Communications Electrical Electronic Energy Plumbing and Allied Services Union of Australia v Western Australian Specialty Alloys Pty Ltd and Skilled Engineering Pty Ltd

[1995] IRCA 571

CATCHWORDS

INDUSTRIAL LAW - APPLICATION TO STRIKE OUT - No reasonable cause of action. RIGHT TO WORK - claims for contractual damages arising from a state registered agreement - COSTS S 347

Industrial Relations Act 1988 SS. 347, 412, 430.

COMMUNICATIONS ELECTRICAL           -v-        WESTERN AUSTRALIAN
ELECTRONIC ENERGY  SPECIALTY ALLOYS PTY LTD
PLUMBING AND ALLIED SERVICES
UNION OF AUSTRALIA       
  and

SKILLED ENGINEERING PTY LTD

No. W1 550 of 1994

Coram:     MADGWICK J
Place:      PERTH

Hearing date:                   9 October 1995

Judgment date:               12 October 1995
IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
WESTERN AUSTRALIA
DISTRICT REGISTRY
GENERAL DIVISION  No W1 550 of 1994

BETWEEN  COMMUNICATIONS ELECTRICAL
  ELECTRONIC ENERGY INFORMATION

POSTAL PLUMBING AND ALLIED

SERVICES UNION OF AUSTRALIA
  Applicant

AND  WESTERN AUSTRALIAN SPECIALTY
  ALLOYS PTY LTD

First Respondent

AND  SKILLED ENGINEERING PTY LTD

Second Respondent

CORAM::     MADGWICK J
PLACE:        PERTH
DATE:          12 OCTOBER 1995

MINUTES OF ORDER

1.         Order that the proceedings be deconsolidated.

2.        The projected amended Statement of Claim be filed, in one only of the      employees’ cases.  (That ought to suffice to raise clearly questions      which might lead to any further Notice of Motion to strike out the      amended parts of the Statement of Claim).

3.        Strike out proceeding number WI 550 of 1994 .

4.        Join the Union as a party in each of the other proceedings respectively       involving the individual employees.

5.        Order that the remaining four cases be heard together.

NOTE:           Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
WESTERN AUSTRALIA
DISTRICT REGISTRY
GENERAL DIVISION  No W1 550 of 1994

BETWEEN  COMMUNICATIONS ELECTRICAL
  ELECTRONIC ENERGY INFORMATION
  POSTAL PLUMBING AND ALLIED  SERVICES UNION OF AUSTRALIA
  Applicant

AND  WESTERN AUSTRALIAN SPECIALTY
  ALLOYS PTY LTD

First Respondent

AND  SKILLED ENGINEERING PTY LTD

Second Respondent

CORAM:      MADGWICK J
PLACE:        PERTH
DATE:          12 OCTOBER 1995

REASONS FOR JUDGMENT

MADGWICK J:       This matter concerns two Notices of Motion, one filed by each respondent. The first respondent seeks that all but one of the claims made against it be struck out, on the grounds that the court has no jurisdiction to hear them and/or that, as pleaded, the applicant’s pleading discloses no reasonable cause of action.
The second respondent by its Notice of Motion seeks that a tortious claim made against it be struck out on the ground that the court has no jurisdiction to hear it and that the applicant pay the costs of the Notice of Motion.  On the hearing of the Notice of Motion the second respondent also submitted without objection that alternatively to the jurisdictional point, the court ought decline in its discretion to hear the relevant claim.

Factual Background
The first respondent (“Specialty”) between 16 August 1993 and 10 January 1994 hired four employees, all skilled tradesmen, Messrs Fitzgerald Nettleton, Lawler and Van De Berg (“the employees”). Prior to the period during which the employees were appointed, Specialty had entered into an Enterprise Bargaining Agreement (“the first EBA”) with a state registered union. The first EBA was an industrial agreement registered pursuant to Section 41 of the Industrial Relations Act 1979 (WA) and was in force throughout the period in which the employees were engaged. The first EBA was replaced by a successor (“the second EBA”) between the same parties and likewise registered on the 15th September 1994.

Both the first EBA and the second EBA contain “Contract of Service” and “Redundancy” clauses.  In each case the Contract of Service clause provides that

“in order to terminate the employment of an employee ... the Company shall give the employee” varying periods of notice or payment in lieu. 

The redundancy clause provides that

“ an employee shall be deemed redundant in circumstances where the Company has made a definite decision that it no longer wishes the job the employee has been doing done by anyone, and this is not due to the ordinary and customary turnover of labour, and termination of the employee results.” 

The clause goes on to provide that “redundancy shall attract ” varying amounts of severance pay “in addition to the notice period provided in  Clause 7. - Contract of Service.”

The second respondent (“Skilled”) is a company which hires out skilled labour, especially to manufacturing firms such as Specialty, for maintenance and the like purposes. 

On 4 November 1994 two executives of Specialty and one from Skilled met the employees.  The employees were then advised on behalf of Specialty that its directors had the previous evening decided to have the plant maintenance performed by Skilled, so that the positions of the four employees would “become redundant”.  This seems to have been the first notice that the employees had of Specialty’s intentions.  They were advised at the meeting that Skilled had vacancies in its workforce and was willing to interview, assess and, if thought suitable, engage one or more of the employees.  They were invited to arrange interviews with Skilled’s executive who, it was said, was present at the meeting for that purpose.  The employees were then given formal notices of termination and paid what Specialty believed were their EBA entitlements. 

The course of the litigation
Proceedings were commenced by the applicant (“the Union”) and by the individual employees in late November 1994.  These followed a series of interlocutory proceedings.  At a directions hearing on 1 December 1994, Judicial Registrar Wheeler made an order described as “consolidating” the five actions, that is those by the four employees and by the Union against the two respondents.  A conciliation conference arranged by the Australian Industrial Relations Commission in January 1995 failed to resolve the matter.  Both respondents then filed Notices of Motion seeking to strike out various paragraphs of the Union’s application which, as contemplated by Judicial Registrar Wheeler, was treated as the vehicle for all claims.  The applicant filed a Statement of Claim at the end of January 1995 and during February both respondents filed amended Notices of Motion seeking to strike out certain paragraphs in that Statement of Claim.  On 7 April 1995 the Union filed a “Minute of Proposed Amended Statement of Claim” which, is to be treated as an amended Statement of Claim as a result of orders made by Spender, J. on 12 July 1995.  His Honour further made orders designed to have the two Notices of Motion amended so as to raise the issues I have indicated in relation to the Statement of Claim.

The Statement of Claim
Paragraphs 1 - 6 of the Statement of Claim outline the history of the employment, the employees’ membership of the Union, and other formal matters.  Paragraph 7 says:

“On 4 November 1994 [Specialty] terminated the employment of the employees.  The said termination was unlawful and in breach of Division 3 of Part VI A of the Industrial Relations Act 1988 (“the Act”).”

Various particulars were given in relation to this matter.
The Statement of Claim continued:

“8.  In the circumstances the termination of the employment of employees by [Specialty] was:

a)        Not for a valid reason connected with the employees’ capacity       or conduct or based on the operational requirements of the         undertaking establishment or service of [Specialty];            alternatively.
b)        Purporting to be based on the operational requirements of   

“9.  By reason of the unlawful termination of the employment of the          employees by [Specialty] the employees have suffered loss and damage.”

It is common ground that so much of the Statement of Claim raises claims of a quite conventional kind which are clearly within the jurisdiction of the court and for which there is no warrant at all for striking out. 

The Statement of Claim asserted in paragraphs 9A to 9C,in effect, that the first EBA and/or second EBA was/were a contract of employment between the employees and [Specialty] so that in the circumstances recited in the earlier paragraphs of the Statement of Claim, Specialty had “breached the [first or second] EBA as a contract of employment and ought to have damages accordingly.

A“right to work” claim
Paras. 9D and 9E went on to claim that there was “to be implied into the [first] EBA as a term thereof the right to work, that is to say the right of the employees to work for [Specialty] for life subject only to valid reasons for termination of their employment.” It was clearly asserted in argument that this right arose from the terms of Article 6 of the International Covenant on Economic Social and Cultural Rights, parts of which are set out as Schedule 8 to the Act.
Article 6 provides as follows:

1         The States Parties to the present Covenant recognise the right to work,                  which includes the right of everyone to the opportunity to gain his              living by work which he freely chooses or accepts, and will take   appropriate steps to safeguard this right.

2         The steps to be taken by a State Party to the present Covenant to   achieve the full realisation of this right shall include technical and   vocational guidance and training programmes, policies and techniques   to achieve steady economic, social and cultural development and full                    and productive employment under conditions safeguarding   fundamental political and economic freedoms to the individual.

Some context is provided by the Preamble to the Covenant which, among other things,  states that the States Parties [consider that]:

“recognition of the inherent dignity and of the equal and inalienable rights of        all members of the human family is the foundation of freedom justice and       peace  in the world ...”,

[that they recognise that]

“the ideal of free human beings enjoying freedom from fear and want can only be achieved if conditions are created whereby everyone may enjoy his economic social and cultural rights as well as his civil and political rights ”

[and realise that]

“the individual”... is under a responsibility to strive for the promotion and observance of the rights recognised in the present   Covenant,”

Two points were taken by Specialty about these claims.  The first is that the first EBA was not a contract of employment, and, eschewing mere pleading points, neither were its terms imported into the contracts of employment by operation of law or by implication, absent express incorporation: Byrne -v- Australian Airlines Limited 1994 47 FCR 300. The second is that Article 6 of the Covenant, be it taken alone or in conjunction with any conceivable characterisation of adoption, implementation or recognition of its terms by the Commonwealth Parliament, does not confer a legal right on anyone, nor does it provide any compelling analogy for the development of such a common law principle.

The practical significance of the arguments raised on behalf of the Union was that it considered that damages for breach of contract might be awarded by the court and that their measure would be a working lifetime’s earnings less any amount to be deducted for available mitigation of damage. After argument, paragraphs 9D and 9E of the Statement of Claim were withdrawn, the view apparently being taken that there was no answer to the objection to the “right to lifetime work” point. I was left to determine a claim based upon an alleged breach of contract, allegedly incorporating some or all of the terms of one or other or both of the EBAs; this is dealt with below. It was made clear, as discussed more fully below in relation to costs, that the Industrial Advocate of the Union held the view that Article 6 could be read in the way asserted in the Statement of Claim. He may not be the only person engaged in the conduct of industrial relations to so read the article. It is to be hoped that the Act, including the Schedules, will be read not only by the legally trained. The point may therefore warrant my expressing a view about it although, as events have turned out, it is unnecessary for me to do so.

Article 6 of the Covenant is alleged directly or indirectly, to be the foundation of an employee’s right to work for his/her entire working lifetime for a particular employer, once he/she has been engaged, by the employer subject only to lawful termination of the employment.  It is abundantly clear, it seems to me, that when Article 6 speaks of a “right to work” it is speaking, in the language of the Preamble, of an asserted and aspirational “economic”, “social”, or “cultural” right as distinct from what the Preamble calls “civil” or “political” rights.  The States Parties were in Article 6 subscribing to an ideal.  Article 6 might be compared, for example, with Article 8 which provides:

“The States Parties to the present Covenant undertake to ensure:..

(d)       The right to strike, provided it is exercised in conformity with the laws      of the particular country.” 

At least that is so in the present context.  If one were considering Article 6 in the context of a legal challenge to a public or private regiment of something akin to slavery, for example, the reference to free choice or acceptance of work might possibly give the Article a different flavour.

In any case, in my opinion the Article simply cannot reasonably be read as purporting to deal with a right such as the Union has wished to assert here, of a right to remain with a particular employer for one’s working life.

A claim for contractual damages arising out of an applicable State-registered industrial agreement
That left the question of whether Paras, 9A - 9C can be read so as to raise a claim that ought not to be struck out.  They are in the following form:

9A      Further or in the alternative the EBA is a contract of employment    between the employees and the First Respondent.
9B      The Applicant repeats para 1-8 hereof.  In the premises the First      Respondent has breached the EBA as a contract of employment.

9C      The employees have suffered loss and damage by reason of the First          Respondent’s breach of the contract of employment.

As Specialty submitted, the principles to be applied by a court in an application to strike out a claim either for lack of jurisdiction or upon the basis that the claim discloses no reasonable cause of action are well travelled and not really in doubt.  As Dixon J, as he then was, said in Dey -v- Victorian Railway Commissioners 78 CLR 62, 91

“A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court.  ... But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then, it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.”

Barwick CJ spoke to like effect in General Steel Industries Inc -v- Commissioner for Railways NSW 112 CLR 125, 129 - 130. His Honour said that, at times, the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the Statement of Claim even if proved cannot succeed; or “... that it is a case that does not admit of reasonable argument ... so to speak, apparent at a glance”

For myself, I am happy to adopt a test which is as high as that, as indeed I understand was Barwick CJ.  At page 130 he said:

“... in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal.”

Also, as the Union submits too,

“A court at first instance should be particularly astute not to risk stifling the development of the law by summarily throwing out of court actions in respect of which there is a reasonable possibility that it will be found, in the development of the law, still embryonic, that a cause of action does lie.  The risk of injustice to the plaintiff, which summary termination of his claim would entail, is real.  One cannot predict with firm assurance what the future holds as a final formulation of the new development.”: HCF -v- Hunt1982 44 ALR 365, 373 - 4.

The second point to be noticed however is the other one made by Barwick CJ, loc. cit.:

“On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim.  Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possible succeed.”

Byrne supra is on appeal to the High Court of Australia, there were powerful dissenting voices raised against its conclusions in the Federal Court and, although naturally of the highest persuasive authority, this Court is not technically bound by decisions of the Federal Court.  I would therefore not strike the claim out merely because it is not in accordance with Byrne.

But, again eschewing mere pleading points and lamentable as the pleading are, it was made clear in submissions that the only alleged breach of the employment contract (which I presently assume contains the terms of one or both EBA’s) is that Specialty treated the employees as “redundant” in purported reliance on the Redundancy clause, when the employees could not be said to be so, because their work was to continue to be performed by others, that is employees of Skilled.

To my mind, that course of action taken by Specialty could not possibly be characterised as a breach of contract.  It was, if anything, a misapprehension by Specialty as to its contractual position against its own contractual interests.  The Union’s submission would have the necessary effect that Specialty had simply paid some monies, redundancy pay, to the employees to which, contractually, the employees were not entitled.

I can see no way that such lack of assertion of a breach of the alleged contract might be cured by re-pleading the matter.  Accordingly the claim appears quite hopeless and should be struck out.

S.14 Fair Trading Act 1987 (WA)
Paragraphs 10 - 16 of the Statement of Claim sought to raise a particular kind of claim, namely that Specialty was guilty “in employing the employees ” of conduct which was liable to mislead them contrary to Section 14 of the Fair Trading Act 1987 (WA). In the course of argument the applicant indicated that it desired to withdraw the particulars given of this claim and to substitute a narrower form of particulars. Counsel for Specialty was unable to submit, without seeing the foreshadowed particulars, that they would still necessarily be such as to warrant the striking out of the paragraphs. Paras 10-16 should therefore be struck out, but conditional leave ought be given to amend the Statement of Claim to raise any other claim to be based on the Fair Trading Act 1987..

Claim for damages for “unconscionable conduct”
Paragraphs 17 and 18 sought to assert a claim for damages based upon “unconscionable” conduct on the part of Specialty allegedly by acting in contravention of the first or the second EBA.  That claim was withdrawn. 

Claim for Slander.
Paragraphs 21 and 22 put forward a claim for damages for slander of the employees by unknown servants or agents of Specialty who were alleged to have stated to an organiser of the Union words to the effect that “the employees had been sacked and that if they put one foot on the premises they would be escorted off the premises by police.”  This claim was withdrawn in the course of argument.

Costs
Thus, every claim but one sought to be made in the associated jurisdiction of the court and as pleaded at the date of the hearing of the Notice of Motion was withdrawn after argument.  There was nothing in the oral argument which materially added to an “Outline of Submissions” prepared, filed and served by the solicitors for Specialty by 3 October, six days before the matter came on for hearing.  It is quite clear that the matters later withdrawn were not reasonably raised in the first place.  In the circumstances of this case their withdrawal is a cogent indicator that that was so, although in other cases the mere fact of a claim being withdrawn would not necessarily point in that direction.

In relation to the remaining claim in the associated jurisdiction, Paragraphs 9A to 9C of the Statement of Claim, which I have struck out, it follows from the tests that I have adopted that I would not have done so if there were any arguable basis for the claim thereby sought to have been advanced.  It follows that that claim also, in my view was instituted without reasonable cause. 

In saying that I am not wishing to denigrate the approach of anybody, union official or lawyer, who might wish to present novel, difficult or, in terms of the preceding law, even barely arguable claims for the opinion of the court, but in my view in respect of each of these claims, once a little time had been taken to understand what was being put forward, one could in the words of Barwick, C.J., supra, “see at a glance” that they are quite untenable.

The question arises whether a portion of the costs of the proceedings ought and can be awarded against the Union. Counsel for the Union informed the Court that all matters were brought forward because an officer of the Union desired that it be tested how widely the net could be cast in a case like this, by the use of the court’s associated jurisdiction under Section 430 of the Act, in an effort to overcome the statutory limitation (S.170 EE) on the amount that might be awarded to an employee whose employment had been unlawfully terminated. I say at once that, in principle and acting with considerable restraint about this matter, I do think that there is a proper case for the ordering of costs if that can be done. In relation to the proceedings to date, taken as a whole, there would be some practical difficulty, no doubt, in untangling the proportion of the costs of the action to be attributed to the now abandoned or struck-out claims, on the one hand, and the perfectly proper claims which remain for consideration, on the other. But that would hardly be impossible. In relation to the Notice of Motion itself, it is much simpler: Specialty has succeeded in substance as to the entirety of the matters which it sought to eliminate from the Statement of Claim.

I am of the view, however, that the court does not have power to order costs as sought by Specialty essentially because it cannot be said that the entire proceeding, as dsistinct from separate claims within it, was brought without reasonaable cause (there seems no need to consider separately any question of vexation). 

The Union is, in my view, a party to a proceeding, namely that proceeding seeking the multiple kinds of relief in the Statement of Claim, in a matter arising under the Act within the meaning of Section 347 of the Act. I agree with the reasoning of Gray J in Bostik (Aust) Pty Ltd -v- Gorgevski No. 2 1992 36 FCR 439 at P.445. In particular, as His Honour said,

“There is no warrant in Section 347 for treating several claims brought together in the one proceeding as if they were separate proceedings.”

I also think that that single proceeding was a proceeding in “a matter arising under the Act”. I would adopt the reasoning of Gray J at pages 445 and 446 of the same case. The subject of the Statement of Claim as it concerns Specialty was a single “matter”. That matter is the justiciable controversy between the parties over the dismissal of the employees by Specialty and the legal consequences of that dismissal. It arose under the Act because it depended for its existence upon the rights given to employees in relation to the termination of their employment by the Act and upon the jurisdiction of the Court to entertain those claims and others that might be brought in the associated jurisdiction of the court under the Act. As it turns out, the withdrawn or rejected claims, originally said to have been associated with the claims inescapably and directly dependent upon the Act, have been found to have been instituted without reasonable cause. But that does not mean that they were not part of that controversy. The controversy was justiciable, even if not in some, indeed most, of the ways asserted by the Union.

The policy inherent in Section 347 of the Act indicates in my view that it ought not to be narrowly interpreted. Legal proceedings arising under the Act are very apt to have economically, and also in some cases socially and politically, volatile contexts. In my opinion, Parliament has evidently had for a great many years, as expressed in Section 347 and its predecessor, the purpose of encouraging parties to industrial relations conflicts to bring their contentions, if they can be legally framed in a reasonable way, to the court without fear of having to pay the costs of those with whom they are in perceived legal conflict. It is clear that Parliament intended that this be so, even at the risk of considerable and not infrequent injustice to those other parties. Accordingly, the characterisation of whether a particular claim is contained within a matter arising under the Act should not proceed on any narrow basis. The considerations adverted to by Gray J in the same case at p.447, upon the question of how ready the court will be to hold that proceedings actually were instituted “vexatiously or without reasonable cause”, are also, in my view, in point on the different question which I am considering.

Counsel for Skilled was content to have the proceedings against it adjourned to enable the determination of its Notice of Motion after the termination of the proceedings against Specialty, if ever necessary.  This was a practical approach in my opinion and I gave directions to give effect to that approach.

Enough has been said to indicate that, procedurally, the reservations expressed at an earlier directions hearing by Spender J as to whether properly speaking the proceedings should have been consolidated may have been well grounded.  This is not to be critical of the learned Judicial Registrar who, as I would understand simply acceded to the joint approach of the parties in the matter. The essence of consolidation properly so called, as I understand it, is that the causes and proceedings that have been consolidated thereafter run as a single proceeding.  Consolidation may be sometimes be convenient, but it is difficult to see here why what was sought to be achieved cannot be achieved merely by the matters being heard together or by picking one as a test case and staying the others pending the result of it.  As there seem to be some matters common to the four employees’ cases, it seems to me that the proper order is that the matters be heard together. What makes consolidation inappropriate here is that the proceedings could not properly and conveniently have been originally joined.  There are afterall four separate employees whose rights and entitlements particularly in relation to the question of whether the termination of their respective employments was harsh unfair or unjust may differ considerably.

What I think should be done procedurally is as follows:

1.         Order that the proceedings be deconsolidated.

2.        The projected amended Statement of Claim be filed, in one only of the      employees’ cases.  (That ought to suffice to raise clearly questions      which might lead to any further Notice of Motion to strike out the      amended parts of the Statement of Claim).

3.        Strike out proceeding number WI 550 of 1994 .

4.        Join the Union as a party in each of the other proceedings respectively       involving the individual employees.

5.        Order that the remaining four cases be heard together.

I certify that this and the preceding (16) pages are a true copy of the Reasons for Judgment of his Honour Justice Madgwick.

Associate:
Dated:  `12 October 1995

APPEARANCES

Counsel for the Applicant:  J. Courtis
Solicitor for the Applicant  Wojtowicz Kelly
Counsel for the First Respondent                  A. Colgate
Solicitor for the First Respondent                 Freehill Hollingdale & Page
Counsel for the Second Respondent             F. Parry
Solicitor for the Second Respondent             Mossensons

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
WESTERN AUSTRALIA
DISTRICT REGISTRY
GENERAL DIVISION  No W1 550 of 1994

BETWEEN  COMMUNICATIONS ELECTRICAL
  ELECTRONIC ENERGY INFORMATION
  POSTAL PLUMBING AND ALLIED
  SERVICES UNION OF AUSTRALIA
  Applicant

AND  WESTERN AUSTRALIAN SPECIALTY
  ALLOYS PTY LTD
  First Respondent

AND  SKILLED ENGINEERING PTY LTD
  Second Respondent

CORAM:  MADGWICK J
PLACE:    PERTH
DATE:     12 October 1995

CORRIGENDA

Please note on page 5 in paragraph commencing “It is common ground” the word “for” in second line should read “as to” and the word “them” should be inserted before the last word “out” which should read “striking them out.”

On page 8 in paragraph commencing “At least that is so” the word “regiment” in the second line should read “regimen.”

On page 10 where the words “Also, as the Union submits too” the word “too” should be deleted and it should read:- “Also, as the Union submits,”

On page 11 the word “pleading” in first line of first full paragraph should read “pleadings.”

On page 17  the word “afterall” in fourth line should be two words “after all” and sixth line there should be a comma after unjust, it should read “unjust, may differ considerably.”

Associate:

Dated:  31 October 1995