Benge v BlueScope Steel (Ais) Pty Ltd
[2018] FCCA 2831
•4 October 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BENGE & ORS v BLUESCOPE STEEL (AIS) PTY LTD | [2018] FCCA 2831 |
| Catchwords: INDUSTRIAL LAW – FAIR WORK – Fair Work Act 2009 (Cth) – interlocutory application by respondent to join the Australian Workers’ Union as a cross–respondent and to file a cross–claim and statement of cross–claim on the basis that the Australian Workers’ Union with respect to the employment contracts between the applicants and the respondent had induced a breach of those contracts and was accessorily liable under s.550 of the Fair Work Act 2009 (Cth) for breaches of those contracts and consequent contraventions by the respondent under s.323 of the Fair Work Act 2009 (Cth) and for equitable contribution – purpose of pleadings – proposed statement of cross–claim failed to plead material facts and was embarrassing in the technical sense – interlocutory application dismissed – leave to file draft cross–claim and proposed statement of cross–claim refused – no leave to replead. |
| Legislation: Fair Work Act 2009 (Cth), ss.323, 543, 546, 550 Federal Court of Australia Act 1976 (Cth), s.37M Federal Court Rules 2011 (Cth) |
| Cases cited: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) v John Holland Pty Ltd (2009) 180 IR 350 Arthur Young v Teico International (1995) 182 LSJS 367 Banque Commerciale S.A. v Akhil Holdings Ltd (1990) 169 CLR 279 Batten v CTMS Ltd [1999] FCA 1576 |
| First Applicant: | Ross Benge |
| Second Applicant: | PETER CONNELLY |
| Third Applicant: | TIMOTHY HORE |
| Respondent: | Bluescope Steel (ais) Pty Ltd |
| File Number: | SYG 2795 of 2016 |
| Judgment of: | Judge Dowdy |
| Hearing dates: | 4 April 2018 & 5 April 2018 |
| Date of Last Submission: | 7 May 2018 |
| Delivered at: | Sydney |
| Delivered on: | 4 October 2018 |
REPRESENTATION
| Counsel for the Applicants: | Mr A. Howell of Counsel |
| Solicitors for the Applicants: | Crawford De Carne Lawyers |
| Counsel for the Respondent: | Mr G. J. Hatcher SC with Mr K. Brotherson |
| Solicitors for the Respondent: | Hall & Wilcox |
THE ORDERS OF THE COURT ARE AS FOLLOWS:
The Application in a Case filed by the Respondent on 28 April 2017 is dismissed.
Refuse leave to the Respondent to file any Cross-Claim or Statement of Cross-Claim against the Australian Workers’ Union.
Grant leave to the Applicants to amend [65(e)] of the Amended Statement of Claim filed on 17 March 2017 by deleting the reference therein to the Australian Workers’ Union so that the second sentence of that sub-paragraph reads instead:
“The pecuniary penalties should be paid to the Applicants pursuant to s546(3)(c) of the Fair Work Act 2009…”
Strike out the following portions of [39] and [87] of the Amended Defence filed by the Respondent on 27 April 2017:
[39] … To any extent that the Respondent did not have a right to vary the Applicants' contracts of employment and/or breached any safety net contractual entitlements (which is denied by the Respondent), the AWU was involved in the contravention as provided for in s550(2) of the Fair Work Act 2009 (Cth) and otherwise induced the breach. The Respondent relies on paragraphs 1-21 above in this latter regard.
[87] …but further says that if the Court does determine any entitlement to relief for the Applicants:
(a)any declaration as claimed in paragraph 65(a) of the Amended Statement of Claim should include the AWU as being involved in any contravention;
(b)liability for any compensation as claimed in paragraph 65 (c) of the Amended Statement of Claim should be attributed to the AWU;
(c)liability for any interest as claimed in paragraph 65 (d) of the Amended Statement of Claim should be attributed to the AWU; and
(d)…, but in any event should not be paid to the AWU.
Reserve the costs of the Application in a Case and of any costs thrown away by the vacation of the final hearing set down for 3, 4 and 5 April 2018.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT Sydney |
SYG 2795 of 2016
| Ross Benge |
First Applicant
| PETER CONNELLY |
Second Applicant
| TIMOTHY HORE |
Third Applicant
And
| Bluescope Steel (ais) Pty Ltd |
Respondent
REASONS FOR JUDGMENT
Introduction
By Application in a Case filed in this Court on 28 April 2017 the Respondent (Bluescope) seeks an order that the Australian Workers’ Union (AWU) be included as a party in this proceeding. Bluescope also seeks leave to file a Cross-Claim and Statement of Cross-Claim joining the AWU as Cross-Respondent.
Background
By Amended Statement of Claim filed on 17 March 2017 the Applicants, who are one former and two current employees of Bluescope, allege that Bluescope has contravened s.323 of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay amounts payable to them by Bluescope under their respective written contracts of employment (employment contract(s)).
It is common ground on the pleadings between the Applicants and Bluescope that:
a)Bluescope has for many years operated a steel manufacturing and processing facility at Port Kembla (Steelworks);
b)the First Applicant (Mr Benge) commenced employment with Bluescope on 29 November 2010 under an employment contract dated 4 November 2010 and ceased employment on 2 December 2016;
c)the Second Applicant (Mr Connelly) commenced employment with Bluescope in November 2007 and has an employment contract dated 9 November 2011;
d)the Third Applicant (Mr Hore) commenced employment with Bluescope on 27 January 1988 and his latest employment contract is dated 22 August 2013;
e)each of the Applicants had a contractual right to receive their respective annualised salary from Bluescope; and
f)an annualised salary includes a component of assessed pre-paid overtime, whereas an aggregate salary does not.
The Applicants allege that in breach of s.323 of the FW Act Bluescope has failed to pay to them their annualised salary in full since 10 January 2016, such that they have failed to receive the following amounts for which, under s.543, they seek relief enforcing their entitlement and compensation for the financial loss suffered by them in the following amounts:
a)Mr Benge - $21,829.12 from 10 January 2016 up to 2 December 2016;
b)Mr Connelly - $459.61 per week from 10 January 2016 and accruing to date; and
c)Mr Hore - $452.56 per week from 10 January 2016 and accruing to date.
General Nature of Bluescope’s Defence to the Claims of the Applicant
By its Amended Defence filed on 27 April 2017 Bluescope first denies that as and from 10 January 2016 the Applicants suffered the financial loss and damage set out in [4] above.
Second, Bluescope pleads that it had a right to vary the employment contracts of each of the Applicants, which it did following an appropriate period of consultation and with notice, such that Bluescope is not in breach of s.323 of the FW Act for failing to pay to the Applicants the financial loss and damage set out in [4] above.
Third, that in the factual events and circumstances which Bluescope further pleads in its Amended Defence, the Applicants consented to a change from an annualised salary to an aggregate salary, such that the Applicants have not suffered the financial loss and damage set out in [4] above.
Finally and importantly for present purposes, Bluescope pleads in [39] of its Amended Defence that to the extent that it did not have the right to vary the employment contracts and it is found that it has contravened s.323 of the FW Act as asserted by the Applicants, the AWU was involved in such contraventions under the accessorial liability provision comprised in s.550 and that the AWU otherwise induced Bluescope’s breach of the employment contracts and consequent contraventions of s.323.
Present Application in a Case
Despite the allegation made in [39] of the Amended Defence, the AWU is not presently a party to this proceeding. It is for that reason that Bluescope has brought the Application in a Case and seeks leave to file a Cross-Claim and a Statement of Cross-Claim against the AWU.
If filed, the proposed Cross-Claim (proposed Cross-Claim) would seek the following orders against the AWU:
1.To the extent that the Court finds any contravention by Bluescope of s323 of the FW Act, an Order pursuant to s550 of the FW Act declaring that the AWU was involved in that contravention.
2.An order that the AWU indemnify Bluescope in respect of any compensation determined [to be] due to the Applicants.
3.An order that the AWU indemnify Bluescope in respect of any pecuniary penalties determined by the Court to be payable under s.546 of the FW Act.
4.An order that any pecuniary penalties determined by the Court be paid to the Commonwealth.
The proposed Statement of Cross-Claim (proposed SCC) is attached for ease of reference as an annexure to these reasons. However, for present purposes it pleads and claims in substance as follows:
a)The work force at the Steelworks falls into two groups. Employees are either “wages employees” or “staff employees”. Staff employees are further differentiated as being either “fortnightly staff” who obtain benefits such as overtime, shift penalties, annual leave loading and long service and “monthly staff” who are comprised of more senior management and professional employees who receive a salary and full compensation for all the requirements of their role. Each of the Applicants at all material times were fortnightly staff employees.
b)The AWU represent the industrial interests of a number of employees at the Steelworks, including the majority of wages employees but also some fortnightly staff employees, including the Applicants.
c)On 24 August 2014 the parent company of Bluescope made an ASX announcement that it needed to achieve ongoing annual costs savings of $200,000,000 if steelmaking at the Steelworks was to continue. If the Steelworks ceased steelmaking, the employment of approximately 2,200 employees was at risk. Of that required saving of $200,000,000 some $60,000,000 related to the costs of employees.
d)The achievement of the ongoing annual costs savings of $200,000,000 was identified in the announcement as required to be made by November 2015, so as to enable the Board of the parent company to make a decision whether or not to continue steelmaking at the Steelworks.
e)Following the announcement of 24 August 2015 negotiations and discussions commenced between Bluescope, the employees and their applicable unions, including the AWU, as to how the required costs savings could be achieved.
f)One significant issue was that of “annualised salary” which included a component of pre-paid overtime based on what employees were expected to work when requested, rather than on what they had actually worked. Over a period of time the component of pre-paid overtime actually being worked had significantly diminished and as such was an obvious area for costs savings. It was the aim of Bluescope to end annualised salary arrangements.
g)Annualised salaries were paid to wages employees in a number of areas of the Steelworks and to certain fortnightly staff, including the Applicants.
h)In relation to wages employees, a mediation process took place in the Fair Work Commission (FWC) before Vice President Hatcher in which the AWU took the lead role on behalf of the wages employees. Vice President Hatcher issued a detailed Recommendation on 6 October 2015 and thereafter Bluescope and the relevant unions (including the AWU) entered into a Memorandum of Agreement which accepted Vice President Hatcher’s Recommendation, provided a basis for a new enterprise agreement which was ultimately made and approved by the FWC on 18 November 2015 and provided for the cessation of all pay arrangements involving pre-payment of overtime, namely annualised salary arrangements.
i)During the mediation in the FWC, and at all other relevant times, the AWU and other unions required the impact of the changes and job losses and employee costs to be spread equally across the entire workforce for both wages employees and staff employees, and Bluescope agreed with this approach.
j)Various officials of the AWU, including Messrs Phillips and Walton, were involved in the mediation in the FWC and the discussions leading to the Memorandum of Agreement; the AWU had a common interest with Bluescope in ensuring that the required costs savings were identified prior to the November 2015 board meeting of Bluescope’s parent company and to ensure continued employment for its members and the AWU, which was a party to the Memorandum of Agreement, had knowledge of the essential facts on which the Applicants now allege that Bluescope has breached the employment contracts and the FW Act.
k)Staff employees, including the Applicants, were continually consulted by Bluescope about the progress of discussions and the outcome of the mediation in the FWC and how any such outcomes would be likely to impact on them. Except for one irrelevant exception, as of 10 January 2016 Bluescope discontinued annualised salaries for all employees at the Steelworks including those for both wages employees and fortnightly staff employees, including the Applicants.
l)However, in December 2015 the AWU engaged in an about face by raising objection to Bluescope’s cessation of annualised salaries for fortnightly staff, including the Applicants. This about face was contrary to the facts and circumstances summarised in sub-paragraphs [11(m)] and [11(n)] below.
m)The AWU knew that Bluescope, as required by the AWU, had arranged to terminate pre-paid overtime under annualised salaries for all employees of Bluescope, being both staff employees and wages employees. The AWU had a duty of care to Bluescope to not misrepresent its position on the issue of pre-paid overtime at the mediation in the FWC, and a duty of care to all of Bluescope’s employees to participate in the mediation in the FWC to attempt to reach an agreement which would secure the employees ongoing employment at the Steelworks.
n)The AWU and Bluescope had a common interest in attempting to secure the on-going operation of the Steelworks and a shared common burden in efforts to do so. The AWU knew the only way in which Bluescope could comply with its obligations under the Memorandum of Agreement was to advise the relevant staff employees of the change from annualised to aggregate salaries, and to terminate their employment if they did not agree to the change, because the AWU had insisted that all staff employees on pre-paid overtime must no longer be paid on that basis and that the AWU’s position in the negotiations could not be accommodated if some only of the staff employees agreed to a variation in their contract of employment with Bluescope.
o)The AWU intended to induce Bluescope to vary the contracts of all staff employees, including the Applicants, to exclude any pre-payment of overtime and it is open to the Applicants to allege that the AWU induced Bluescope as a third party to breach their contracts.
p)Accordingly, any breach of the Applicants’ employment contracts by Bluescope was the same breach and to the same extent as the breach induced by the AWU.
q)The AWU in the circumstances is to be taken as contravening s.323 of the FW Act and to have been involved in tortious conduct. The AWU should indemnify Bluescope or contribute to any compensation or penalties for which it might be liable at the behest of the Applicants.
r)The relief sought by Bluescope in the proposed SCC is as follows:
Orders Sought
In the event that the Court finds that [Bluescope] has contravened s.323 of the FW Act, [Bluescope] seeks the following orders:
a.A declaration that by reason of s.793 and s.550(1) of the FW Act that [the AWU] is taken to have been involved [in] the contravention of s.323 by [Bluescope].
b.A declaration that [the AWU] is involved in the contravention of s.323 by [Bluescope] in accordance with s.550(2)(a), (b) and (c) of the FW Act.
c.A declaration that any breach of the Applicants’ contracts of employment by Bluescope was induced by the AWU.
d.An order that [the AWU] indemnify [Bluescope] in respect of any compensation under s.545 of the FW Act determined [to be] due to the Applicants.
e.An order that [the AWU] indemnify [Bluescope] in respect of any pecuniary penalties determined by the Court to be payable under s.546 of the FW Act.
f.In the alternative to orders (d) and (e), an order that [the AWU] contribute equally with [Bluescope] to any compensation or penalties due to the Applicants, or otherwise in such proportionate amount as the Court determines.
g.An order [that] any pecuniary penalties determined by the Court under s.546 of the FW Act be paid to the Consolidated Revenue Fund of the Commonwealth.
h.Such further or other orders as the Court may consider appropriate.
Consideration
At the hearing of the Application in a Case Bluescope identified three bases or causes of action upon which it relied in its claim against the AWU, being:
a)the tort of inducing a breach of contract;
b)accessorial liability under s.550 of the FW Act; and
c)the equitable doctrine of contribution.
The AWU opposes being joined to the proceeding and leave being granted to Bluescope to file the proposed Cross-Claim and proposed SCC on a number of grounds. In substance, the AWU contends that the proposed SCC is not properly pleaded and particularised, does not plead material facts sufficient to establish the alleged causes of action and does not disclose reasonably arguable causes of action.
Purpose of Pleadings
The purpose of pleadings was stated by Mason CJ & Gaudron J in Banque Commerciale S.A. v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 where their Honours said:
The function of pleadings is to state with sufficient clarity the case that must be met: Gould & Birbeck & Bacon v Mt Oxide Mines Ltd (1916) 22 CLR 490 at 517, per Isaacs & Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision.
In Gould & Ors v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490 at 517 Isaacs & Rich JJ had said:
Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function.
In approaching the consideration of the proposed SCC I am guided by the following recent statement of O’Callaghan J in Granite Transformations Pty Ltd v Apex Distributions Pty Ltd [2018] FCA 725 (Granite Transformations) at [3]:
[3]The relevant principles were not disputed. All of the facts alleged in the relevant pleading are to be accepted as true. Provided that a pleading fulfils its basic function of identifying the issues, that it discloses an arguable cause of action and that it apprises the other party of the case that it has to meet at trial, the pleading should be allowed to stand: see e.g. Young Investments Group Pty Ltd v Mann (2012) 293 ALR 537; [2012] FCAFC 107 at [6].
To similar effect Lander J had stated in Arthur Young v Teico International (1995) 182 LSJS 367 at 370 that the question of adequacy of pleadings ought be approached not by looking with a critical eye for some deficiency, but by reference to “the ultimate question: Does the pleading give fair notice of the case to be made against the other party at trial, thereby minimising the risk of injustice arising from surprise.”
Requirements and Content of a Proper Pleading
As the basic function of a pleading is to identify the issues, disclose arguable causes of action and apprise the other party of the case that it has to meet at trial, it follows that any pleading should comply with the statement of principle of the Full Court of the Federal Court of Australia in Young Investments Group Pty Ltd v Mann (2012) 293 ALR 537 at 540 [7] per Emmett, Bennett and McKerracher JJ:
[7]A statement of claim must allege a cause of action with sufficient particularity and not simply make allegations in general terms. The adequacy of a statement of claim is to be assessed by reference to whether the cause of action is pleaded at a level of particularity that is sufficient to define the issues and inform the other party of the case that it has to meet, in the context of the particular allegations. A respondent or defendant is entitled to know the factual foundation for the case that is being alleged, so that the respondent or defendant can prepare to meet that case at trial. In order to disclose a reasonable cause of action, a statement of claim must contain an allegation of all of the relevant facts necessary to support any allegation made in it. A pleading that simply pleads a conclusion is embarrassing and should not be permitted to stand.
Further, by force of r.1.05(2) of the Federal Circuit Court Rules 2001 (Cth) I consider that I should apply r.16.02 of the Federal Court Rules 2011 (Cth) as to the required general content of a pleading which must not, in particular, be likely to cause prejudice, embarrassment or delay. In Takemoto v Moody’s Investors Service Pty Limited [2010] FCA 407 at [8] Flick J said of this requirement as follows:
[8]… In Shelton v National Roads and Motorists’ Association Ltd [2004] FCA 1393, (2004) 51 ACSR 278 Tamberlin J discussed the term “embarrassment” and said:
[18] … “Embarrassment” in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. This is not an exhaustive list of situations in which a pleading may be embarrassing: see Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434. An example of an embarrassing pleading is where the pleading simply pleads a conclusion. …
See also: Fleet v Royal Society for the Prevention of Cruelty to Animals (NSW) (RSPCA) [2005] NSWSC 926 at [52]; McGuirk v University of New South Wales [2009] NSWSC 1424 at [209]. A pleading will be embarrassing, it has been said, “where it is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him”: Priest v New South Wales [2006] NSWSC 12 at [34].
I now turn to consider the causes of action as sought to be pleaded by Bluescope.
Inducing a Breach of Contract
The core claim in this regard is reflected in order (c) as sought in the proposed SCC (see [11(r)] above) and is to the effect that if Bluescope is found to have breached the employment contracts, such breaches were induced by the AWU. The paragraphs of the proposed SCC which are arguably relevant to a claim that the AWU induced a breach of contract are [11], [58], [60] – [62] and [68] – [69] in the following terms:
[11] The Cross Claimant further alleges that, to the extent there was a breach of the contracts of employment of the Applicants, that breach was induced by the conduct of the Cross Respondent and the Cross Respondent is liable equally with the Cross Claimant for such breach.
[58]The Cross Respondent knew there were contracts of employment between the Applicants (or all persons of a class to whom the Applicants belonged) and the Cross Claimant, and that such contracts provided for pre-paid overtime.
PARTICULARS
(i) The Cross Respondent relies on the facts and circumstances pleaded in ground 17.
[60]The Cross Respondent intended to induce the Cross Claimant to vary the contracts of all staff employees, including the Applicants, to exclude any prepayment of overtime.
[61]In circumstances where the Cross Respondent required the Cross Claimant to cease all arrangements for pre-paid overtime, including for fortnightly staff such as the Applicants, it was (and is) open to the Applicants to allege that the Cross Respondent induced the Cross Claimant (as a third party) to breach their contracts.
[62]Any breach of the contracts of employment of the Applicants by the Cross Claimant is therefore the same breach, and to the same extent, as the breach induced by the Cross Respondent.
[68]By reason of the facts and matters pleaded, the Cross Respondent induced any breach of the contracts of employment of the Applicants involving the cessation of pre-paid overtime, and the move from annualised to aggregate salaries.
PARTICULARS
(i) The Cross Respondent relies on the facts and circumstances pleaded in grounds 17, 33, 34, 35, 37, 40, 41, 44, 50, 58, 59 and 65.
[69]The breach claimed of the Applicant’s contracts of employment in the primary proceedings is the same breach, and to the same effect, as the breach of the Applicant’s contracts of employment induced by the Cross Respondent.
In my view, the pleading of this tort fails to properly plead material facts giving rise to such a cause of action, and as a matter of pleading, is embarrassing because of the diffuseness, lack of precision and generality in which it pleads an inducement of breach of contract.
The general ingredients of the tort of inducing a breach of contract are set forth in the decision of the Full Court of the Federal Court in Daebo Shipping Company v The Ship Go Star (2012) 207 FCR 220 at 240 [88] per Keane CJ, Rares and Besanko JJ as follows:
[88]The tort of inducing a breach of contract consists of the following elements:
(1) there must be a contract between the plaintiff (or applicant) and a third party;
(2) the defendant (or respondent) must know that such a contract exists;
(3) the defendant must know that if the third party does, or fails to do, a particular act, that conduct of the third party would be a breach of the contract;
(4) the defendant must intend to induce or procure the third party to breach the contract by doing or failing to do that particular act;
(5) the breach must cause loss or damage to the plaintiff.
More recently, O’Callaghan J in Granite Transformations at [17] in considering this tort said:
[17]In Allstate Life Insurance Co v ANZ [1995] FCA 1368; (1995) 58 FCR 26, Lindgren J (with whom Lockhart and Tamberlin JJ agreed) cited the following passage from the judgment of Street J in Short v City Bank [1912] NSWStRp 21; (1912) 12 SR (NSW) 186 (which was cited with approval on appeal by Barton and O’Connor JJ in Short v City Bank of Sydney [1912] HCA 54; (1912) 15 CLR 148):
To make out a cause of action of this kind, it is incumbent upon the plaintiff to establish three things. He must establish in the first place that the defendant in fact induced and procured the breach complained of; in the second place that the breach was procured with the deliberate intention of injuring the plaintiff, or in such circumstances that it must have been obvious to the defendant that the reasonable consequence of what he did would be to injure the plaintiff; and in the third place that what was done did in fact injure him.
In the present case the plaintiff has, in my opinion, altogether failed to adduce any evidence showing that the bank did anything for the purpose of inducing or procuring the Society to break its contract. The words 'induce' and 'procure' in their ordinary significance, I think, convey the idea of persuasion or contrivance, and I think that a person complaining of a breach of contractual relations brought about by these means must show that the person whose actions are complained of did something in the nature of effectually persuading or prevailing upon the other party to the contract to violate his obligations under it. The persuasion may take the form of advice or friendly solicitation, or it may take the form of intimidation or molestation, but in every case I think that it must be shown that the defendant deliberately intervened between the contracting parties, either with the express design of depriving the plaintiff of the benefit of his contract, or under such circumstances that he must have known that the effect of his intervention would be to deprive the plaintiff of that benefit.
In my view, the proposed SCC does not properly plead and allege the elements of the tort, in accordance with the authorities referred to above.
First, [60] of the proposed SCC does not even allege an intention of the AWU to induce Bluescope to “breach” the employment contracts, but rather alleges an intention to induce Bluescope to “vary” those contracts. A breach of contract is an actionable legal wrong, but a valid variation of a contract does not constitute a breach of contract at all. This is because a variation to the terms of an existing contract requires the parties to the contract to agree to any alteration of its terms, supported by consideration. The parties are then regarded as having made two contracts, namely the original contract and the subsequent contract varying the terms of the original contract: Federal Commissioner of Taxation v Sara Lee Household and Body Care (Australia) Pty Ltd (2000) 172 ALR 346 at 350 [22] per Gleeson CJ, Gaudron, McHugh and Hayne JJ. A variation usually takes the form of a modification or a rescission of some of the terms of the existing contract and a variation cannot be imposed unilaterally. None of these issues are addressed by [60], and on a fair reading it simply alleges that the AWU wanted Bluescope to enter into a contractually binding variation of the employment contracts with the Applicants. This does not constitute a proper pleading against the AWU of the tort of inducing a breach of the employment contracts.
Further, [60] simply recites an intention to induce variation of the employment contracts without reference to any actual direct action or actions by the AWU at any particular point of time or by any particular mode or method of inducement.
Paragraph [61] merely asserts that it is “open to the Applicants to allege that the [AWU] induced [Bluescope] (as a third party) to breach their contract”. The reference to “the Applicants” is inapposite because their position is irrelevant to a claim of inducement of breach of contract by Bluescope against the AWU. Even if the reference to “the Applicants” is a typographical error for Bluescope, [61] does not advance the claim of inducement of breach of contract because it merely pleads that it was “open” to Bluescope to allege inducement of breach of contract, without actually pleading inducement.
Paragraph [62] also fails to allege with any specificity the time, date and act of inducement by the AWU of Bluescope’s breach of the employment contracts.
Finally, [68] – [69] of the proposed SCC fail to plead the relevant ingredients of the cause of action and are embarrassing as a pleading because of their lack of precision, their generality and because they constitute a mere statement of conclusions rather than pleading material facts. Further, I consider that it is embarrassing for [68] to give as particulars references to earlier paragraphs of the proposed SCC which plead, or ought to plead, material facts. It is not the function of particulars to take the place of the pleading of material facts. The function of particulars was described by Gleeson CJ in Goldsmith v Sandilands (2002) 190 ALR 370 at 371 [2] as follows:
[2]… The function of particulars is not to expand the issues defined by the pleadings, but “to fill in the picture of the plaintiff’s cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial.” Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713
Further, the AWU ought not to be obliged to trawl through the rolled-up paragraphs referred to in the particulars to [68] in an attempt to ascertain the facts relied upon in support of the cause of action and whether the parts of those paragraphs properly support the cause of action.
In other words, in my view the proposed SCC fails to properly and coherently plead:
a)that the AWU knew that if Bluescope did not pay to the Applicants their annualised salary under their employment contracts after 10 January 2016 Bluescope was breaching those employment contracts;
b)that the AWU intended to induce or procure the breach by Bluescope of the employment contracts in this respect;
c)that the AWU did or performed any particular action or actions which induced, procured and caused the breach by Bluescope of the employment contracts; and
d)an identification of the loss or damage alleged to have been caused to Bluescope by any action or actions of the AWU.
Further, in my view as a matter of pleading the proposed SCC in this respect is diffuse, generalised and lacking in sufficient precision. In the present context it seems to me to be particularly important that the tort of inducement of breach of contract should be pleaded with clarity and precision in circumstances where there is an apparent tension and uncertain coherence between a claim that Bluescope on the one hand considered that it was critical to its continued operation of the Steelworks that there should be an end of annualised salaries, and on the other hand a claim that the AWU induced and procured Bluescope to breach the employment contracts which provided for annualised salaries, when Bluescope had already determined to terminate them.
Finally, it is not sufficient for Bluescope to point to the fact that the AWU wanted or wished for the cessation of annualised salaries for staff employees as well as wages employees because first, it would not be presumed that the AWU would wish or intend for that result to be achieved by unlawful, rather than lawful, means and second, as the plurality comprised of Gleeson CJ, Gaudron, Kirby and Hayne JJ pointed out in Sanders v Snell (1998) 196 CLR 329 at 339 [22]:
[22]… But the tort of inducing or procuring a breach of contract is not established by demonstrating only that the alleged tortfeasor hoped or wished that the contract would or might be breached…
Accessorial Liability
Section 550 of the FW Act is the equivalent and analogue of the accessorial liability provisions in Commonwealth trade practices and corporations legislation whereby a person “involved in a contravention” of a civil remedy provision is “taken to have” contravened that provision. Sub-section 550(2) defines “involved in a contravention” as having aided, abetted, counselled or procured the contravention, induced the contravention, have been knowingly concerned in or a party to the contravention, or conspired with others to effect the contravention. In this case the proposed SCC relies upon all of the elements of “involved in the contravention” except conspiracy to effect a contravention.
There are only three paragraphs of the proposed SCC which arguably refer to contraventions as provided for by s.550 of the FW Act, being [10] and [66] – [67], and which are as follows:
[10] The Cross Claimant denies the allegations of the Applicants in the proceedings but claims that if it is found to have contravened s323 of the FW Act, that the Cross Respondent was also involved in that contravention as provided for in s550 of the FW Act.
[66]By reason of the facts and matters pleaded, and by operation of s793(1)(a) and (2) of the FW Act, the Cross Respondent is taken to have been engaged in all of the conduct of Mr Walton and Mr Phillips.
PARTICULARS
(i) The Cross Respondent relies on the facts and circumstances pleaded in grounds 33, 34, 35, 37 and 44.
[67]By reason of the facts and matters pleaded, the Cross Respondent was involved in any contravention of s323 of the FW Act by the Cross Claimant found by the Court, as provided for in s550(2)(a), (b) and (c) of the FW Act. As a result, the Cross Respondent is taken also to have contravened s323 of the FW Act.
PARTICULARS
(i) The Cross Respondent relies on the facts and circumstances pleaded in grounds 17, 33, 34, 35, 37, 40, 41, 44, 50, 58, 59 and 65.
In short, Bluescope wishes to assert that the AWU, by reason of the conduct of Messrs Phillips and Walton, was involved in contraventions under s.550 of the FW Act in connection with Bluescope’s breaches of the employment contracts under s.323.
A claim against a party of accessorial liability is a serious one, and in particular an allegation of aiding, abetting, counselling or procuring is like that of an accessory before the fact in criminal proceedings: Batten v CTMS Ltd [1999] FCA 1576 at [28] per Kiefel J (as she then was).
In my view, the proposed SCC fails to properly plead the necessary material facts and ingredients for a claim of accessorial liability against the AWU and also fails as a pleading to plead such a cause of action because of its discursive and general nature.
The first ingredient of a claim for accessorial liability against the AWU must be to allege and plead the primary contraventions of s.323 of the FW Act by Bluescope to which it alleges that the accessorial liability of the AWU attached. Obviously, Bluescope wishes to deny the breach of the Applicants’ employment contracts, but it could and should have pleaded with precision in the alternative those breaches in the proposed SCC. However, it does not do so. The assumption seems to be that whatever undefined breaches of s.323 for which Bluescope may ultimately be found to be liable, the AWU will be accessorily liable. I do not consider that this is a fair and proper mode of proceeding to plead a claim of accessorial liability,
Second, the proposed SCC fails to plead actual knowledge by the AWU through its officials of the matters, facts and circumstances comprising Bluescope’s primary contravention and its intentional participation in the primary contraventions, and such are essential matters which must be alleged and pleaded: Quinlivan v ACCC (2004) 160 FCR 1 at 4 – 6 [10] – [15].
In other words, the proposed SCC fails to comply with the requirements of a pleading of accessorial liability which are conveniently summarised in Knott Investments Pty Ltd v Winnebago Industries, Inc (No. 2) [2015] FCA 1214 at [34] – [35] per Yates J, as follows:
[34]In their written submissions, the respondents canvass a number of principles relating to the requirements for a proper pleading and the circumstances in which leave will be granted to amend a pleading. One cardinal rule is that the pleading must state the material facts on which a party relies that are necessary to give the opposing party fair notice of the case to be made against that party at trial: r 16.02(1)(d) of the Federal Court Rules 2011. Although important in all cases, the requirement for a proper pleading is particularly important when allegations of misleading or deceptive conduct are made. The case to be brought must be clearly and distinctly stated so that the defending party has a proper opportunity of meeting it: Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486 at [21]-[26]. Insistence on this requirement is not mere pedantry or, as the plurality in Forrest put it, a “pleader’s quibble”.
[35] In relation to the pleading of accessorial liability, the respondents submitted that, in order to establish such liability, it is necessary for the applicant to show, and hence to plead, that the accessory participated in, or assented to, the principal contravention with prior knowledge of all the essential elements of the contravention: Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [48]. Furthermore, the respondent submitted that it is necessary to show, and hence to plead, that the accessory was involved in the contravention by some positive act in relation to the impugned conduct, amounting to a close involvement: Fencott v Muller (1983) 152 CLR 570 at 584. I accept these submissions. I do not understand the applicant to have contested the need for its pleading to comply with these requirements.
It is insufficient for a claim of accessorial liability to prove merely constructive knowledge, but rather it is necessary for Bluescope to plead that at the relevant time the officials of the AWU knew, and hence the AWU knew through them of the acts or omissions said to constitute Bluescope’s contravention of the employment contracts. As Greenwood J stated in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) v John Holland Pty Ltd (2009) 180 IR 350 at 359 – 360 [44]:
[44]… Accessorial liability requires a pleading of actual knowledge on the part of the accessory of each and every element of the offence or contravening conduct…and an election to engage in the relevant conduct.
Further, it is inadequate for a pleading of accessorial liability to simply allege that the party said to be accessorily liable was “involved in any contravention” as pleaded in [67] of the proposed SCC. As a matter of pleading it is unacceptable to simply refer back to the previous 66 paragraphs as supporting the allegation of involvement in the rolled-up, grab-bag way utilised by [67]: Liberty USA Pty Ltd v Telstra Corp Ltd (BC9405964 of 24 August 1994) at 4 per Branson J and Granite Transformations at [21].
Accordingly, in my view the proposed SCC fails to plead essential elements and ingredients of the claim against the AWU for accessorial liability, and further its mode of pleading of the claim is embarrassing.
Equitable Contribution
The doctrine of contribution was accepted by both the common law and equity as one of natural justice, and is founded on the principle that if several persons have a common obligation they should as between themselves contribute proportionately in satisfaction of that obligation: Gibbs CJ in Mahoney v McManus (1981) 180 CLR 370 at 378.
The equitable doctrine of contribution has been considered in recent years by the High Court in Burke v LFOT Pty Ltd (2002) 209 CLR 282; Friend v Brooker (2009) 239 CLR 129 (Friend) and HIH Claims Support Limited v Insurance Australia Limited (2011) 244 CLR 72 (HIH). For present purposes it is sufficient to state the content of the doctrine of equitable contribution by reference to the following statement of the plurality comprised of French CJ, Gummow, Hayne and Bell JJ in Friend at 148 [38] – [39]
[38]With a claim to contribution, as is the position generally with the intervention of equity to apply its doctrines or to afford its remedies, the plaintiff must show the presence of “an equity” founding the case for that intervention (92). The “natural justice” in the provision of a remedy for contribution is the concern that the common exposure of the obligors (or “debtors”) to the obligee (or “creditor”) and the equality of burden should not be disturbed or be defeated by the accident or chance that the creditor has selected or may select one or some rather than all for recovery (93). Were equity not to intervene, then it would remain within the power of the creditor so to act as to cause one debtor to be relieved of a responsibility shared with another (94). Equity follows the law in the sense that it does not seek to direct the manner of exercise of the rights of the creditor, but equity does make an adjustment between the debtors. Thus equity does not interfere with the action of the creditor but seeks to ensure the sharing of the burden between those subjected to it (95).
[39]The equity to seek contribution arises because the exercise of the rights of the obligee or creditor ought not to disadvantage some of those bearing a common burden; the equity does not arise merely because all the obligors derive a benefit from a payment by one or more of them (96). As explained in United States authority (97), contribution is an attempt by equity to distribute equally, among those having a common obligation, the burden of performing it, so that without that common obligation there can be no claim for contribution.
It is clear that the duty to contribute is not based on “some general principle of justice, of the nature that a man ought not to get an advantage unless he pays for it” and the doctrine is not enlivened merely because the claimant’s payment operates to the financial benefit or relief of the other party: HIH at 88 [42] and 89 – 90 [45].
Rather, it is critical that both the party claiming contribution and the party from whom contribution is claimed must be under co-ordinate liabilities or common obligations of the same nature and to the same extent as each other to make good the one loss. That common obligation or co-ordinate liability may have different sources such as, for example, statute and contract, but only so long as the obligations can be characterised as being of the same nature and to the same extent. Contribution is a two-way exercise, and there cannot be contribution from one without contribution from the other: see generally HIH at 87 – 89 [36] – [43].
Apart from order (f) as sought (see [11(r)] above), the only paragraphs of the proposed SCC which arguably refer to the equitable doctrine of contribution are [47], [57], [72] and [74], which are as follows:
[47] The Cross Respondent had a common interest with the Cross Claimant in ensuring that the required cost savings were identified prior to the November 2015 meeting of the Board of BlueScope, and to ensure continued employment for its members. By entering the MOA on the agreed position that key terms, including the cessation of annualised salaries, would be implemented and apply to both wages employees and fortnightly staff, the Cross Respondent had knowledge of the essential facts on which the Applicants in the primary proceedings now allege the Cross Claimant has breached their contracts of employment and the FW Act.
[57] The Cross Respondent and Cross Claimant had a common interest in attempting to secure the on-going operation of the Steelworks and shared a common burden in efforts to do so.
[72] If the Court determines that any compensation in accordance with s545 of the FW Act is due to the Applicants the Cross Respondent should, because of its conduct as pleaded above, indemnify the Cross Claimant for the whole of such compensation.
[74] In the alternative, and in accordance with common law and/or equity, the Cross Claimant claims from the Cross Respondent contribution for any compensation and/or penalties awarded to the Applicants by the Court.
In my view, these paragraphs do not, whether considered individually or cumulatively, properly plead a claim of equitable contribution against the AWU because:
a)paragraph [47] merely pleads that Bluescope and the AWU had a common interest in ensuring the costs savings were identified prior to the November 2015 board meeting of the parent company of Bluescope;
b)paragraph [57] claims that Bluescope and the AWU had a common interest in attempting to secure the continued operation of the Steelworks and a common burden in efforts to do so; and
c)paragraphs [72] and [74] merely record the claim for contribution.
In other words, there is no pleading of material facts which would go anywhere near establishing that Bluescope and the AWU were under any sort of recognised co-ordinate liability or common interest or burden to make good the one loss. There is no pleading of material facts which would go to establish that the obligation between Bluescope and the AWU could be characterised as one of the same nature and extent. There is not even an attempt at [47] and [57] to ground the claim of the parties to have a common interest or a common burden back to and based on nominated earlier paragraphs of the proposed SCC.
On the face of the matter the obligation of Bluescope was to pay the Applicants their just legal entitlements under the employment contracts. The AWU never employed the Applicants and had no obligation to pay them any sort of wage entitlements. Rather, the obligation of the AWU, if any, was to advance and protect the position and rights of the workers at the Steelworks. There is no attempt at a coherent pleading to establish and explain by material facts how those respective obligations are said to constitute common interests, co-ordinate obligations or a common burden.
Duty of Care
Another problem with the proposed SCC is [55] which asserts that the AWU owed a duty of care to Bluescope thus:
[55]The Cross Respondent had a duty of care to the Cross Claimant to not misrepresent its position on the issue of pre-paid overtime in the FWC Mediation, and a duty of care to all employees of the Cross Claimant (and certainly those it is eligible to represent, including the Applicants) to participate in the FWC Mediation and other discussions in August, September and October 2015 to attempt to reach an agreement that would secure their ongoing employment.
Paragraph [55] merely sits there in its place in the proposed SCC. There is no claim for negligence and it is not explained how the alleged duty of care is said to be relevant to the claims for inducing breach of contract, accessorial liability or contribution. Its unexplained presence is in my view also embarrassing in the technical sense.
Summary
I consider, for the reasons given above, that the proposed SCC is a defective pleading both in substance and in form and leave should not be granted to join the AWU to the proceeding to permit the proposed SCC to be raised against the AWU.
At the directions hearing on 15 March 2018 and at the hearing of the Application in a Case, Counsel for the Applicants submitted that if I came to this view it should follow that the portion of [39] of the Amended Defence alleging that the AWU was involved in contraventions under s.550 of the FW Act and induced a breach of contract should be struck out. Counsel further submitted that the part of the relief sought in [87] of the Amended Defence which referred to the AWU should also be struck out. I agree with this submission because there is no basis for these references to the AWU remaining in the Amended Defence when the AWU is not a party to the proceeding and accordingly the portions of those paragraphs of the Amended Defence referring to the AWU will be struck out by my orders when disposing of the present Application in a Case.
A Final Matter – Should Leave to Replead be Granted to Bluescope?
It is common for Courts to grant leave to further plead after having rejected a first attempt at a pleading. Further, Courts are naturally reluctant to preclude a party from raising claims which on their face have a seeming relevance to the pending proceeding in which leave is sought.
However, I have come to the view that I ought not to grant to Bluescope any further opportunity to replead, having regard to the following chronology of events.
The original Statement of Claim was filed on 12 October 2016. The original Defence was filed on 18 November 2016. That original Defence made many references to the AWU and at [36] asserted that Bluescope was induced by the AWU to vary the employment contracts. However, no application was made at this time to join the AWU as a party or to raise a cross-claim against the AWU. The Amended Statement of Claim was filed on 17 March 2017 and the Amended Defence was filed by Bluescope on 27 April 2017, with the Application in a Case being filed on 28 April 2017.
On 5 May 2017 Bluescope filed a Concise Statement in support of its Application in a Case which summarised the claims which Bluescope wished to raise against the AWU.
In June 2017 Bluescope, the Applicants and the AWU filed and served detailed written submissions.
On 16 August 2017 by arrangement with the parties the hearing of the Application in a Case was set down for 27 February 2018, and the final hearing was set down for three days commencing on 3 April 2018.
On 22 February 2018 Bluescope served the proposed Cross-Claim which merely sought a declaration of contravention against the AWU under s.550 and indemnification by the AWU of Bluescope of any compensation due to the Applicants or pecuniary penalties payable under s.546 of the FW Act (see [10] above).
On 26 February 2018 I caused the following email to be sent from my Chambers to the parties’ legal representatives:
Dear Parties,
His Honour would have thought that it was fundamental to the Application in a Case seeking to join the Australian Workers’ Union as a party to the present proceeding that there be given to the Court a draft pleading setting out the claim against the AWU and the type of relief sought and the statutory basis for such relief.
In other words, the Court on such Applications does not usually trawl though the alleged facts in any detail.
So the purpose of this email is to ask is there a draft proposed pleading against the AWU for the Court to consider?
At the time of the sending of the email of 26 February 2018 I was unaware that on 22 February 2018 Bluescope had served the proposed Cross-Claim referred to in [64] above.
Bluescope then sent to my Chambers a copy of the proposed Cross-Claim and advised that it had been served on the Applicants and the AWU on 22 February 2018. I caused an email to be sent in response, relevantly as follows:
Dear Mr Dearden,
His Honour takes the view that the document entitled “Cross-Claim” is not a proper pleading of the material matters, facts and circumstances appropriate to consider in an Application such as that presently before the Court.
…
On 27 February 2018 Mr Hatcher SC, with Mr Brotherson of Counsel, appeared for Bluescope and Mr Howell of Counsel appeared for the Applicants and the AWU. I referred the parties to r.16.02 of the Federal Court Rules 2011 (Cth) and indicated to Mr Hatcher that I would not determine the Application in a Case without a proper Statement of Cross-Claim and that I regarded the proposed Cross-Claim forwarded to the Applicants on 22 February 2018 as really in the nature of a mere Cross-Summons. Mr Howell then sought that I peremptorily dismiss the Application in a Case in the absence of any proffered draft Statement of Cross-Claim. I was not prepared to do that.
In the result, I made the following orders:
(1)The Respondent is to draft a Statement of Cross Claim compliant with Rule 16.02 of the Federal Court Rules 2011 (Cth) within 14 days of today, being 13 March 2018.
(2)The said draft Statement of Cross Claim is to be served on the Applicants and the Australian Workers’ Union by the close of business on 13 March 2018 and also forwarded at the same time to the Court.
(3)The matter is stood over for further directions and consideration to 2.15pm on 15 March 2018 in Court 13.2, 80 William Street, Sydney.
(4)The costs of today are reserved.
On 13 March 2018, in accordance with order 2 made on 27 February 2018, Bluescope served a first draft of the proposed SCC.
At the directions hearing on 15 March 2018 Mr Howell of Counsel again appeared on behalf of the Applicants and the AWU and Mr Hatcher appeared for Bluescope. I offered Mr Howell the option of consenting to the joinder of the AWU and to the filing of the draft proposed SCC, in which case the dates for the final hearing of 3 – 5 April 2018 would be maintained, or alternatively he could maintain opposition to the filing of the draft proposed SCC, in which case the final hearing set down for those dates would be vacated and the hearing of the contested Application in a Case would take place instead.
Mr Howell, as he was entitled to do, maintained his position that leave to file the draft proposed SCC should not be granted. Accordingly, the final hearing was vacated and the Application in a Case set down for hearing on 4 and 5 April 2018.
Mr Hatcher wanted a last opportunity for Bluescope to refine the draft proposed SCC and the pertinent orders made on 15 March 2018 were:
(4)Argument on whether or not the Respondent should be granted leave to file a Cross Claim and Statement of Cross Claim be heard on 4 April 2018 and insofar as is necessary 5 April 2018.
(5)By 4pm on Tuesday 20 March 2018 the Respondent is to serve on the Applicants the final form of any proposed Cross Claim and Statement of Cross Claim.
On 20 March 2018 the proposed SCC was served.
I have regard to the overarching purpose of civil procedure embodied in s.37M of the Federal Court of Australia Act 1976 (Cth). The Applicants are entitled to a final hearing in a timely way. I am listed with hearings until early 2020 and I will have to vacate hearings already listed to make time available to conduct the final hearing of this case in the early part of 2019. In my view, the above chronology of relevant facts and circumstances establishes that Bluescope has had more than a sufficient and reasonable opportunity to seek to join the AWU to this proceeding by way of an acceptable pleading. I have found that it has failed to do so, and I do not consider that, doing justice to all parties, it is in the interests of justice that any further opportunity be afforded to Bluescope in this regard and accordingly I will not grant leave to replead.
Conclusion
It follows that I will dismiss the Application in a Case filed by Bluescope on 28 April 2017 and refuse leave to replead.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of Judge Dowdy
Associate:
Date: 8 October 2018
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