Australian Federation of Air Pilots v Regional Express Holdings (No.2)
[2020] FCCA 219
•6 February 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AUSTRALIAN FEDERATION OF AIR PILOTS v REGIONAL EXPRESS HOLDINGS (No.2) | [2020] FCCA 219 |
| Catchwords: PRACTICE AND PROCEDURE – Proceedings commenced by Application and Response – whether Application and Response are pleadings – whether Applicant should be held to case outlined in Amended Application – purpose of pleadings considered – Applicant permitted to advance case different from that set out in Amended Application – no procedural unfairness suffered by the Respondent in the circumstances – parties will ordinarily be held to case articulated in Application or Response. |
| Legislation: Fair Work Act 2009, ss.340, 343, 345 Fair Work (Registered Organisations) Act 2009 |
| Other Material: Regional Express Pilots Enterprise Agreement 2005 |
| Cases cited: Australian Building and Construction Commissioner v CFMEU [2017] FCA 1398 |
| Applicant: | AUSTRALIAN FEDERATION OF AIR PILOTS |
| Respondent: | REGIONAL EXPRESS HOLDINGS |
| File Number: | MLG 788 of 2015 |
| Judgment of: | Judge Blake |
| Hearing dates: | 17 July 2019, 16 & 17 October 2019 |
| Date of Last Submission: | 17 October 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 6 February 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Kelly |
| Solicitors for the Applicant: | Australian Federation of Air Pilots |
| Counsel for the Respondent: | Mr Howard |
| Solicitors for the Respondent: | Clayton Utz |
ORDER
The Application filed on 15 April 2015 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 788 of 2015
| AUSTRALIAN FEDERATION OF AIR PILOTS |
Applicant
And
| REGIONAL EXPRESS HOLDINGS |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns claims arising out of the content of a letter sent by the Respondent to applicants for a cadetship in September 2014 (‘Letter’). In summary, in the Letter, the Respondent asked prospective cadets to submit a ‘handwritten motivation letter’. In the Letter, the Respondent asked candidates to give ‘us your solemn promise to give back to the Company by volunteering to undertake various activities and actions’. The Letter contained an example. The example referred to cadets in the past who had ‘promised us the Earth’ but then ‘very quickly show their true colours’. The example related to cadets refusing to stay at the ‘AAPA accommodation’. In the Letter, the Respondent went on to state that cadets who break their promises lack integrity, and that the Respondent would not allow any pilot lacking in integrity to hold a command or consider such pilot suitable for entry into PICUS, (‘Pilot in Command Under Supervision’) which is a pre-requite to holding a command. The full terms of the Letter are important and are set out at paragraph [46] in this judgment.
The Applicant alleges that the content of the Letter gives rise to contraventions of sections 340, 343 and 345 of the Fair Work Act 2009 (‘Act’). In respect of the alleged contraventions, the Applicant seeks injunctive relief and the imposition of pecuniary penalties on the Respondent.
For the reasons that follow, I have decided to dismiss the Application.
Background
The Applicant is a registered organisation pursuant to the Fair Work (Registered Organisations) Act 2009.
The Respondent operates a business providing commercial aviation services in Australia. The focus of the Respondent’s business is the provision of affordable passenger and air cargo transport to regional Australia. In the 2017/2018 year, the Respondent transported over 1.2 million passengers across Australian regional aviation routes.
For many years, the Respondent has encountered difficulties in retaining the pilots it hires. Many pilots would often leave shortly after completing training and commencement with the Respondent, to take up employment with other airlines.
To address this issue, the Respondent created its own cadet program called the Rex Pilot Cadet Program (‘RECP Programme’). It also established the Australian Airline Pilot Academy Pty Ltd (‘AAPAPL’).
The AAPAPL operates an Academy in Wagga Wagga, New South Wales, known as the Australian Airline Pilots Academy (‘Academy’). The Academy was opened in May 2010. It is a pilot training establishment featuring a fully self-contained campus which includes an academic centre, individual bedroom accommodation for all students, and dining and recreational facilities. The Academy is situated next to the flight training centre.
The RECP Programme is a 34 week intensive training program. For the duration of the RECP Programme, cadets reside at the Academy. Cadets who complete the RECP Programme obtain an Australian Commercial Pilot Licence with Multi-Engine Instrument Rating. On successful completion of the RECP Programme, cadets may also be offered employment with the Respondent or one of its subsidiaries, although there is not a guarantee of employment.
The current cost of the RECP Programme is $130,000 per cadet. Cadets are asked to pay an amount of $25,000 upfront at the start of the RECP Programme that is non-refundable. The Respondent provides cadets who participate in the RECP Programme with two unsecured loans for the remaining amount of the course fees. These are a study loan of $80,000 and a scholarship loan of $25,000. Cadets are asked to enter into loan agreements in relation to these matters.
On completion of the RECP Programme and upon commencing employment with the Respondent as a pilot, fortnightly instalments are deducted from the wages of the pilot to repay the loan. The amount of these fortnightly instalment repayments increase over time taking into account the likely career progression and increases to salary a pilot will enjoy. Interest is also charged on the loan.
If a pilot who has completed a cadetship resigns from the employment of the Respondent or its subsidiaries within the first seven years, the outstanding loans plus accrued interest become due and repayable by the cadet in full immediately upon the last day of employment. If, however, the pilot remains in employment for the full seven year period, the interest rate applied to the loans is reduced to the ATO rate and a $25,000 retention bonus is paid to the pilot.
Without the loans provided by the Respondent, a cadet would have to pay for the total cost of the course on their own, which may involve him or her taking out a personal loan.
The Respondent says that the RECP Programme provides a unique, appealing opportunity for individuals to become a pilot. It enables cadets to become a pilot without the struggle of having to maintain a day job and incurring the upfront cost of training. Without the RECP Programme, an individual may not become a first officer for up to 7 years. If an individual undertakes the RECP Programme, the individual may become a first officer within 18 months.
The selection process for entry into the RECP Programme is a comprehensive one. The Respondent looks for people who, among other things, are the right fit and who have all of the intrinsic attributes, attitudes and behaviours that are required by the Respondent.
There are, as one might expect, various stages to the process for selecting recruits into the RECP Programme. Of significance in this case is the final stage of the selection process. That stage involves the candidates being asked to provide what is known as a ‘handwritten motivation letter’ to the Respondent. Candidates are asked to confirm in writing some of the matters discussed with them during the interview process.
Shortly after receipt of the motivation letter by the Respondent, candidates are advised of their success or otherwise for entry into the RECP Programme.
The Burden of Proof in the present matter
The Applicant alleges three contraventions of section 340 of the Act. One claim of threatened adverse action is made in respect of persons who at 5 September 2014 were employee pilots and former cadets of the Respondent (‘affected class one’). Two claims of threatened adverse action are made in respect of persons who were prospective employees who were ultimately offered, and accepted a place, in the cadet program and are currently undertaking, or have undertaken, cadetships (‘affected class two’).
In addition to the claims above, the Applicant advances the claim that the Respondent contravened section 343 of the Act by threatening to take action against members of each affected class in order to coerce those persons not to exercise their workplace rights. Finally, the Applicant advances the claim that the content of the Letter contained representations that contravened section 345 of the Act.
The claims of adverse action and coercion made by the Applicant, inter alia, are threats of adverse action or a threat to take action. The Applicant accepted that section 361 of the Act does not operate with respect to threats: see for example, the decision of Tracey J in Australian Building and Construction Commissioner v CFMEU [2017] FCA 1398 at [70]. The Applicant therefore bears the onus to prove each of the elements to ground a contravention of sections 340 and 343 of the Act.
There is then the claim of misrepresentation based on the alleged contravention of section 345 of the Act. The Applicant accepted that it bears the onus in respect of this claim.
The scope of the trial
The Applicant commenced this application under rule 45.08 of the Federal Circuit Court Rules 2001 (‘Rules’). That rule permits an applicant to file a claim of this type in accordance with the approved form (‘Form 4’) and that the form be accompanied by a claim. The Applicant’s claim was contained within the Form 4.
At the opening of the trial, the Applicant advanced a case that differed from what was set out in the Form 4.
In response to the above, the Respondent contended that the scope of the trial was to be determined by the pleadings and only the pleadings. The Respondent submitted that the Application, the Response and the Reply ought to be regarded as pleadings and the Applicant’s case ought to be confined to matters disclosed by the pleadings.
The submission that this case has been conducted on the pleadings is problematic for a number of reasons. Section 50 of the Federal Circuit Court of Australia Act 1999 expressly provides that proceedings can be instituted in this Court without pleadings. The Rules of this Court do not provide for pleadings. The Applicant commenced the proceedings under the Rules in a manner that is permitted by the Rules. Equally however, this is a matter in which the Applicant filed a Reply to the Response. In doing so, it appears to invoke the Federal Court Rules 2001 in relation to pleadings.
In Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-287, Mason CJ and Gaudron J explained an essential function of pleadings is to ensure ‘a basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her’. The relevant question it seems to me in this case is not whether the initiating process filed by each party constitute pleadings or not, or whether the parties should be held to the Form 4 and Response, but rather, whether the Respondents have been denied procedural fairness because at trial, the Applicant advanced a case that differed from what was set out in the Form 4.
The Applicant did advance a case at trial that was to some extent different from the case disclosed by the Form 4. The clearest example of this is the case that the Applicant sought to advance in terms of the alleged contravention by the Respondent of section 345 of the Act (though there exists other departures when the Applicant’s written outline is compared to the Form 4).
While the Applicant did advance, to some extent, a different case at trial to what was disclosed in its Form 4, I find that the Respondent was not denied procedural fairness, and that the Applicant may pursue the case it outlined in its opening. I do so for the following reasons. This was a matter in which written outlines of argument were filed in advance of the trial. In this matter, the written outline was filed by the Applicant on 4 July 2019, some 8 business days before the date of commencement of the trial. Accordingly, the Respondent was on notice from this time as to the case it was required to meet. It could have taken any number of steps, including seeking an adjournment of the trial and a costs order against the Applicant, in order to deal with any prejudice. The Respondent did not do so.
That, however, is not the end of the matter. When the trial opened, it had to be adjourned on the first morning because a key witness was unavailable. That resulted in the trial being delayed for a further 3 months. The adjournment occurred after the Applicant had opened its case orally. Accordingly, the Respondent had a further period of three months in which to consider the Applicant’s case (disclosed both in the written outline, and in its oral opening at the trial) and decide how to meet it.
Given the circumstances above, I consider that the Respondent cannot now be heard to complain that it was denied procedural fairness, or suffered prejudice, because of the degree to which the case, as advanced at trial, departed from the Form 4. The Respondent suffered no material loss of opportunity to meet the case advanced by the Applicant. Accordingly, the Court will deal with the claims as advanced by the Applicant at trial.
The conclusions I have expressed above are very much applicable to the circumstances of this case. They ought not to be taken as an endorsement by this Court that parties are free to advance a case at trial that is different from that which is advanced in the initiating documents filed in this Court, whether those documents be pleadings, an Application and a Response, or any other variant. In the ordinary course, a party advancing a case different from that notified ought to be expected to be held to the claims or defence advanced in the initiating documents.
Matters preceding the sending of the Letter
The Applicant emphasised that there was a history of disputation between the parties that was relevant to the matters the Court is required to take account of. Much of the factual background that the Applicant urged me to consider is not in dispute, and I have summarised it below. Before doing so, I set out the terms of the relevant enterprise agreements which give rise to the ‘workplace right’ that arises in this proceeding.
The terms of the enterprise agreements
The terms and conditions of employment of pilots employed by the Respondent are, among other things, set out in enterprise agreements. The relevant enterprise agreement that applied at the time of the events in this matter is the Regional Express Pilots’ Enterprise Agreement 2011 (‘2011 Agreement’). It is also relevant to note that there was an earlier enterprise agreement, the Regional Express Pilots Enterprise Agreement 2005 (‘2005 Agreement’) that contained relevantly, terms not dissimilar to the accommodation terms in the 2011 Agreement which I describe in further detail below.
The 2011 Agreement contained, among other things, terms relating to the nature of the accommodation that is to be provided by the Respondent whilst employee pilots are on an overnight layover. Relevantly:
a)clause 58.1 of the 2011 Agreement provides that a pilot who is absent on layover from their base will be provided with ‘appropriate accommodation’.
b)Clause 3.4 of the 2011 Agreement defines the term ‘appropriate accommodation’.
c)In respect of the term ‘appropriate accommodation’, clause 58.2 of the 2011 Agreement provided that ‘to the extent possible, a list of approved places of accommodation will be compiled on the basis of mutual consultation between the Employer and the RexPC’. The ‘RexPC’ is the Pilots Committee.
d)Finally, clause 58.3 of the 2011 Agreement provides, effectively, that a party proposing to change the existing accommodation will notify the other party of the proposal. If agreement about new appropriate accommodation cannot be reached, the parties are to refer such dispute to the Dispute Settlement Procedure for determination.
The disputes about the accommodation at the Academy
In 2010, the Respondent notified the RexPC that it proposed to change the existing approved accommodation in Wagga Wagga to include the accommodation facilities at the Academy. This proposal was resisted by the RexPC. Proceedings in the Fair Work Commission ensued, however a final resolution was not reached. The accommodation at the Academy remained accommodation that was not ‘appropriate accommodation’ for the purposes of the 2005 Agreement.
In April 2014, the Respondent indicated that it wished to use the accommodation at the Academy for, among other things, simulator checks. This led to a reassessment of the accommodation at the Academy.
On 9 June 2014, the Applicant wrote to the Respondent and indicated that the accommodation at the Academy was not considered to be ‘appropriate accommodation’ for the purposes of the 2011 Agreement. The matter was not taken any further by the Respondent, and accommodation at the Academy remained not ‘appropriate accommodation’ for the purposes of the 2011 Agreement at the time of the events the subject of this proceeding.
On 11 June 2014, the Crew Resources Division of the Respondent sent a memorandum to all pilots asking them to complete a preference form for accommodation when staying in Wagga Wagga. The options put to pilots were to stay at the Mercure (which was ‘appropriate accommodation’ for the purposes of the 2011 Agreement) or the accommodation at the Academy.
On 1 July 2014, Neville Howell commenced in the position of Chief Operating Officer of the Respondent.
On 4 July 2014, the Crew Resources Division sent a further memorandum to all pilots. That memorandum relevantly advised that many pilots had not returned their preference form for accommodation at Wagga Wagga following the earlier request. Pilots were again asked to indicate their preference. Pilots were advised that if they did not complete the form by Wednesday 9 July 2014, they ‘will be accommodated at the AAPA’.
On 8 July 2014 and again on 15 July 2014, the Applicant wrote to Mr Howell requesting, among other things, the withdrawal of the memorandum of 4 July 2014.
On 20 July 2014, the Respondent withdrew the memorandum of 4 July 2014 and reiterated that it needed to plan in advance in order to roster properly.
The events above occurred in a context where it was accepted that the Respondent operated in a difficult financial environment. The Respondent had also bought and installed a new simulator at Wagga Wagga, which would result in many pilots requesting overnight accommodation.
The Letter
A critical issue in this proceeding is what is conveyed by the terms of the Letter. The Letter is part of the recruitment process of the Respondent.
The Letter was sent to candidates for the entry into the RECP Programme known as ‘Rex17’.
The terms of the Letter sent to candidates for entry into Rex17 is as follows:
‘Dear Cadet,
Re: Rex Cadet Pilot Program
You are being considered for a position in the Regional Express Cadet Pilot (RECP) programme. We consider this a very special honour as it means you have been assessed to have among the best technical/academic aptitudes amid the thousands of applications we have on record.
However, for us at Regional Express (Rex), pure technical skills alone are not enough. We are looking for Cadets who will acknowledge the privilege of this life-changing opportunity and commit to paying back to the Company by being fiercely loyal and company-minded and by going way above and beyond the call of duty especially in times of needs for the Company, This will provide the best chance for the Company to remain resilient and strong in this very tough industry and enable the Company to raise the next generation of Cadets and aspiring airline pilots.
We expect you to honour all your commitments for at least the first 7 years of your career with the Rex Group.
We have encountered many Cadets in the past who promised us the Earth in order to be selected for the RECP programme, but once selected they very quickly show their true colours. Even simple requests like volunteering to stay at the AAPA accommodation are refused when overnighting for simulator checks. Senior management and directors regularly stay at the AAPA accommodation when on official visits and yet some Cadets find that this is not good enough for them (when they were perfectly fine with it for 9 months of their Cadet training) and instead choose to stay at the local motel, costing the Company more than $100 per night extra.
You should be aware that the Rex Group considers such Cadets to be totally lacking in integrity in breaking their solemn undertakings given earlier. The Rex Group will not allow any pilot lacking in integrity to hold a command and will not consider him/her to be suitable for entry into the PICUS programme which is a pre-requisite to holding a command.
For us to gauge if you would fit the profile of the type of Cadets we are looking for, we would like you to prepare a hand-written motivation letter telling us what this life-changing opportunity means to you and giving us your solemn promise to give back to the Company by volunteering undertake various activities and actions.
You should give specific examples of these activities and actions, like the one we have cited above, on the different concrete ways that you are willing to give back to the Company for this extraordinary opportunity and privilege afforded to you. Your final selection will be largely determined by how far you are motivated to go above and beyond the call of duty for the Company as detailed in the list of examples you will provide.
If you are selected, we expect you to honour not only the contractual obligations as spelt out in your letter of employment and the Enterprise Bargaining Agreement, but also the solemn promises/commitments that you have articulated in your motivation letter. We therefore urge you to think carefully before you promise or commit to anything; your word is your bond and we reserve the right to respond accordingly if you break your word. So do not pursue this application for the RECP programme if you have the slightest doubts about your ability to honour your commitments over the next 7 years.
Yours sincerely,
[Signed]
Neville Howell
Chief Operating Officer’ (emphasis in original)
As noted earlier, the Letter forms part of the Respondent’s recruitment process. This was not the first occasion in which the Respondent had sent a letter to candidates for the RECP Programme asking them to make ‘solemn promises’ to voluntarily contribute to the Respondent. Earlier iterations of the request by the Respondent were placed before the Court. The earliest example before the Court was a letter from September 2012. The terms of that letter are as follows:
‘You are being considered for a position in the Regional Express Cadet Pilot programme. We consider this a very special privilege as it means you have been assessed to have among the best technical/academic aptitudes amid the thousands of applications we have on record.
However, for us at Regional Express, pure technical skills alone are not enough. We are looking for Cadets who will acknowledge this privilege and pay back to the Company for this life-changing opportunity by being fiercely loyal, company-minded and by going above and beyond the call of duty and in good faith helping the Company out in its times of need. We have an expectation you will honour this commitment for at least the first 7 years of your career with Regional Express.
This commitment is not only for the Company. By helping Regional Express to be a strong and viable regional airline, you will also be assisting future generations of budding aviators to have their life-long ambitions realised just as you did so yourself. You will also be paving the way forward in regional Australia to ensure a lasting legacy of the finest regional airline in the world.
We would like you to prepare a hand written letter, telling us why you are deserving of the cadetship and what this opportunity means to you. We also want you to give us your solemn promises on what you commit to Rex and the regional communities if selected to be a cadet pilot. We also would like to hear of any other novel and additional ways you would like to voluntarily contribute to the Rex Group/regional communities that are over and above the duties promulgated in the Enterprise Bargaining Agreement.
If you are selected, we expect you to honour not only the contractual obligations, but also the promises/commitments that you have articulated in your hand written letter. You should be aware of the serious ramifications on the rest of your career of not upholding your commitments - your motivation letter could be shared with your future employers when reference checks are requested - as all reputable institutions will have a very dim view of any professional who breaks solemn commitments.
We encourage you to think carefully before you promise or commit to anything; your word is your bond and so do not pursue this application if you have the slightest doubt about your ability to honour your commitments over the next 7 years.’
A key plank of the Applicant’s claim is that the example of persons refusing to stay at the Academy found its way into the Letter in July 2014, shortly after the RexPC confirmed it did not regard the accommodation at the Academy as ‘appropriate accommodation’, and shortly after the Respondent had required pilots to make a selection about where they chose to stay when in Wagga Wagga. The Applicant submits that this is an important fact to consider when assessing its claims in this matter.
Aside from the letter, the evidence in this matter comprised of various documents tendered into evidence, and evidence from the following witnesses: Robin Darroch, Eric Djonlagic, Stephen Manna and Neville Howell.
The adverse action claims against affected class two
Two claims of a threat to take adverse action are made in respect of affected class two. The threats emanating from the Letter are said to be, relevantly, as follows. First, that the Respondent threatened to refuse to employ members of affected class two who did not give an undertaking that they would refrain from exercising their workplace right to the benefits of the 2011 Agreement. Second, that the Respondent threatened members of affected class two that they would be bound not to exercise workplace rights as employees, or would be subject to sanction if they elected to exercise their workplace rights.
The question of whether particular action is threatened was the subject of examination by Justice Bromberg of the Federal Court of Australia in Fair Work Ombudsman v Australian Workers’ Union (2017) 271 IR 139 (‘AWU’). After carefully reviewing a number of authorities, Bromberg J set out a number of principles drawn from those authorities. At paragraph [54] Bromberg J stated:
‘A number of principles may be drawn from the authorities I have just outlined. First, “threatening to take action” must involve the communication of a threat directed at an ascertainable person which is received or is likely to be received by that person. That a particular outcome is threatened by existing or prospective circumstances is not a threat of the requisite kind. Second, to threaten means to communicate an intent to inflictharm or, in other words, a warning of an intention to inflict harm. Third, the essence of a threat is that it is made for the purpose of intimidating a person. Accordingly, “threatening to take action” must involve an expression of an intimidatory purpose. Fourth, it is not necessary that a subjective intent to carry out the threat be established. Fifth, the notion of a threat is not confined to an intent to inflict harm which was unlawful or unjustified. Sixth, the presence of malice or some other injurious motive is not a prerequisite. Lastly, a threat to take action may be conditional (in the sense that X will occur if Y does not).’
In AWU, a union official wrote to two employees to advise them the charges of misconduct against them were serious and could lead to a fine, suspension or expulsion from the union. The letter was not a threat: it was information as to prejudicial consequences should various conditions not be satisfied.
In Vacic v DC Strategy [2018] FCCA 3151 (‘Vacic’), an employer wrote to an employee advising that it was highly likely the employee would be summarily dismissed if alleged conduct was investigated and substantiated. The letter discussed ramifications of the investigation and what might happen to the employee’s reputation. The letter was found not to be a threat. It was rather the provision of information as to the probable consequences if the employer found the allegation substantiated.
The Applicant submitted that in construing the Letter and whether the statements within it constituted threats of adverse action, the Court should have regard to the surrounding circumstances. Those circumstances included, among other things, that there had been an ongoing industrial dispute between the Applicant and the Respondent in relation to what constituted ‘appropriate accommodation’ under the 2011 Agreement, that the Respondent had spent a significant sum of money establishing the accommodation at the Academy only to find that it was not regarded as ‘appropriate accommodation’ for the purposes of the 2011 Agreement, that the Respondent was looking to save costs in a difficult economic environment, and that some pilots had refused to co-operate and insisted upon their right to stay at hotels, rather than at the accommodation at the Academy. It is understandable that the Applicant would be concerned with the content of the Letter, given the history of events it points to.
The Respondent, for its part, submitted that whether or not the Letter contained a threat of adverse action is to be determined having regard to the terms of the Letter itself.
I find that the terms of the Letter do not constitute a threat of unlawful adverse action against affected class two. I hold this view for the following reasons.
The Letter does not state, as the Applicant asserts, that the Respondent will refuse to employ members of affected class two who do not give an undertaking to stay at the accommodation at the Academy. Nor does the Letter say that members of affected class two would be bound not to exercise their workplace rights, or that they would be subject to sanction if they elected to exercise their workplace rights. The Letter says neither of these things (nor can these be reasonably inferred).
It is important, in my view, to look at the Letter as a whole and to ascertain the subject matter to which it is directed. The Letter is a letter to prospective cadets during a recruitment process. It is a document that is providing information and inviting a response. It explains that ‘technical skills alone are not enough’ and that the Respondent expects cadets to go ‘beyond the call of duty’. It then seeks from candidates ‘solemn promises’. Candidates are not required to respond to the Letter.
The Letter does not require candidates to give any particular promise – it expressly leaves that choice to the candidate. So much is evident from the terms of paragraph 6 which refers to a candidate undertaking ‘various activities and actions’, paragraph 7 which calls for the giving of ‘specific examples’ and paragraph 8 which refers to the ‘solemn promises/commitments that you have articulated in your motivation letter’ (emphasis added).
Two statements in the Letter attracted particular debate in the hearing. The first is that the Respondent ‘will not allow any pilot lacking in integrity to hold a command’. The second statement is that the Respondent ‘will not consider him/her suitable for entry into the PICUS Program’ (‘Statements’). These Statements are contained within a single sentence. An issue is to whom these Statements are directed.
I consider that the Statements set out above are directed at individuals who break ‘their solemn undertakings’. That the express text of the Letter supports such a conclusion is apparent from what follows:
a)As stated above, the Letter is directed at ensuring that candidates honour all their commitments. This can be seen from paragraph 3 which begins with the words ‘We expect you to honour all your commitments…’;
b)While paragraph 4 contains the example of persons refusing to stay at the Academy, its focus is on integrity – on persons who promised something – ‘promised us the earth’ and then do something else;
c)The Statements are contained in the paragraph that is clearly addressed to those who break their solemn undertakings. So much may be seen from the first sentence of paragraph 5 of the Letter which provides as follows: ‘you should be aware that the Rex Group considers such Cadets to be totally lacking in integrity in breaking their solemn undertakings given earlier’. Further, when the entire sentence containing the Statements is read, it can be seen from the words that precede the Statements that the Statements are directed to persons ‘lacking in integrity’;
d)Paragraph 6 of the Letter seeks the provision of a motivation letter containing the ‘solemn promise to give back to the company by volunteering to undertake various activities and actions’.
e)The final paragraph of the Letter emphasises the expectation on candidates to honour their ‘solemn promises/commitments’ and advises them not to pursue their application if they have the slightest doubt about their ‘ability to honour your commitments over the next seven years’.
The emphasis in the Letter placed on integrity and honouring commitments is unexceptional when one takes into account the circumstances. This is not to be an ordinary employment relationship. It is one where the parties are contemplating entering into a relationship of at least seven years, and one which will see the commencement not only of an employment relationship, but also a relationship of debtor/creditor in order to fund the training of the candidate. Further, the emphasis on integrity is unremarkable when consideration is given to the roles cadets will ultimately fill – pilots in command operating an aircraft with passengers safely.
There is then the evidence of Neville Howell. Mr Howell is the Chief Operating Officer of the Respondent and the author of the Letter. Mr Howell’s evidence was that the reference to ‘AAPA accommodation’ in the Letter was given as an example of persons who had not adhered to commitments. He did not have any particular person in mind. He sought from candidates specific examples of commitments they would give and follow through with. His evidence in chief was that he sent the Letter because the integrity and character of candidates was a very important consideration for entry into the RECP Programme. He also, in evidence in chief, expressly disavowed that he sent the Letter to threaten people in relation to the exercise of their workplace rights.
Mr Howell was cross examined at length about his reasons for sending the Letter. Under cross examination, Mr Howell made a number of statements that the Applicant asserted, effectively, amounted to admission or were dispositive of the case in the Applicant’s favour.
I have considered closely the evidence of Mr Howell in chief and in cross examination. His evidence in many ways largely reflected the content of the Letter. That is that Mr Howell regarded it as very important that individuals keep promises, and that there would be consequences for those who break their promises. Mr Howell was resolute in his views about the singular importance of integrity to the Respondent. Further, given the opportunity to clarify his answers on re-examination, Mr Howell returned to the central theme of his evidence in chief and emphasised that when he referred in the Letter to those lacking in integrity, he was referring to those who make a commitment and then renege on it.
I had the benefit of observing Mr Howell in the witness box. He was careful in giving evidence. He sought to explain his answers. He did not resile from the importance of integrity in the Respondent’s operations.
Having seen Mr Howell in the witness box, I find that when he wrote the Letter, it was his intention to extract from candidates commitments or ‘solemn promises’ and to inform candidates of the consequences for them if they broke those commitments. Mr Howell was concerned to ensure that candidates understood the importance of integrity as part of the recruitment process, and the view the Respondent took of persons who lack integrity (i.e. those who break their promises). Mr Howell did not intend to refuse to employ a person who did not stay at the Academy. Mr Howell did not, and did not intend to, threaten to sanction a person because they chose not to stay at the Academy. The Statements were directed at those who broke their promises.
As I have noted, the Applicant, understandably, points to the timing of the inclusion of the AAPA accommodation example in the Letter and that it followed renewed attempts by the Respondent to require pilots to stay at the Academy. It says, among other things, that that context and history ought to inform the Court’s view about the content of the Letter, and Mr Howell’s intentions in writing it. I accept that the context of surrounding events can be important in coming to a view about whether the Letter threatened adverse action. That does not mean, however, that I should look beyond the ordinary words used in the Letter.
To the above I would also add the following. To the extent that the history to the matter is of significance, all of it needs to be considered. One additional factor evident from the history and context is that the Letter was not the first of its type sent to prospective cadets. Versions of the Letter were sent from at least September 2012. A review of the earlier letters (one of which is set out earlier in these reasons) discloses that the Respondent has, well before the present proceedings, placed an emphasis on the importance of integrity and honouring commitments. Indeed, the Respondent has a history of asking prospective candidates to give solemn promises over and above their contractual commitments. Mr Howell was not the author of the earlier letters. Those letters however, demonstrate two things. They support Mr Howell’s evidence about the primary importance placed on integrity by the Respondent. They disclose the history of cadets being asked to give promises. They also show a history of the company explaining to cadets the consequences of them breaking their promises.
For all of the above reasons, the adverse actions claims in respect of the affected class two must be dismissed.
The adverse action claim against affected class one
The Applicant claims that the Respondent thwarted adverse action against affected class one.
The Applicant, among other things, identified the following statements in the Letter:
a)‘We have encountered many Cadets in the past who promised us the Earth in order to be selected for the RECP Programme, but once selected that they very quickly show their true colours’;
b)‘Even simple requests like volunteering to stay at the AAPA accommodation are refused when overnighting for simulators’;
c)‘You should be aware that the Rex Group considers such Cadets to be totally lacking in integrity in breaking their solemn undertakings given earlier’;
d)‘The Rex Group will not allow any pilot lacking integrity to hold a command and will not consider him/her to be suitable for entry into the PICUS program which is a prerequisite to holding a command’.
It was the Applicant’s contention that the statements above constituted a threat by the Respondent to inflict harm on members of affected class one by forming a negative judgement about their integrity, or denying them entry into the PICUS program, or not allowing them to hold a command.
An immediate issue arises with the claim advanced by the Applicant. It is this. The alleged threat is not contained in correspondence directed to any member of affected class one. Rather, the alleged threat against members of affected class one is contained within a communication sent to members of affected class two. Members of affected class two may not currently hold any employment, or have any connection with, the Respondent.
In Community and Public Sector Union and Others v Telstra Corporation Ltd (No.2) (2000) 101 FCR 45, Finkelstein J considered the issue of a threat that was not communicated to the intended recipients. Finkelstein J had earlier found that a threat had to be communicated to employees, and where there is no communication, there is no threat. The union sought to challenge that finding. At paragraphs [15] – [16], Finkelstein J stated that:
‘[15] I accept that the communication need not be directly to the person threatened but could be just as effectively made if it is communicated to a person in circumstances where it is intended to or is likely to find its way to the person threatened. I was then and am still of the view that it is the essence of a threat that it be made for the purpose of intimidating a person: Wood v Bowron (1866) LR 2 B 21. One primary meaning of the word ‘threaten’ given by the Oxford English Dictionary is: “to try to influence (a person) by menaces”. See also the definition of “threat” in Black’s Law Dictionary (7th ed, 1999), pp1489 – 1490 and Mozley & Whitely’s Law Dictionary (11th ed, 1993), p.271.
[16] I did not then, and I do not now, believe that there can be a relevant threat whenever an employer states intention to contravene s 298K, regardless of the circumstances. Take but one example. Assume that a director of a “one-man company” tells his secretary that he intends to take action against the company’s employees for a prohibited reason, intending the communication to remain secret between them. Is that a threat? I do not believe that it is. …’
For a communication to be a threat, it must be the case that the communication was sent in circumstances where it is intended to, or is likely to, find its way to the person that is the subject of the threat: see two decisions of Bromberg J in Construction, Forestry, Mining and Energy Union v State of Victoria [2013] FCA 445 at [224] and AWU at [54] – [55].
I find that adverse action was not threatened by the Respondent against members of affected class one. My reasons for this are as follows.
The Letter was a letter sent to candidates for the RECP Programme. It was not a communication that was published at large. It was not a communication that was directed toward members of affected class one. It was a communication that formed part of the Respondent’s recruitment process where it was dealing with candidates seeking entry into the RECP Programme. The content of the Letter was concerned with informing candidates that they had been considered for the program, and inviting them to prepare and send a ‘motivation letter’. When the content of the Letter is considered, it is plain, in my view, that it was a communication intended for candidates only. The communication was not intended for members of affected class one.
There is then the issue of whether the Letter was likely to find its way to members of affected class one. In this matter, the Letter did in fact come to the attention of Eric Djonlagic, a pilot employed by Respondent. The Applicant relies on that fact. The Applicant also points to Mr Howell’s acceptance that candidates would seek help during the recruitment process from persons employed within the Respondent (notwithstanding the confidential nature of the recruitment process) as proof that the Letter was likely to come to the attention of members of affected class one.
I am not satisfied it was likely that the Letter would find its way to members of affected class one. Mr Howell wrote the Letter to candidates only. The subject matter of the Letter was to deal with the submission of a handwritten motivation letter as part of the recruitment process. The fact that a candidate may seek assistance from employees of a prospective employer in order to secure a position is, in this day and age, unexceptional. The mere fact that a candidate would so act does not, in my view, lead automatically to the conclusion that it is likely that the entire contents of a letter sent during the recruitment process would necessarily be distributed to all employees in an affected class.
If I am wrong about my conclusion above however, I find that the Letter did not constitute a threat of adverse action toward members of affected class one. This is because, as noted by Finkelstein J above, the essence of a threat is that it is made for the purpose of intimidating a person. Or to note the Oxford English Dictionary definition cited by Finkelstein J above, to threaten is ‘to try to influence (a person) by menaces’. The purpose of the communication was not to intimidate members of affected class one, or to influence them by menaces. Mr Howell sent the Letter to candidates for the purposes outlined earlier – to extract from affected class two a handwritten motivation letter where they gave commitments (that they chose to give and were prepared to keep). It was not sent to intimidate members of affected class one. It would be an odd outcome if it were held that Mr Howell intended to intimidate or threaten members of affected class one by making statements to a group of persons (affected class two) who are not even confirmed as being in the employ of the Respondent.
Finally, I have made findings earlier about the content of the Letter. I rely on those findings here. The Letter was sent as part of the recruitment process to secure from candidates a handwritten motivation letter and to impress upon them the importance with which the Respondent regards integrity in its enterprise.
For the above reasons, I find adverse action was not threatened against members of affected class one.
The coercion claim
The Applicant alleges that the Respondent, in contravention of section 343 of the Act, threatened to take action against members of affected class one and affected class two with the intention of coercing them not to exercise their workplace rights to the benefit of the 2011 Agreement.
The threats against affected class one are said to be the threat that members of the class lacked integrity, would be denied entry into the PICUS course and would not be allowed to hold a command. The threats against affected class two are said to be a refusal to employ them, to employ them on terms and conditions less favourable than existing employees, or a threat to sanction them if, having accepted employment, they exercise their workplace rights.
The expression ‘intent to coerce’ in section 343 of the Act requires the Court to be satisfied about two discrete elements: Esso Australia Pty Ltd v Australian Workers Union [2016] FCAFC 72 (‘Esso’). First, that there was an intent to negate choice. Second, that there was the use of unlawful, illegitimate, or unconscionable means to do so. An intent to coerce refers to more than a mere inducement to comply: Esso. Coercion connotes something akin to the use of force, or at least the threat of harm to the interests of another: National Tertiary Education Union v Commonwealth of Australia [2002] FCA 441 (‘NTEU’) at [97]. What is required is an intent to negate choice, and not merely an intent to influence or to persuade or induce: NTEU at [103]. Coercion implies a high degree of compulsion, at least in a practical sense, not some lesser form of pressure by which a person is left with a realistic choice as to whether or not to comply: NTEU at [103].
I deal firstly with whether there was an intention to negate choice. The starting point is to consider the context in which the Letter was sent. I have dealt with this issue earlier and rely on my earlier findings. In summary, the Letter was sent to candidates for a cadetship as part of the Respondent’s recruitment process. The purpose of the Letter was to secure from candidates a handwritten motivation letter in which they made ‘solemn promises’ that they chose to give to the Respondent.
There is then the terms of the Letter itself. Again, I rely on my earlier findings. In summary, the Letter did not request any specific commitment from candidates. Rather, the Letter permitted candidates to choose which commitments they wished to give. The Letter emphasised the importance of integrity and of candidates honouring their commitments. The Statements applied in respect of a failure by a person to honour their commitments.
The terms of the Letter also went one step further. Candidates were informed not only of the expectation that they honour their commitments, but were informed not to pursue the application if they had the slightest doubts about their ability to honour their commitments. In other words, it was entirely up to the candidate as to what response they gave and indeed whether they chose to pursue the application for the cadetship.
The Applicant contends that the positions for cadetships were highly sought after. That may well be the case. Indeed, many employment opportunities are highly sought after and hotly contested. That fact alone however, does not mean that an applicant had no effective choice or that they were otherwise coerced. Here, the Letter makes plain that not only did the candidates have a choice as to what commitment they gave, but they also had a choice as to whether they wished to pursue their application.
For completeness, I note that the second element required to establish coercion is that the Respondent utilised means that were unlawful, illegitimate or unconscionable. There is not any unlawful conduct of the Respondent. The Applicant submits however, that unconscionable or illegitimate pressure was brought to bear on members of each affected class.
The Applicant submitted that members of the affected classes were bound (or would be bound) to the Respondent for a period of at least seven years, were unable to take alternative employment, and were subject to onerous loan agreements.
I accept that the arrangements relating to the loan agreements in evidence before me are not what one might regard as ordinary commercial or personal loans. Some of the terms are more onerous than those that might be imposed by a bank, including the imposition of financial penalties if cadets ultimately left employment with the Respondent to take up employment elsewhere. It is critical, however, to remember that the loans on offer are unsecured loans. Furthermore, they are loans that permit a cadet to focus on training, and not be distracted by having to gain other employment to immediately commence repaying the loan. The advantages enjoyed by a cadet under the RECP Programme, in terms of faster training, have been recorded earlier. The commercial arrangement on offer, it seems to me, balances these considerations. A candidate enjoys an expedited path through training and licensing and into command. With that comes the particular loan obligations. It is a choice they are ultimately free to make. That many of them choose it and enjoy the advantages that come with it means, in my view, that they cannot properly be heard to complain about the terms that are less favourable to them. At the end of the day, what is struck is a bargain, and every bargain has its positive and negative aspects.
To the above matters the following may be added. It is common in this day and age for students in a variety of disciplines to take out loans to further their education. Such loans may be through (admittedly) generous Government schemes, or may be obtained on private terms that are more commercial in nature. Students often incur significant debts and face the prospect of not being able to secure employment at the end of their studies in their chosen field. The ubiquity of such arrangements, in my view, detracts significantly from the proposition by the Applicant in this case that the loans or the loan terms, or a cadets ability to ultimately repay the loans, should be regarded as giving rise to circumstances that are unconscionable or illegitimate.
Finally, insofar as affected class two are concerned, many students in a variety of settings find themselves in highly competitive application processes, for limited numbers of positions and are significantly invested in the process. Those matters of themselves, or in combination with the loan terms, do not result in a conclusion that the Respondent has applied illegitimate or unconscionable pressure on members of affected class two.
For all of the above reasons, I find that the Respondent has not engaged in conduct that contravenes section 343 of the Act
The Misrepresentation Claim
The final allegation made against the Respondent is that it has contravened section 345 of the Act. The Applicant submitted four implied representations emerged from the Letter that contravened section 345 of the Act. The asserted representations taken from the Applicant’s written submissions are:
‘(a) Rex could lawfully determine whether or not to offer employment to persons by reference to whether those persons were prepared to undertake not to exercise workplace rights;
(b) Rex could lawfully refuse to offer employment to a person if they failed to give an undertaking not to exercise certain workplace rights;
(c) Rex could lawfully refuse to accept a person into the PICUS course or refuse to offer a person a command if that person exercised their workplace right to the benefit of the 2011 Agreement; and/or
(d) Rex could lawfully sanction a person who undertook not to exercise a workplace right and later elected to exercise that workplace right.’
There are a number of elements that must be satisfied in order for a court to form the view that section 345 of the Act has been contravened. Among other things, the representation must be either false or misleading. It must also be ‘about’ one of the matters specified in subsection (1)(a) or (1)(b) of section 345 of the Act.
The principles relating to whether a representation is false or misleading in the context of section 345 of the Act were canvassed by a Full Court of the Federal Court of Australia in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298 (‘BHP Coal’) at [156] to [162]. I do not repeat here all of the observations of the Full Court, but rely on them.
I find that the Letter does not convey representations that are either false or misleading. My reasons for so finding are as follows.
Firstly, regard must be had to the terms of the Letter. The Letter does not refer to the relevant clauses in the 2011 Agreement. It does not refer to a workplace right. As the Letter says nothing about the clauses in the 2011 Agreement, it says nothing about the effect of those clauses.
Second, to the extent it might be said that the example given in the Letter is inconsistent with any workplace right, that of itself does not make the representation about a workplace right. In BHP Coal, the union published its own policy about overtime. The statement in the union policy was inconsistent with BHP’s workplace rights. The fact that there was an inconsistency between the union policy and BHP’s workplace rights did not produce the result that the union statement was ‘about’ workplace rights.
Third, words in documents must be read in context. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199, in the context of misleading conduct under section 52 of the Trade Practices Act 1974, Gibbs CJ stated that it ‘is obvious that where conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words’.
I have already in these reasons given my views on the terms of the Letter. I rely on those findings in respect of the context referred to by Gibbs CJ here including that:
a)The Letter seeks that candidates identify the commitments that they are prepared to give to the Respondent;
b)A candidate is at liberty to select the commitments that he or she wishes to give;
c)The Letter does not require candidates to give a commitment to not stay at the Academy;
d)The Letter does not say that if a candidate fails to stay at the Academy, the candidate will not be admitted for entry into PICUS, or withheld from command;
e)The Letter does stipulate that if a candidate does not honour the commitments that he or she has made, he or she will lack integrity, and persons who lack integrity will not be permitted to hold a command or be considered for entry into PICUS.
The above matters, in my view, provide context for, and inform the meaning of the words complained about. When the entire context is considered, its contents do not support a finding that the Respondent made statements that were false or misleading about a workplace right.
In addition to the above, I would also add the following reasons:
a)it was submitted that two of the implied representations flowing from the Letter were as follows. First, that the Respondent could refuse to offer employment to a person who failed to give the undertaking not to exercise certain workplace rights. Second, that the Respondent could lawfully determine whether or not to offer employment to persons by reference to whether those persons were prepared to undertake not to exercise workplace rights. There is nothing in the Letter, either expressly or impliedly, that links a refusal to offer employment, or determining whether or not to offer employment, to the question of whether persons were prepared to give an undertaking not to exercise certain workplace rights. The language of the letter does not support such a conclusion.
b)There is not an implied representation that the Respondent could refuse to accept a person into the PICUS course or refuse to offer that person a command if they exercise their workplace right. The language of the letter does not support such a conclusion. The refusal to accept a person into PICUS or give them a command is squarely linked to a person who lacks integrity because they have broken ‘solemn undertakings’ given earlier.
Finally, there is an issue as to whether it can be said that a representation was made ‘to’ members of affected class one. As noted earlier, the Letter was sent to candidates as part of a recruitment process. It was not intended to be communicated to members of affected class one. As I stated earlier, statements directed toward withholding a person from command, or not permitting entry into PICUS, are directed at those persons who break commitments that they voluntarily give to the Respondent. An additional basis for my rejection of this claim is that I am not satisfied that any representation was made ‘to’ members of affected class one. For the reasons articulated at paragraphs [71] to [83], which I rely on here, the communication was sent to candidates only. Mr Howell did not intend that the communication be sent to or seen by members of affected class one. The content of the Letter was plainly directed to candidates completing a step in the recruitment process, being the provision of a handwritten motivation letter.
For the above reasons, I find that the Respondent has not contravened section 345 of the Act.
As the Applicant has not succeeded with their claim, the Application will be dismissed.
I certify that the preceding one hundred and nine (109) paragraphs are a true copy of the reasons for judgment of Judge Blake
Associate:
Date: 6 February 2020
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