FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE – representative proceedings – application for order that proceedings no longer continue as representative proceedings –representative proceedings in relation to allegation of application of duress under s 170WG Workplace Relations Act 1996 – notion of duress in s 170WG – scope of the term “party” in relation to an Australian Workplace Agreement (AWA) – whether question of law identified by applicants appropriate for representative proceeding.

Federal Court of Australia Act 1976 (Cth) ss 33C, 33H, 33N

Workplace Relations Act 1996 (Cth) ss 170VA, 170VB, 170VV, 170WG

Public Service Act 1922 (Cth) s 81C(3)

Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384

Westpac Banking Corporation v Cockerill (1998) 152 ALR 267

PETER SCHANKA, ERICA ALDRIDGE, ROBERT ASHFIELD AND RICHARD WALDEN AND COMMUNITY AND PUBLIC SECTOR UNION v EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LTD

NG 461 of 1998

MOORE J

9 SEPTEMBER 1998

SYDNEY

THE COURT ORDERS THAT:

1.                  Robert Ashfield be removed as an applicant.

2.                  The proceedings in so far as they concern the Community and Public Sector Union be dismissed as disclosing no reasonable cause of action.

3.                  James Burns be added as an applicant.

4.                  The notice of motion of the respondent is otherwise dismissed.

5.         The matter is adjourned for directions on Wednesday, 16 September 1998.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Introduction

On 15 May 1998 an application was filed under s 170VV of the Workplace Relations Act 1996 (“WR Act”) alleging contravention of s 170WG of that Act by Employment National (Administration) Pty Ltd (“ENA”).  Section 170WG provides that it is an offence to apply duress to an employee in connection with an Australian Workplace Agreement (“AWA”) which is an agreement regulated by the WR Act concerning terms and conditions of employment and made by an employer and an individual employee.  The applicants were named individuals and the Community and Public Sector Union (“CPSU”).  The proceedings were instituted as representative proceedings under Part VIA of the Federal Court of Australia Act 1976 (“FC Act”).  On 31 July 1998 ENA filed a notice of motion raising several issues.  The principal issue was whether an order should be made under s 33N of Part VIA of the FC Act that the proceedings no longer continue as a representative proceeding.  It is now common ground that the CPSU should not be a party to the proceedings.  Of the named applicants Mr Peter Schanka, Mr Peter Aldridge and Mr Richard Walden wish to continue as applicants.  Mr James Burns seeks to be added as an applicant which is opposed by ENA.

The background

The following is the background leading to the representative proceedings.  It is drawn from a number of affidavits and other material relied on by both the applicants and ENA.  None of the evidence has been tested and some of it is contentious.  However it was accepted that the material could, even in those circumstances, be used to deal with ENA’s notice of motion. 

The Commonwealth Employment Service (“CES”) was an agency of the Commonwealth engaged in placing people in employment whether employed or unemployed. It operated within the administrative structure of the Department of Employment, Education, Training and Youth Affairs (“DEETYA”).  Commonwealth employees engaged in CES’s operations were employed under the Public Service Act 1922 (Cth) (“PS Act”) and their terms and conditions of employment were predominantly regulated by the Australian Public Service, Administrative Services Officers (Salaries and Specific Conditions) Award 1995 and the Australian Public Service, General Employment Conditions Award 1995.  Executives in the CES had their terms and conditions of employment regulated by the Australian Public Service, Senior Executive Service (Salaries and Specific Conditions) Award 1995. 

In August 1996 the Australian Government announced that a new competitive market would operate in relation to the provision of employment placement services.  It announced that there would be a publicly owned provider competing in the new market and CES would cease operations.  To that end a company, Employment National Limited (“EN”), was incorporated under the Corporations Law with all shares owned by the Commonwealth.  EN contracted to DEETYA to provide employment services.  The contract was secured through a national tendering process and EN is one of a considerable number of providers of employment services.  ENA is a wholly owned subsidiary of EN and has contracted to EN to provide all services, including staff, required by EN to perform its contract with DEETYA.  In some of the material in evidence a rigid distinction is not drawn between EN and ENA concerning which company is the employer.  I will repeat what the material says and thus it may appear, at times, that EN, and not ENA, is the employer.

In October/November 1997 certain of CES’s functions were transferred to an agency called Centrelink and 2,900 staff who had worked in the CES transferred to that agency.  Towards the end of 1997 expressions of interest were sought from staff of the CES to work for ENA. Shanka, Aldridge, Walden and Burns expressed interest in working for ENA.  In February 1998 Aldridge received an email advising her that she had obtained a position with ENA.  She was invited to respond and did so, indicating she accepted the position. 

On about 25 February 1998 the staff of CES were sent a survey that had to be completed by 13 March 1998.  It asked each employee to indicate their preference for a number of options concerning future employment.  The survey form said that by indicating a preference the employee was not committing themselves to an option nor was a guarantee being provided that their preference would be met.  The options were employment in EN, voluntary retrenchment, redeployment to Centrelink (while remaining a member of the Australian Public Service) or redeployment elsewhere within the Australian Public Service.  On 25 February 1998 Walden received a letter offering employment with ENA.  It provided:

I am pleased to be able to invite you to join Employment National (Administration) Pty Ltd, as Associate Consultant, from the 1^st of May 1998.  This position will be initially located at Sydney CBD.

As you are aware, we are currently developing the employment framework with existing employees and these will be finalised and reflected in a Certified Agreement before you transfer across to us on the 1^st of May.  The terms and conditions in this agreement will incorporate the Government guarantees announced in December 1996 and will reflect the employment arrangements outlined in the Employment Relationship Agreement and the Personnel Policies and Procedures Manual, under which current staff are employed.  Any movement in remuneration that arises from the current DEETYA negotiations on a certified agreement for Network staff will also be incorporated.

Should you have any questions in relation to these arrangements, or should you wish to review any of the documents I have referred to, please see your Business Manager.

As you would appreciate, it is necessary or Employment National to continue to manage the Network until 30 April 1998 and you will contribute to the successful finalisation of that contract.

In the meantime, I need to know for planning purposes, if you intend to take up the offer of employment and I would be grateful for advice of your intentions by 4 March 1998.

I look forward to working with you to achieve our goal of making Employment national the market leader in employment services.

Yours sincerely,                                   I accept, subject to the finalisation of a

                                                            Satisfactory employment framework.

Bob Hall

Regional Manager                              Richard Walden

Sydney Metropolitan Region

Burns received a letter in the substantially same terms dated 26 February 1998.  On 27 February 1998 Burns signed the letter of invitation and returned it to the manager of ENA who had sent him the letter of 26 February 1998.  Walden took a similar step on 3 March 1998 by emailing an acceptance “subject to finalization of a satisfactory employment framework”. 

On 20 March 1998 the board of ENA passed a resolution in exercise of powers thought to be conferred by s 81C(3) of the PS Act which provides:

For the purpose of facilitating a transfer of persons into the employment of a Commonwealth authority, the Commonwealth authority may, notwithstanding anything in any other law (other than an industrial award), determine any special terms or conditions of employment that are to apply to the persons.

This section applies when the Prime Minister has certified that a function performed by persons appointed or employed under the PS Act is to be performed by a Commonwealth authority.  It provides a mechanism for the transfer, by operation of law, of the employment of employees by the Commonwealth in the Australian Public Service to employment by the relevant authority.  A Commonwealth authority is defined to include a company in which the Commonwealth has a controlling interest: see s 7 of the PS Act.  The exercise of this power by the board appears to have proceeded on the assumption that EN or ENA (which is the relevant Commonwealth authority performing the function is not clear and may have been relevant to the valid operation of s 81C) would be performing functions formerly employed by members of the Australian Public Service employed under the PS Act.

On 22 March 1998 the managing director of ENA sent a memorandum to staff of the CES.  It read:

Today the board has authorized me to make the following announcement regarding recruitment to Employment National.

1.                  Basis of Employment – Your Choice

Staff joining Employment National on or before 30 April 98 may elect, at their discretion, to work under the terms of an Australian Workplace Agreement (already signed by some 250 colleagues) or to work under terms identical to those of the AWA but without the formal agreement (as determined by the Board today under s 81c [sic] of the Public Service Act).

In due course, pending proceedings in the AIRC, a Certified Agreement will be offered to staff.

2.                  Salaries and Bonuses – Further Benefits

All staff joining Employment National from the CES will receive the financial benefits agreed by the Network with DEETYA, specifically: 2% salary increase plus a $500 bonus.

In addition to this, staff joining employment National from the CES on or before 30 April 98 will receive a further 2% salary increase and a further $500 bonus on 1 December 98.

3.                  Timing

To enable staff to fully consider this offer the closing date for acceptance has been extended until 3 April 98.

A further and more detailed memorandum was sent shortly after to staff of the CES.  The memorandum indicated that EN was seeking to put in place the certified agreement as soon as possible and it would replace the determination that the board had earlier made.  The memorandum included:

All operational staff (excluding Business Managers) who have signed up to date on AWAs can transfer to the determination made by the Board if they wish.  Similarly, you can elect to sign an AWA, and not fall under the determination.  The option is yours.

At this point EN was managing the operation of CES and had been doing so since December 1997.  On 2 April 1998 CPSU wrote to ENA threatening legal action if the determination made under s 81C(3) of the PS Act was not revoked.  As a result of this action by the CPSU, the option that employees might have their employment with ENA regulated by the s 81C(3) determination was withdrawn.  This occurred on or about 18 April 1998 though the precise time does not clearly emerge from the material to which I have been referred.  From that point any employee accepting employment with ENA had to sign an AWA.  In early April 1998 Schanka and Walden received an offer of appointment to the staff of ENA though the letter contained the following:

It is a condition of this offer of employment that you and the Company enter into two Agreements: firstly, an Employment Relationship Agreement which is an Australian Workplace Agreement (AWA) made under the provisions of the Workplace Relations Act 1996 and secondly, an Agreement to terminate that AWA when a Certified Agreement is made and certified by the Australian Industrial Relations Commission.  Copies of both Agreements are included in the Information Kit that accompanies this letter.

The letter went on to detail the process that would lead to the signing of the AWA and how information would be provided concerning it.  It nominated a person who could answer any queries.  It also contained an explanation about the termination agreement.  As stated in the letter, it was accompanied by an information kit.  Burns received a similar letter on 1 April 1998. 

On 6 April 1998 the CPSU issued a bulletin informing members that it was not necessary to sign an AWA if they had been offered a job in EN and wanted to take it up.  The bulletin said:

If you sign an AWA then you accept those employment conditions until and unless we can improve them through a certified agreement.  If you agree to transfer without an AWA, then at the very least your conditions will be those outlined in the AWAs, and if our legal challenge is successful they will be better.

By email dated 15 April 1998 Burns indicated he did not wish to sign an AWA but wished to be transferred under s 81C(3) of the PS Act.  On 20 April 1998 he was advised that the option under s 81C(3) was no longer available and, accordingly, Burns declined the offer of employment.  Also on 20 April 1998 Aldridge was told that if she did not sign an AWA she would not have a job with ENA.  On 22 April 1998 Aldridge accepted an offer of employment and signed an AWA.  On 23 April 1998 Schanka was told that if he did not sign an AWA his offer of employment would be withdrawn.  That day he signed one.  On 29 April 1998 Walden accepted his offer of employment and signed an AWA.

On 30 April 1998 the CES ceased to function.  At that time there were 4,400 employees employed in its various operations.  2,000 had accepted an offer of voluntary retrenchment, 450 had transferred to Centrelink, 150 were to be retrenched voluntarily later in 1998, 600 were declared excess to requirements and 150 would be declared excess to requirements when winding up duties had been completed.  The two lastmentioned groups constituted 750 former CES staff who were seeking redeployment.

On 1 May 1998 Schanka, Aldridge and Walden commenced employment with ENA.  The declaration made under s 81C of the PS Act transferring certain former employees of the CES to ENA was gazetted on 4 May 1998 effective 1 May 1998.  By 12 May 1998 1,100 people who had been employed in the CES had taken up employment with ENA.  400 of them were temporary staff and 930 were employed on AWAs.

The relevant legislative framework

In order to understand the issues arising in ENA’s notice of motion it is necessary to set out various provisions of the WR Act and also the FC Act.  Section 170WG of the WR Act provides:

(1)               A person must not apply duress to an employer or employee in connection with an AWA or ancillary document.

(2)               A person must not knowingly make a false or misleading statement to another person with the intention of persuading the other person to make, or not to make, an AWA.

(Emphasis added)

It is contravention by ENA of s 170WG(1) that is alleged in the application.

Contravention of that provision exposes a person to a civil penalty which may be enforced in the way provided in s 170VV which reads:

(1)               An eligible court may make an order imposing a penalty on a person who contravenes a penalty provision.

(2)               The penalty cannot be more than $10,000 for a body corporate or $2,000 in other cases.

(3)               An application for an order under sub-s (1) that relates to an AWA or ancillary document may be made by a party to the AWA or ancillary document.

(Emphasis added)

These provisions are found in Pt VID of the WR Act which contains, in s 170VA, various definitions.  The relevant definitions are:

employee has a meaning affected by s 170VB

employer has a meaning affected by s 170VB

…

party, in relation to an AWA or ancillary document, means the employer or employee.

It can be seen that these definitions are affected by s 170VB which provides:

(1)               So far as the context permits, a reference in this Part to an AWA or ancillary document includes a reference to a proposed AWA or ancillary document.

(2)               In relation to a proposed AWA or ancillary document, a reference to the employer or employee is a reference to the person who will be the employer or employee when the AWA or ancillary document starts to operate.

The contentious elements of this statutory scheme are firstly what is comprehended by the notion of applying duress referred to in s 170WG and secondly whether “party” in s 170VV includes a person who was asked to become a party to an AWA but did not become a party.

The relevant provisions of the FC Act are found in Part IVA which deals with representative proceedings.  Section 33C deals with the circumstances in which a representative proceeding may be commenced and provides:

(1)               Subject to this Part, where:

(a)               7 or more persons have claims against the same person; and

(b)               the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)                the claims of all those persons give rise to a substantial common issue of law or fact;

            a proceeding may be commenced by one or more of those persons as representing some or all of them.

(2)               A representative proceeding may be commenced:

(a)               whether or not the relief sought:

(i)                 is, or includes, equitable relief; or

(ii)               consists of, or includes, damages; or

(iii)             includes claims for damages that would require individual assessment; or

(iv)             is the same for each person represented; and

(b)               whether or not the proceeding;

(i)                 is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or

(ii)               involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.

Once proceedings of this type are commenced the Court has a power to order that the proceeding no longer continue as a representative proceeding.  That power is conferred by s 33N which provides:

(1)               The Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because:

(a)               the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or

(b)               all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or

(c)                the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or

(d)               it is otherwise inappropriate that the claims be pursued by means of a representative proceeding.

(2)               If the Court dismisses an application under this section, the Court may order that no further application under this section be made by the respondent except with the leave of the Court.

(3)               Leave for the purposes of sub-s (2) may be granted subject to such conditions as to costs as the Court considers just.

The pleadings and related matters

The group on whose behalf a representative proceeding is brought is to be identified in the application: see s 33H of the FC Act.  It is convenient to set out the way the group was identified in the amended application in these proceedings.  It was in these terms:

This action is brought by the first applicants as representative parties.  The group members to whom the proceeding relates are all persons formerly or presently employed by the Commonwealth of Australia who in or about March and/or April 1998 were required by the respondent (“ENA”) to enter into an Australian Workplace Agreement (“AWA”) under Part VID of the Workplace Relations Act 1996 (“the Act”) as a condition of obtaining employment with ENA.

In so far as the amended application identified common questions of fact or law it did so in the following terms:

The questions of fact or law common to the claim of the group members are:

(a)               whether ENA contravened s. 170WG(1) of the Act by applying duress to the employees in connection with their AWAs;

(b)               whether the AWAs entered into by the employees and ENA are void and of no effect because they were entered into under duress and/or in contravention of s. 170WG(1) of the Act.

The orders sought were a declaration that ENA had contravened s 170WG(1), an order imposing a penalty on ENA and an order declaring the AWAs entered into between the employees and ENA are void.  It is convenient to also set out a document provided during the hearing of the notice of motion by counsel for the applicants which took the form of a question of law arising in the proceedings that might be answered separately and the facts by reference to which it could be answered.  The document read:

FACTS

1.                  The employees were employees of the Commonwealth employed under the Public Service Act 1922.

2.                  The employees whilst employed under the Public Service Act performed functions relating to the provision of job placement services to employers and job seekers;

3.                  The job placement functions performed by the employees were transferred to the employer (“ENA”) and such functions are no longer performed within the Australian Public Service;

4.                  ENA is a wholly owned subsidiary company of a company wholly owned by the Commonwealth, and is a Commonwealth authority within the meaning of s7 of the Public Service Act;

5.                  ENA made offers of employment to the employees;

6.                  The employment offered by ENA entailed the performance of substantially similar functions to those which, at the time of the offer of employment, were performed by the employees under the Public Service Act;

7.                  The offers of employment by ENA were conditional on the employees agreeing to enter into an AWA with the employer.

8.                  The cessation of the performance of job placement functions within the Australian Public Service meant that the employees could not continue to do the same or similar work to that which they were performing at the time of the offers of employment with ENA unless they accepted the said offers;

9.                  If the employees did not accept the offers of employment they faced the possibility of redundancy or alternatively redeployment;

10.              The facts referred to in (8) and (9) above were known to ENA at the time it made the offers of employment;

11.              Employees who did sign an AWA were transferred to the employment of ENA pursuant to s81C of the Public Service Act.

QUESTION

Does the conduct of ENA in the above circumstances constitute the application of duress in connection with an AWA for the purpose of s170WG of the Workplace Relations Act 1996?

Counsel for ENA formulated a different though related question in the following terms:

Does a person contravene s 170WG(1) of the Workplace Relations Act 1996 by offering employment to another person, conditional upon the latter person entering into an AWA with the first person?

Submissions and conclusion

Before considering the issues raised in the notice of motion it is important to note that I have been invited not to finally determine questions of law concerning the proper construction of s 170WG and related provisions of the WR Act.  In particular I am not being invited to determine on any concluded basis what the expression “not apply duress” means.

There have now been a number of decisions involving consideration of whether an order should be made under s 33N of the FC Act or related issues.  They commence with the judgment of French J in Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 and the judgment of Wilcox J given a little less than two weeks later in Tropical Shine Holdings Pty Ltd (trading as KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457.  They also include the judgment of Einfeld J in Marks v GIO Australia Holdings Ltd (1996) 63 FCR 304, a Full Court in Qantas Airways Ltd v Cameron (1996) 66 FCR 246, Drummond J in Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723, Spender J in Wong v Silkfield Pty Ltd [1998] ATPR 41-613, Kiefel J in Milfull v Teranora Lakes Country Club Ltd, unreported, 16 June 1998, and Lindgren J in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd, unreported, 14 July 1998.

Two principles emerge from these authorities.  The first is that the fact that the individual circumstances of members of the group might have to be investigated does not preclude the maintenance of a representative proceeding concerning them.  The second is that the suggestion of Drummond J in Connell v Nevada Financial Group Pty Ltd (supra) that a process of balancing common issues with non-common issues in ascertaining whether the proceedings should continue as a representative proceeding under Part VIA has not subsequently found broader judicial acceptance.  It was an approach not accepted by both Spender J in Wong (supra) and Kiefel J in Milfull (supra) and by Wilcox J in extra judicial commentin an article in Australian Product Liability Reporter, vol 8, No 5, entitled “Representative Proceedings in the Federal Court of Australia: A Progress Report”.

Zhang v Minister for Immigration, Local Government and Ethnic Affairs (supra) involved an application under the Administrative Decisions (Judicial Review) Act 1977 and s 39B of the Judiciary Act 1903.  The application was brought by Zhang de Yong (“the applicant”) under Pt IVA as a representative proceeding.  A delegate of the Minister for Immigration, Local Government and Ethnic Affairs (“the Minister”) had determined that the applicant was not a refugee.  Before that determination was made the applicant had not been given an opportunity of an oral hearing by the delegate.  The applicant contended that he was entitled to such a hearing and the failure to afford it constituted a denial of natural justice.  The applicant’s circumstanceswere broadly the same as a number of other individuals in respect of whom a similar determination had been made by the Minister. 

An issue arose in the proceedings as to whether it should continue as a representative proceeding.  In that context the Minister submitted that the practice of considering applications in the way the applicant’s had been, would only result in a breach of the rules of natural justice if the particular circumstances of the case required an oral interview.  It was submitted that there could only be a common question of law in relation to members of the group which would justify a representative proceeding if the circumstances of each were such as to require an oral hearing by the decision maker.  This submission was drawing attention to the individual differences that may have existed between members of the group.

As to this issue French J said at 405:

In the present case, the relationship between the circumstances of each group member is defined by a few common integers which leaves room for considerable diversity and circumstances which might support individual claims to set aside the review decision.  Some applicants may have complaints about aspects of the decision making process which have nothing to do with the question whether or not they should be afforded an oral hearing.  There may be applicants who are able to show that even if there is no common entitlement to the opportunity of an oral hearing, the particular circumstances of their case require such a hearing as a matter of natural justice.  Notwithstanding that possibility, I am satisfied that the claims of the members of the group as defined in the present application are connected by circumstances sufficiently related to warrant the use of the procedure under Pt IVa for the determination of the common issue of law defined in the application.  In so holding, I have regard to the need for a purpose of approach to the construction of s 33C(1)(b), bearing in mind the utility of determining the common issue in this way.  If the application were to succeed, all group members would be entitled to the offer of an oral hearing by the decision maker.  In that event, other aspects of individual claims to which I referred might not be pursued.  If the application fails, then a principle applicable to each group member would be established, namely that there is no entitlement in any member of the group to an oral hearing by reason only of the fact that the member is an applicant for administrative review of the refusal to grant refugee status.

His Honour went on to note that it was important to ensure that the determination of any issue in the representative proceedings would not prejudice individual claims to be determined by reference to individual circumstances.  Individual circumstances would be considered if the Court took the step provided by s 33Q of determining issues which were not common to members of the group on whose behalf the representative proceeding was brought (assuming they continued as a representative proceeding).  His Honour then considered whether the rules of natural justice required an oral hearing in the general circumstances raised in relation to all members of the group and concluded they did not.  He then made an order under s 33N(1) that the proceedings not continue as a representative proceeding.

At the forefront of the submissions of ENA was what was comprehended by the notion of duress in s 170WG.  The use of the word “duress”, it was submitted, invites attention to the quality of the consent of the individual upon whom duress is alleged to have been applied.  In determining whether s 170WG(1) has been contravened it is necessary to assess the quality of the consent having regard to the conduct of the party allegedly applying duress in the specific circumstances in which the other party acts or responds and having regard to that response.  Reference was made to Smith v William Charlick Ltd (1924) 34 CLR 38 at 56, Deemcope Pty Ltd v Cantown (1995) 2 VR 44, The Commonwealth v Verwayen (1990) 170 CLR 394, Belgravia Investments Pty Ltd v Evans, unreported, 13 March 1998, Supreme Court of Victoria, Smith J, and Westpac Banking Corporation v Cockerill (1998) 152 ALR 267.  The relevant legal principle concerning what constitutes duress at general law is sufficiently described by Kiefel J in Westpac v Cockerill (supra).  Her Honour said at 289-290:

In Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 McHugh JA, with whom Samuels and Mahoney JJA agreed, said (at 46B):

Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct.  But the categories are not closed.  Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.

I do not think that his Honour was intending in this passage to refer to the equitable doctrine of unconscionable dealing which is recognised as affording an independent ground on which a court exercising equitable jurisdiction can relieve from a contract.

The point of distinction which is relevant for present purposes is that duress, like undue influence, focuses upon the effect of pressure, upon the quality of the consent or assent of the pressured party, rather than the quality of the conduct of the party against which relief is sought – a distinction pointed to in Commercial Bank of Australia Ltd v Amadio 1983) 151 CLR 447 at 474; 46 ALR 402, and referred to by his Honour, the primary judge, in the present case.  The cases, apart from Crescendo Management, which recognise the possibility of “economic” duress, such as Barton v Armstrong and Pao Yiu Long [1980] AC 614, emphasise the feature that the pressure applied is so coercive of the will that consent is treated as vitiated.  In Smith v William Charlick Ltd (1924) 34 CLR 38 Isaacs J said (at 56):

It is conceded that the only ground on which the promise to repay could be implied is “compulsion”.  The payment is said by the respondent not to have been “voluntary” but “forced” from it within the contemplation of the law.  Leaving aside, for the present, the question whether in law the payment was “forced” from the respondent by some undue advantage taken of its situation having regard to the Wheat Harvest legislation, the point is whether the board’s insistence was what is regarded as “compulsion” from the simple standpoint of common law.  “Compulsion” in relation to a payment of which refund is sought, and whether it is also variously called “coercion”, “extortion”, “exaction”, or “force”, includes every species of duress or conduct analogous to duress, actual or threatened, exerted by or on behalf of the payee and applied to the person or the property or any right of the person who pays or, in some cases, of a person related to or in affinity with him.  Such compulsion is a legal wrong, and the law provides a remedy by raising a fictional promise to repay.  Apart from any additional feature presented by the relevant legislation, it is plain that a mere abstention from selling goods to a man except on condition of his making a stated payment cannot, in the absence of some special relation, answer the description of “compulsion”, however serious his situation arising from other circumstances may be …

Although the conclusion in that case was that money had been paid as a result of commercial pressure not duress in the eye of the law, the passage set out above usefully emphasises that duress focuses attention on the quality of assent.

The import of the submissions of counsel for ENA was that the circumstances of any particular person who signed an AWA could not, or at least should not, be investigated in a representative proceeding.  Such an inquiry would necessitate investigation of the quality of the consent of each person to which duress is alleged to have been applied.  This was not, it was submitted, an inquiry of the type to be undertaken in a representative proceeding.

In responding to this submission counsel for the applicants directed attention to the language of s 170WG and submitted that the section is cast in terms that focus on the conduct of the person alleged to have applied the duress.  That is, the section is concerned, or primarily concerned, with the conduct of the actor purportedly exerting pressure constituting duress and not the response of the person on whom it may have been exerted or applied.  In my opinion, one would not normally speak of the application of duress but would speak of it as something to which a person was exposed or which they experienced.  However it may be, as submitted by counsel for ENA, that the language of s 170WG involves a direct or indirect adoption or adaptation of language used by Isaacs J in the passage from Smith v William Charlick Limited (supra) quoted by Kiefel J in Westpac v Cockerill (supra) in which Isaacs J spoke of “duress … applied to the person …”. 

However for present purposes it can be assumed that in considering whether there has been contravention of s 170WG it will at least be necessary to consider the possible or probable impact of the conduct of ENA on individuals who signed AWAs and, arguably, those who were invited to sign them.  It may also involve a consideration of the individual circumstances of each employee and, arguably, a consideration of the subjective reaction to the conduct of ENA on a given individual and the contribution, if any, it made to the signing of the AWA if they signed them.  I put it this way because it may ultimately be necessary for the circumstances of individuals to be considered separately. 

However the scheme in Part VIA of the FC Act provides a mechanism where, by order of the Court, the proceedings cease to be representative proceedings and become proceedings in which the circumstances of individual applicants are considered in separate proceedings.  This was the course charted by French J in Zhang v Minister for Immigration, Local Government and Ethnic Affairs (supra).  In my view it is appropriate for the present proceeding to continue for the time being as a representative proceeding.  That is, at least until a point is reached where it is apparent that it will be necessary to examine the subjective reaction of any person who signed an AWA and their circumstances in order to ascertain whether there has been a contravention of s 170WG. 

In my opinion the question of law identified by the applicants and set out earlier, with qualifications, is a question that could be addressed in a representative proceeding.  It could be addressed having regard to what are identified by the applicants as the relevant facts, though again my preliminary acceptance of them is also qualified.  I speak of preliminary acceptance because the evidence, even though it is untested and in some respects contentious, indicates that the alleged facts are in large measure made out.  Further evidence may be necessary to ascertain whether they are or are not made out.  One important qualification that would have to be made to the recitation of the facts (see alleged fact 7) is that the offer of employment by ENA was, it presently appears, plainly conditional only from about 18 April 1998.  Thus the consideration of the question in the terms formulated by the applicants may require separate consideration of circumstances as they existed before 18 April 1998 and circumstances as they existed after that time. 

If, on this basis, the applicants are able to agitate the issue of whether ENA applied duress in relation to those employees who signed, or were invited to sign, an AWA either before or after 18 April 1998 then the legislative purpose underpinning Part VIA would be satisfied.  The continuance of the representative proceeding for the time being is not against the interests of justice as that expression appears in s 33N.  If, on the other hand, the applicants did not succeed in establishing that ENA applied duress in the general circumstances identified in the facts proposed but modified in the way I have discussed, then my present view is that the appropriate course would be to make an order under s 33N of the FC Act bringing the representative proceeding to an end.  In my opinion ENA has not demonstrated that a point has been reached where an order should be made under s 33N that the proceeding no longer continue as a representative proceeding.  I will dismiss its notice of motion to the extent that it seeks an order under s 33N.

It is necessary to consider one further issue.  That is whether Burns should be an applicant.  His position differs from the other applicants because he did not sign an AWA nor did he take up employment with ENA.  It is to be recalled that s 170VV identifies who may make application under that section.  It is, relevantly, a “party” to the AWA.  In terms, this would not include Burns.  However the submission was made on his behalf that the combined effect of the definition of “party” and “employee” and the provisions of s 170VB is that a person who may have become a party to an AWA but, in fact, did not, is nonetheless a “party” for the purposes of s 170VV(3).  That is because the reference to AWA in s 170VV(3) must be treated as a reference to not only an AWA but a proposed AWA and, correspondingly, the reference to employee and employer is, respectively, a reference to a person who will be the employee or will be the employer. 

ENA submitted that the reference to proposed AWA, and a person who will be the employer or employee is intended to comprehend situations where, for present purposes, duress was applied before the employee became an employee and before an AWA was entered into by the parties but where they later did.  Thus s 170WG would apply notwithstanding the fact that the person on whom the duress was applied was not then an employee nor was there then an executed document which was an AWA.  There is considerable force in this submission.  The reservation I have about accepting it is that s 170VV(3) also identifies who may seek the imposition of a penalty for a contravention of s 170WG(2).  It is to be recalled that s 170WG(2) concerns a person making misleading statements with the intention of persuading another person to make or not to make an AWA.  A person might knowingly have made a false or misleading statement with the intention of persuading a second person not to make an AWA and be successful.  It would be, in my opinion, a curious situation if that person was immune from prosecution for breach of s 170WG because the second person had no standing under s 170VV(3).  I doubt that this was intended.  It is consistent with the language of s 170VB to treat the word “party” in s 170VV(3) at least as a reference to a person who became a party to an AWA because of the offending conduct or may have become a party to the AWA but for the offending conduct.  As I apprehend it, the purpose of creating the offences identified in s 170WG is to ensure that processes that might lead to the making of an AWA occur in a way that ensures free choice is exercised.  If so, that purpose would be effectuated by construing s 170WG as proscribing conduct which interferes with exercise of that free choice irrespective of whether it results in the execution of an AWA.  However it is not necessary now to express a concluded view about the scope of s 170VV, and indirectly s 170WG, and all the more so given the submission made by ENA that I ought not.  I say that because if the investigation of standing involves complex legal questions it need not be determined at the outset: see Robinson v Western Australian Museum (1977) 138 CLR 283 at 302.  Burns should be joined as a party and a final determination made concerning the scope of s 170VV(3) made at a later stage in the proceedings.  Accordingly I propose to order that he be joined.

Associate:

Dated:              9 September 1998