CFMEU v Laing O'Rourke Australia Construction Pty Ltd
[2014] FCCA 2498
•21 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CFMEU v LAING O’ROURKE AUSTRALIA CONSTRUCTION PTY LTD | [2014] FCCA 2498 |
| Catchwords: INDUSTRIAL LAW – Costs – s.570 of the Fair Work Act 2009 (Cth) – where party’s unreasonable act or omission caused other party to incur costs – no reasonable cause of action – claim for coercion – application discontinued – whether indemnity costs appropriate where proceedings instituted vexatiously or without reasonable cause. |
| Legislation: Federal Circuit Court Act 1999 (Cth), ss.79, 17A, 31A |
| Australian and International Pilots Association v Qantas Airways Limited (No.3) (2007) FCA 879 Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff (No.2) [2009] NSWCA 12 CFMEU v Clarke [2008] FCAFC 143 Chen v Karadonis [2002] NSWCA 412 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Commonwealth of Australia v Ryan (No.2) [2002] NSWCA 386 Community and Public Sector Union v Telstra Corp Ltd [2000] FCA 1610 Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Cruse v CFMEU [2008] FCA 1267 Dey v Victorian Railway Commissioners (1949) 78 CLR 62 Fair Work Ombudsman v National Jet Systems Pty Ltd [2012] FCA 243 Harrison v Schipp [2001] NSWCA 13 John Holland v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2009] FCA 235 Lahoud v Lahoud [2006] NSWSC 12 Liquor Hospitality and Miscellaneous Union v Arnotts Biscuits Pty Ltd [2010] FCA 770 National Tertiary Education Industry Union v Commonwealth of Australia [2002] FCA 441 Re Wilcox; Ex Parte: Venture Industries Pty Ltd (No.2) (1996) 72 FCR 151 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Schankav Employment National (Administration) Pty Ltd [2000] FCA 202 State of Victoria v CFMEU [2013] FCAFC 160 Stephens v Australian Postal Corporation [2013] FCCA 1988 |
| Applicant: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
| Respondent: | LAING O’ROURKE AUSTRALIA CONSTRUCTION PTY LTD |
| File Number: | BRG 896 of 2013 |
| Judgment of: | Judge Burnett |
| Hearing date: | 9 May 2014 |
| Date of Last Submission: | 9 May 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 21 October 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr R. Reitano |
| Solicitors for the Applicant: | CFMEU |
| Counsel for the Respondent: | Mr C. Murdoch |
| Solicitors for the Respondent: | Minter Ellison |
ORDERS
That the applicant pay the respondents’ costs of and incidental to the application, to be assessed on the indemnity basis.
| FEDERAL CIRCUIT COURT AT BRISBANE |
BRG 896 of 2013
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
Applicant
And
| LAING O’ROURKE AUSTRALIA CONSTRUCTION PTY LTD |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This proceeding has had a troubled history. The applicant commenced the proceeding on 3 October 2013 seeking declarations of contraventions of s.343 of the Fair Work Act 2009 (Cth) (“FW Act”) and the imposition of penalties. Broadly, the applicant alleged that the respondents had taken action to coerce a member of it and a former delegate, Mr Manuel.
The issue at stake concerned Mr Manuel’s alleged unpaid entitlements upon termination. That matter had escalated to a dispute before the Fair Work Commission brought by Mr Manuel against the respondent Laing O’Rourke Construction Pty Ltd. In the course of the proceeding, it is alleged that the second respondent, Mr Purcell, approached Mr Manuel and stated that he should discontinue his application before the Fair Work Commission or he would “burn his bridges with Laing O’Rourke” or that he stated words to that effect.
On a subsequent occasion a couple of days later, during the course of a telephone conversation between Mr Purcell and Mr Manuel, it is alleged that he said to Mr Manuel, “Talk to the union about dropping the claim, as continuing with the claim will burn your bridges with Laing O’Rourke” or words to that effect.
Each of those events was alleged to occasion a statement made with intent to coerce Mr Manuel not to exercise a workplace right, namely, his right to prosecute his claim before the Fair Work Commission in respect of his workplace entitlements concerning the alleged unpaid entitlements upon termination. Thereby it was said that the conduct constituted a contravention of s.343 of the Fair Work Act (supra), which proscribes action done with intent to coerce.
From the outset, the respondents complained about the pleading, alleging it did not allege a cause of action. The applicant was afforded two opportunities by orders made on 30 October 2013 and 4 December 2013 to file amended pleadings to address the principal source of concerns of the respondents, namely, the absence of allegations of fact to support a finding of coercion. After delivery of the original statement of claim, the first respondent filed an application in a case seeking summary dismissal on the basis that the pleading disclosed no cause of action. Consequently, the applicant was ordered to file an amended statement of claim. That pleading too was unsatisfactory and the respondents again applied for summary relief.
A further amended statement of claim was filed. It too was alleged to be unsatisfactory, and the application in a case to dispose of the matter summarily was listed for hearing on 24 February 2014. On 21 February 2014, the applicant filed a notice of discontinuance. The respondents now seek orders pursuant to s.570 of the Fair Work Act (supra) for costs and related orders. The court’s power to award costs arises under s.570 of the Fair Work Act (supra) and rule 13.02 of the Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”). s.570 FW Act relevantly provides:
(1) A party to proceedings, including an appeal, in a court in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2)…
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause or
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur costs.
FCC Rule 13.02 provides:
(1) If a party discontinues an application or part of an application, another party in the proceeding may apply for costs.
The respondents contend that by reason of the unreasonable acts and omissions engaged in by the applicant, it was caused to incur costs and that the unreasonable and unnecessary legal costs were occasioned by the conduct of the applicant, thereby enlivening an entitlement to the exercise of the court’s discretion generally provided for by s.79(3) of the Federal Circuit Court Act 1999 (Cth) (“FCC Act”) and in accordance with s.570(2)(b) FW Act.
I pause to note here that, in its submissions, the respondents at paragraph 23 contended that they ought be awarded costs because of the applicant’s unreasonable acts, that is, s.570(2)(b) FW Act, but also they ought be awarded indemnity costs on the s.570(2)(a) FW Act limb, that is, because of an unreasonable cause. I will address costs on both bases, although obviously I will deal with the issue of indemnity costs only in due course.
In respect of an application for costs, the court commences from the premises that, in the exercise of its jurisdiction under the Fair Work Act (supra), that jurisdiction generally is a no-cost jurisdiction subject to the exceptions, one of which is instituting proceedings without reasonable cause, s.570(2)(a) FW Act, and the other being that the respondent has caused costs to be increased by its unreasonable acts or omissions as provided for in s.570(2)(b) FW Act.
The respondents in this case bear the onus of proving to the court’s satisfaction that the applicant instituted proceedings without reasonable cause and/or that an unreasonable act or omission by the applicant has caused the respondents to incur costs. The first limb requires the satisfaction of one matter. It requires the court be satisfied that there was an unreasonable act or omission which result in the incurring of costs. In either event, it is then within the court’s discretion to award costs if the costs have been incurred by the party applying for costs.
So far as subsection (2) is concerned, whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case: see generally Australian and International Pilots Association v Qantas Airways Limited (No.3) (2007) FCA 879. For the purposes of s.570(2)(b) FW Act, the court must be satisfied that the two criteria have been fulfilled, as set out in CFMEU v Clarke [2008] FCAFC 143 at [28], that is:
a)A party must have engaged in an unreasonable act or omission; and
b)that the unreasonable act or omission must have caused another party to incur costs in the proceeding.
As I’ve earlier noted, the respondents in particular contend they ought be awarded costs in this instance on the indemnity basis. They contend that this ought follow because, first, the applicant instituted the proceeding by filing the application on 3 October 2013 without reasonable cause; second, the applicant engaged in unreasonable acts after filing the application, which caused the respondents to incur unreasonable costs in defending the proceeding, and; third, in the circumstances of this case, the behaviour of the applicant is sufficiently egregious to warrant costs to be assessed on the indemnity basis in that, properly advised, the applicant should have known it had no chance of success and, notwithstanding this, it blindly continued to pursue the proceeding until 21 February 2014.
So far as the general principles informing the award of indemnity costs are concerned, the respondents accept that the mere abandonment of a claim by the applicant is not of itself sufficient to warrant an order for indemnity costs. The indemnity costs order is sought on the basis that the application against the respondents was hopeless and ought never to have been brought. In support of this contention, the respondents rely upon the observations of Campbell J in Lahoud v Lahoud [2006] NSWSC 126 at [38], where his Honour observed that it is open for a court to make an order for indemnity costs when the justice of the case requires it.
Obviously, while the making of such an order is discretionary in nature with the matter to be decided by reference to the facts of a particular case, the categories in which such a discretion can be exercised are not limited, although they are still relatively confined. The nature of the confinement was addressed best in the decision of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, the often-cited decision of Sheppard J, who, at 233-234, provided examples of a number of categories in which it may be appropriate to award costs on an indemnity basis.
Those categories include proceedings which have been brought with wilful disregard to the facts or law, proceedings that made serious and unfounded allegations, including allegations of fraud and/or dishonest conduct, proceedings that involved undue prolongation of proceedings by a party or whether there has been an imprudent refusal to accept an offer of compromise.
In this instance, the respondents submit that, in instituting these proceedings, the applicant had disregard to the law, in particular the well-established legal principles of coercion and intent to coerce, and subsequently unduly prolonged the proceedings in circumstances where it should have been clear to the applicant that the matter could not succeed on the basis of the pleaded conduct.
In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Limited (1988) 81 ALR 397 at 400, Woodward J outlined the test with respect to indemnity costs for bringing a hopeless case in the following terms:
“I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.”
The test outlined in Fountain Selected Meats (supra) has since been applied in Re Wilcox; Ex Parte: Venture Industries Pty Ltd (No.2) (1996) 72 FCR 151 at 156-157, Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615-616, Harrison v Schipp [2001] NSWCA 13 at [138], Commonwealth of Australia v Ryan (No.2) [2002] NSWCA 386 at [6], Chen v Karadonis [2002] NSWCA 412 at [110] and Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff (No.2) [2009] NSWCA 12 at [4] and, of course, Colgate-Palmolive Co v Cussons Pty Ltd. It follows that central to the resolution of the question of costs is a consideration of the applicant’s claim and whether it was, indeed, one which was instituted without reasonable cause and accordingly, in due course, unreasonably prosecuted.
The respondents say it was so instituted. The applicant says it was not but that it was discontinued because its principal witness, Mr Manuel, indicated to the applicant’s solicitor on or around 14 February 2014 that he no longer wished for the CFMEU to proceed with the application. In his affidavit, Mr O’Brien says in a paragraph following relating his conversation with Mr Manuel, “I caused a notice of discontinuance to be filed on 21 February 2014.”
I note the manner of expression did not indicate any causal connection between these two events. However, I will afford the applicant the benefit of the doubt on this matter, given the temporal proximity between these two events and their sequential appearances in the affidavit.
Turning, then, to the cause of action. From the outset, the respondents have complained that the applicant’s pleaded case was flawed because it could not allege facts to support a claim of collusion. The phrase “intent to coerce” as used in s.343 of the Fair Work Act (supra) and its earlier s.170NC of the Workplace Relations Act 1996 (Cth) (“WR Act”) has been the subject of extensive judicial consideration, and its meaning is now considered to be relatively settled by the courts: see generally, State of Victoria v CFMEU [2013] FCAFC 160.
In a decision of Seven Network Operations Limited v Communications, Electrical, Energy, Information, Postal, Plumbing, and Allied Services Union of Australia [2001] FCA 456 at [41], Merkel J said:
“…there must be two elements to prove "intent to coerce" under s170NC(1). First, it needs to be shown that it was intended that pressure be exerted which, in a practical sense, will negate choice. Second, the exertion of the pressure must involve conduct that is unlawful, illegitimate or unconscionable.”
Recently, the Full Court of the Federal Court in State of Victoria v CFMEU at [71] has endorsed this test as being “one of the clearest statements of the elements to be established in making out the term ‘intent to coerce’.”
Looking, then, to the first element: pressure intended to negate choice. In National Tertiary Education Industry Union v Commonwealth of Australia [2002] FCA 441, intent to coerce was said to be something more than a mere inducement to comply. Furthermore, Weinberg J, having reviewed a range of authorities on the point, noted at [103] that:
“The approach to the expression 'intent to coerce" taken in each of the authorities set out above makes it clear that what is required is an intent to negate choice, and not merely an intent to influence or to persuade or induce. Coercion implies a high degree of compulsion, at least in a practical sense, and not some lesser form of pressure by which a person is left with a realistic choice as to whether or not to comply.”
Weinberg J’s view was recently affirmed by the Full Court of the Federal Court in State of Victoria v CFMEU and also in Cruse v CFMEU [2008] FCA 1267, a decision which considered the meaning of coercion under the Building and Construction Industry Improvement Act 2005, where the court said at [18]:
“Intention to coerce requires intent to exert pressure that would in a practical sense negate choice: see National Tertiary Education Industry Union at 143. Negation of choice can be contrasted with a desire to influence, persuade or induce. The question will be, as Weinberg J said in National Tertiary Education Industry Union at 143, whether “a person is left with a realistic choice as to whether or not to comply””
The decision in Liquor Hospitality and Miscellaneous Union v Arnotts Biscuits Pty Ltd [2010] FCA 770 was the first decision to specifically consider the meaning of the phrase ‘intent to coerce’ in the context of s.343 of the Fair Work Act (supra). In that decision, Logan J noted that while there were no authorities which provided assistance as to the construction of s.343 or its analogous predecessor, s.400 of the WR Act, guidance could be taken from cases which considered the meaning of ‘with intent to coerce’ as that phrase appeared in the former s.170NC of the WR Act.
s.170NC prohibited a person from engaging in a particular specified conduct with intent to coerce another to make, vary, or terminate a certified agreement. The expression ‘with intent to coerce’ was thus used in an analogous way to the manner in which it is used in s.343 of the Fair Work Act (supra). In Liquor Hospitality and Miscellaneous Union v Arnotts Biscuits Pty Ltd (supra), Logan J adopted the approach set up by Weinberg J at paragraph 103 of National Tertiary Education Industry Union v the Commonwealth (supra). Logan J also made the following observation at [67]:
“In making its offer, Arnott did not intend to negate choice, but rather, for what is aptly described as ‘merciful reasons’, it did so for the purpose of offering a choice.”
The second element to be established is that the conduct is unlawful, illegitimate, or constitutes unconscionable pressure. This element is also to be made out in establishing intent to coerce. In Community and Public Sector Union v Telstra Corp Ltd [2000] FCA 1610, that phrase was held at [24] to require “an intention to overbear by illegitimate or unconscionable pressure, the will of the person to whom the action is directed.” A case that I note was considered in Schankav Employment National (Administration) Pty Ltd [2000] FCA 202, a case referred to by the applicant in submissions.
Recently in the State of Victoriav CFMEU (supra), Buchanan & Griffiths JJ applied the test followed by Buchanan J in Fair Work Ombudsman v National Jet Systems Pty Ltd [2012] FCA 243 at [24], where his Honour, citing McHugh J in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 46, said that “pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed.”
In John Holland v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2009] FCA 235, another decision which considered the meaning of coercion under the Building and Construction Industry Improvement Act, Marshall J made these observations at [47]:
“Turning next to the matter of coercion, the authorities establish that what is required is an intent to negate choice, and to do so by conduct which is unlawful, illegitimate, or unconscionable… Here it is, in my opinion, important to recognise the connection between the ‘action’ and the ‘intent to coerce’ which together provide the axis along which ss 43 and 44 of the BCII Act relevantly operate. That is to say, the action must be taken with the intent referred to. This is important because of the meaning which the word ‘coerce’ carries in context. The putative respondent’s intent must be to negate choice on the part of his or her target, and the means employed must be unlawful, illegitimate, or unconscionable. The means employed, of course, are one and the same thing as the ‘action’ referred to in the sections. That is to say, the action which is considered to be unlawful, illegitimate or unconscionable must be the same action by reference to which the putative respondent intends to negate the choice of his or her target.”
I note the applicant referred to the Full Court’s decision in Schanka v Employment National (Administration) (supra), but, in my view, nothing in the authorities referred to by the applicants appears to be contrary to the court’s decision in Schanka, and, in my view, the purported debate is largely uncontroversial.
After the commencement of the proceeding, an affidavit by Mr Manuel was filed by the applicant. In it, he stated his complaints concerning coercion. After providing some background concerning his departure from employment with Laing O’Rourke and an observation that he had no reason except for social matters to believe Mr Purcell would have any contact with him, he restated a meeting which occurred over coffee on 20 September, when he says Mr Purcell brought up the claim that Mr Manuel had made in the Fair Work Commission.
He said that Mr Purcell informed him that he – that is, Mr Manuel – should speak to the CFMEU to get the claim discontinued, as he did not think Mr Manuel would receive anything from the claim. Mr Manuel says that Mr Purcell then said words to the effect, “You won’t get anything out of this.” Mr Manuel says that he told Mr Purcell he felt that he was entitled to the claim and that he would not be discontinuing the claim. He says Mr Purcell responded with words to the effect of, “If you continue with the claim, you will burn your bridges with Laing O’Rourke.”
Mr Manuel says he was taken aback by this and took Mr Purcell to mean that he would never get another job with Laing O’Rourke or a job with a subcontractor on a project run by Laing O’Rourke. He says he explained to Mr Purcell why he felt he was entitled to the claim, and he says Mr Purcell continued to encourage him to discontinue the claim, and the matter was concluded on the basis that Mr Manuel would consider Mr Purcell’s urgings. He says that on 1 October, he then received a phone call from Mr Purcell.
He says that upon receiving the call, he asked Mr Purcell why he was being called, to which he says Mr Purcell said words to the effect of, “Did you speak to anyone at the union” – meaning the CFMEU – “about dropping the claim?” Mr Manuel says that he had not, and that he would follow it up the next day. Mr Manuel says he said this because Mr Purcell was aggressive in asking him to discontinue the claim, and he did not want to continue the conversation. He says that at that time he did not intend to discontinue the claim.
He said that during the telephone conversation, Mr Purcell said words to him to the effect of, “You need to pull out of the claim as it is only $1000, and you need to get the union” – meaning the CFMEU – “to pull out of the claim.” Mr Manuel says that he said words to the effect of, “I’m entitled to the claim and the money being claimed.” He then says Mr Purcell said words to the effect, “You will burn your bridges with Laing O’Rourke if you continue with the claim.” Mr Manuel says again that he took that to mean that Laing O’Rourke would not employ him again if he were to apply for a job with them, and that he would not be able to work for a subcontractor on a project being run by Laing O’Rourke.
Again, he says that he told Mr Purcell that he would follow up the next day, and at that point the call was terminated. Mr Manuel says that he understood Mr Purcell’s words, “You will burn your bridges with Laing O’Rourke,” to mean that he would not be able to gain employment with Laing O’Rourke or any subcontractor on a project being run by Laing O’Rourke if the claim continued. He said he was worried about this as he has worked for one-tier builders for a number of years, and had always preferred working for a large company. He noted there were only about seven local one-tier builders and that the nature of the industry is that construction workers regularly change employers.
He stated that he believed it was likely at some point he would be applying for work at Laing O’Rourke again or he would be applying for work with a subcontractor on a Laing O’Rourke project. He stated that the nature of the construction industry is that workers often change employers when the project they are on finishes. He said, because of this, he has always tried to keep good relationships with employers so as to have the option to go back to work for them again in order to ensure that he always had work.
He stated that in his experience, the principal contractor for a project has to approve the site access for all employees of subcontractors. He said he has seen builders refuse site access to an employee of a subcontractor if they did not want that employee on the site for some reason. He noted that such a worker was usually dismissed by the subcontractor because they cannot work on the project. He said he believed that this was what Mr Purcell was saying Laing O’Rourke would do to him if he didn’t discontinue his claim. He noted that construction workers can only work on whatever projects are active and he was concerned that he might end up unemployed because he could not work for Laing O’Rourke or work on a project run by Laing O’Rourke if they were the only projects that were active at any time that he was seeking work.
He said that at no time did he consider withdrawing the claim as he felt that Mr Purcell was threatening him and his future employment over the claim. He said that although he was worried about not being able to find work because of Laing O’Rourke at some time in the future, he did not like being threatened and only became more determined to continue with his claim by reason of the approaches. It is significant to note that the affidavit postdates the further amended statement of claim and was filed after directions were made requiring the applicant to file any affidavits that they would seek to rely upon at the hearing of the proceeding.
In the circumstances of the then-extant dispute concerning whether or not a cause of action concerning coercion could be made out and given the preceeding directions, it can be reasonably inferred that Mr Manuel’s affidavit reflected the applicant’s best case. The further amended statement of claim has been appropriately marked to indicate its amendments. The two contraventions alleged largely mirror the facts contained in the affidavit: see generally paragraphs 14 and 15 of the further amended statement of claim. It is also noteworthy that they don’t appear to be materially different to the earlier allegations alleged in the statement of claim and the amended statement of claim, except to add additional paragraphs by way of particulars which, I note, are more in the nature of argument or conclusion, rather than allegations that, in making the statements complained of, Mr Purcell threatened that the first respondent would not employee Mr Manuel.
The question then is whether these facts will give rise to a cause of action under s.343 of the FW Act. There was broadly no dispute between the parties that a correct approach to the resolution of this issue would be to consider whether the proceeding ought to be summarily dismissed adopting the well settled principles applicable to s.17A of the FCC Act.
In White Industries Australia v The Commissioner of Taxation [2007] FCA 511 at [53], the test was articulated in these terms:
“[53] The “no reasonable prospects of success” formula of s 31A is that which was adopted in r 24.2 of the United Kingdom’s Civil Procedure Rules (“CPRs”) following the recommendation of Lord Woolf, Master of the Rolls, in his Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1996), ch 12, ss 31–36. The same test has been adopted in rr 292(2) and 293(2) of Queensland’s Uniform Civil Procedure Rules 1999.
[54] Under s 31A I must be satisfied that the applicants have no reasonable prospect of success, but as s 31A(3) makes clear, this does not mean that I must be satisfied that the proceeding is hopeless or bound to fail. I suggest that the legislature’s intention in enacting s 31A was to lower the bar for obtaining summary judgment (including summary dismissal) below the level that had been fixed by such authorities as Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91–92, and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129–130: see Lawrenson Light Metal Die Casting Pty Ltd (in liq) v Cosmick Pty Ltd [2006] FCA 753 at [15]
…
[59] … In the United Kingdom it has been held in the context of the similar r 24.2 of the CPRs noted at [53] above, that the expressions “no real prospect of succeeding” and “no real prospect of successfully defending” require attention to be given to real, as opposed to “fanciful” or “merely arguable” prospects: Swain v Hillman [2001] 1 All ER 91 at 92; Three Rivers District Council v Governor and Co of the Bank of England (No 3) [2003] 2 AC 1 at [90], [95], [133]–[134], [158]–[162]; ED & F Man Products Ltd v Patel [2003] EWCA Civ 472 at [8]. The Queensland Court of Appeal has similarly held, following Swain v Hillman and Three Rivers District Council v Governor and Company of the Bank of England, that the “no reasonable prospects of success” test requires the court to determine whether there are “real” as opposed to “fanciful” prospects of success: Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 at 235.”
The question is whether the claim for coercion has no reasonable prospects, meaning no real prospect of succeeding. I have earlier addressed the principles relevant to proving coercion. The question here is whether the facts support a conclusion that the second respondent’s conduct toward Mr Manuel demonstrated an intent to negate choice and not merely to an intent to influence or persuade – thus implying a degree of compulsion, at least in a practical sense, and not to some lesser form of pressure by which Mr Manuel was left with a realistic choice as to whether to comply or not.
The statements particularised at paragraphs 14 and 15 of the further amended statement of claim, which mirror the statement provided by Mr Manuel, are incapable, in my view, of amounting to action taken with intent to coerce Mr Manuel not to proceed with the Fair Work Commission application, nor did it have that effect, as Manuel stated in paragraph 36 of his affidavit:
“At no time did I consider withdrawing the claim as I felt that Mr Purcell was threatening me and my future employment over the claim. Although I was worried about not being able to find work, because of Laing O’Rourke and at Laing O’Rourke at some time in the future, I did not like being threatened and only became more determined to continue with the claim.”
In any event, by reason of the line of authorities and submissions that I have earlier addressed, for an intent to coerce to be established, the applicant must prove that the second respondent ,Mr Purcell, acting on behalf of the first respondent had an intent to negate choice and not merely an intent to influence or persuade or to induce Mr Manuel not to exercise his workplace right. Coercion implies a high degree of compulsion, at least in a practical sense and is not some lesser form of pressure by which a person is left with a realistic choice as to whether or not to comply.
For the applicant to succeed, It is also necessary to demonstrate that the second respondent had possessed an intention to exert pressure by illegitimate or unconscionable pressure upon the will of Mr Manuel. No facts or circumstances have been pleaded or affirmed which in my view are capable of supporting a finding that the first or second respondents applied pressure that was intended to negate Mr Manuel’s choice to proceed with his Fair Work Commission application.
Indeed, it is clear from Mr Manuel’s evidence that he was left with a realistic choice as to whether or not to discontinue that application, which he took. In fact, he states that he only became more determined to continue his claim before the Fair Work Commission after speaking with Mr Purcell. The pleaded statements at paragraphs 14 and 15 of the further amended statement of claim and of paragraphs 17 and 26 of Mr Manuel’s affidavit do not support any intent to negate his choice.
Mr Purcell’s comments alleged by Mr Manuel in his affidavit, even if established in evidence, are, in my view, comments of an industrial relations adviser attempting to reach a conciliatory outcome between an employer and former employee. They are, in my view, advisory only. Mr Manuel was an ex-employee who, on the pleadings and on his own evidence, had no contemporaneous present or potential relationship with Laing O’Rourke and at the time had a realistic choice as to whether he followed Mr Purcell’s advice in respect or whether he would request his union to pursue the claim.
In my view, there was nothing pleaded or asserted to indicate that he was potentially able to be compelled, in any way, to follow the advice of Mr Purcell. There is no suggestion of any relationship that was relevant for him to be the subject of pressure. Thus, in my view the necessary intent to coerce cannot be reasonably inferred. In any event, even if I were wrong on that, it is necessary to demonstrate the second element – that is, that the conduct was unlawful, illegitimate or unconscionable.
In respect of that issue, the pleaded comments made by Mr Purcell were comments that, on the facts pleaded and filed, did nothing more than emphasise the obvious fact that disputes are often damaging to relationships. The provision of this advice to an ex-employee who, on the evidence, had no contemporaneous intention or opportunity to seek employment with Laing O’Rourke was plainly benign.
The comments can, as I’ve earlier stated, be advisory only and in those circumstances, could not, in my view, reasonably be characterised as illegitimate or unconscionable, particularly when there was nothing capable of being the subject of pressure. In my view, this is particularly so in the construction sector where, as Mr Manuel observed, there are relatively few potential employers and knowledge of those who would be considered troublemakers is more likely to be widely disseminated within that sector, in contrast to a sector where there are more operators and there is less likelihood of reputational knowledge being circulated.
Additionally, the respondents contended that the adverse action claim has no foundation in law. The applicant’s claim in respect of this matter is rather confusingly pleaded. It contends particulars at paragraphs 14 and 15 of the further amended statement of claim that the respondent took coercive action pursuant to s.343 of the FW Act by threatening to refuse to employ Mr Manuel. It alleged this constituted adverse action within the meaning of s.342(1) of the FW Act.
For reasons which follow, it is not. In any event, to constitute a meaningful cause of action, the alleged adverse action has to be causally linked to a workplace right: see s.340(1) of the FW Act. No such claim has been pleaded, although I apprehend that it was the applicant’s intention by its pleading. The pleading is defective by not making such an allegation on its face and prima facie does not disclose a cause of action for contravention of s.340(1) of the FW Act.
No reasonable cause of action has been disclosed because the applicant alleges in those paragraphs that the action taken by the first and second respondent was adverse action in accordance with that provision. In a recent decision of this Court in Stephens v Australian Postal Corporation [2013] FCCA 1988, an applicant alleged that a respondent took adverse action against him by refusing to employ him because the applicant exercised a workplace right by: (a) participating in Administrative Appeals Tribunal proceedings involving the respondent in 2010, and (b) Federal Magistrates Court proceedings involving the respondent, also in 2010.
In that case, that claim was rejected. In rejecting the claim, Judge Emmett set out at paragraphs 59 to 64 the relevant legal principles from a line of authorities on point which I will now restate.
“In Construction Forestry Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2000] FCA 1008 (“CFMEU v BHP”), Wilcox J stated at [50] as follows:
“50. A refusal to employ somebody involves discrimination or victimisation only if there was, at the relevant time, a vacancy or prospective vacancy. For that reason, I agree with, and apply to the current legislation, Moore J's observation that the reference to refusing to employ a person concerns actual employment where there is a refusal to employ a person in circumstances where, apart from the refusal, employment might or would arise."
In McIlwain v Ramsey Food Packaging Pty Ltd (2006) 154 IR 111, Greenwood J at [201] stated that before a refusal to employ an individual for a prohibited reason can arise, the individual must demonstrate that a vacancy was available to be filled. Greenwood J referred to Wilcox J’s observations in CFMEU v BHP in support of that proposition and Wilcox J at [50].
Greenwood J also referred to Fraser v Fletcher Construction Australia Ltd (1996) 70 IR 117 (“Fraser”), where Moore J stated as follows:
“…the expression “refuse to employ” deals with… actual employment where there is a refusal to employ a person in circumstances where apart from the refusal, employment might or would arise. It concerns actual and not theoretical employment.”
Greenwood J considered the decision of North J in Amieu v Belandra [2003] FCA 910 at [51], where North J suggested that a refusal to employ arises even though there may be no available vacancy. North J suggested that once an applicant proves the conduct of refusal, the onus shifts to the respondent to disprove the prohibited reason alleged. North J found that it is at this point that the absence of a vacancy may provide an innocent explanation for the conduct. His Honour stated that depending on the circumstances giving rise to the absence of a vacancy, the lack of an available position may show that the reason for the refusal to employ was not for a prohibited reason.
However, Greenwood J went on to state as follows:
“It seems to me, in having regard to the threshold conduct of a refusal to employ another person, required to be established by the applicant before s.298V [of the Workplace Relations Act 1996] has any operation, the phrase ‘logically contemplate the existence of a position to be filled or a position in prospect within the boundaries of reasonable temporal limitations. Evidence my demonstrate such a position or demonstrate in respect of a particular industry, a systemic process of casual employment or a recurrent demand within a particular industry for full time employees. It seems to me the applicant would need to adduce some evidence of a vacancy or prospective vacancy and not simply a theoretical possibility of the position.”
In Fraser, Moore J observed that no evidence had been lead to establish that vacant positions existed that the prospective employee might have been able to occupy or fill if the request for employment had not been refused.”
In considering, then, this case and applying the reasoning from the decision in Stephens v Australian Postal Corporation (supra), it seems clear that an applicant seeking to establish adverse action under item 2 of s.342(1) FW Act must first establish that the person against whom adverse action was taken was seeking employment from a prospective employer and, secondly, establish that there was a vacant position available within the prospective employer at that time or at the time the person was seeking employment. Here, the applicant has not pleaded any facts which establish or suggest that Mr Manuel was seeking to be reemployed by the first respondent. It is not sufficient for Mr Manuel to state in his affidavit that he believed it was likely that at some point in the future he would be applying for work with Laing O’Rourke again or would be applying for work with a subcontractor of Laing O’Rourke. He has not satisfied the element required to be established in Stephens v Australian Postal Corporation (supra).
The applicant, in fact, has not pleaded any facts or proffered any evidence which would establish that there was a vacant position with the first respondent for Mr Manuel to fill at the relevant time or some future point of time. Indeed, as Mr Manuel’s affidavit made apparent, there are prospectively seven first tier employers in the market. It follows that I am not satisfied that the action pleaded by the applicant had reasonable prospects of success. In my view, neither the allegations nor statements supporting those allegations could reasonably lead to the conclusion that the conduct demonstrated an intent to negate choice and were not intended to merely influence or persuade. Accordingly, the claim, in my view, has no real prospects of succeeding. Additionally, the applicant had no reasonable prospects on his best case of demonstrating a breach of a general protection.
I am satisfied that the respondents have made out a prima facie right for a claim of costs pursuant to both s.570(2)(a) of the FW Act, in that the applicant commenced the proceeding without reasonable cause and, moreover, that this finding informs a finding for a prima facie claim of right for costs under s.570(2)(b) of the FW Act. The fact that the action should never have been commenced was plainly followed by the unreasonable conduct by the applicant in failing to address the difficulties with its pleading once it was formally placed on notice that the case was fundamentally flawed in the manner that was alleged by the respondents. This, in my view, entitles the prima facie entitlement to the respondents to costs under either head.
In oral submissions, the applicant correctly contended that notwithstanding any findings made it does not follow ipso facto that costs ought to follow the event. The Court retains a general discretion. I accept that submission. The applicant further contended that the following factors militate against a costs order: first, the applicant’s filing of the notice of discontinuance is not itself informative of the applicant’s prospects of success of the proceeding. Second, that the respondent seeks a preliminary determination of issues solely on one affidavit filed by Mr Manuel, such that the strike-out would succeed on a matter of pleadings, not on its merits. Third, that there was a causal link between the discontinuance and Mr Manuel stating that he would not give evidence. Respectfully, I do not accept the applicant’s submissions on these points.
First, while it is accepted that a notice of discontinuance of itself does not inform the question of whether the action had reasonable prospects of success, the notice was filed on the eve of the hearing of the strike-out application. In my view, that was not entirely serendipitous, particularly given my other findings. Second, the applicant was given three opportunities to address its pleading. On the last occasion – that is, on 4 December – it was ordered to file a statement of claim in “complaint form” and also supporting affidavits. This was done to avoid the prospect of injustice and afford the applicant its best opportunity to present its case. The statement filed was Mr Manuel’s evidence and arguably presented his best case given the application concerned his complaint. It is expected that was, in all likelihood, the only evidence to be relied upon. It is plain, however, that that affidavit still was not enough.
Third, I have earlier expressed my suspicion about the drafting of Mr O’Brien’s affidavit. As I have earlier observed, I have afforded the respondent the benefit of the doubt in respect of the manner in which it is drafted. The fact remains that, compliant with my orders of 4 December 2013, the applicant caused an affidavit by Mr Manuel to be prepared and filed. Given the allegations, there was probably little else to do except run the matter to trial unless earlier dismissed. If Mr Manuel had decided he no longer wished to proceed to trial, the applicants could still have compelled to him attend any hearing by the issue of subpoena and simply submitted Mr Manuel as a witness for cross-examination. There was probably no further evidence-in-chief to be adduced. The case, as I state, was put at its best by the affidavit of Mr Manuel.
Nothing that the applicant has put before me persuades me I should not accept the respondents’ submissions. I am satisfied they ought to have costs. The respondents also seek costs on the indemnity basis. The application, in my view, has no merits. The respondent has complained from the outset that the applicant had no cause of action. It has not conceded the respondent’s complaints. In my view, they were well-founded and, in truth, upon a more informed consideration, more likely to have led to the applicant’s decision to discontinue than the basis contended for in submissions. In its refusal to address this concern despite adequate opportunity the applicant has, by its conduct, acted unreasonably and thus caused the respondents to incur costs.
The case, in my view, has been unreasonably prosecuted in disregard to clearly settled law. In my view, the respondents ought to be awarded its costs on the indemnity basis.
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Judge Burnett
Date: 22 December 2014
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