employees outside the factory. In the course of the discussions one of the employees asked that Mr D'Costa be returned to supervisory duties and Mr Cooke responded that that would happen as soon as Mr D'Costa agreed to perform his duties. The second and third respondents then attended Mr Cooke's office and advised him that unless the employees got a letter by the end of the day guaranteeing their job security they would put a picket in place the following morning. 12 During 3 September 2001 only ten of fifty-five day shift employees performed work. The remainder of the shift remained outside the factory. At about 9.30 am, the shift employees commenced a picket at the loading bay entrance to the premises. Cars and metal barriers were placed across the driveway which prevented access to and egress from the premises. There was a change of shift in the afternoon to the afternoon shift around 3.30 pm but of the thirty‑two shift employees who should have commenced work on that occasion only one performed work. The remainder of the employees, including the three personal respondents, stayed outside the premises preventing access to the three entrances to the premises. Trucks arriving to pick up products for delivery and to deliver products were prevented from gaining access to the premises by the picket line. Police attended but did not assist to remove the picket line. 13 The consequence of the picket line has been that the applicant, has been unable to dispatch approximately $100,000 worth of product on 3 September and has lost approximately 50% of its normal production as a result of employees not performing their work. The applicant is concerned because it operates in a very competitive industry and is concerned that its reputation may be damaged by its inability to deliver product. It is also concerned that it may lose customers to its competitors due to its inability to deliver product. 14 The applicant submitted that these facts disclosed a contravention of s 170MN and s 170NC of the Act. Section 170MN provides – "(1) From the time when: (a) a certified agreement; or (b) an award under subsection 170MX(3) (which deals with the exercise of arbitration powers on termination of a bargaining period); comes into operation until its nominal expiry date has passed, an employee, organisation or officer covered by subsection (2) must not, for the purpose of supporting or advancing claims against the employer in respect of the employment of employees whose employment is subject to the agreement or award, engage in industrial action. (2) For the purposes of subsection (1), the following are covered by this subsection: (a) any employee whose employment is subject to the agreement or award; (b) an organisation of employees that is bound by the agreement or award; (c) an officer or employee of such an organisation acting in that capacity. Section 170NC(1) provides: A person must not: (a) take or threaten to take any industrial action or other action; or (b) refrain or threaten to refrain from taking any action; with intent to coerce another person to agree, or not to agree, to: (c) making, varying or terminating, or extending the nominal expiry date of, an agreement under Division 2 or 3; or (d) approving any of the things mentioned in paragraph (c). 15 The applicant submitted that the Union was engaging in industrial action in contravention of s 170MN(1). The certified agreement had come into operation, its nominal expiry date had not passed and the Union had engaged in industrial action because it had been involved through its organiser Ms Pope and the respondent shop stewards in organising the employees to refuse to attend for, and perform, work. It was submitted that s 170MN(1) proscribed industrial action engaged in for the purpose of supporting or advancing claims against the employer in respect of the employees bound by the agreement and that in this case the claims being advanced related to no work being carried out while outsourced product was on the site and to the employees seeking a guarantee of job security. 16 It was also submitted that s 170MN(1) applied to the Union because in accordance with s 170MN(2)(b) the Union was bound by the certified agreement. The Union submitted that s 170MN(1) did not apply to the conduct in which it had engaged as the section proscribed engaging in industrial action and did not proscribe organising industrial action. The Union submitted that Div 8 of Pt VIB of the Act recognised the distinction between organising industrial action and engaging in industrial action and that s 170MN only proscribed engaging in industrial action and did not affect organising industrial action. 17 At this early stage of the proceeding, I do not have to determine this issue finally, rather I have to determine whether there is a serious question to be tried in relation to this issue. Although Div 8 of P t VIB recognises a distinction between engaging in industrial action and organising industrial action: see, for example, ss 170ML(2), 170MM(1) and (2), s 4(8) of the Act provides: "In this Act, a reference to engaging in conduct includes a reference to being, whether directly or indirectly, a party to or concerned in the conduct." 18 On the present state of the facts it appears that the Union, through its organiser Ms Pope, has been a party to and concerned in the withdrawal of labour for the purpose of advancing the claims in relation to the issue of working on outsourced products and the guarantee of job security. 19 An interesting question arises whether the expanded definition of engaging in conduct found in s 4(8) applies to the conduct proscribed in s 170MN having regard to the distinction recognised in Div 8 of Pt VIB between organising and engaging in industrial action. Unaided by authority I consider there to be a serious question to be tried on that issue, having regard to the inclusive definition in s 4(8). The issue has, however, been considered in some cases. In Australian Paper Ltd v Communication, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (1998) 81 IR 15 North J, held that s 170MN(1) only prohibited engaging in industrial action during the period of the certified agreement and did not prohibit organising industrial action in that period. 20 His Honour said (at 21-22): The terms of s 170MN(1) present a greater obstacle to the applicant's success. There is a curiosity about the section in the overall context of Division 8. The section only prohibits engaging in industrial action during the period of the certified agreement, and not to organising industrial action in that period. Throughout Division 8 there is a distinction drawn between engaging in industrial action and organising industrial action (see ss 170ML(2) and 170MN(1) and (2)). Engaging in industrial action is the taking of direct action which interferes with usual work patterns while organising industrial action involves procuring others to take the direct action. A union official or employee who is not employed at the worksite which is the subject of disruption does not engage in industrial action for the purposes of Division 8 by encouraging employees to stop work. This conduct amounts to organising industrial action. Section 170MN(1) is only contravened by engaging in industrial action while a certified agreement is in place. 21 However, in Kilpatrick Green Pty Ltd v The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing, & Allied Services Union of Australia & Anor (unreported, Ryan J 28 May 1998), Ryan J took a different view to the action covered by s 170MN. His Honour was presented with the submission that organisation of industrial action by a Union or Union official could not amount to engaging in industrial action in contravention of s 170MN. Reliance was placed on the passage in Australian Paper (supra) to which I have referred above. Ryan J rejected the submission and was unable to adopt North J's conclusions. Ryan J said: "It is accepted on both sides that those conclusions were reached by his Honour without the benefit of any argument and, with respect, I am unable to adopt them. It is true that s 170ML(2) appears to speak disjunctively of an entitlement to "organise or engage in industrial action directly against the employer". However, the entitlement is not conferred distributively on the organisation of employees and its officers on the one hand and the members employed by the employer and employees who are negotiating parties on the other. In other words, the concluding part of s 170ML(2) contemplates that an organisation of employees may "engage in" as well as "organise" industrial action and a member of the organisation employed by the relevant employer may similarly "organise" industrial action against the employer as well as engage in it himself or herself. Sub-ss 170MN(1) and (2) preserve the same dichotomy between engaging in and organising industrial action but not in a mutually exclusive way that confines the former activity to employees of the relevant employer and the latter to the registered organisation and its officers. It is clear that s 170MN(2) makes the prohibition in s 170MN(1) which is confined to engaging in industrial action during the life of a certified agreement applicable to: (b) an organisation of employees that is bound by the agreement or award; (c) an officer or employee of such an organisation acting in that capacity. as well as to employees whose employment is subject to the certified agreement. It must therefore contemplate that an organisation of employees can "engage in" industrial action in the sense in which that expression is used in s 170MN(1). The argument is clinched by s 4(8) of the Act which provides: In this Act, a reference to engaging in conduct includes a reference to being, whether directly or indirectly, a party to or concerned in the conduct. An organisation of employees which through officers or employees counsels, procures or "organises" the taking of industrial action by employees whose employment is subject to a certified agreement is at least indirectly a party to or concerned in that industrial action." 22 The approach taken by Ryan J was implicitly accepted by Beaumont J in BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union (2000) 102 IR 275. His Honour said at p 290: "The Commission went on to cite the following passage from the judgment of Ryan J in Kilpatrick Green Pty Ltd v CEPU … An organisation of employees which through officers or employees, counsels, procures or "organises" the taking of industrial action by employees whose employment is subject to a certified agreement is at least indirectly a party to or concerned in that industrial action." I respectfully agree." 23 In this state of the authorities I am confirmed in my view that there is a serious question to be tried that the conduct of the Union, through its organiser Ms Pope, constitutes industrial action of the type proscribed by s 170MN(1). 24 I am also satisfied that there is a serious question to be tried on the issue whether s 170MN(1) is contravened in the circumstances of this case, notwithstanding that the industrial action is not taken for the purpose of supporting or advancing claims for a certified agreement. I addressed this issue in The Original Juice Co Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2001) FCA 675 where I identified the different views expressed by Cooper J in Thiess Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (1999) FCA 407, and Beach J in Amcor Packaging Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (unreported 29 October 1999). I adverted to the fact that on the application to the Full Federal Court to extend the time within which to apply for leave to appeal from the decision of Cooper J (which application was refused) two members of the Full Court appeared to regard Cooper J's construction of s 170MN as an open question. 25 I concluded that there was a serious question to be tried, that the section is not limited to those types of cases considered by Cooper J in Thiess Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union where the industrial action is engaged in for the purpose of negotiating another certified agreement. I remain of that view. 26 I turn to the claim that there has been a contravention of s 170NC of the Act. The applicant referred to cl 19 of the certified agreement which was headed "Job Security" and which is in the following terms: "It is not the Company's intention to have forced redundancies during the life of this agreement, however, should business conditions warrant, the Company reserves the right to make necessary changes to its workforce. The Company will advise the union at the earliest opportunity should circumstances warrant a review of crewing arrangements, consistent with the relevant award requirements and the parties will review the needs of the business and will focus on opportunities available to address these requirements. Redundancy arrangements are detailed in Appendix B." 27 The applicant submitted that by this clause the Union, which was bound by the certified agreement, agreed that the applicant reserved the right to make redundancies. It was then submitted that the demand that the employees get a letter guaranteeing their job security was a demand that sought to change the terms which had been agreed in cl 19. As the applicant had been informed that unless the employees got a letter by the end of the day guaranteeing their job security, a picket would be put in place, it was said that the terms of s 170NC were invoked as industrial action was threatened and taken with intent to coerce the applicant to agree to vary the certified agreement. It was said that the demand was inconsistent with the terms of cl 19 and intended that there be a change to the agreement. 28 The Union submitted that the demand that the employees receive a letter guaranteeing their job security should not be seen as action taken to obtain a variation of a certified agreement but rather evidenced the concern of the employees to ensure that the job security provisions in cl 19 of the certified agreement would be observed. 29 Although there may have been some concern in the previous week as to the future employment of Mr Douglas, it does not appear that his situation was a motivation in the demand for the letter guaranteeing the employees' job security. Mr Douglas had returned to work on the previous Friday, 31 August 2001 and any issue in relation to his employment had been laid to rest. 30 It is not easy to distil out of the demand for a letter guaranteeing the employees job security that they were seeking to change the terms of the certified agreement and cl 19 in particular. Nevertheless, one has to give some meaning and content to the demand that job security be guaranteed. More particularly is this so when the matter was addressed in cl 19 of the certified agreement. The applicant submitted that any such guarantee sought by the employees and the Union would go beyond cl 19 and would override the certified agreement. 31 It was submitted that if the employees were told that the certified agreement would override the letter then their response would be that the certified agreement should be varied. At this early stage of the proceeding I cannot form a view as to what the employees might say in response to such a question. All I can determine is whether there is a serious question to be tried as to whether the conduct falls within s 170NC. 32 I am conscious of the fact that this dialogue occurred in the course of industrial disputation when the parties perhaps had not turned their mind to the consequences of what was being said. Nevertheless, what occurred was that a demand was made for job security; there was a threat that unless it was given a picket would be put in place. In fact a picket was put in place. 33 I consider that there is a serious question to be tried whether the conduct of the Union and the conduct of the employees in relation to the demand that there be a guarantee of job security comes within the proscription in s 170NC. There had been an underlying concern by the employees as to the consequences of the further outsourcing of part of the manufacturing process to contractors off the site. The applicant through Mr Cooke had held the regular briefing sessions to which I had referred but notwithstanding what he had said the demand was made for the guarantee of job security. Although it occurred in the course of an industrial dialogue, and although the matter is not free from doubt, I consider there is a serious question to be tried that the intention behind the request was to achieve a situation which was a better situation for the employees than exists by reference to the terms of cl 19 of the certified agreement. 34 I turn to the balance of convenience. I consider that the balance of convenience is in favour of the grant of an interlocutory injunction restraining the Union from inducing or encouraging or procuring any employees of the applicant to stop work or fail to work, otherwise in accordance with the terms of the certified agreement. I am also satisfied that the balance of convenience is in favour of the grant of an injunction restraining the Union from interfering with access to and egress from the premises, having regard to my finding of the serious question to be tried in relation to a breach of s 170NC of the Act. 35 The evidence establishes that the applicant has lost approximately 50% of its normal production as a result of the employees not performing their work which is causing a continuing loss of revenue. It is also relevant that the applicant operates in a competitive industry where there is the potential to lose the loyalty of customers as a result of an inability to meet orders. 36 The Union submitted that the Court should exercise caution in granting interlocutory injunctions in industrial matters and relied upon the observations of North J in Australian Paper (supra). His Honour said at p 24: "By reason of these recurring features of industrial disputes, ordinarily, justice will be best served if the Court approaches the grant of an interim injunction against industrial action with particular caution. I emphasise that this is not a universal or inflexible rule or precondition but rather an approach which will be applicable in most cases because of the usual features of such cases." 37 Like Merkel J in ACI Operations Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2000) FCA 393 at [62], I do not consider that North J was intending to lay down a rule that special principles should apply to the grant of interlocutory relief and industrial litigation, different from the principles which apply to the grant of interlocutory relief in other areas of disputation. I agree that in considering whether interlocutory relief should be granted in the area of industrial relations disputation, one should consider carefully the consequences of granting relief for each party. That I have done. 38 The applicant by its counsel has proffered the usual undertaking as to damages and I am satisfied that an injunction should be granted restraining the Union from inducing, encouraging or procuring or directing any employee of the applicant to stop work or fail to work other than in accordance with the terms of the certified agreement. However, such restraint should only be imposed for the purpose where such action is taken, or is to be taken, of supporting or advancing claims in relation to the guaranteeing of job security and the outsourcing of part of the manufacturing process of products off site by outsource contractors. The injunction should go no wider than is necessary to meet the particular reason why the employees are presently failing to attend for work. 39 Subject to what the parties may say I propose that the injunctions run until 4.30 pm on Friday, 7 September, as the matter has come on for hearing in great haste and the Union in particular should be given the opportunity to make further submissions as to whether the injunctions should be continued. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate: Dated: 7 September 2001 Counsel for the Applicant: F Parry Solicitor for the Applicant: Clayton Utz Counsel for the First Respondent: L Armstrong Solicitor for the First Respondent: Maurice Blackburn Cashman Date of Hearing: 4 September 2001 Date of Judgment: 5 September 2001