FEDERAL COURT OF AUSTRALIA

Cadbury Schweppes Pty Ltd v Australian Liquor Hospitality

& Miscellaneous Workers’ Union

[2000] FCA 1793

INDUSTRIAL LAW – industrial action – picket – whether intent to coerce employer to agree to making a certified agreement – lockout – whether notice of lockout invalid – whether permissible to respond to industrial action more than once, without three days’ notice

Workplace Relations Act 1996 (Cth)  ss 170ML, 170MO, 170NC

Hanley v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union [2000] FCA 1188  cited

Lumley v Gye (1853) 118 ER 749  cited

Ansett v Australian Pilots Association [1991] 1 VR 637  cited

Finance Sector Union of Australia v Commonwealth Bank of Australia [2000] FCA 1468  cited

Finance Sector Union v Commonwealth Bank of Australia [2000] FCA 1372  cited

Barton v Armstrong [1976] AC 104  cited

Pao On v Lau Yiu Long [1980] AC 614  cited

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

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

C T N Cash and Carry Ltd v Gallagher Ltd [1994] 4 AllER 714  referred to

ACI Operations Pty Ltd v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union (2000) 173 ALR 109  followed

Australian Workers’ Union v Yallourn Energy Pty Ltd [2000] FCA 65  cited

PWB Anchor Ltd v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union [2000] FCA 1482  cited

National Workforce Pty Ltd v Australian Manufacturing Workers’ Union (1997) 75 IR 200  cited

CADBURY SCHWEPPES PTY LTD v AUSTRALIAN LIQUOR HOSPITALITY & MISCELLANEOUS WORKERS’ UNION and JAMES WEISSMANN

V 925 of 2000

AUSTRALIAN LIQUOR HOSPITALITY & MISCELLANEOUS WORKERS’ UNION v CADBURY SCHWEPPES PTY LTD

V 934 of 2000

FINKELSTEIN J

MELBOURNE

7 DECEMBER 2000

UPON the applicant, by its counsel, undertaking:

(a)    to submit to such order (if any) as the Court may consider to be just for the payment of compensation to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order hereby made 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:

Until the hearing and determination of the proceeding or further order, the first respondent, whether by itself, its servants, agents or howsoever otherwise, be, and it hereby is, restrained from organising or continuing to organise or being otherwise involved in the physical obstruction of, or the physical impediment to, the free movement of goods, vehicles or people to and from the premises of the applicant at 2 Beverage Drive, Tullamarine, Victoria.

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

THE COURT ORDERS THAT:

The application for interlocutory injunctions be dismissed.

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

REASONS FOR JUDGMENT

1                     Cadbury Schweppes Pty Ltd (the company) manufactures beverages, including soft drinks and mixed alcoholic drinks.  Its principal manufacturing plant is at Tullamarine.  Many of the company’s employees are members of the Australian Liquor, Hospitality & Miscellaneous Workers’ Union (the union).  In December 1999 the Australian Industrial Relations Commission certified an agreement between the company and the union setting out the terms of employment of the company’s workforce.  The nominal expiry date of that agreement has passed, and since September 2000 the parties have been negotiating a new agreement.  At the moment those negotiations have stalled on a number of important issues.  The company and the union have taken action to break the impasse.  It is that action which brings the parties to court.  In separate proceedings, which have been heard together, each seeks an interlocutory injunction to restrain the other from pressing ahead with its action.

2                     I start with a brief discussion of the relevant provisions of the Workplace Relations Act 1996 (Cth), for each party relies upon that statute as the foundation for its cause of action and the relief sought.  I shall then refer to the facts which, for the most part, are not in dispute.  Then I will state my conclusions which must be tentative, in virtue of the fact that this is an interlocutory application where the evidence is untested and the argument was brief. 

3                     Part VIB of the Workplace Relations Act (ss 170L to 170NI) is concerned with the making and certification by the Commission of agreements that settle or prevent industrial disputes:  see ss 170L and 170LN.  The legislation contemplates that there will be “collective bargaining” that will result in an agreement:  see, eg, ss 170LI, 170LJ, 170LN, 170LO.  When certified, an agreement prevails over any inconsistent award or other certified agreement:  s 170LY.

4                     A party wishing to negotiate an agreement may give written notice under s 170MI to initiate a “bargaining period”, that is, a period for negotiating the proposed agreement.  While Pt VIB contemplates that an agreement will be the product of “free bargaining between employers and their employees” (Hanley v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union [2000] FCA 1188 at [44]), the parties are entitled to take action to improve their bargaining position.

5                     Subject to certain immaterial exceptions, during a bargaining period a union, and its officers and members, may organise or engage in “industrial action” against an employer, for the purpose of supporting or advancing claims made in respect of the proposed agreement or responding to a lockout by the employer of employees whose employment will be subject to the agreement:  s 170ML(2).  Industrial action is defined in s 4(1) to include strikes and work bans.  If industrial action is taken by a union, its officers or members, then, according to s 170MO(2), that action will qualify as “protected action” if: 

“(a)     [in a case where] the action is in response to, and is taken after the start of, a lockout of employees by the employer in respect of the proposed agreement – the organisation, or the employee who is a negotiating party, has given the employer written notice of the intention to take the action; or

(b)       in any other case – the organisation, or the employee who is a negotiating party, has given the employer at least 3 working days’ written notice of the intention to take the action.”

The consequence of industrial action being “protected action” is that no action lies under any law in respect of that action, subject to certain (for present purposes irrelevant) exceptions:   s 170MT(2).

6                     Employers may also take protected action during a bargaining period.  Thus, an employer is entitled to lock out from their employment all or any of its employees for the purpose of supporting or advancing claims made by the employer in respect of a proposed agreement or responding to industrial action by any of the employees whose employment will be subject to the proposed agreement:  s 170ML(3).  In order for a lockout to be protected action the employer must comply with s 170MO(3)(a), which provides that the lockout will not be protected:

“(a)     … unless the employer has given the other negotiating party or each of the other negotiating parties:

            (i)         if the lockout is in response to, and takes place after the start of, industrial action organised or engaged in by an organisation that is a negotiating party in respect of the proposed agreement – written notice of the intended lockout; or

            (ii)        in any other case – at least 3 working days’ written notice of the intended lockout; …”

7                     The deadlock in the negotiations resulted in the union giving notice of industrial action.  On 13 November it advised the company that there would be a twenty-four hour strike and also that its members would impose various bans, limitations and restrictions on the performance of their work. In accordance with the notice there was a strike on 17 November and some bans came into force on 21 November.

8                     The company was quick to react.  Employees who were members of the union were told that if they were not prepared to perform their duties they would not be paid (see             s 170ML(5)).  Because the employees indicated that they would comply with the bans they were stood down. 

9                     A few days later, on 25 November, the company gave notice to the union, and to those of its employees who were members of the union, that the employees would be locked out from 27 November until 4 December unless an agreement was made in the meantime.  The locked out employees were told they would not be paid any wages throughout the lockout. 

10                  Following the service of the lockout notice, the union organised a picket of the company’s Tullamarine plant.  The picket began early on the morning of 27 November and remained in place until late in the afternoon of 29 November.  At that time, on the urgent application of the company, I ordered that the union “be restrained from organising or continuing to organise or being otherwise involved in physical obstruction” of the Tullamarine site.  The company asked for that order because it said that the picket line was preventing the movement of goods to and from the Tullamarine site, which was costing the company something in the order of $150,000 per day.  The company now seeks a continuation of that injunction pending trial.  That is the first of the two applications that require resolution. 

11                  On 1 December the company served a second notice of intended lockout.  The notice stated that it was being given in response to the industrial action initiated by the union.  The notice goes on to say that the second lockout will begin when the current lockout expires and will continue until 18 December 2000, unless agreement is reached in the meantime.  The union seeks an order restraining the company from acting on this notice.  That is the second application that is before the court.

12                  Before dealing with the merits of each application, I should mention that there are many matters that are not, or are not seriously, in dispute for present purposes. The parties, through their counsel, did not press for relief they were unlikely to obtain, nor did they present arguments they were likely to lose.  They confined their argument to one or two central submissions.  This resulted in a significant reduction in the hearing time, a matter for which the parties should be commended.

13                  The picket organised by the union is not action which falls within the definition of “industrial action”.  Accordingly, the picketers, and those who organised the picket, did not, and if it is continued will not, engage in “protected action”.  Moreover, those that organised, and those that prevented, the movement of goods to and from the Tullamarine site have engaged in unlawful conduct.  The conduct was unlawful because it was tortious.  Here I have in mind two torts.  The first is the tort of interference with contractual relations, that was first recognised in the famous case of Lumley v Gye (1853) 118 ER 749.  The second is interference with trade or business by unlawful means, which now appears to be recognised as an independent tort:  see Ansett v Australian Pilots Association [1991] 1 VR 637 at 666-668. 

14                  As a result of the picket the company was not able to distribute soft drinks or mixed alcoholic beverages from its Tullamarine site to its customers.  To satisfy outstanding orders the company arranged for products to be supplied from stock that it held at interstate locations.  In the first two days of the picket about 180 trucks carried soft drink from interstate.  The cost was approximately $75,000 per day.  It seems the company presently has stock worth around $2.4 million at the Tullamarine site which could not be delivered to customers if the picket is reinstated. 

15                  The company also sustained a loss of approximately $84,000 per day because it was unable to transport alcoholic mix.  Alcoholic mix can be produced without the labour of the locked out employees.  Because alcoholic mix can be stored for only 48 hours before it perishes, it was not produced in case it could not be transported.  This is what caused the loss.  The company will suffer further loss if there is another picket.

16                  Although the picket was tortious, and the company suffered significant loss in consequence of it, it could not bring any proceeding to restrain the tort or to recover damages.  Section 166A(1) of the Workplace Relations Act provides that an action in tort may not be brought against a union or its officers, members or employees in relation to conduct by those persons, in contemplation or furtherance of claims that are the subject of an industrial dispute, unless the Commission has given a certificate under s 166A(6).  The circumstances in which the Commission must issue a certificate are: where the conduct is unlikely to stop promptly; where the prevention of bringing a tort action would cause substantial justice; or where within 72 hours after a notice of intention to bring tort proceedings is given, the Commission is unable to stop the conduct.  Although the company has applied for a certificate, the Commission has not yet granted it.

17                  In its proceeding the company alleges that by organising the picket the union and Mr Weissmann, one of its organisers, are acting in contravention of s 170NC(1). That subsection provides:

“A person must not:

(a)       take or threaten to take any industrial action or other action; or

(b)       refrain or threaten to refrain from taking any action;

with intent to coerce another person to agree, or not to agree, to:

(c)        making, varying or terminating, or extending the nominal expiry date of, an agreement under Division 2 or 3; or

(d)       approving any of the things mentioned in paragraph (c).”

The alleged infringement is that the union and Mr Weissmann are taking action with intent to coerce the company to agree to making a new certified agreement.

18                  It is not necessary in this case to consider the somewhat vexed question of what is meant by “coerce”.  This topic was discussed by Gyles J in Finance Sector Union of Australia v Commonwealth Bank of Australia [2000] FCA 1468 and by me in a case between the same parties, Finance Sector Union v Commonwealth Bank of Australia [2000] FCA 1372.  One of the difficulties is distinguishing between concepts such as influence, persuasion, inducement, duress and coercion.  It is no doubt correct to assume that what the common law regarded as duress that would vitiate contractual consent, would amount to coercion for the purposes of s 170NC.  In its early formulation the “doctrine” of duress was limited to actual violence to the person or threats of violence.  Duress in the strict sense was where a person was compelled to do an act by injury, beating or unlawful imprisonment.  Duress per minas was where a person was compelled to act by the threat of being killed, suffering some grievous bodily harm, or being unlawfully imprisoned.  Duress also included threatening, beating or the imprisonment of the wife, parent or child of such a person.

19                  In the area of industrial disputes, one is usually concerned with what is known as “economic coercion” or “economic duress”, assuming there to be no difference between these concepts.  As the “doctrine” of economic duress has developed in England, through cases such as Barton v Armstrong [1976] AC 104, Pao On v Lau Yiu Long [1980] AC 614 and Universe Tankships Inc of Monrovia v International Transport Workers’ Federation [1983] 1 AC 366, and in Australia, with Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40, it now seems to be established, at least in proceedings for restitution or the avoidance of a contract, that in order to succeed the plaintiff must show that the defendant exerted economic pressure that has induced the plaintiff to act, and that the pressure was illegitimate.  Pressure will be illegitimate if it involves unlawful action (eg breach of contract or commission of a tort) or the threat of unlawful action.  However, as the cases show, there may be duress even if the action, or threatened action, is lawful.  In C T N Cash and Carry Ltd v Gallagher Ltd [1994] 4 AllER 714 at 719 Steyn LJ (as his Lordship then was) said that:  “In a purely commercial context, it might be a relatively rare case in which ‘lawful duress’ can be established.”  But as Universe Tankships Inc demonstrates, where economic duress is exercised in the field of industrial relations, special considerations apply.  There it would seem, “lawful act duress” can be made out more easily. 

20                  On this application the union does not dispute that the picket is to be regarded as relevantly coercive.  The point the union makes is that the evidence does not establish that it organised the picket with intent to coerce the company to making an agreement (which would result in a contravention of s 170NC).  It says that it organised the picket as a reaction to, or in retaliation for, the lockout.

21                  In support of its argument the union points to the following facts.  First, it says that the timing of the picket shows it to be in response to the lockout and that it was not organised, as the company alleges, with intent to coerce the company to enter into an agreement.  It may be accepted that the sequence of events outlined earlier provides some support for the union’s submission.  Second, the union points to a bulletin which it published on the first day of the picket.  The bulletin reads:

“CADBURY SCHWEPPES ENTERPRISE BARGAINING

INFORMATION TO THE PUBLIC

Currently, workers employed by Cadbury Schweppes their union and the Company are in dispute over enterprise bargaining agreement negotiations at this site.  The agreement discussions commenced at the beginning of September.  About two weeks ago, those discussions broke down.

The people you see at the front gate of the Cadbury Schweppes site have been locked out of their workplace. 

As a result, the workers with the support of their union, the Australian Liquor, Hospitality and Miscellaneous Workers Union, have set up this community protest to make a point to their employer, who has locked its employees out of their workplace. 

We ask for your patience, cooperation and support for the community protest.”

I am prepared to accept that the bulletin also supports the union’s argument. 

Finally there is the evidence of Mr Veenendaal, an industrial officer employed by the union.  He said that the picket was a protest “against the Company’s provocative action in having employees escorted from the site by police and locking out the employees.  The purpose of the protest is and was in protest at the employer’s action and was not to further the [certified agreement] negotiations.”  He went on to say that “the union would be prepared to stop protesting if the company lifted the lockout against employees.”

22                  The union’s argument has some attraction.  But it seems to me that it is not so easy to keep separate the various acts of the company that the union regards as unacceptable (the hard line in the negotiations and the lockout) for the purposes of identifying the conduct to which the picket is a response.  Moreover, the proposition that it was the lockout that provoked the picket does not deny the possibility that the means by which it was hoped the picket would bring the lockout to an end was by forcing the company to conclude the negotiations for an agreement.  This was the view that was taken by Merkel J of a similar argument in ACI Operations Pty Ltd v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union (2000) 173 ALR 109.  In that case there was a lockout of employees during a bargaining period.  The union organised a picket of the employer’s plant and the plants of several of its major customers.  The employer claimed that the organisation of the pickets contravened s 170NC.  The union argued that the pressure of the picket was simply to bring an end to the lockout.  Merkel J said (at 116) that the union’s argument was not an answer to the employer’s claims.  He said that the lockout was the employer’s response to the industrial action of the employees, and was intended to support the employer’s position in relation to the new agreement.  He said there was “a degree of unreality about the union submission that action taken with the intent to bring an end to the lockout which, if successful, would clearly weaken [the employer’s] bargaining position, is conduct unrelated to seeking to weaken that position”.  He made similar observations in Australian Workers’ Union v Yallourn Energy Pty Ltd [2000] FCA 65 at [73].

23                  Although it might be going too far to say that the union’s argument is “unreal”, I only have to be satisfied that the company’s claim that the picket was for a proscribed purpose is seriously arguable.  In this connection, Mr Parry, who appeared for the company, referred to occasions on which the evidence suggests that the picket was not simply in response to the lockout.  For example, during the picket, there was a telephone conversation between Mr Weissmann and a company representative where Mr Weissmann asked whether the company had a further offer to put to the union.  There was no mention of the lockout.  There were other examples of discussions between the two sides about the picket where the negotiations were mentioned but not the lockout.  Mr Parry said it could be inferred that the purpose of the picket was to exert pressure to conclude an agreement.

24                  On the whole of the evidence, I am satisfied that it is sufficiently arguable that the picket was organised to compel the company to conclude an agreement.  As all other relevant considerations are in favour of the grant of an injunction, that relief should be given.

25                  I can now deal with the attack the union makes against the company.  Here again the parties have concentrated their attention on one narrow point, which, if it goes against the union, will result in the dismissal of its application.

26                  The point at issue is one of statutory construction.  The union contends that on the proper construction of s 170MO(3), an employer may respond to industrial action using the notice provision in subsection 3(a)(i) on only one occasion.  Once an employer has exhausted that right, it must, in every other case, whether or not it is acting in response to industrial action, give the three days’ written notice provided for by subsection (3)(a)(ii).  The union says that if the construction that it puts forward is correct, or is arguably correct, the notice that was given is invalid or arguably invalid (relying upon what Goldberg J said in PWB Anchor Ltd v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union [2000] FCA 1482), thus warranting the grant of interlocutory relief. It seems be accepted by the company that if its lockout notice was invalid, or arguably invalid, then the union should have its injunction.

27                  To support the construction for which the union contends, Mr Friend, who appeared on its behalf, explained the point very succinctly.  He said:

“The three-day notice provision is important.  It allows people to make arrangements and it stops people saying, in the middle of a concrete pour, ‘We’re having some protected industrial action now, unless you agree to our demands,’ putting the boot on the other foot.

…

If, once industrial action has been taken by one party in the course of the bargaining [period], the other party can as often as it wishes engage in protected industrial action forthwith, without giving the three-day notice, that protection in the Act would be seriously undermined.  The Act allows the responsive action so that a person who is the subject of industrial action doesn’t have to submit to it for the three-day period.  They can take immediate action in response.  But in my submission they can only do that once, because otherwise once anyone takes industrial action during the course of a bargaining period, both parties are going to be able to tit–for–tat without anyone giving any notice at all and the scheme of the legislation would be undermined very seriously because the only three-day notice that would be given is the first notice.”

28                  Mr Friend explained that one of the principal objects of the requirement that there be three days’ notice of industrial action is so the parties to an industrial dispute may organise their affairs to minimise the adverse impact of the threatened action:  see National Workforce Pty Ltd v Australian Manufacturing Workers’ Union (1997) 75 IR 200 at 203.  Mr Friend’s description of the object of s 170MO may be accepted.  But it does not, in my opinion, constitute a sufficient reason to warrant the construction for which the union contends, a construction which, to my mind, is inconsistent with the clear language of the relevant sections. 

29                  Section 170ML identifies the actions to which the immunity granted by s 170MT will apply.  For an employer, the relevant action is a lockout of its employees, if that lockout is for one of the two nominated reasons. Section 170ML at least contemplates that an employer may lock out its employees on more than one occasion during the course of a bargaining period.  Indeed, this is no reason to suppose that there will only be a single lockout during the course of a bargaining period.  Section 170MO(3) contains the requirements which an employer must satisfy before a lockout will be protected action.  Provided the relevant requirements are satisfied, the lockout will have the benefit of the immunity given by             s 170MT.  Section 170MO does not impose a limit on the number of occasions an employer is entitled to lock out its employees.  The only work of that section is to specify the type of notice that must be given so that action taken under s 170ML will be protected by s 170MT.

30                  In the result, the only order I propose to make is to continue the injunction until trial.  The injunction will only go against the union as there was no evidence that justifies such an order against Mr Weissmann.  It has not been shown that Mr Weissmann organised the picket.  While he manned the picket line, I do not accept that acting as an individual, Mr Weissmann had any intent to coerce the company to take any action.  As an individual he had no power or influence over the company in any sense.  I do not mean to suggest that an individual may not contravene s 170NC, but here there is no evidence that this has occurred.

Associate:

Dated:              7 December 2000