FEDERAL COURT OF AUSTRALIA

Finance Sector Union of Australia v Commonwealth Bank of Australia

[2003] FCA 435

INDUSTRIAL LAW – application for interlocutory injunction – employer arranges for wholly owned subsidiary to employ employees under individual contracts – whether a reason for the arrangement is that the employer’s employees are entitled to the benefit of an industrial instrument or an order of an industrial body - whether a serious issue to be tried that the arrangement contravened s 198K(1) of the Workplace Relations Act 1996 (Cth) and whether the non-disclosure of it contravened s 52 of the Trade Practices Act 1976 (Cth) – whether the balance of convenience favours the grant of interlocutory relief

Workplace Relations Act 1996 (Cth) s 298K(1)(c)

Trade Practices Act 1974 (Cth) ss 52 and 53

Patrick Stevedores Operations No 2 Proprietary Limited v Maritime Union of Australia (1998) 195 CLR 1 - cited

Community and Public Sector Union v Telstra Corporation Ltd (2001) 107 FCR 93 - cited

Burnie Port Corporation Pty Ltd v Maritime Union of Australia (2000) 104 FCR 440 - cited

Henjo Investment Pty Limited v Collins Marrickville Pty Limited (1988) 39 FCR 546 – cited

Bullock v The Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 - cited

Finance Sector Union of Australia v Commonwealth Bank of Australia (2000) 106 IR 139 - cited

FINANCE SECTOR UNION OF AUSTRALIA v COMMONWEALTH BANK OF AUSTRALIA AND COMMONWEALTH SECURITIES LIMITED

V 185 OF 2003

MERKEL J

9 MAY 2003

MELBOURNE

THE COURT ORDERS THAT:

1.      The application of the applicant for an interlocutory injunction be dismissed.

2.      Liberty to apply on reasonable notice is reserved.

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

REASONS FOR JUDGMENT

1                     On 1 April 2003 the applicant (“FSU”) commenced a proceeding against the first respondent (“CBA”) and the second respondent (“CommSec”) claiming relief in respect of alleged contraventions of s 298K(1) of the Workplace Relations Act 1996 (Cth) (“the WRA”) and ss 52 and 53 of the Trade Practices Act 1974 (Cth) (“the TPA”).  The alleged contraventions concern the employment by CommSec of employees to carry out functions and activities in CBA’s Premium Financial Services business (“CBA’s PFS business”).

2                     CBA’s PFS business involves the provision of special financial services to CBA’s more affluent customers.  During 2002 CBA decided to segregate its PFS business from its other businesses by moving its PFS business to its wholly owned subsidiary, CommSec, which previously had only carried out stockbroking services for CBA’s customers.  While it was necessary for CBA to continue to employ a number of employees engaged in CBA’s PFS business, during 2002 a decision was made that CommSec should be the employer of employees engaged in that business.  The choice of CommSec, rather than CBA, to be the employer of the employees engaged in CBA’s PFS services was said by the Chairman of CommSec to be:

“because of the advantages that would flow to the PFS business in the following areas:

(a)       Branding;

(b)       Licensing issues; and

(c)        The provision of an adaptable platform of employment conditions.”

3                     The relevant CBA employees, including those engaged in CBA’s PFS business, were employed under either the Commonwealth Bank of Australia Employees Award 1999 or under certain certified enterprise bargaining agreements (“the regulated employment conditions”).  Although CommSec operated under its own enterprise agreement, cl 12 of that agreement authorised CommSec to enter into individual contracts of employment with its employees so that their terms and conditions of employment were governed by the terms of individual contracts, rather than by any regulated employment conditions.  The dispute between FSU, CBA and CommSec relates to the consequences of CommSec, rather than CBA, employing employees engaged in CBA’s PFS business.  The relief sought by FSU includes declaratory relief that:

(a)               CBA contravened s 298K(1)(c) of the WRA by altering the position of certain of its employees to their prejudice for a prohibited reason, namely that the employees are entitled to the benefit of the regulated employment conditions (see s 298L(1)(h));

(b)               in the negotiations between CBA and FSU for the enterprise bargaining agreements made and certified in 2002, CBA contravened s 52 of the TPA by not disclosing its intention and plans to withdraw as the employer of employees working in CBA’s PFS business;

(c)               CBA, by reason of its failure to disclose its intention and plans to withdraw as the employer of employees working in the CBA’s PFS business, is estopped until 1 July 2004 from not employing all the employees working in that business;

(d)               CommSec contravened s 52 of the TPA by representing to its employees that they are being employed under the CommSec enterprise agreement when those employees are being employed under individual contracts, which do not incorporate the regulated employment conditions.

4                     FSU is seeking an interlocutory injunction restraining CBA from using the services of employees employed by CommSec to perform work in CBA’s PFS business, save and except for any employee of CommSec presently working in that business.  If the relief is granted it would require that CBA, and not CommSec, be the employer of any further employees which CommSec engages to work in CBA’s PFS business.  The FSU is also seeking an interlocutory injunction restraining CommSec from representing to any of its employees that their employment will be made under or regulated by the CommSec enterprise agreement.

5                     The affidavits and exhibits relied upon by the parties in the interlocutory application are voluminous and the issues of law and fact raised by that material are complex.  As it is important that the judgment on the interlocutory application not be delayed I have decided that the preferable course is to deliver my reasons for judgment as soon as possible, even if that has the consequence that the reasons may not be as detailed as they might otherwise have been.

6                     I have concluded that there is a serious issue to be tried in respect of the contraventions alleged against CBA of s 298K(1)(c) of the WRA and s 52 of the TPA.  In respect of the WRA claim I am satisfied that there is a serious issue to be tried that the CBA has altered the position of senior employees in CBA’s PFS business to the employees’ prejudice within the meaning of s 298K(1)(c), in the sense that the employees may be likely to suffer “adverse affection of, or deterioration in, the advantages enjoyed” by them before the decision of CBA to withdraw as the employer of employees in its PFS business: see Patrick Stevedores Operations No 2 Proprietary Limited v Maritime Union of Australia (1998) 195 CLR 1 (“Patrick Stevedores”) at 18.  The prejudicial alteration would be likely to come about as a result of the employment prospects of those employees being detrimentally affected by CBA’s decision to have CommSec replace it as the employer of employees working in CBA’s PFS business.  The evidence at this stage does appear, prima facie, to support FSU’s claim that s 298L(1)(h) applies in the present case because a reason for CBA withdrawing from the employment of employees in its PFS business, and CommSec assuming the role of employer in respect of those employees, is that CBA’s employees are employed under the regulated employment conditions.

7                     There are, however, a number of problems confronting the FSU’s claims.  The present case is one in which the prejudicial alteration complained of plainly involves questions of degree, and there may be difficult issues of fact involved in determining whether the alteration is real and substantial, rather than merely possible or hypothetical: see Community and Public Sector Union v Telstra Corporation Ltd (2001) 107 FCR 93 (“CPSU v Telstra”) at 100 [17]-[18].  Further, the claims under s 298K(1) can only extend to the employees currently enjoying regulated employment conditions as employees of CBA, and not to new employees taking up employment with CommSec: see Burnie Port Corporation Pty Ltd v Maritime Union of Australia (2000) 104 FCR 440.  As I shall later explain this issue is of some importance in respect of the interlocutory relief that is being sought.  There is also a significant issue of fact as to whether any of the offending conduct on the part of the CBA is directed at individual employees or at a number of ascertainable employees as appears to be required by s 298K(1): see CPSU v Telstra at 101 [21].

8                     In the above circumstances, at this stage, I am unable to form a view as to the strength of the FSU’s claims under s 298K(1)(c) of the WRA and I therefore approach the question of interlocutory relief on the basis that, although there is a serious issue to be tried, I am not in a position to determine the likelihood of the FSU succeeding on those claims.

9                     The FSU’s TPA claim is premised on the propositions that:

·                    the CBA was under a duty under its certified enterprise bargaining agreements to inform the FSU of the changes to working arrangements proposed by the CBA in respect of its PFS business; and

·                    its failure to inform the FSU of those changes constituted misleading and deceptive conduct: see Henjo Investment Pty Limited v Collins Marrickville Pty Limited  (1988) 39 FCR 546 at 557.

10                  As with the s 298K(1)(c) claims I am satisfied that there is a serious issue to be tried in respect of the alleged breach of s 52 of the TPA by the CBA.  There are, however, also a number of problems confronting the claim.  The first is whether the conduct in question occurred in “trade or commerce”.  The second is whether the duty relied upon to found the claim of misleading conduct arose and was breached in the manner alleged.  The third and, most significant for present purposes, is whether the relief sought in respect of the alleged breach of s 52, which is essentially the same as that sought in respect of the alleged contravention of s 298K(1), is appropriate.  The relief does not challenge the agreements reached, or seek to compensate for the opportunity said to have been lost, as a result of the alleged misleading conduct.  Rather, the FSU’s case appears to assume that had the FSU been informed of the changed employment arrangements proposed by CBA those arrangements would not have been implemented or the proposed employment would have been upon the regulated employment conditions.  Thus, there is a real issue as to whether the final and interlocutory relief sought in respect of the s 52 claim is appropriate: cf Patrick Stevedores at 28 [26].

11                  As is the case with the s 298K(1)(c) claim the problems to which I have referred have resulted in me not being able to form a view as to the strength of FSU’s s 52 claims, notwithstanding that I am satisfied that there is a serious issue to be tried in respect of those claims.  Thus, the present case is not one in which the strength of an applicant’s claims may lead the Court to more readily grant an interlocutory injunction: cf Bullock v The Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 at 470.

12                  Other WRA and TPA claims of the FSU have been put in a number of different ways but, as I am satisfied that there is a serious issue to be tried in respect of the main claims set out above, it does not add anything to FSU’s case for interlocutory relief for me to consider the alternative legal bases upon which those claims have been put.

13                  I have also considered the estoppel claim against the CBA and the claim for breach of s 52 against CommSec.  I doubt that there is a serious issue to be tried in respect of those claims but need not reach any conclusion on that matter as I am not satisfied that the claims have sufficient cogency or strength to justify the grant of the interlocutory relief sought.  In particular, the estoppel claim would not seem to add anything further to the s 52 claim in respect of which I have found there is a serious issue to be tried.  The s 52 claim against CommSec does not warrant the grant of interlocutory relief as I am not satisfied that employees agreeing to be employed under individual contracts have been or are likely to be misled by the conduct complained of or as to the terms of their employment.

14                  It is in the above context that I turn to consider the balance of convenience.  The relief sought would require that only CBA, and not CommSec, engage employees in relation to CBA’s PFS business.  It is common ground that CommSec is advertising for employees in relation to CBA’s PFS business from both within the CBA and outside of the CBA.  If the relief is granted CommSec would not be permitted to continue to engage employees on individual contracts because those employees would have to be employed by the CBA under the regulated employment conditions.  The problem with that outcome is that it would prevent CommSec from engaging employees from outside of the CBA which, on any view of the case in respect of which I have found there is a serious issue to be tried, is not unlawful.  The relief sought would also deny to employees who come from outside of CBA, the opportunity to elect to be employed under the individual contracts being offered by CommSec, rather than under the regulated employment conditions.  Thus, the relief sought could impact adversely on the entitlement of CommSec and employees who are not presently employed by the CBA to agree upon the terms of employment of those employees, notwithstanding that FSU has no legal right to intervene or to seek relief in respect of those contractual arrangements.  That is of particular significance in respect of employees coming from outside of CBA, who are innocent third parties in respect of the present dispute.

15                  Of course, it would be open to the FSU to restrict its relief to persons who are presently CBA employees as they are the employees against whom the FSU claims there has been unlawful discrimination by the CBA when it decided to withdraw from its role as employer in respect of its PFS services.  The problem with confining the relief in that way, however, is that it would have the consequence of causing CommSec to seek employees from outside of CBA and therefore deny to CBA employees the employment opportunities presently available and being offered by CommSec to them.  Understandably, the FSU has not sought that outcome as it may be one that is adverse to the interests of current CBA employees who may wish to take up employment with CommSec.

16                  There is also an assumption underlying the FSU’s case for interlocutory relief that the regulated employment conditions are more advantageous to employees than the individual contracts.  While that is clearly so in respect of many of the conditions, the evidence before the Court at this stage does not allow me to confidently draw any conclusion about the correctness of the assumption when it is applied to all of the terms and conditions of employment.

17                  There is next the question of whether, if the FSU is ultimately successful in establishing its claims, it might be denied or deprived of the fruits of that success by reason of the Court’s refusal to grant interlocutory relief.  Put another way, an issue arises as to whether FSU has satisfied the Court that there is a real risk that it, or employees of CBA, might suffer irreparable harm if the interlocutory relief sought is refused.  FSU has accepted that one of the forms of final relief that is available under the WRA is for the Court to remedy the alleged contravention of s 298K(1) by requiring CBA and CommSec to take all steps necessary to ensure that employees employed by CommSec in the CBA’s PFS business are employed under the regulated employment conditions, notwithstanding their individual contracts.  I put to one side at this stage whether an exception might be made in respect of employees who do not wish to accept the benefit of the regulated employment provisions.

18                  Senior counsel for CBA and CommSec did not dispute the power of the Court to grant such relief although he submitted that his clients would oppose the grant of such relief, even if the contraventions were made out.  The acceptance of senior counsel appears to be correct as the form of relief that might be granted in respect of a contravention of s 298K(1) is both flexible and broad.  In that regard s 298U(e) and (f) confer a broad power on the Court to make orders in respect of conduct contravening, inter alia, s 298K(1) that the Court “thinks necessary to stop the conduct or remedy its effects” and “any other consequential orders”: see Patrick Stevedores at 28 [26].  I regard this aspect of the application as significant on the balance of convenience as it demonstrates that this is not a case where the Court may not be able to grant effective final relief unless interlocutory relief is granted.  Rather, the present case appears to be one in which it would be open to the Court, if it regards it as appropriate to do so, to rectify the harm caused by any contravention by granting appropriate and effective relief at the final hearing.  Thus, no irreparable harm is likely to be caused by the refusal of interlocutory relief.

19                  One possible prejudice to CBA employees who wish to seek employment with CommSec in CBA’s PFS business may be that they do not wish to lose their regulated employment conditions by applying for positions in CommSec.  However, the possibility of that harm has been alleviated to some extent by CommSec undertaking to the Court not to make any offer to a prospective employee to work in a position in the CBA’s PFS business without informing the employee of this proceeding and of the relief sought.  As a result of the undertaking all prospective employees of CommSec will be aware that, if the alleged contravening conduct is found to be unlawful, the Court may confer upon them the benefit of the regulated employment conditions in their capacity as employees of CommSec, notwithstanding their individual contracts of employment.  That would tend to alleviate, if not eliminate, the harm that is said to be caused to CBA’s employees by having to resign their employment with the CBA to take up employment with CommSec.  Of course, if the FSU claim fails the transferring employees would not be entitled to transfer and retain the regulated employment conditions.

20                  FSU also relied upon the harm caused to a CBA employee by having to resign his or her CBA employment to obtain a position with CommSec.  However, that harm would be suffered even if CommSec’s employment of those employees was upon the regulated employment conditions.

21                  Delay is an additional issue on the balance of convenience.  While it can be accepted that delay unaccompanied by prejudice may not be an answer to a claim for interlocutory relief (see Finance Sector Union of Australia v Commonwealth Bank of Australia (2000) 106 IR 139 at 155 [59]), the position may be otherwise where, as a consequence of the delay the status quo that is sought to be maintained by the interlocutory relief, has altered.  That has occurred to some extent in the present case.  It is clear that by November 2002 the FSU was fully aware of the CBA’s and CommSec’s plans.  The extent of that awareness is set out in the FSU update for Commonwealth Bank Officer’s dated 7 November 2002, which is entitled “PFS Agenda Exposed”.  While the FSU undertook negotiations with CBA in respect of the matters of which it complained, it did not take any proceedings in the Court until 1 April 2003.  In the intervening period CommSec proceeded with employing employees in CBA’s PFS business, both from within and outside of the CBA.  At the present time, employees engaged in CBA’s PFS business include CBA employees, new employees engaged by CommSec and former CBA employees who transferred to CommSec.  Thus, the current status quo is one in which the CBA withdrawal complained of by FSU has progressed significantly, and the need for urgent interlocutory intervention on the part of the Court may have diminished accordingly.

22                  There is a further reason why the delay that has occurred in the present case may tend against the grant of interlocutory relief.  Delay, particularly if not satisfactorily explained, may justify an inference that the harm alleged is not as serious as the applicant might suggest.  Further, where there has been delay the Court is often in a better position to scrutinise the facts in order to determine whether the serious harm that is said to warrant the grant of interlocutory relief is, in fact, occurring.

23                  In the present case the evidence of such harm is unclear.  I accept that some CBA employees may have declined to apply for a transfer to CommSec because that would result in the loss of the benefit of their current employment, including the regulated employment conditions.  However, as explained above, that harm has been alleviated to some extent by all future employees being put on notice by CommSec of this proceeding and of the relief claimed, and by the Court’s power to grant that relief if FSU’s claim ultimately succeeds.

24                  The final matter on the balance of convenience is the possibility that the employment by CommSec of employees in CBA’s PFS business may, as a matter of law, be regulated by the regulated employment conditions.  That possibility arises in two ways.  The first is that FSU contends, but CBA and CommSec deny, that there has been a transmission or succession in respect of the CBA’s business to CommSec, with the consequence that CommSec is bound by the regulated employment conditions (see ss 149(1)(d) and 170MB of the WRA).  The second is that the employment arrangement between CBA and CommSec, which has not been investigated in detail, is unusual.  CBA, through its wholly owned subsidiary CommSec has arranged for employees, who would normally be employed by CBA to conduct CBA’s PFS business, to be employed by CommSec to conduct that business.  The basis upon which, and the capacity in which, those employees are employed to conduct CBA’s PFS business is unclear.

25                  The second way in which the regulated employment conditions might apply is that, properly analysed, CommSec may in truth be acting as CBA’s undisclosed agent in employing its employees.  If that were so then the employment may continue to be regulated by the regulated employment conditions.  Although FSU is not presently pursuing a transmission, succession or agency case in this proceeding the possibility that the CommSec employees may be entitled to the benefit of the regulated employment conditions cannot be entirely discounted.

26                  While each of the matters to which I have referred in respect of the balance of convenience, when considered in isolation, may not warrant the refusal of the interlocutory relief sought, I am satisfied that those matters, cumulatively, warrant the refusal of that relief.  The preferable course is for the Court to refuse the interlocutory relief but to give appropriate directions that would enable this matter to be brought on for final hearing.

27                  There is a final matter to which I wish to refer.  A significant number of CBA employees are currently being employed by CBA in CBA’s PFS business to work together with CommSec employees.  While it is unclear as to whether CBA or CommSec is proposing to take steps to cause those employees to be employed by CommSec on individual contracts, they are plainly ascertainable employees and if they were being encouraged or required to resign their CBA employment to become employees of CommSec under individual contracts in order to continue their employment in CBA’s PFS business, a real issue would arise as to whether that conduct constituted unlawful discrimination in contravention of s 298K(1).  As that issue has not been argued, and no relief has been sought specifically in relation to those employees, I say nothing further about it other than:

·                    I propose to reserve liberty to apply so that if that issue does arise it could be brought before the Court by FSU;

·                    I do not regard my reasons for refusing the present application for interlocutory relief as in any way prejudicing such an application.

28                  For the above reasons I have concluded that the application for interlocutory injunctive relief is to be dismissed.

Associate:

Dated:              8 May 2003