FEDERAL COURT OF AUSTRALIA

Schanka v Employment National (Administration) Pty Ltd [2000] FCA 202

INDUSTRIAL LAW – meaning of “duress” in section 170WG of the Workplace Relations Act 1996 – whether a breach of section 170WG can occur where the alleged duress has not resulted in the making of an Australian Workplace Agreement – standing to apply for relief under section 170VV of the Workplace Relations Act 1996 – whether person who is not a party to a concluded Australian Workplace Agreement has standing.

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

Federal Court Act 1976 Part IVA

Smith v William Charlick Ltd (1924) 34 CLR 38

Westpac Banking Corporation v Cockerill (1998) 152 ALR 267

Deemcope Pty Ltd v Cantown Pty Ltd [1995] 2 VR 44

Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40

Attorney-General for New South Wales v Brewery Employes Union of New South Wales (1908) 6 CLR 469,

Barker v The Queen (1983) 153 CLR 338

Yorke v Lucas (1985) 158 CLR 661

R. v. Slator 8 Q.B.D. 267

Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366,

Barker v The Queen (1983) 153 CLR 338

PETER SCHANKA, ERICA ALDRIDGE, RICHARD WALDEN and JAMES BURNS v EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED (ACN 080 046 411)

NG 461 of 1998

RYAN, LEE and BRANSON JJ

SYDNEY

3 MARCH 2000

ON APPEAL FROM A JUDGE OF

THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.         The respondent's application for leave to appeal be granted.

2.         The appeal be dismissed.

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

ON APPEAL FROM A JUDGE OF

THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

THE COURT:

1                     There is before the Court a motion by the respondent, Employment National (Administration) Pty Limited, ("ENA") for leave to appeal from an interlocutory judgment of Moore J given on 24 September 1999.  The occasion for that judgment arose from an application under s 170VV of the Workplace Relations Act 1996 (Cth) ("the WR Act") alleging contravention by ENA of s 170WG of the WR Act.  The application has been brought as a representative proceeding under Part IVA of the Federal Court of Australia Act 1976.  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 or ancillary document."

2                     After an application for leave to appeal from an earlier judgment of Moore J pronounced on 9 September 1998 (see (1998) 86 IR 283) had been resolved by consent, his Honour ordered that the following questions be determined as preliminary questions in the proceedings:

"On the proper interpretation of s 170WG(1):

(a)        can a person ever be said to have applied duress to an employee in connection with an AWA by requiring the employee to make an AWA as a condition of appointment to the employment;  and

(b)        is duress in that section limited to the conduct of the alleged perpetrator."

3                     In the course of his reasons for judgment, Moore J decided that the preliminary questions should be reformulated to ask:

"(a)      Can a person, by their conduct, contravene s 170WG(1):

(i)         before an AWA is made by the person to whom the conduct was directed;

(ii)        irrespective of whether an AWA is made by a person to whom the conduct was directed;  or

(iii)       if an AWA is not made by a person to whom the conduct was directed."

4                     His Honour answered each of those questions in the affirmative and ordered that Mr James Burns to be added as an applicant in the proceedings.  It is from each of those orders that ENA seeks leave to appeal.  Mr Burns, it appears, has not signed an AWA with ENA and remains a member of the Australian Public Service. 

5                     Section 170WG is to be found in Part VID of the WR Act which provides a mechanism for the creation and regulation of Australian Workplace Agreements ("AWAs").  The facility to make an AWA is conferred by s 170VF(1) which provides:

"An employer and employee may make a written agreement, called an Australian workplace agreement, that deals with matters pertaining to the relationship between an employer and employee."

6                     Section 170VF(2) makes clear that a pre-existing relationship of employer and employee is not essential to the creation of an AWA.  That sub-section provides:

"The AWA may be made before commencement of the employment."

7                     Division 7 of Part VID of the WR Act is concerned, as the sub-heading indicates, with "Enforcement and remedies" and the first section in that Division is s 170VV which has been invoked by the applicants in the present proceedings.  That section provides:

"(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 subsection (1) that relates to an AWA or ancillary document may be made by a party to the AWA or ancillary document."

8                     Central to ENA's argument, both at first instance and in support of its application for leave to appeal, has been the proposition that an application of "duress" within the meaning of s 170WG cannot occur unless the conduct constituting the duress has brought about the entry into an AWA by the person to whom it has been applied.  The meaning attributed to "duress" by that argument is said to correspond with the meaning which the word has been given in the application of the general law.  By way of illustrating that meaning, Mr Trew QC who appeared with Mr L Kaufman of Counsel for ENA, referred to Smith v William Charlick Ltd (1924) 34 CLR 38 where Isaacs J said, at 56:

"‘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, exacted 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 to the description of ‘compulsion’ however serious his situation arising from other circumstances might be."

9                     Other illustrations of the meaning of "duress" in the application of the general law have been derived from Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 at 290 and Deemcope Pty Ltd v Cantown Pty Ltd [1995] 2 VR 44 at 47 and 55.  In the former case Kiefel J, as a member of a Full Court of this Court, was concerned with whether a release which had been executed by the respondents could be relied on by the appellant bank which had procured it by threatening to appoint a receiver of the respondents' partnership business.  The primary judge HAD found that the threat to appoint a receiver constituted illegitimate pressure and that it was "unconscientious" for the appellant to rely on the release.  After referring to the passage from Smith v William Charlick cited above, Kiefel J noted that it "usefully emphasises that duress focuses on the quality of assent".  Her Honour had earlier observed, at 289 that "‘duress’, like undue influence, focuses upon the effect of pressure, upon the quality of consent or assent of the pressured party rather than the quality of the conduct of the party against which relief is sought .....".

10                  Deemcope Pty Ltd v Cantown Pty Ltd (supra) concerned a claim by a purchaser to avoid a contract for the sale of land on the ground of "economic duress".  Coldrey J, at 47, adopted the analysis of duress by McHugh JA in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45-46.  That analysis contained this passage:

"In my opinion the overbearing of the will theory of duress should be rejected.  A person who is the subject of duress usually knows only too well what he is doing.  But he chooses to submit to the demand or pressure rather than take an alternative course of action.  The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate?  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.

In their dissenting advice in Barton v Armstrong [1973] 2 NSWLR 598;  [1976] AC 104, Lord Wilberforce and Lord Simon of Glaisdale pointed out (at 634;  121):

“... in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act.  Absence of choice in this sense does not negate consent in law:  for this the pressure must be one of a kind which the law does not regard as illegitimate.  Thus, out of the various means by which consent may be obtained - advice, persuasion, influence, inducement, representation, commercial pressure - the law has come to select some which it will not accept as a reason for voluntary action:  fraud, abuse of relation of confidence, undue influence, duress or coercion.”

In Pao On v Lau Yiu Long [1980] AC 614, the Judicial Committee accepted (at 635) that the observations of Lord Wilberforce and Lord Simon in Barton v Armstrong were consistent with the majority judgment in that case and represented the law relating to duress.

It is unnecessary, however, for the victim to prove that the illegitimate pressure was the sole reason for him entering into the contract.  It is sufficient that the illegitimate pressure was one of the reasons for the person entering into the agreement.  Once the evidence establishes that the pressure exerted on the victim was illegitimate, the onus lies on the person applying the pressure to show that it made no contribution to the victim entering into the agreement:  Barton v Armstrong (at 633;  120) per Lord Cross."

11                  ENA seeks to support its contention that the whole concept of duress as applied by courts administering the general law is to be imported when construing the WR Act, by relying on Attorney-General for New South Wales v Brewery Employes Union of New South Wales (1908) 6 CLR 469, Barker v The Queen (1983) 153 CLR 338 at 356 and Yorke v Lucas (1985) 158 CLR 661 at 667 and 673.

12                  The first of those cases was concerned with whether "trade marks" in s 51(xviii) of the Constitution comprehended "workers' trade marks" of the kind affixed to goods to denote that they had been produced by union labour, or was confined to the kind of mark traditionally regulated as a subject of intellectual property.  O'Connor J observed, at 531:

"The meaning of the expression "trade mark" is plain enough taking the words in their ordinary signification.  So used the expression would include any mark used in trade or commerce, and would undoubtedly cover the kind of mark described as the "workers' trade mark" in the provisions now under consideration.

It cannot however be denied that the words taken together have acquired a meaning as a legal term.  The expression "trade mark" has long been used to describe a special kind of mark used in trade, recognised as property, having well known legal incidents, and which had been for many years before the passing of the Constitution a subject of international agreement in Europe, America, and the different portions of the British Empire, and a subject of legislation in Great Britain and the several Colonies of Australia.  The ambiguity, therefore, which meets us at the outset is this:  has the Constitution used the expression in the sense which the words convey in their ordinary meaning, or has it used it as a legal term carrying its acquired signification with it?

The rule of interpretation to be applied in such a case is well known.  Where words have been used which have acquired a legal meaning it will be taken, prima facie, that the legislature has intended to use them with that meaning unless a contrary intention clearly appears from the context.  To use the words of Denman J. in R. v. Slator 8 Q.B.D. 267 at p272:-  "But it always requires the strong compulsion of other words in an Act to induce the Court to alter the ordinary meaning of a well known legal term."

13                  Bennion, Statutory Interpretation, 2^nd ed. p. 833 formulates the principle exemplified by R v Slator in these terms:

"If a word or phrase has a technical meaning in a certain branch of law, and is used in a certain branch of law, and is used in a context dealing with that branch, it is to be given that meaning, unless the contrary intention appears."

14                  In the treatment which follows, the same learned author invokes the concept of a "free-standing legal term" as "one that stands on its own feet without the need for any definition" and goes on to enunciate the principle that:

"Unless the contrary intention appears, Parliament is taken, when using a free-standing legal term to intend that its meaning in the enactment shall correspond to the legal meaning assigned to it generally."

15                  We are not persuaded that "duress" in s 170WG(1) is used in a context dealing with the same branch of the law as the cases in which courts have been concerned to apply it to relieve a victim from the consequences of a contract or a payment procured by duress.  Accordingly, we do not regard the expression as "a free-standing legal term" as that phrase is used in the passage just quoted.

16                 Nor are we persuaded that there is any ambiguity between the ordinary English meaning of "duress" and its meaning as a legal term with the signification acquired from the authorities in which it has been applied.  All that the authorities reveal is that the need to apply the concept has only arisen when the application of duress has resulted in the party, the subject of the illegitimate pressure, changing his or her position, for example, by the making  of a contract or payment from which the victim seeks to be relieved.  However, the making of such a contract is not an intrinsic part of the "duress" which is alleged to have procured it.  The Oxford English Dictionary defines "duress" in the relevant sense as "Constraint compulsion;  spec in Law, Constraint illegally exercised to force a person to perform some act."

17                 That definition focuses on the conduct and intention of the person applying the pressure which is said to constitute duress.  That focus is logically anterior to the question of whether the alleged duress has, in fact, forced the victim to act in a particular way.  However, it is not surprising that courts, concerned with claims that victims should have a remedy because they have entered into a contract or done some other act as a result of duress, usually ask first whether the applied pressure induced the contract or other act and then ask whether that pressure was illegitimate.  To address the question in that order, as McHugh JA did in Crescendo Management v Westpac (supra), ensures that an academic inquiry into the nature of quality of the alleged duress will be avoided if it emerges that the alleged duress did not bring about the contract or other act in respect of which relief is claimed.  Nevertheless, that practical consideration does not entail that the making of the contract is an essential or intrinsic element of duress. 

18                 The distinction between the pressure applied to an actor which constitutes duress both in its ordinary English meaning and its connotation in the general law, and the consequences as a matter of law which may attend the application of that pressure, was recognised, we consider, by Lord Scarman in Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366 where his Lordship said, at 400:

"It is, I think, already established law that economic pressure can in law amount to duress;  and that duress, if proved, not only renders voidable a transaction into which a person has entered under its compulsion but is actionable as a tort, if it causes damage or loss:  Barton v. Armstrong [1976] A.C. 104 and Pao On v. Lau Yiu Long [1980] A.C. 614.  The authorities upon which these two cases were based reveal two elements in the wrong of duress:  (1) pressure amounting to compulsion of the will of the victim;  and (2) the illegitimacy of the pressure exerted.  There must be pressure, the practical effect of which is compulsion or the absence of choice.  Compulsion is variously described in the authorities as coercion or the vitiation of consent.  The classic case of duress is, however, not the lack of will to submit but the victim's intentional submission arising from the realisation that there is no other practical choice open to him.  This is the thread of principle which links the early law of duress (threat to life or limb) with later developments when the law came also to recognise as duress first the threat to property and now the threat to a man's business or trade."

19                  In Barker v The Queen (1983) 153 CLR 338 the High Court had to consider the words "enters any building .... as a trespasser" in s 76(1) of the Crimes Act 1958 (Vic).  It was argued on behalf of the applicant that a person who enters premises with the permission or consent of the owner does not enter as a trespasser unless the consent has been vitiated by fraud or duress.  However, the High Court held, by majority, that "trespasser" was to be taken to bear its common law meaning, so that an entrant is a trespasser if the entry has been beyond the scope of the permission of the owner, or if the entrant has remained on the premises after the permission has been revoked or exhausted or the entrant's conduct on the land has rendered the entrant's presence outside the scope of the permission.  It does not appear that the alternative meaning which the applicant asserted as a matter of construction was supportable by reference to ordinary, non-legal, usage of the expression "trespasser".

20                  In Yorke v Lucas (1985) 158 CLR 661 there was similarly no suggestion, apart from one derived from construction of the Trade Practices Act 1974 as a whole, that the expressions "aiding, abetting, counselling or procuring" had any different meaning from that which had become settled in the application of the criminal law.  In the joint judgment of Mason ACJ, Wilson, Deane and Dawson JJ it was observed, at 668:

"The nature of the prohibition imposed by s.52 is, however, governed by the terms in which it is created and the context in which it is found.  Section 75B, on the other hand, in speaking of aiding, abetting, counselling or procuring, makes use of an existing concept drawn from the criminal law and unless the context requires otherwise, there is every reason to suppose that it was intended to carry with it the settled meaning which it already bore:  cf.  Barker v. The Queen (1983) 153 CLR 338.  Nor is there any reason to suppose that because the application of s.75B may occur in conjunction with a provision such as s.52, which requires no intent, it must also be construed so as to dispense with intent as an element of aiding, abetting, counselling or procuring."

21                  Counsel for ENA referred to the Explanatory Memorandum which accompanied the introduction into Parliament of the Bill containing the clause which became s 170WG(1) of the WR Act.  The relevant clause of the memorandum recited:

"New subsection 170WG(1) provides that a person must not apply duress to an employer or employee in connection with an AWA or ancillary document.  This would not prevent an employer from offering employment on the basis that the employee enter into an AWA."

22                  We do not understand that passage to cast any light on the questions which Moore J had to answer.  It certainly does not suggest that the application of duress in connection with an AWA can never occur unless an AWA is actually entered into by the prospective employee.  In our view, the Explanatory Memorandum indicated only that to stipulate that entry into an AWA is essential to obtain employment with the offeror will not, of itself, or necessarily, constitute duress. 

23                  It was also contended on behalf of ENA that the construction of s 170WG which Moore J favoured "would be an extraordinary interference with the conduct of an employer's business."  We are unable to accept that submission.  In our view, the answers given by his Honour to the questions which he identified involved his discerning from s 170WG in the context of Part VID as a whole, an intention that an employer should not, in an endeavour to induce an existing or prospective employee to enter an AWA containing particular terms, apply pressure which, in the circumstances, is illegitimate.

24                  That intention is consistent with what appears to be the policy underlying Part VID that AWAs should be negotiated and concluded openly and freely at arm's length without outside interference and without either party being deceived or misled.  The legislature's concentration on the quality of the conduct and intention of the person against whom duress is alleged is also borne out by the fact that the proscription in s 170WG(1) is cast in the form "a person must not apply duress".  It is significant in the same context that the prohibition is against the application of duress "in connection with an AWA".  Had it been intended to confine the penalty contemplated by s 170VV to the application of duress which results in the entry by an employer or employee into an AWA, that could have been made clear by different language in s 170WG(1).  It is true, as Counsel for ENA pointed out, that Division 8, by granting immunity in respect of industrial action (as defined) engaged in by an employer or employee for the purpose of procuring an AWA on particular terms and conditions, authorises a specific form of pressure to be applied in connection with an AWA which by force of s 170VB(1), includes a proposed AWA. 

25                  However, the definition of "industrial action" in s 170WB confines the conduct to action by an employer or employee and so is predicated on an existing employment relationship.  The presence in the WR Act of Division 8, in our view, says nothing about what may constitute threats or intimidation or duress by a personwhich are respectively proscribed by ss 170WF and 170WG.

26                  The operation of s 170VB is significant because of its effect in enlarging the field of legal relations in connection with which the application of duress is prohibited.  In its terms that section 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."

27                  On its face, that extension of the concept of an AWA has the effect that, as far as the context of Part VID permits, a person to whom employment is offered or proposed on particular terms and conditions and who will thus become an employee if and when the offer is accepted, is an employee.  There is nothing in the context of the sub-section to deny that extended meaning to the expression "employee" in s 170WG(1).  Counsel for ENA sought to overcome this difficulty by contending that "proposed AWA" in s 170VB referred to a contract of employment, all the terms of which had been agreed between the parties and which required only execution in writing as required by s 170VF in order to become an actual AWA.  We see no warrant for limiting in this way the wide general import which is to be given to the word "proposed" as a matter of ordinary English usage.

Standing of Mr Burns as an applicant

28                  On behalf of ENA it has been contended that Moore J erred in adding Mr Burns as an applicant.  That error was said to have arisen because Mr Burns had declined ENA's offer of employment and so had never become a party to an AWA.  Section 170VV of the WR Act provides:

"(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 subsection (1) that relates to an AWA or ancillary document may be made by a party to the AWA or ancillary document.

(4)        In this section:

penalty provision means subsection 170VK(2) or (4), section 170VP, section 170VT, section 170VU, subsection 170WE(1), subsection 170WF(1), subsection 170WG(1) or (2) or subsection 170WH(1) or (2)."

29                  Section 170VA includes this provision:

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

30                  The same section stipulates that "employer" and "employee" each has a meaning affected by s 170VB which, as we have already noted, respectively extends those concepts to a person who will become an employer or employee if and when a contract is concluded.  That extension of those concepts is permitted by the context of the definition of "party" in s 170VA and, in that respect, may be contrasted with the expressions "existing employee" and "new employee" which are defined in the same section as follows:

"existing employee, in relation to an AWA, means an employee who signed the AWA after commencing the employment to which the AWA relates."

"new employee, in relation to an AWA, means an employee who signed the AWA before, or at the time of, commencing the employment to which the AWA relates."

31                  We do not accept that "party" as used in s 170VV does not include a "party to negotiations".  The latter expression is not defined but is used in s 170WF, which provides:

"(1)      A person who is not a party to negotiations relating to an AWA or ancillary document must not use threats or intimidation with the intention of hindering the negotiations or the making of the AWA or ancillary document.  For this purpose party to negotiations includes a bargaining agent.

(2)        This section does not apply to conduct by or on behalf of an organisation of employees for the purpose of negotiating a certified agreement, if the conduct is authorised by another provision of this Act."

32                  We consider that Mr Burns, as a "party to negotiations relating to an AWA", was a "party" as defined in s 170VA construed with the aid of the extended meaning given to the expression "employee" by that section in conjunction with s 170VB(2).

33                  In another Part of the WR Act dealing with certified agreements, the legislature has chosen to identify who is to be a negotiating party and so entitled to notice of the initiation of a bargaining period;  see s 170MI(3).  However, the range of persons who may be parties to negotiations to a proposed AWA is necessarily much more limited and we do not regard the absence from Part VID of a counterpart to s 170MI(3) as implying that "party" in s 170VV is to be confined to a person who actually becomes bound by an operative AWA.  Similarly, the range of persons enabled by s 298T(2) to seek remedies for breach of the freedom of association provisions of Part XA, and the scope of those remedies, is much more extensive than the class of applicant and the single remedy identified in s 170VV.  Accordingly, we do not derive any assistance on this question of standing from the fact that the latter section does not exhibit the drafting technique adopted in s 298T(2).

34                  The construction for which ENA contends would allow even the most reprehensible conduct engaged in by a party in relation to a proposed AWA to go unexamined by a court if no concluded agreement were to come into existence.  We would only impute to Parliament such an intention to limit the scrutiny of conduct of persons in an industrial relationship if the language of the legislation intractably compelled that result.  For reasons which we have endeavoured to explain, Part VID of the WR Act, on its proper construction, supports a wider availability of the remedy afforded by s 170VV.  We are not persuaded to the contrary construction by the possibility that power to sue for penalties might be conferred on the Employment Advocate by regulation made under s 83BB(1)(j) assuming, what is far from certain, that such a regulation would be within power.

CONCLUSION

35                  The hearing of ENA's application for leave to appeal has effectively been treated as the hearing of the substantive appeal.  The questions identified by Moore J were clearly appropriate for separate consideration and resolution pursuant to O29 r2 of the Rules of this Court.  Their resolution in the way indicated by his Honour, which, for the reasons explained above, we affirm, will have a significant impact on the scope and nature of the evidence to be called and the issues to be determined in the course of these representative proceedings.  In those circumstances, the appropriate course is to grant leave to appeal and dismiss the appeal.

Associate:

Dated:                                                     3 March 2000