FEDERAL COURT OF AUSTRALIA Automotive, Foods, Metals, Engineering, Printing & Kindred Industries Union v Eaton Electrical Systems Pty Ltd [2005] FCA 2 AUTOMOTIVE, FOODS, METALS, ENGINEERING, PRINTING & KINDRED INDUSTRIES UNION v EATON ELECTRICAL SYSTEMS PTY LTD NSD1979 OF 2004 MOORE J 7 JANUARY 2005 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD1979 OF 2004 BETWEEN: AUTOMOTIVE, FOODS, METALS, ENGINEERING, PRINTING & KINDRED INDUSTRIES UNION APPLICANT AND: EATON ELECTRICAL SYSTEMS PTY LTD RESPONDENT JUDGE: MOORE J DATE OF ORDER: 7 JANUARY 2005 WHERE MADE: SYDNEY THE COURT NOTES THATthe applicant by its counsel undertakes to the Court: (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 this interlocutory order 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. If, within seven days, any person listed in Schedule A states in writing to the respondent that he is willing: (a) to become an employee of the respondent pending the hearing and determination of this proceeding or further order; and (b) to accept the obligations attaching to him as such an employee, the respondent, by itself, its servants and agents, thereafter until the hearing and determination of this proceeding or further order employ any such person on terms and conditions of employment no less favourable than those afforded to him immediately prior to the termination of his employment on 22 December 2004. 2. In the event that the Court makes a final order in this proceeding without ordering that any such person be reinstated in his employment with the respondent, unless the Court otherwise orders, the employment referred to in order 1 will cease and determine without further act by or on behalf of either the respondent or any such person. 3. Liberty is reserved to either party to apply on forty-eight hours notice in writing to the other party. SCHEDULE A Gordon Chen Adel Eldahaby Branham Jonathan Regan C Kusabs Josef Rehak Victor M Tomas Zoran Gorgievski Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD1979 OF 2004 BETWEEN: AUTOMOTIVE, FOODS, METALS, ENGINEERING, PRINTING & KINDRED INDUSTRIES UNION APPLICANT AND: EATON ELECTRICAL SYSTEMS PTY LTD RESPONDENT JUDGE: MOORE J DATE: 7 JANUARY 2005 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application for urgent interlocutory relief in proceedings brought by the Automotive, Foods, Metals, Engineering, Printing and Kindred Industries Union ("the Union") against Eaton Electric Systems Pty Ltd ("the Company"). The proceedings arise out of the dismissal of nine of the Company's employees on 22 December 2004. Seven of them are members of the Union which can maintain these proceedings on their behalf: see s 298T(2) of the Workplace Relations Act 1996 (Cth) ("the Act"). The matter is urgent because the Company will resume production activities on 10 January 2005 after a Christmas shutdown. 2 The nine employees worked in an area of the Company's business known as Low Voltage Assembly in which, primarily, electrical switch boards were manufactured. Part of this activity was production to satisfy non-standard orders, that is one off or low-volume orders produced to meet the specific engineering requirements of an individual client. This activity was undertaken at premises at 2 Kent Road, Mascot ("the leased premises") which the Company leased for an annual rental of approximately $650, 000. The leased premises were next-door to premises owned by the Company ("the owned premises") the address of which was 10 Kent Road, Mascot. 3 The events immediately surrounding the terminations were as follows. On Monday 21 December 2004 an industrial officer of the Union was approached by the National Secretary and asked to organise a group of members at the manufacturing workplace to meet with journalists. In the mid-afternoon, the industrial officer spoke to a Union delegate ("the first delegate") employed by the Company in its Low Voltage Assembly production. In the result the first delegate agreed to speak to the journalist and organise other employees to do so. The journalist attended the Company's workplace and permission was sought from management for photographs to be taken and for the employees to be interviewed in the Company's car park. Permission was given by the Human Resources Manager. In due course photographs were taken of 8 to 10 employees from the Low Voltage Assembly production area. When this was occurring, the group was approached by the Operations Manager, the General Manager and the Human Resources Manager. They appeared to the first delegate to be angry. The General Manager spoke to the journalist and told him that the Company had high ethical standards and he did not want him dragging its name through the mud. The following morning an article appeared in the Australian newspaper which reported the first delegate as saying everyone knew that sooner or later all manufacturing jobs would go (overseas) and that there had been a significant decline in the number of tradesmen and process workers employed by the Company. 4 At approximately 7.30 am the following day, Tuesday 22 December 2004, Mr Bruce Trewin forwarded to the Company's parent company in the United States a recommendation that the Low Voltage Assembly of non-standard items be discontinued and outsourced to an external entity. The recommendation was that the nine employees engaged in that activity be made redundant as of 24 December 2004 and that they be advised of the termination of their employment on 22 December 2004. That is, they should be advised that day. Mr Trewin held a position called Director of Integration ("the Director of Integration") which entailed reviewing and reporting on the profitability and sustainability of all aspects of the Company's business in Australia. The recommendation appears to have been in a written form but contained nothing other than the bare recommendation. That is, it did not contain any argument or submission in support of the recommendation though it did note that the recommendation was based on a review of the Mascot manufacturing operations in consultation with the Australian management of the Company. The Director of Integration received a verbal confirmation by telephone from the United States to implement the recommendation at about 9.00 am that day. He was not then aware of the article in the Australian newspaper. 5 The Director of Integration made arrangements to meet with the nine employees that afternoon. He in fact met with only five of them. They were each given a letter terminating their employment. One of the other nine employees, who was a union delegate ("the second delegate"), did not attend the meeting but refused to accept a letter when it was proffered to him in the car park. Copies of the letters were sent by courier to all nine employees at their houses that evening. The letters informed the employees that a decision had been made to discontinue the non-standard Low Voltage Assembly division, they were being made redundant and that it was not possible to offer them any other position within the Company. Each employee was invited to participate in meetings with an outplacement services provider organised by the Company. Each employee was told that the production facility would be closed over the following two days and it was unnecessary for them to attend for further work. Each employee was informed of how much they would be paid by way of redundancy pay and other termination payments. With one exception, the amounts were significant sums ranging from approximately $33, 000 to $78, 850. The exception was one employee who had worked with the Company for only six months and who received approximately $6, 000. It is unnecessary to detail what occurred after these notices were sent. It is sufficient to note that there were communications and meetings involving representatives of the Union and some of the affected employees which appeared to have been acrimonious. 6 It is against this background that I turn to consider the question of whether interlocutory injunctive relief ordering reinstatement should issue though other facts are relevant. I should note that the evidence was, mostly, in the form of affidavits to which no objection was taken (for the purposes of this interlocutory application) and in respect of which the deponents were not, by agreement, cross-examined. However, some oral evidence was given by the Director of Integration and he was cross-examined. In his affidavit he said that the level of profitability of producing non-standard orders in the Low Voltage Area had proved not to be acceptable. He also said there were a number of additional costs in the business associated with non-standard orders flowing largely from the lack of economies of scale and volume. In his oral evidence in chief he identified overheads associated with maintaining the production of non-standard orders and gave evidence that these costs, when incorporated as part of a notional hourly labour cost, resulted in a cost of $80 per hour. External providers could operate at a notional labour cost level of $45 per hour. These were the reasons he gave for the recommendation to close that area of the Company's operations. 7 Time does not allow for all the evidence contained in the affidavits to be detailed here though I will later refer, in a summary way, to salient features when discussing whether there is serious question to be tried and the balance of convenience. However, I should first deal with an argument advanced by senior counsel for the Company that there is no power to grant interlocutory injunctive relief requiring the reinstatement of the seven employees. In order to deal with this submission it is necessary to briefly refer to the grounds upon which the principal application is made. For present purposes it is only necessary to refer to two of them. It is alleged that the dismissals involved contravention of s 298K of the Act because they were for either of two prohibited reasons or for reasons which included one or both of those two reasons. First, that each employee was a member or (as to two of them) a delegate of the Union (the prohibited reason in s 298L(1)(a)). Or second, that each employee was entitled to the benefit of an industrial instrument (the prohibited reason in s 298L(1)(h)). Those provisions form part of Pt XA of the Act which also contains s 298V which reverses the onus of proof in relation to the actuating reason or reasons. It is also alleged that the dismissals involved a breach of a term of the employees' contracts of employment that they would not be dismissed harshly, unfairly or unreasonably (on the basis that the contracts of employment of the employees expressly incorporated by reference the terms of an award which, in turn, prohibited termination if it was harsh, unfair or unreasonable). Counsel for the Union submitted that an arguable case could be made out in relation to both these grounds and the balance of convenience favoured the grant injunctive relief. 8 Counsel for the Company submitted that, to the extent that the Union relies on the provisions of Pt XA, s 269U provides the remedies for contravention of s 298K which does not authorise the grant of interlocutory injunctive relief requiring reinstatement and that latter section is part of a code. The short answer to this submission is that Gray J reached the opposite conclusion in Australasian Meat Industry Employees' Union v G & K O'Connor Pty Ltd (2000) 100 IR 383 ("O'Connor's case"). That is, his Honour concluded s 269U was not part of an exhaustive code and s 23 of the Federal Court of Australia Act 1976 (Cth) conferred power to make an order precisely of the type sought by the Union in this matter. I am not persuaded his Honour is clearly wrong (indeed I think he is correct) and, accordingly, I am bound to follow his judgment: see Bank of Western Australia Ltd v Commissioner of Taxation for the Commonwealth of Australia (1994) 55 FCR 233. I am satisfied I have power to make the orders sought. 9 This leads to a consideration of whether there is a serious question to be tried. As to the case based on Pt XA, s 298V has a role to play. It was discussed by Gray J in the following passage from O'Connor's case: In determining whether there is a serious question to be tried whether Mr Voss was dismissed in contravention of s 298K(1)(a) of the Act, the possible role of s 298V is of some significance. The latter section has the effect of reversing the onus of proof in relation to allegations that conduct was carried out for a particular alleged reason. In Davids Distribution Pty Ltd v National Union of Workers [1999] FCA 1108, (1999) 91 FCR 463, the Full Court provided helpful guidance on the effect of s 298V in relation to applications for interlocutory relief. At [110], Wilcox and Cooper JJ said: Where there is an application for interim relief in proceedings under the Division, the onus remains upon the applicant to demonstrate that there is a serious question to be tried that the dismissal occurred for a prohibited reason. If a serious question to be tried is made out in respect of the other ingredients of the alleged contravention, s 298V operates to establish there is a serious question to be tried that the dismissal was for a prohibited reason. It remains available to the employer to demonstrate at the interlocutory stage that the reason for the dismissal was other than for a prohibited reason. The weight of that evidence may be such as to persuade the court there is no serious question to be tried. In the present matter there is no issue that the seven employees were dismissed, at the time they were members of the Union (and two were delegates) and were entitled to benefits under an industrial instrument, namely the Eaton Electrics Systems Pty Ltd Certified Agreement 2003 ("the Agreement"). In this matter, s 298V operates to establish that the dismissals were for the alleged prohibited reasons unless the weight of the evidence relied on by the Company persuades me that there is no serious question to be tried because the reason for the dismissal was other than for the alleged prohibited reasons. The Company has sought to do so. 10 The gravamen of the Company's case is that the reason for the dismissals was that a commercial decision was taken to cease the production of electrical components to satisfy non-standard orders in the Low Voltage Area of the Company's operations and that decision was taken for sound commercial reasons referred to briefly at [6] above. However, I am not satisfied there is no serious question to be tried because the reason for the dismissals was other than for the alleged prohibited reasons. Real doubts arise about whether the reason advanced by the Company was the only reason or indeed the actual reason. In summary, those doubts arise because: · No documentary evidence was tendered by the Company concerning the review leading to the recommendation to close the relevant production facility or, in particular, the views of the Australian management who were consulted before the recommendation was made. The Director of Integration gave evidence that such documents existed. Indeed, he searched for them as a result of a notice to produce served on the Company by the Union. Even allowing for the fact that he had limited time to search for documents, I find it curious, at the least, that he was not able to immediately place his hands on relevant documents or, indeed, that such documents were not advanced by the Company as part of its evidentiary case. This aspect of the Company's case and its failure to call any evidence from other members of the Australian management, and in particular the General Manager, as well as its failure to call evidence which might establish what may have been before the decision-makers in the United States leading to their decision (beyond the bare recommendation) is redolent of the criticisms of the employer's case referred to by Mason J in General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605 at 619. In making these comments I am making allowance for the fact that these are interlocutory proceedings brought on with some urgency. However, that does not explain what appear to me to be significant omissions in the evidentiary case of the Company. · While acccepting that the Director of Integration did not read the article in the Australian newspaper before sending his recommendation, I cannot discount entirely that the events of the previous day did not play a part in the sending of the recommendation. On the evidence as it presently stands, the General Manager appeared to be upset or angered by the activities of the first delegate and those employees (mainly from the Low Voltage Area) associated with the investigations by the journalist which led to the article. Also the evidence indicates, the General Manager had exhibited, from time to time, antipathy towards union involvement in the Company's operations. The evidence suggests that the union membership in the Low Voltage Area were particularly active. But the General Manager was not called to give evidence to discount the possibility that his contribution to the recommendation and it being sent was affected by his attitude to the Union and the union members in the Low Voltage Area and, in particular, affected by the events of the afternoon of Monday 21 December 2004. · The making and implementation of the recommendation was at odds with what appears to be, at least arguably, the Company's obligations under the Agreement. It is arguable that clause 8 of the Agreement obliges the Company to consult the union and the employees either before making, or at least before implementing, a decision to alter the operations of the Company leading to redundancies. Indeed, on an earlier occasion it had done so and engaged in consultation. Yet in relation to the dismissals to which these proceedings relate, the Company acted with apparent haste to make the decision and to implement the decision to close down the non-standard production activities in the Low Voltage Area. Moreover, no satisfactory explanation was offered by the Company in its evidence for acting as it did in making the decision with apparent expedition and implementing it immediately. The bare denial in the evidence of the Director of Integration that the recommendation for closure was made for a prohibited reason has to be balanced with the surrounding circumstances described here. It is probably analogous to a bare assertion by a witness of the purpose for which a document was brought into existence (and for which legal professional privilege was claimed) which may be given little weight having regard to other evidence: see Kennedy v Wallace [2004] FCAFC 337 at [13]. · The essentially unexplained timing of the recommendation, decision and implementation is all the more curious in light of evidence which suggested that management viewed the performance of the non-standard order production activities of the Low Voltage Area as satisfactory only days before the dismissals. Also, that the need for the leased premises to be available (one consequence of stopping that production though there was some evidence which suggested the same result could be achieved by moving that production to the owned premises) for the activities of a recently acquired company associated with the Company would not arise until or after Easter 2005. 11 As I indicated earlier, I am not satisfied there is no serious question to be tried because the reason for the dismissals was other than for the alleged prohibited reasons. It follows that there is a serious question to be tried that the Company contravened s 298K when it dismissed the employees. I was initially sceptical that, on the facts of this case, a reason for the dismissals could have been (whether in whole or in part) that the employees were entitled the benefit of the Agreement. There are, however, probably two answers. The first is simply that unless I am satisfied on the case presented by the Company that this reason was not a reason because the only reason was that advanced by the Company, s 298V is operative. The second is that even on the Company's own case, its decision to stop the production of non-standard orders in the Low Voltage Area was to enable that production to be done by others on its behalf more cheaply. There is evidence to suggest that it can be done more cheaply by third parties because of the comparative advantage they enjoy over the Company given that, at least arguably, the rates of pay under the Agreement are higher and the conditions more generous than those which would apply to the workforce of the third parties. 12 It is unnecessary to consider in detail the question of whether there is a serious question to be tried on the breach of contract claim but I presently doubt whether it is sufficiently seriously arguable, on the current state of the authorities, that even if a term of the contracts of employment was that each employee would not be dismissed harshly, unjustly or unreasonably, a remedy of reinstatement or analogous injunctive relief would be available. 13 I now turn to consider the balance of convenience though conscious that this question is linked to the strength of the Union's case. For the following reasons I am satisfied that the balance of convenience favours the making of the interlocutory orders sought by the Union: · The dismissals took place without notice, without consultation and only days before Christmas. The circumstances of the dismissal are a relevant consideration. At least arguably, the dismissals were harsh, unjust and unreasonable in the circumstances. · It is not a sufficient to point to, as the company does, the fact that each employee (perhaps with the one exception mentioned earlier) was paid a significant amount at the time of dismissal which would tide them over until any final hearing or that in due course they might receive compensation if they are successful. While important, employment is more than a means of gaining income. To varying degrees it has a greater significance. It provides a social context for daily activity and can provide satisfaction and stimulation. Nor is it sufficient, in my opinion, for the Company to point to the fact that the employees, or at least some of them, might gain employment elsewhere. There is evidence to suggest that this will not be easy for some of the employees. Moreover, the evidence raises real doubts whether any alternative employment would be as remunerative as the positions from which they were dismissed. · There remains work for the employees to do. The evidence was to the effect that there was still outstanding non-standard orders to be filled which had not yet been contracted out to third parties. Space would remain available for some months in the leased premises for the work to be done. · The Company relies on the fact that any claim for unfair dismissal can be dealt with in the Australian Industrial Relations Commission and it remains willing to do what is necessary to enable any such claim to be heard expeditiously. I should note that there have already been conciliation proceedings in the Commission though they have not borne fruit. I doubt whether the fact that proceedings can be brought in another forum is of particular significance in assessing the balance of convenience. The Union is pursuing rights conferred by the Act enforceable in this Court. They are different rights than those that might be pursued in the Commission: see, by analogy, Miller v University of New South Wales (2003) 132 FCR 147. · The Company submitted that any interlocutory relief should be limited to preserving the status quo at the time the application was made. At that time, the dismissals had been effected and the employees were no longer employed. An interim order of reinstatement, it was submitted, would go beyond preserving the status quo. This, with respect, proposes a wholly too narrow view of the nature of the relief which might be sought and granted on an interlocutory basis pending a final hearing both generally and in the case such as the present. As Denning MR said in Hubbard v Vosper [1972] 2 QB 84 at 96, the remedy of an interlocutory injunction is so useful that it should be flexible and discretionary and it must not been made the subject of strict rules. 14 I propose to make the orders sought by the Union. They were, I was informed, modelled on the orders made in O'Connor's case. They allow for the possibility that a particular employee may not wish to resume employment with the Company. The matter will be allocated to a docket judge who can, in due course, make whatever directions are necessary to prepare the matter for final hearing. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. Associate: Dated: 7 January 2005 Counsel for the Applicant: B G Docking Solicitor for the Applicant: Turner Freeman Counsel for the Respondent: J Phillips SC Solicitor for the Respondent: Baker & McKenzie Date of Hearing: 6 January 2005 Date of Judgment: 7 January 2005