Fair Work Ombudsman v Toyota Material Handling (NSW) Pty Limited
[2013] FCCA 1881
•18 November 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v TOYOTA MATERIAL HANDLING (NSW) PTY LIMITED | [2013] FCCA 1881 |
| Catchwords: INDUSTRIAL LAW – Workplace agreements – alleged contraventions of post-reform Workplace Relations Act – duress – meaning of term duress in workplace relations legislation – where employees hired under AWA as field service technicians in 2005 and early 2006 but transferred to specific site to perform shift work in January and February of 2006 – where AWA did not cover conditions of employment at specific site – where employees offered Individual Transitional Employment Agreements (ITEAs) to cover site specific work on 9 March 2009 – where concerns raised about draft ITEAs – where amended ITEA offered on 30 April 2009 – where employees informed that ITEAs had to be signed by “deadline” of 1 May 2009 – where employees informed that if ITEAs not signed by deadline they would be rotated off shift work at specific site – where ITEAs signed by employees – whether respondent engaged in conduct the effect of which left its employees no real choice – whether respondent intended conduct to have that effect – whether conduct unlawful – where employees members of union – whether employees at situational disadvantage – whether employees rendered unable to make a judgment in their own best interests – whether employees had a legitimate expectation to remain at specific site – whether conduct unconscionable or otherwise illegitimate – whether respondent applied duress within the meaning of s.400(5) of the post-reform Workplace Relations Act – whether respondent failed to take reasonable steps to provide employees with ITEAs seven days before they were approved – whether respondent failed to provide Information Statement at least seven days before the ITEAs were approved. | |
| Legislation: Workplace Relations Act 1996 (Cth) ss.170VO, 170VO(1)(c). 170VP , 170WH, 349(2), 170WG | |
| Briginshaw v Briginshaw (1938) 60 CLR 336 Brown v Dunn (1893) 6 R. 67, H.L Qantas Airways Ltd v Gama [2008] FCAFC 69 Barton v Armstrong [1976] AC 104 Pao On v Lau Yiu Long [1980] AC 614 Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366 Crescendo ManagementPty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Australia & New Zealand Banking Group Ltd v Karam (2005) 64 NSWLR 149 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 Fair Work Ombudsman v National Jet Systems Pty Ltd [2012] FCA 243 Schanka v Employment National (Administration) Pty Ltd (2000) 97 FCR 186 Schanka and Others v Employment National (Administration) Pty Ltd (1999) 166 ALR 663 Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276 Bishop v Ropolo Services Pty Ltd [2006] FCA 592 Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union (2001) 109 FCR 378 National Tertiary Education Industry Union v Commonwealth of Australia [2002] FCA 441 Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 195 ALR 502 |
| Applicant: | FAIR WORK OMBUDSMAN |
Respondent: | TOYOTA MATERIAL HANDLING (NSW) PTY LIMITED |
| File Number: | SYG 1356 of 2011 |
| Judgment of: | Judge Raphael |
| Hearing dates: | 16 & 17 September 2013 |
| Date of Last Submission: | 11 November 2013 |
| Delivered at: | Sydney |
| Delivered on: | 18 November 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr P McDonald SC |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondent: | Mr J H Pearce |
| Solicitors for the Respondent: | Holding Redlich |
THE COURT DECLARES THAT
The respondent contravened section 170VP of the pre-reform WR Act by making a statement in a declaration to the Office of the Employment Advocate on 24 March 2006 that it knew, or ought reasonably to have known, was false or misleading.
The respondent contravened subsection 400(5) of the WR Act by making a statement to Mr Morrow, Mr Dafo and Mr Gould on 1 May 2009 which amounted to the application of duress in connection with an ITEA.
The respondent contravened subsection 337(8) of the WR Act by failing to take reasonable steps to ensure that Mr Morrow, Mr Dafo and Mr Gould had, or had ready access to, a copy of their ITEA for 7 days before approval.
The respondent contravened subsection 337(9) of the WR Act by failing to take reasonable steps to ensure that Mr Morrow, Mr Dafo and Mr Gould were given an information statement at least 7 days before approval.
ORDERS
Pursuant to section 170VV of the pre-reform WR Act the respondent pay a penalty in respect of the contravention of section 170VP of the pre-reform WR Act.
Pursuant to section 407 of the post-reform WR Act the respondent pay a penalty in respect of the contravention of subsection 400(5) of the post-reform WR Act.
Pursuant to section 407 of the post-reform WR Act the respondent pay penalties in respect of the contraventions of subsections 337(8) and 337(9) of the post-reform WR Act.
Pursuant to subsection 546(3) of the Fair Work Act 2009 (Cth) all pecuniary penalties imposed be paid into the Consolidated Revenue Fund of the Commonwealth.
Payment of the penalty to the Commonwealth be paid within twenty-eight days of the date of the order for payment.
The parties file and serve submissions upon penalty within 14 days.
If any party wishes to be heard to those submissions application shall be made to my associate for a hearing date with an estimate of time and available dates between now and 30 March 2014.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1356 of 2011
| FAIR WORK OMBUDSMAN |
Applicant
And
| TOYOTA MATERIAL HANDLING (NSW) PTY LIMITED |
Respondent
REASONS FOR JUDGMENT
This matter was brought to the court on the basis of an Amended Statement of Claim filed on 22 December 2011. The applicant seeks penalties against the respondent and declarations that it contravened the pre-reform Workplace Relations Act 1996[1] arising out of the manner in which an Australian Workplace Agreement[2] was entered into between it and one of its employees, Mr Bryson Morrow, in 2006. It also seeks penalties and declarations in respect of alleged contraventions of the post-reform Workplace Relations Act 1996[3] arising out of events surrounding the signing of Individual Transitional Employment Agreements[4] by Mr Morrow and two others in May 2009.
[1] “WR Act”
[2] “AWA”
[3] “Post-reform WR Act”
[4] “ITEA”
Toyota Material Handling (NSW) Pty Limited[5] provided services to customers involving the service and repair of mobile plant and equipment including forklifts and other vehicles. It employed service technicians to carry out these tasks. Mr Bryson Morrow was such a service technician who commenced employment with TMH on 20 June 2005. At first he worked out of the Newcastle office of TMH servicing customers in that area including Hydro Aluminium Kurri Kurri Pty Limited which had an aluminium smelting facility at Kurri Kurri known as the Hydro site. In or about January 2006 TMH won a contract to undertake all servicing activities at the Hydro site and so determined to employ four service technicians including Mr Morrow on a permanent rotating shift basis there. Prior to this time Mr Morrow had been employed as a service technician on a day shift basis. Employment at the Hydro site on the rotating shift basis involved a considerable uplift in his remuneration because of shift penalties and loadings. This was an advantageous arrangement for Mr Morrow whose wife had recently given birth to their second child. He agreed to the proposal and commenced work on 7 January 2006. He remained employed exclusively at the Hydro site until around June 2010. There were also employed at the Hydro site as service technicians Mr Gould, Mr Dafo and a Mr Perry.
[5] “TMH”
In 2009 TMH decided to replace the AWAs under which the service technicians were working with more site specific ITEAs. It is the way in which TMH approached the signing of these agreements that constitutes the second part of the Amended Statement of Claim and the declarations and penalties sought.
In short, it is alleged that TMH applied duress to Mr Morrow in the manner in which it required him to sign his AWA and then made false and misleading statements in the declaration required under s.170VO of the WR Act. It is also alleged that TMH did not provide Mr Morrow with a copy of his AWA fourteen days prior to signing. The applicant also alleges that TMH failed to give copies of certain documents to Mr Morrow as soon as practicable as required by the Act. The relevant statutory requirements will be set out in more detail below. With regard to the breaches of the WR Act in respect of the ITEAs it is alleged that TMH applied duress to Mr Morrow, Mr Gould, Mr Dafo and Mr Perry in connection with the signing of those documents, that TMH failed to take reasonable steps to ensure that they had or had ready access to a copy of the ITEA seven days before the agreement was approved and that TMH failed to take reasonable steps to ensure that Mr Morrow, Mr Gould and Mr Dafo were given an Information Statement at least seven days before the ITEAs were approved.
TMH denies these allegations. In particular it maintains that no duress was applied to Mr Morrow in 2006 or to he, Mr Gould, Mr Dafo and Mr Perry in 2009. Alternatively, in respect of the 2006 incident it argues that it is not responsible for the actions of Mr Hughes, its employee who made the statements alleged to constitute duress. In these reasons the court shall deal first with the 2006 incident and then with the 2009 incident.
The 2006 incident
In late 2005 through to mid-2006, the material time for the purposes of the alleged contraventions, the WR Act contained a scheme that applied to employers who sought to utilise AWAs as their method of organising the employment contracts they had with their employees. The scheme set out requirements relating to the way in which the AWAs were presented to the employees and dealt with after they were signed intended to ensure that the employees were aware of what they were signing and did so voluntarily. The first relevant requirement was that the employer was required to provide its employee with a copy of the proposed AWA at least fourteen days before the AWA was signed. This requirement came about as a result of a publication by the Employment Advocate of a notice in the Gazette on 11 December 2002 pursuant to the provisions of s.170VO(1)(c). Section 170VO also sets out other requirements for an AWA:
“170VO Filing requirements
AWA
(1) The filing requirements for an AWA are:
(a)the AWA must be signed and dated by each of the parties, and the signatures must be witnessed; and
(b)the AWA must be accompanied by a declaration by the employer:
(i)declaring that the AWA complies with section 170VG; and
(ii)declaring that, before the employee signed the AWA, the employer gave the employee a copy of an information statement prepared by the Employment Advocate; and
(iii)declaring whether or not the employer has offered an AWA in the same terms to all comparable employees; and
(c)the employer must have provided any other information that the Employment Advocate requires, by notice published in the Gazette, for the purpose of performing his or her functions.”
After an AWA had been signed and filed with the Employment Advocate copies of the relevant documents were required to be given to the employee pursuant to s.170WH:
“170WH Employer must give copies of documents to employee
(1) As soon as practicable after an employer receives any of the following documents from the Employment Advocate or Commission, the employer must give the employee a copy of the document:
(a) a filing receipt;
(b) an approval notice, refusal notice or referral notice;
(c) an AWA or ancillary document, as approved.
(2) The employer must give the employee any other document prescribed by the regulations, within the period required by the regulations.”
The employer was required to make accurate declarations. This is s.170VP:
“170VP Employer’s declaration must be accurate
An employer must not, in a declaration filed with the Employment Advocate for the purposes of this Part, make a statement that the employer knows, or ought reasonably to know, is false or misleading.”
Finally, and most importantly, a person must not apply duress or make a false statement in connection with an AWA in contravention of s.170WG:
“170WG Persons must not apply duress or make false statements in connection with AWA etc.
(1) A person must not apply duress to an employer or employee in connection with an AWA or ancillary document.
(2) A person must not knowingly make a false or misleading statement to another person with the intention of persuading the other person to make, or not to make, an AWA or ancillary document.”
In Mr Morrow’s affidavit sworn on 22 September 2011, he deposes that from 20 June 2005 until 29 April 2006 he understood his terms and conditions of employment with TMH were set out in the New South Wales Metals Award. He said that there was some talk about AWAs in June 2005 but he heard no more about this until January 2006 when he started to work at the Hydro site. He then became aware that some employees of TMH had signed AWAs but he claims that he did not sign one until the events of 23 March 2006. In particular he denied that he received an AWA, an AWA cover letter or employee Information Statement upon commencing employment with TMH in June 2005 nor did he receive such documents in December 2005, in particular he did not receive an AWA dated 9 December 2005 until March 2006. What he does say is that the AWA that he received on 23March 2006 was dated 9 December 2005:
“[31]When reviewing the AWA Document I saw that the second page of the AWA Document was dated 9 December 2005. I thought this was strange because the current date was 23 March 2006. I do not recall ever receiving any document from TMH that was titled an Australian Workplace Agreement, prior to 23 March 2008. I do not recall asking Mr Hughes any questions about the date on the AWA Document. Mr Hughes never said anything to me during the conversations referred to in paragraph 26 above to the effect that I had previously signed or been provided with a copy of the AWA.”
It is the respondent’s case that on or about 9 December 2005 Mr Mills printed out an AWA for a number of employees including Mr Morrow together with cover letters and Information Statements and put them in a pack which he and Mr Keeping distributed to the employees during that month. Mr Mills claims that it was his practice to tell employees that they had to hold on to the document for at least fourteen days before it was signed. However, he is unable to be firm in his recollection that he actually gave a copy of this pack to Mr Morrow or said those words to him. Neither can he say that Mr Morrow signed the AWA in his pack until sometime between 23 February and 23 March 2006 in respect of which he says:
“Mr Morrow returned a signed AWA to the Newcastle branch office. I cannot now recall the exact date that I received a copy but I refer to this fact in an email dated 23 March 2006 which I sent to Ms Soud at 10.47 am. In that email I informed Ms Soud that Mr Morrow had returned his signed AWA… I informed Ms Soud that Mr Morrow had returned his AWA because I had seen it and placed it in the overnight delivery bag to her before 23 March 2006. I aware that Mr Morrow had returned his signed AWA because of my direct involvement in seeing and returning it to the head office of TMH (NSW) and not because someone else informed me at the time that Mr Morrow had returned the signed AWA.”
However, under cross examination Mr Mills said words to the effect that he could not say anything about the AWA that Mr Morrow signed before 23 March 2006. He had his name ticked off on a spread sheet but that spread sheet could not be produced. He could not say if the AWA annexed to the email was that of December 2005. He could not say if there were any changes to the AWA from December to March although Mr Morrow pointed out that the December AWA that he was shown in evidence contained a pay rate of $20.00 per hour whereas the AWA he signed had a pay rate of $23.00. What is clear from the evidence is that by 23 March 2006 Ms Soud and those in the TMH head office were very anxious that all AWAs be signed by 23 March. There is annexed to Mr Mills’ affidavit a chain of emails between him and Ms Evelyn Soud in the TMH legal department which has Mr Mills insisting that Mr Morrow had signed and had returned an AWA, Ms Soud not being able to find the document and eventually on 23 March 2006 writing as follows:
“So that I have the signed AWA prior to tomorrow’s deadline please fax me a copy of the signed AWA and I will arrange for electronic lodgement. The original AWA can follow by mail. We are having trouble finding Bryson’s AWA – it is not on our file with Dave – please can you get him to resign the AWA – you can sign for TMH (NSW) and have it witnessed and faxed to me for lodgement given that nothing has changed from the earlier version – Bryson can sign the AWA document straight away.”
Mr Morrow deposed that on 23 March 2006 he was approached by Mr Paul Hughes. He knew that Mr Hughes was a branch service supervisor at the Newcastle branch. He had reported to Mr Hughes when he was a general service technician. He did not report directly to Mr Hughes after he became employed full time at the Hydro site. However, he did have contact with Mr Hughes from time to time at the Newcastle branch office. Mr Morrow deposed that Mr Hughes approached him about 3.30 in the afternoon with a document in his hand. They had a conversation in which words to the following effect were said:
“[26]When Mr Hughes approached me, as referred to in the paragraph directly above, I saw that he had a document in his hand. Mr Hughes and I had a conversation in words to the following effect:
Mr Hughes:“Hi Bryson, can I talk to you? Look as you know we have AWAs here and I’ve been sent up here to get you to sign this”.
Me:“Do I have to read it here and now? I mean, I’m not going to sign something like this without reading it”.
Mr Hughes:“It has to be signed today so have a read through it now.””
Mr Hughes then gave Mr Morrow the AWA. He read through it over the next half hour whilst Mr Hughes paced back and forth. He noted that the second page of the AWA document was dated 9 December 2005 which he thought strange but he said nothing about it. He then deposes:
“[32]Having read the AWA Document quickly, I could not see any clauses that really affected my entitlements as a shift worker because the AWA Document was very general, however, I saw that one of the last paragraphs in the AWA document, prior to the annexures, stated:
“As an existing employee of TMH (NSW) you must wait 14 days before you sign and return the Agreement to your manager. TMH (NSW) is also obliged to collect the additional information set out in the attached form and provide you with the attached brochure.
Please read all the information provided to you and feel free to approach me to discuss any questions you have in relation to this agreement.”
[33]Upon seeing the requirement that I had to wait 14 days before signing the AWA (as referred to in the paragraph directly above), I showed the paragraph to Mr Hughes and we had a conversation in words to the following effect:
Me:“Paul, this says I have to wait 14 days before I sign. I’ll actually be in breach of the document if I sign now. What happens if I don’t sign? What do I do?”
Mr Hughes:“Look, I’ve been told by management to tell you that if you don’t sign it you can leave your keys to the van on the table.”
Me:“Are you serious?”
Mr Hughes nodded his head and did not say anything further.”
Mr Morrow deposed that he understood Mr Hughes’ comment about leaving his keys on the table to mean that he either had to sign the agreement at that time or he would lose his job:
“I made this assumption because of Mr Hughes’ demeanour and also on the basis of the normal meaning of the words. I understood that Mr Hughes’ reference to “keys to the van” was a reference to the keys to my company van. I didn’t think that Mr Hughes would have the authority to terminate me on the stop if I did not sign the AWA. However, as I knew that Mr Hughes reported to Mr Keeping and Mr Keeping to Mr Mills I considered that Mr Hughes would communicate my response to Mr Keeping and Mr Mills and I understood that Mr Keeping and Mr Mills had authority to terminate my employment.”
Mr Morrow deposed that he thought about his family, the fact that he had a two month old baby and that his wife was at home having taken time off work to look after the baby. He felt that he had no choice but to sign the AWA straight away. He did so and in or around July 2008 he received an approved copy of the document from Mr Hughes. He claims that he never received a copy of the Information Statement either on 23 March or in December 2005 but he agreed that a few days after he signed the AWA he received a letter from the Office of the Employment Advocate advising him that the AWA was being considered. He did not receive a copy of a document called or identified as a filing receipt or approval notice for the AWA from TMH at any time.
Mr Morrow was cross examined upon his evidence. He agreed that he had no philosophical objection to signing an AWA between December 2005 and March 2006 but he did have concerns about the document that he eventually signed because it did not appear to be specific to the job that he was doing. It did not set out what the specific entitlements were for a person like him working continuous shifts. He was cross examined about the letter he received from the Employment Advocate dated 24 March 2006. He agreed that he read it. The letter states relevantly:
“Why have I received this letter?
This letter is to confirm that you recently made an Australia workplace agreement (AWA) with your employer. The AWA is currently being considered by our office. If approved, the AWA will provide the legal basis for your pay and other employment conditions.
Am I required to reply to this letter?
You do not need to reply to this letter if the following statements are true
·I signed the AWA.
·I genuinely consented to making the AWA.
·My employer explained the effect of the AWA to me before I signed it.
·I received the AWA the required number of days before signing it.
oThe Required days if signing after commencement of the employment to which the AWA relates is 14 days.
oThe Required days if signing before or at the time of commencement of the employment to which the AWA relates is five days.
If one or more of the statements above is not true, what should I do?
You should reply to this letter within 14 days from the date of this letter. You will need to advise this Office which statements are false. There are two ways you may reply to this letter…”
Mr Morrow was asked why he didn’t reply when he was alleging that he neither genuinely consented to the making of the AWA or that his employer explained the effect of it before he signed it. He was also alleging that he did not receive the AWA fourteen days before he signed it. In response Mr Morrow said that he was in fear of his job and where he stood vis a vis TMH. He said that was the case all the way through. He had a new born baby at home and his wife was not working. He agreed that he had not complained about the matter until June or July 2009 but said that whilst he knew he could have complained before he did not for the security of his family. It was suggested to him that his complaint followed hard upon him getting a final warning about his work performance in 2009. Mr Morrow responded that he did get the final warning but he took the matter up with Mr Wilson because he claimed the alleged offence of not reporting the number of hours that machinery had been in operation when certain repairs were carried out was a common one. He said that Mr Wilson agreed and tore up the final notice.
The respondent argues that one must apply the “Briginshaw standard” when coming to a decision as to whether certain events constituted contravention of the Fair Work Act. What fell from the court in Briginshaw v Briginshaw (1938) 60 CLR 336[6] has been explained in the context of racial discrimination by Branson J in Qantas Airways Ltd v Gama [2008] FCAFC 69. Her Honour warned against the use of such expressions as “the Briginshaw standard” and “the Briginshaw test” as being misleading, and went on to opine at [124-126]:
124 It is appropriate to start by referring to the well known statement of Dixon J in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-362:
Fortunately ... at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved.
The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding, are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.
125 I note, incidentally, that in the above passage Dixon J speaks of ‘allegations’ rather than, for example, causes of action. His Honour was concerned, as it seems to me, with the appropriate standard of persuasion in respect of individual allegations of material fact rather than with the standard of persuasion appropriate to be adopted in respect of all allegations made in a particular civil proceeding.
126 More importantly for present purposes, Dixon J did not purport to identify any particular standard; rather his Honour made plain that before accepting the truth of evidence of a particular allegation, the tribunal should give consideration to the nature of the allegation and the likely consequences which will follow should it be accepted. As his Honour observed, the common law has not developed a third standard of persuasion; it acknowledges only the two standards – the criminal standard of beyond reasonable doubt and the civil standard of balance of probabilities or reasonable satisfaction.
[6] “Briginshaw”
Branson J then noted that the Evidence Act 1995 (Cth)[7] provides the correct approach to the standard of proof to be followed by the Federal Magistrates Court, as this court then was, and her Honour cited (at [127]) s.140 of the Evidence Act:
“(1) in a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.”
[7] “Evidence Act”
Her Honour concluded at [139]:
“As I have already indicated, I agree with the conclusion of French and Jacobson JJ that the Federal Magistrate’s reasons for judgment do not disclose any error in the application of the applicable standard of proof to Mr Gama’s allegations. However, in my view, for the reasons given above, references to, for example, "the Briginshaw standard" or "the onerous Briginshaw test" and, in that context, to racial discrimination being a serious matter not lightly to be inferred, have a tendency to lead a trier of facts into error. The correct approach to the standard of proof in a civil proceeding in a federal court is that for whichs 140of theEvidence Actprovides. It is an approach which recognises, adopting the language of the High Court in Neat Holdings, that the strength of the evidence necessary to establish a fact in issue on the balance of probabilities will vary according to the nature of what is sought to be proved – and, I would add, the circumstances in which it is sought to be proved.”
The court has applied her Honour’s reasoning in coming to its views upon the evidence presented.
The contravention of applying duress to a person in connection with the signing of an AWA is one of the most serious offences under the FWA. The only contradictions to Mr Morrow’s evidence are based on Mr Mills’ general recollections, none of which are able to be corroborated in documentary form. He says that the December AWA was given to Mr Morrow but was not signed until February but there is no documentation indicating that he has reminded Mr Morrow that he has the document for some months and should return it signed. He says that he gave him a pack with all the accompanying documents to the AWA. There is no written evidence about that. He says he returned the signed AWA sometime after 23 February but there is no written evidence such as an accompanying email or letter and the document could not be found. There is no indication from the witnesses from head office that they knew they had received the document or recalled receiving the document. Mr Morrow’s evidence was not seriously challenged. Perhaps the most serious challenge was around his inaction over the letter he received from the Employment Advocate. Why did he do nothing about it if he was so concerned about the AWA? Mr Morrow gives a response. He was frightened for his job. This is not an unreasonable response given the threat he says was made to him by Mr Hughes. He had a wife with a young baby at home. This is accepted. He had no particular problems with the AWA. It gave the correct hourly rate of pay although it did not set out the shift loadings and penalties to which he was entitled. However, he continued to be paid as he had been previously so one can understand why he did not wish to rock the boat. Taking all these matters into consideration I am of the view that I believe that I can accept Mr Morrow’s evidence about what occurred on 23 March 2006 and in particular the following:
i)The conversation with Mr Hughes as deposed to by Mr Morrow. Mr Hughes did not give evidence at the hearing.
ii)That the only document Mr Morrow received from Mr Hughes on that date was the AWA. He did not receive any of the other documents in the “package”.
iii)He had not received the AWA fourteen days prior to his signing.
iv)Mr Hughes did not explain the effect of the AWA to him before he signed it.
v)He did not receive a copy of the filing receipt, approval notice and AWA as approved from TMH.
It would follow from these findings that when TMH made a statement in a declaration filed with the Office of the Employment Advocate in respect of Mr Morrow’s AWA to the effect he had received a copy of his AWA at least the required number of days before signing that statement was false and misleading.
It also follows from these findings that I am satisfied that TMH is in breach of s.170WH and 170VP. There is outstanding the serious dispute between the parties as to whether or not the action of Mr Hughes that I have found took place is a contravention of s.170WG on the part of TMH. In the Amended Statement of Claim at paragraph 20 the liability of TMH for Hughes’ conduct is stated to be as follows:
“[20]By email dated 23 March 2006, Evelyn Moodley advised David Mills that Morrow had to sign his AWA that same day, 23 March 2006. Mills is the Newcastle Branch Manager. Hughes reports directly to Mills. When Hughes made the Statement to Morrow, Hughes was acting on the direction given to him by Mills and within the scope of his responsibilities as Service Manager of TMH (NSW). The Statement is taken, by reason of subsection 349(2) of the pre-reform WR Act, to be engaged in by TMH (NSW).”
Mr Mills denies that he gave any instructions to Mr Hughes to threaten Mr Morrow with loss of his employment should he not sign the AWA that day. He agrees that he asked Mr Hughes to get Mr Morrow’s signature on the document but this was done as a matter of convenience only as Mr Hughes lived near the site and was able to go to it without difficulty. Mr Hughes, he says, was acting as a messenger and not as an employee superior in the chain of command to Mr Morrow. Mr Morrow acknowledged that he did not believe that Mr Hughes could himself dismiss him. Mr Hughes did not give evidence. To this extent Mr Mills’ evidence is un-contradicted and I cannot be satisfied that Mr Hughes was acting on any direction from Mr Mills to make the threat that I believe he did make. Section 349(2) of the WR Act states:
“349 Conduct by officers, directors, employees or agents
(1) Where it is necessary to establish, for the purposes of this Act or the BCII Act, the state of mind of a body corporate in relation to particular conduct, it is sufficient to show:
(a) that the conduct was engaged in by an officer, director, employee or agent of the body corporate within the scope of his or her actual or apparent authority; and
(b) that the officer, director, employee or agent had the state of mind.
(2) Any conduct engaged in on behalf of a body corporate by:
(a) an officer, director, employee or agent of the body corporate within the scope of his or her actual or apparent authority; or
(b) any other person at the direction or with the consent or agreement (whether express or implied) of an officer, director, employee or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the officer, director, employee or agent;
shall be taken, for the purposes of this Act or the BCII Act (as the case requires), to have been engaged in also by the body corporate.
(3) A reference in this section to the state of mind of a person includes a reference to the knowledge, intent, opinion, belief or purpose of the person and the person’s reasons for the intent, opinion, belief or purpose.”
The evidence is not sufficient for me to make a finding of a contravention by TMH pursuant to s.349(2)(b). It is not sufficient to find that Mr Mills told Mr Hughes to make the threat he did even if I applied the rule in Brown v Dunn (1893) 6 R. 67, H.L. that the absence of evidence from Mr Hughes entitles me to make an inference that nothing he might say could assist the respondent. I did not make any serious finding of untruthfulness in Mr Mill’s evidence and that is all that was available to me.
The 2009 incident
Between April 2008 and April 2009 Mr Morrow raised a number of issues about his employment conditions. In about November 2008 he received a phone call from Karen Vasakos at human resources at TMH. She had looked at the AWA under which Mr Morrow as employed and the AWAs for the other permanent shift workers and realised that those documents did not accurately set out all the terms and conditions of the technician’s employment. In particular, it did not set out the shift work penalties that were an important part of the make up of their pay. She also believed that the technicians were being paid in accordance with an agreement that existed between Hydro and its workers rather than the relevant award. He gave evidence that this made a small difference to the technician’s pay, at first to their disadvantage but later to their advantage because of the way in which holiday allowances were treated. Ms Vasakos decided that a new agreement should be prepared for each of the technicians as an Individual Transitional Employment Agreement[8]. On about 9 March 2009 there was a meeting held at the TMH Beresfield office attended by the technicians, Mr Wilson, Mr Keeping and Ms Vasakos. Mr Morrow deposes that immediately after the presentation by Ms Vasakos she provided him and the other shift work technicians with a draft copy of three documents:
“(a)a general agreement for TMH employees which was entitled Individual Transitional Employment Agreement (ITEA); and
(b)Addendum to the ITEA which set out the specific terms and conditions for service technicians undertaking shift work at the Hydro Site; and
(c)1 page document from Ms Vasakos titled “Hydro Shift Roster Pay Schedule – Proposed” which outlined the loadings and penalty rates that would apply under the new agreement.”
[8] “ITEA”
Mr Morrow deposes that he was not provided with an Information Statement either on 9 March 2009 or any time before that. Mr Morrow took the ITEA away with him after the meeting and read through it because he was concerned that some of the entitlements contained in it were less than the entitlements in the New South Wales Metals Award.
About 20 April he attended a further meeting to discuss the ITEA, this again took place at Beresfield and was attended by Mr Wilson, Mr Gould and Mr Morrow. Ms Vasakos dialled into the meeting via the telephone. In the course of that meeting Ms Vasakos told Mr Morrow that the New South Wales Metal Award was not the appropriate award for the ITEA. She agreed to send Mr Morrow some further information and she did so. This included a link to the Metal Engineering and Associated Industries Award 1998. Mr Morrow accessed that link and sent emails to Ms Vasakos and Mr Wilson with his concerns. On or about 27 April 2009 he went to the Beresfield office to collect a revised version of the ITEA and an addendum.
On 29 April 2009 Ms Vasakos wrote to Mr Morrow with a copy to Mr Wilson. The email says relevantly:
“Hi Bryson
I have just spoken with the man who wrote the Metal Engineering Award regarding your queries. He has confirmed the following:
Public holidays …
Shift loading…
Leave…
Please advise if there are any further questions by COB today. Paperwork is to be signed and returned to the Beresfield by COB tomorrow to take effect Friday 1 May 2009.
Thank you
Kind regardsKaren”
On April 30 at 6.09p.m. Mr Wilson wrote to Mr Morrow by email with a copy to Ms Vasakos:
“Hi Bryson
As discussed I have attached the new ITEA which reflects the 3% wage rise. I have also attached the updated pay calculation. As we discussed we need to have this finalised and signed off by COB tomorrow. Please let me know your intentions as soon as possible.
Regards
Peter”
Mr Morrow deposes that upon receiving this document he saw that amendments had been made regarding frequency of payments and the hourly rate.
Mr Morrow deposes that he had concerns about his rights in relation to the ITEA and telephoned the AMWU. He felt he was being pressured by Ms Vasakos to sign the document by 30 April or 1 May. He refers to an email sent to him on 27 April by Ms Vasakos which stated inter alia:
“If there are any more areas you would like me to clarify please let me know prior to Wednesday. As we have discussed the documents need to be signed by COB Thursday for implementation on Friday 1 May 2009. If amendments are required they will be made immediately and the documents reissued for signing.”
On 1 May Mr Morrow received a telephone call from Mr Wilson telling him that the documents needed to be signed as soon as possible and Mr Morrow told Mr Wilson that he was in two minds about whether to sign it or not. He had a meeting in the afternoon of that day with Mr Dafo and Mr Perry and two other technicians. During the course of that meeting they rang Mr Wilson. Mr Morrow deposes that Mr Wilson stated:
“[78]During the meeting at Andrew Perry’s house (as referred to in the paragraph directly above), I recall that I rang Mr Wilson to talk to him about the documents and to let him know that Lee Dafo, Andrew Perry and I were meeting to discuss the documents (Second Telephone Call). During that telephone call, Mr Wilson and I had a telephone conversation in words to the following effect:
Mr Wilson:“I’ve had a direction from Sydney that if you don’t sign the documents you’ll be circulated off your shift work positions. We’ll put on other blokes who want to do the job and get the job done up there”.
Me:“Ah right, ok”
Mr Wilson:“Is Andrew or Lee there? Can I have a quick chat to them about it?
Me:“Yes. Hold on”
Mr Morrow understood that Mr Wilson was telling him and the other technicians that if they did not sign the document by the next day they would rotated off their shift work and sent back out on the road as field service technicians. This would mean a substantial loss of pay. He knew that Mr Wilson was the branch manager of the Newcastle office and was in a superior position to him. He believed he had the authority to recommend that he should be circulated off shift work if he did not sign the document. Mr Morrow knew that he did not have to sign the document because that was what he was told by the AMWU. But because the consequences of him being rotated off shift work would be that he would lose about $500.00 to $600.00 a week and he believed the threat to do that was real, he decided to sign. Mr Morrow rang Mr Wilson and told him that he and the other technicians had agreed to sign the documents but could not do so until the Monday 4 May when they attended the Beresfield office to sign the ITEA and the addendum. An amendment was made by hand to each of the addendums by Mr Wilson to allow the shift loading penalty to be paid weekly.
Mr Lee Dafo, another technician, swore an affidavit on 22 September 2011 which, in regard to the 2009 incident, essentially corroborates what Mr Morrow said in his affidavit. This included the conversation with Mr Wilson at the technician’s meeting on 1 May. He deposes the following:
“[32]Bryson then handed the phone to me while Mr Wilson was still on the line and I recall having a conversation with Mr Wilson in words to the following effect:
Me:Hi it’s Lee.
Peter:Hi Lee, Look the documents have to be signed on Monday or you’ll be rotated off shift work.
Me:“Oh, ok”
His understanding of the meaning of that conversation is expressed at [35]:
“[35]As a result of the conversations referred to in paragraphs 31 and 32 above, I understood that if I didn’t sign the ITEA and the Addendum then I would be taken off my shift work at the Hydro Site and I would instead go back to working as a field service technician, Monday to Friday from 7.30a.m.to 3.30p.m. I formed this view simply on the clear meaning of the words that were spoken by Mr Wilson that we would be rotated off shift work, off site.”
Mr Dafo states that he signed the ITEA and addendum because he did not want to lose his shift work at the Hydro site. He believed that Mr Wilson could or would rotate him off the site and off shift work if he did not sign and he needed the extra hours and extra money that they involved in order to look after his son:
“[40]The reason that I signed the ITEA and the Addendum was because I did not want to lose my shift work at the Hydro Site. I believed that Mr Wilson could (or would) rotate me off site and off shift work if I did not sign the ITEA and Addendum. Working at shift work a the Hydro Site was important to me because:
(a)I needed to work those hours so that I could look after my first son. I had just finished court proceedings regarding custody of my son that had run for at least 18 months. The court has based my visitation rights on my Hydro Site shift roster so I had to say o the shift work roster so that I could see and look after my son on my days off.
[41]I earned more money working shift work and I did not want to lose my shift penalties as at that time I was paying maintenance for my son and also had a mortgage to pay. When I signed the ITEA and the Addendum on 4 May 2009, I thought that, from that day on, both the ITEA and the Amendment made up the complete terms and conditions of my employment with TMH while I worked at the Hydro site.
[42]Prior to signing the ITEA and Addendum, I had not at any time received a document titled Information Statement in relation to the ITEA.”
Mr David Gould, another technician, swore an affidavit on 28 September 2011. This again corroborates the evidence of Mr Morrow. He was not at the meeting on 1 May because he was working on shift but he deposes that he had a telephone conversation with Mr Wilson:
“[31]In or around early May 2009, I was working at the Hydro Site when I received a telephone call from Mr Wilson about signing the ITEA and Amendment. During the telephone call, Mr Wilson and I had a conversation in words to the following effect:
Mr Wilson:Hi David. These agreements need to be finalised. I’ve spoken to Lee, Andrew and Bryson and they have agreed to sign on the proviso that they get a letter stating they don’t have to repay any of the monies that were overpaid to them under the AWA.
Me:Right.
Mr Wilson:The people in Sydney want these finalised by close of business today. If you’re not willing to sign, you could be put back on day work and we will find people to work the shifts that are willing to sign them.
Me:Well I will ring Lee, Andrew and Bryson and confirm that they are agreeing to it.
Mr Wilson:And you’ll need to sign today.
Me:I’m at work today so I won’t be able to do it.
Mr Wilson:I can meet you outside Hyrdo and we can sign it.
Me:I can’t, I’m too busy.”
[32]Immediately after I finished speaking to Mr Wilson, I rang Bryson Morrow to find out whether he and the other Shift Technicians had agreed to sign the ITEA and the Addendum:
Me:Hi Bryson. I just received a call from Peter [Wilson] and he said that you have all agreed to sign.
Bryson:Yes we have agreed to just sign it. We are going to go in to the office on Monday.
Me:Ok.”
Mr Gould deposed to his concern about having to sign the agreement and that he only did so because he believed that the threat to rotate him off shift work was a real one and that he needed the extra money because of his family commitments. He had a new baby at home and his wife had given up work for three months to look after her. He believed he would have struggled to pay the mortgage if he lost the $500.00 to $600.00 per week extra that he was being paid as a permanent shift worker at Hydro. Mr Morrow confirmed that when he signed the document he did not see from TMH a document entitled “Information Statement”.
Neither Mr Gould nor Mr Dafo were called for cross-examination. Mr Morrow was cross-examined. He was asked whether, when he signed the document on 4 May, he knew it was for him to choose between working permanent shift work or not. He stated that he knew he did not have to sign the document and that it was illegal to force him to sign but he did sign. He believed he was going to be rotated off shift work if he did not.
Ms Vasakos gave evidence on behalf of the respondent. She is now known as Karen Thompson and swore an affidavit in that name. She does not really dispute that part of the evidence of the applicant’s witnesses with which she is directly concerned. She told that TMH had to put a deadline in place for the signing of the ITEAs. 1 May was that deadline. Under cross examination she was asked whether the advice in paragraph 4 of the email stipulated what would happen if the deadline was not reached. She responded that the position was that if the employees did not wish to sign they could revert to the position they were in under the AWAs. The AWAs did not give them a job description of working as permanent shift workers at the Hydro plant. They were described in those documents merely as a technician on rostered hours of 38 hours each rostered period. It is to be remembered that it was the lack of definition in the AWAs that caused Ms Thompson to recast them in the ITEAs so that they reflected the work actually undertaken. She was asked whether that was pressure she wanted to place on the employees. She responded
“No it was a benefit to them to sign the ITEA.”
To Ms Thompson the AWA was a fall back. The situation was that if they were not happy with the ITEA they would revert to the AWA technician’s work. She denied that she was pressuring the technicians to sign up or lose their shift work. She told under cross examination that she imposed the deadline because the HR department were changing the pay rates. They changed the pay rate and public holiday loadings and also the frequency of pays. That was why they wanted the agreements signed so that the new rates could be incorporated in the first pay period thereafter. She agreed that the ITEA in April was different to the one shown to the employees in March because the pay rates had risen but denied that they reflected responses to the questions that Mr Morrow had raised between March and April.
On 30 April 2009 Ms Thompson sent an email to Mr Wilson:
“Hi Pete,
Not yet. They have to wait for all the states spreadsheets to be provided before it will be approved.
We need to proceed anyway and you can advise Dave that his 3% increase has been made and we have applied for a further increase and are waiting approval.
I have attached the 4 ITEAs reflecting their new hourly rate as at 1 April with the additional 3%. These are the documents that will need to be signed.
All ITEAs and Site Specific Conditions are suppose [sic] to be signed by COB today however if need considering these ITEAs have been reissued we can stretch it to COB tomorrow. This is the final deadline. Employees refusing to sign or not making themselves available to pick up/sign paperwork need to be advised that failing to accept TMH’s Hydro site conditions will mean they will revert back to a standard day work Technician in either field service, work shop or on the Hydro site. The rotating shift positions will be made available to other staff members.
Can you please advise where things are at with the boys to date?
I have also attached the updated payroll calculation template with the change to the public holiday calculation.”
The email can be read as a threat or as a simple statement of fact. Whilst one would prefer to think of it as the latter it is still necessary to consider objectively how it might have been understood by the employees. It is also not really the case to say, as the respondents have urged, that non-signing would merely continue the status quo. That was not what was being said. The status quo was the payment of the shift allowances and penalties for work undertaken at the Hydro site. It was not being suggested that if they did not sign that would continue but, for example, the proposed pay rise would not come into force, it was being suggested that if they did not sign they would lose the benefits that they were being paid and revert to ordinary day shift workers losing approximately $500.00 to $600.00 per week. That is how it was seen, and quite rightly, by the technicians and would have been seen by any reasonable employees in their position. It was the risk of reverting to day shift that caused them to sign the document at a time when they knew that they were not required to by law.
I have been looking in this judgment at the question of duress from the evidence of Ms Thompson but in fact it was Mr Wilson who made the oral “threats”. I am satisfied from the evidence of Mr Morrow and the undisputed evidence of Mr Dafo and Mr Gould that Mr Wilson said the words attributed to him.
There exists a degree of legal controversy in the consideration of duress as it applies to industrial relations legislation pre and post-reform. This controversy no doubt stems from the uncertainty currently engulfing the nascent concept of economic duress in Australia, to which the courts have turned in examining duress as it appeared in those acts. It may be argued that economic duress has been on unsteady ground since its inception as an amalgamation of common law and equitable principles in such cases as Barton v Armstrong [1976] AC 104, [9] Pao On v Lau Yiu Long [1980] AC 614, [10] Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366[11] and Crescendo ManagementPty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40. [12] Indeed, it has been suggested that duress should be reserved to cases which involve duress to the person, either applied as a defence to criminal action or to avoid contracts. There have been calls to abandon the concept of economic duress, as it applies to circumstances in which the pressure being applied is not unlawful, and replace it with the overarching concept of unconscionability: Australia & New Zealand Banking Group Ltd v Karam (2005) 64 NSWLR 149 at 168; Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 per Kirby P in dissent at 106.
[9] Barton v Armstrong
[10] Pao On v Lau Yiu Long
[11] Universe Tankships
[12] “Crescendo”
However, given Parliament’s insertion of the term ‘duress’ into the WR Acts, this is not the appropriate occasion to continue such a debate. What must be resolved is how best to approach duress in this context given that the authorities to be relied upon are embroiled in the debate at large. It is a difficulty that becomes apparent when juxtaposing the authorities relied upon by the applicant with the recent judgment of Buchanan J in Fair Work Ombudsman v National Jet Systems Pty Ltd [2012] FCA 243[13].
[13] “National Jet Systems”
The applicant submits (at [68] and [150]) that the following principles apply when considering duress in the context of the WR Act and the Post-reform WR Act:
“(a) The use of the word “duress” in section 170WG of the of the pre-reform WR Act is not a free-standing legal term and does not necessitate that the general law use of the term duress is the same as the statutory use of the word duress in section 170WG;
(b) “Duress” in the relevant sense involves the illegitimate application of pressure to induce a party to enter an AWA;
(c) Pressure that is likely to have the effect of denying the exercise of free will, will be sufficient;
(d) What is illegitimate is a question of fact to be decided in the circumstances of each case which may include whether there is an existing relationship of employer and employee or some other relationship of utmost good faith.”
The first two of these propositions are supported by what fell from the Full Court of the Federal Court in Schanka v Employment National (Administration) Pty Ltd (2000) 97 FCR 186 per Ryan, Lee and Branson JJ. Their Honours stated at [15]:
“We are not persuaded that “duress” in s 170WG(1) is used in a context dealing with the same branch of the law as the cases in which courts have been concerned to apply it to relieve a victim from the consequences of a contract or a payment procured by duress. Accordingly, we do not regard the expression as “a free-standing legal term” as that phrase is used in the passage just quoted.”
And continued at [23]:
“It was also contended on behalf of ENA that the construction of s 170WG which Moore J favoured “would be an extraordinary interference with the conduct of an employer's business”. We are unable to accept that submission. In our view, the answers given by his Honour to the questions which he identified involved his discerning, from s 170WG in the context of Pt VID as a whole, an intention that an employer should not, in an endeavour to induce an existing or prospective employee to enter an AWA containing particular terms, apply pressure which, in the circumstances, is illegitimate.”
The third relies on the dicta of Moore J at first instance in Schanka and Others v Employment National (Administration) Pty Ltd (1999) 166 ALR 663, in which his Honour stated (at [42]-[43]):
“In my opinion s 170WG(1), properly construed, applies to the conduct of a person applying duress irrespective of whether that conduct actually results in the making of an AWA and irrespective of whether, as a matter of fact, the party subjected to that conduct did not freely make the AWA if one was made.
That is not to say that in ascertaining whether conduct contravened s 170WG(1), the potential effect of the conduct on the exercise of free will by the person to whom it is applied is irrelevant. It plainly is in this way. The conduct of the contravening party must involve illegitimate pressure. I doubt that the mere fact that an employer offers employment on the basis that an AWA in certain terms must be made, is illegitimate pressure. It would do no more than place the potential employee in the position of either declining or accepting the employment on those terms and regulated that way, that is by an AWA. Something more is probably necessary and whether pressure is illegitimate will ultimately depend on the factual context in which the allegation of duress arises. But it must be pressure that is likely to have the effect of denying the exercise of free will if an AWA was made. It also must be intended to have that effect.” [emphasis added]
Finally, the fourth proposition finds its support in Ryan J’s opinion in Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276, in which His Honour considered the authorities, including both of the Schanka judgments, and concluded at [43] that:
“In my view, the consensus of the authorities to which I have referred is that duress, in the relevant sense, involves the illegitimate application of pressure to inducea party to enter into an AWA, or to discouragea party from taking that course. What is illegitimate is a question of fact to be decided in the circumstances of each case which may include whether there is an existing relationship of employer and employee or some other relationship of utmost good faith between the parties to the proposed AWA.”
These views were, to varying extents, recently called into question by Buchanan J in National Jet Systems. The essence of his Honour’s criticisms of these authorities is that they amalgamate two distinct elements of duress into one test. Indeed, his Honour opened his discussion of duress by identifying the elements required to establish economic duress according to his understanding, at [12]:
“I take it to be sufficiently established for the purpose of the statutory scheme in the WR Act that an allegation of duress must be sustained by proof of two matters: conduct negating effective or real choice; and application of pressure by unlawful, unconscionable or illegitimate means. It will be necessary to explain the bases for this conclusion.”
His Honour then went on to discuss the early authorities on economic duress of Barton v Armstrong , Pao On v Lau Yiu Long and Universe Tankships before opining (at [21]-[22]):
“[21] The unmistakeable and clear emphasis on the necessity for each element (compulsion and illegitimacy) to be present has, in my respectful opinion, become blurred in some cases in this court. In part, that is because the legislature has chosen to focus on the application of pressure, rather than on its result. The reason is clear enough. The legislative code is not only concerned with undoing the effects of duress, or setting aside a transaction which results from duress. The statute is concerned with prohibiting and punishing the application of duress in the first instance. Nevertheless, in order to satisfy the elements of duress, so as to conclude that it has been applied, certain things must still be present. It may not be necessary to wait until the illegitimate pressure has produced its inevitable result but, under the classic formulation set out above, lack of a practical alternative, or effective negation of choice would be regarded as an essential feature. Compulsion, as identified by Lord Scarman, clearly involved application of pressure which vitiated consent. A threshold must be crossed to satisfy this test. It involves more than pressure which would tend to compel, or be hard to resist.
[22] The other element, illegitimacy, may be more elusive. In his further discussion of this issue Lord Scarman observed (at 401) that unlawful action would be illegitimate. A more difficult question arises in cases where action, or threatened action, might be lawful, but is nevertheless “illegitimate”. Lord Scarman gave, as an example, a case of blackmail constituted by a threat to do a lawful act, such as reporting a matter to the police. With respect, the example has a tendency to confuse because blackmail itself may be an unlawful act. However, it is clear that Lord Scarman intended to draw attention to the difference between an illegitimate demand (eg blackmail) and the means (perhaps a threat of otherwise lawful action) by which the demand was, if necessary, to be enforced. The point is an important one. If the means used to apply pressure are unlawful, the pressure will be illegitimate. The use of lawful means to achieve an unlawful demand will also constitute illegitimate pressure. And, as earlier observed, the pressure must be accurately described as compulsive, in the sense that it vitiates consent.”
After discussion of the concept of illegitimacy, Buchanan J returned to re-examine the statement of Moore J in Schanka, as cited above, noting at [31] - [34]:
“[31] The two elements of duress seem here, with respect, to have been brought together in a single concept — ie pressure will be illegitimate if it is likely to have the effect of denying the exercise of free will. With respect, this omits one matter recognised at the outset when consideration was being given to whether economic pressure could be a form of duress. It was accepted that economic pressure could, in some circumstances, be overwhelming. That does not mean that its use involves duress. That is why it was necessary to identify an element of illegitimacy — ie generally either unlawful or unconscionable conduct.
[32] In Finance Sector Union of Australia v Commonwealth Bank of Australia (2000) 106 FCR 16 Gyles J discussed a range of cases concerning “coercion” and “duress”, including Crescendo, Barton v Armstrong and Universe Tankships. The tests for coercion and duress may be regarded as identical. After his survey of authorities, Gyles J concluded that in the context set by the WR Act it was necessary to identify compulsive conduct which was unlawful, illegitimate or unconscionable. As to the first element, his Honour said (at 20):
20 … In my opinion, there is a significant difference in ordinary meaning between concepts such as influence, persuasion, inducement and the like, on the one hand, and coercion, on the other.
[33] In my respectful view, the analysis of Gyles J involved a correct application of established legal principle. His Honour’s approach was described by Weinberg J in National Union of Workers v Qenos Pty Ltd (2001) 108 FCR 90 (at [128]) as compelling. It was applied by Merkel J in Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union (2001) 109 FCR 378. Merkel J said (at [41]):
41 The … cases establish that there must be two elements to prove “intent to coerce” under s 170NC(1). First, it needs to be shown that it was intended that pressure be exerted which, in a practical sense, will negate choice. Secondly, the exertion of the pressure must involve conduct that is unlawful, illegitimate or unconscionable.
[34] Notwithstanding the views expressed by Moore J in Schanka, I take the need to establish each of the two elements, to the necessary standard of proof, to be firmly established. Those elements establish the legal content of the term chosen by Parliament to state the nature of the prohibited conduct in both s 170WG(1) of the pre-reform WR Act and s 400(5) of the post-reform WR Act.”
The conflation of the tests is clearly identifiable in the judgment of Madgwick J in Bishop v Ropolo Services Pty Ltd [2006] FCA 592 [a case also relied upon by the applicant in support of its third legal principle cited above]. In that case Madgwick J expressed the Schanka test thus:
“21 As Moore J said in Schanka No 1 at [43], for the application of pressure to become illegitimate: ‘it must be pressure that is likely to have the effect of denying the exercise of free will if an AWA was made. It also must be intended to have that effect’. It follows that s 170WG(1) does not confine the prohibition on duress to situations which have actually resulted in the conclusion of an AWA. The authorities make it clear that s 170WG(1), with its prohibition of duress ‘in connection with’ an AWA, applies to both the formulation of an AWA and to the completed AWA, regardless of whether entry into an AWA by an employee or employer eventuates. As Moore J said in the Schanka No 1 at [42]:
‘In my opinion s 170WG(1), properly construed, applies to the conduct of a person applying duress irrespective of whether that conduct actually results in the making of an AWA and irrespective of whether, as a matter of fact, the party subjected to that conduct did not freely make the AWA if one was made.’
22 In the second stage of the Schanka litigation, following the appeal to the Full Court, Moore J further considered how the test of illegitimate pressure was to be applied to s 170WG(1) in Schanka v Employment National (Administration) Pty Ltd [2001] FCA 579; (2001) 112 FCR 101 (‘Schanka No 2’). His Honour concluded at [100] that:
‘...the question raised by s 170WG is not answered, in my opinion, by first asking whether the prospective employer (as alleged in this case) applied pressure as a discrete question and then asking whether the pressure was illegitimate. The question raised by the section is whether duress was applied which can be answered by considering whether illegitimate pressure was applied to secure, at the very least, ostensible agreement to enter an AWA and thereby to secure, again at the very least, ostensible agreement to the terms and conditions of employment embodied in the AWA. That is, to repeat what I said in the judgment of 24 September 1999, whether illegitimate pressure was applied, and conduct was engaged in, by a person (in this case the prospective employer, ENA) that might result in illusory and not real negotiation or bargaining and general agreement’.”
It is also identifiable in the judgment of Ryan J in Canturi extracted at [49] above.Though it is worth noting that in National Jet Systems Buchanan J took issue with the first sentence of that finding, noting:
“[36] In my respectful view this passage does not state the correct test. While it may be true to say that the matter need not in every case be tested by asking whether someone’s will was, in fact overborne (a circumstance which is, in any event, not a sufficient indication of duress on its own) neither is it correct to ask if pressure is intended to “induce” or “discourage”. The pressure must be such as to leave no real choice. It must negate, not merely burden, the will. In addition, it must be unlawful, illegitimate or unconscionable pressure.”
This, with respect, seems to be a departure from the findings of McHugh J in Crescendo, the seminal Australian case on economic duress, in which his Honour opined at (p45-46):
“In my opinion the overbearing of the will theory of duress should be rejected. A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate?
Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.”
However, I believe that the core principle, the lack of real choice, is the appropriate test and does not conflict with McHugh J’s dicta.
Whether or not application of the distinctions drawn by Buchanan J will result in different outcomes than the test in Schanka is less than certain. It appears that the crux of his Honour’s concern is stated at [31], cited above, that economic pressure may be overwhelming but not amount to duress: see also Crescendo pre McHugh J at p46. It seems to me that the two elements may be treated separately regardless of the apparent joining of the concepts in Schanka.
What is evident in both Schanka and National Jet Systems is the necessity that the employer intend to apply the pressure that will remove from the employee real choice. Whereas Moore J states the requirement explicitly (as seen in the emphasised sentence above), Buchanan J is a little less direct and relies on the test for “intent to coerce” found in Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union (2001) 109 FCR 378. According to this test intent attaches to the first limb of duress, and not to the illegitimacy of the compulsive conduct.
I am fortified in this view by the judgment of Weinberg J in National Tertiary Education Industry Union v Commonwealth of Australia [2002] FCA 441 in which his Honour opined:
“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.
I am fortified to some degree in my view that this is the correct meaning to ascribe to the expression "intent to coerce" by the observations of Lord Romilly MR in Ellis v Barker (1871) 40 LJ Ch 603. His Lordship accepted that coercion may take an infinite number of forms. However, he noted that the moment that a person who influences another does so by threatening to take away something he then possesses, or by preventing him from obtaining an advantage he would otherwise have obtained, it then becomes coercion and ceases to be persuasion.”
Thus, in my opinion, the court must enquire firstly, as to whether there exists conduct the effect of which is to leave an employee or future employee no real choice; secondly, that this negatory effect was intended by the employer; and thirdly that the conduct was illegitimate, whether unlawful, unconscionable or otherwise.
Did the respondent engage in conduct the effect of which was to leave Mr Morrow, Mr Dafo and Mr Perry no real choice?
I have already found, and the respondent concedes, that Mr Wilson said the words attributed to him. The effect of those words were that if the ITEA was not signed, Mr Morrow, Mr Dafo and Mr Perry would be rotated off the shift work at the Hydro site and that this work would be undertaken by other employees. The respondent submits, in argument about the legitimacy of the conduct, that:
“The intention of Mr Wilson in making the statement to the Hydro Three [Mr Morrow, Mr Dafo and Mr Perry] was not to deny them the exercise of free will. The email chain between TMH head office and Mr Wilson and the evidence of Ms Thompson demonstrates that the intention of the Respondent was to put a timeframe on concluding longstanding discussions about an agreement which would reflect the actual work arrangements at the Hydro site.”
I do not agree with this assessment of the respondent’s intent and, in any case, it is apparent from the above discussion of duress that it applies the incorrect standard. The 30 April 2009 email from Ms Vasakos to Mr Wilson employed the term “deadline” as opposed to “timeframe”. That deadline was the day after the email was sent. It clearly states that if the ITEA is not signed the next day the employees were to be told that they would be rotated off the Hydro site shift work (Domino Affidavit of 23 September 2011, ED-2 at Tab 8). I believe that the intent of the statement was to leave Mr Morrow, Mr Dafo and Mr Perry no real choice, such that they would sign the ITEA.
The respondent concedes that Mr Morrow’s concern that if he did not sign the ITEA he would lose his position was a real one. However, the respondent also reminds the court that it was Mr Morrow’s evidence that he was of the opinion that it was unlikely that he would be moved off the Hydro site unless the respondent lost work. I am also not convinced by this line of argument. The three employees were given one day to sign the ITEA, and were given the choice of signing or not signing, with the proviso that if they did not sign, they would be rostered off the very work which the ITEA was intended to cover. Whether or not this threatened deprivation of work was real or not is inconsequential if its effect was to remove the employees’ real choice. I am satisfied that it did have that effect, and I am satisfied that it was intended to have that effect.
Was the conduct unlawful, unconscionable or illegitimate?
There is no suggestion that the conduct engaged in was unlawful; the question is then whether it was unconscionable or otherwise illegitimate. While the notion of unconscionability may be less controversial than that of economic duress, it too is unsettled. As to what may be otherwise illegitimate, the courts in the cases cited above seem to have left the question open. Moore J in Schanka noted that what is illegitimate, in the context of illegitimate pressure, will depend on the factual context of the alleged duress (at [43]). Whilst Buchanan J took issue with the test proposed by Moore J, his Honour acknowledged in National Jet Systems that conduct that was neither unlawful nor unconscionable could otherwise be illegitimate (at [41] – [42]) but found it unnecessary, in the circumstances, to expand upon it.
However, in relation to unconscionability, his Honour opined at [26] – [28]:
[26] Unconscionable conduct involves more than just taking advantage of someone, or their inferior bargaining position. In ACCC v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 (“Berbatis Holdings”), Gleeson CJ said (at [7]):
7 … unconscionability is a legal term, not a colloquial expression. In everyday speech, “unconscionable” may be merely an emphatic method of expressing disapproval of someone’s behaviour, but its legal meaning is considerably more precise.
and (at [11]):
11 A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests.
[27] Similarly, Gummow and Hayne JJ accepted (at [56]) that:
56 … a person in a greatly inferior bargaining position nevertheless may not lack capacity to make a judgment about that person’s own best interests.
[28] In my view a similar rigour should be applied to the notion of what is illegitimate conduct. Conduct correctly described as illegitimate in this context must infringe a legal standard. The issue is not a moral one, nor one for personal value judgments. The test is necessarily objective.
Gleeson J, in Berbatis also noted, after referring to the difficulty of classifying the circumstances of disadvantage that may be involved in unconscionable conduct, that:
“The common characteristic of such circumstances is that they place one party at a serious disadvantage in dealing with the other.”
He continued:
“In the present case, French J said that the lessees suffered from a "situational" as distinct from a "constitutional" disadvantage, in that it did not stem from any inherent infirmity or weakness or deficiency. That idea was developed somewhat in a joint judgment, to which French J was a party, in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd, where it was said that, under the rubric of unconscionable conduct, equity will set aside a contract or disposition resulting from the knowing exploitation by one party of the special disadvantage of another, and then it was said:
"The special disadvantage may be constitutional, deriving from age, illness, poverty, inexperience or lack of education: Commercial Bank of Australia Ltd v Amadio. Or it may be situational, deriving from particular features of a relationship between actors in the transaction such as the emotional dependence of one on the other: Louth v Diprose; Bridgewater v Leahy."
10 While, with respect to those who think otherwise, I would not assign the facts of Bridgewater v Leahy to such a category, the reference to emotional dependence of the kind illustrated by Louth v Diprose as a form of special disadvantage described as "situational" rather than "constitutional" is understandable and acceptable, provided that such descriptions do not take on a life of their own, in substitution for the language of the statute, and the content of the law to which it refers. There is a risk that categories, adopted as a convenient method of exposition of an underlying principle, might be misunderstood, and come to supplant the principle. The stream of judicial exposition of principle cannot rise above the source; and there is nothing to suggest that French J intended that it should. A problem is that the words "situation" and "disadvantage" have ordinary meanings which, in combination, extend far beyond the bounds of the law referred to in s 51AA; and, it may be added, far beyond the bounds of what was explained to Parliament as the purpose of the section.
11 One thing is clear, and is illustrated by the decision in Samton Holdings itself. A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests.
12 In Amadio, Mason Jsaid that the point of using the qualifying word "special" before "disadvantage" in this context is "to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasise that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests". It was the inability of a party to judge his or her own best interests that was said by McTiernan J in Blomley v Ryan - fn_LAWREP-AUS-214-CLR-0051-FN.38, and again by Deane J in Amadio, to be the essence of the relevant weakness.
…
14 Unconscientious exploitation of another's inability, or diminished ability, to conserve his or her own interests is not to be confused with taking advantage of a superior bargaining position.”
This is instructive in that Gleeson J accepts the concept of situational disadvantage as opposed to constitutional disadvantage, whilst warning that the concept should not stretch beyond a statute’s intent or the content of the law. I believe that a situational disadvantage may be gleaned from the relationship of employer and employee. I believe that this is apparent in the recognition that a prior relationship between the parties may be significant in determining whether duress had been applied (see Bishop v Ropolo at [23]).
If this is an extension of the categories of unconscionability, I do not believe that this finding is out of keeping with the industrial relations acts and their importation of the concept of duress. In this respect, it is worth noting Moore J’s appreciation of the place of s.170WG in the WR Act in Schanka at [38]:
“Approaching the construction of s 170WG(1) with these principles in mind, it is necessary to consider not only its language but also its apparent purpose in the statutory context in which it appears. Part VID creates a class of industrial instrument which depends upon the agreement of an employer and an employee. Such an agreement is intended ordinarily to displace the effect of an award made under the WR Act, a State award or agreement, or State law dealing with the same, and may displace certain Commonwealth laws dealing with the same subject matter as the agreement: see ss 170VQ(2), 170VQ(4), 170VR(1) and 170VR(4). This process of individual agreement-making is plainly intended to supplement if not displace, in appropriate circumstances, the determination of working conditions on a collective basis and a basis involving the intervention of an industrial tribunal including the potential exercise of arbitral powers. Evident in this scheme is a policy that any agreement reached between an employer and an employee (or their agents) is reached through a process of real and not illusory negotiation and general agreement. An aspect of that negotiation can include industrial action on the part of the employer or employee (see generally Div 8 of Pt VID), but constraints are placed on the nature of that action. Apart from that element of coercive influence, the process is otherwise intended to be free bargaining. So much is manifest by the provisions in Div 9 and other provisions (see s 170VR(4)) which proscribe conduct which might otherwise militate against free bargaining. Not only is conduct proscribed and provision made for the imposition of penalties, but provision is also made for the granting of injunctive relief preventing or restraining proscribed conduct: see s 170VZ.” [emphasis added]
It is clear that the scheme recognises the disadvantage in which employees may find themselves in when conducting negotiations in view of reaching an AWA. It is also clear, however, that the existence of a relationship of employer/employee will not satisfy the requisite disadvantage of itself. In this respect it is pertinent to note Buchanan J’s reminder that unequal bargaining power will not of itself result in the requisite situational disadvantage. The disadvantage must be such that persons who are being taken advantage of lack the ability to make a judgment as to what is in their own best interests.
Factual consideration:
In my opinion, the facts in the present case suggest that the employees were left in a position of sufficient disadvantage such that they were unable to make a judgment in their own best interests.
January - February 2006: Transfer to Hydro site
The three workers were transferred to the Hydro site during this period. Mr Morrow was transferred on 7 January 2006 after having worked as a field service technician for approximately 6 months. Mr Gould began working at the Hydro site in February 2006 after having worked as a field service technician for approximately 3 months. Mr Dafo was also transferred to the Hydro site in February. He had only been working as a field service technician for a few weeks.
April 2008:
Mr Morrow queried Mr Richards about employment entitlements/ annual leave entitlement.
October or November of 2008:
Ms Thompson contacted Mr Morrow about his entitlements query and later suggested that a new agreement be arranged.
9 March 2009: Meeting to arrange ITEA
On 9 March 2009 a meeting was convened to propose the ITEA. At the meeting it was disclosed that the employees working at the Hydro site were receiving allowances that they were not entitled to under their AWAs (Thompson at [32]). The effect was that employees were being paid more than they should have been (Morrow at [54]). A draft ITEA with an addendum setting out specific terms and conditions for the hydro site workers was provided to the employees (Morrow at [55]). No deadline was given, though Ms Thompson informed the workers that it would be better to finalise the matter sooner rather than later.
20 April 2009: Mr Morrow first raises concerns about ITEA
Mr Morrow attests that he had a conversation with Ms Thompson and that Ms Thompson stated they were on a ‘timeline’ at [63]. Ms Thompson does not mention this conversation in her affidavit, however, she did send Mr Morrow a link to the federal Award on which the proposed ITEA was based.
Mr Wilson also emailed Ms Thomson regarding concerns that Mr Morrow had with the ITEA (annexure BM 9 to Mr Morrow’s affidavit, Annexure C to Ms Thompson’s affidavit).
27 April 2009: Ms Thompson’s reply to Mr Morrow’s concerns
Ms Thompson emails Mr Morrow stating:
“Hi Bryson,
I have taken on board your concerns and based on our discussions I would like to come back to you with the correct information.
The man that I have been speaking to who wrote the award will be back in the office on Wednesday. I have left a message with him to give me a call first thing. I will raise your concerns with him and respond to your email straight after.
If there are any more areas you would like to discuss please let me know prior to Wednesday. As we have discussed the documents need to be signed by COB Thursday for implementation on Friday 1 May 2009. If amendments are required they will be made immediately and documents reissued for signing.”
28 April 2009
Mr Morrow sent an email to Ms Thompson with some further concerns (Annexure BM 11).
29 April 2009: The deadline
Ms Thompson conversed with a contact made through “BIZassist” about the award and Mr Morrow’s concerns.
Mr Thompson emailed Mr Morrow, and copied Mr Wilson into the email chain, replying to his concerns and stating:
“Please advise if there are any further questions by COB today. Paperwork is to be signed and returned to the Beresfield by COB tomorrow to take effect Friday 1 May 2009.” [Annexure BM-12 to Mr Morrow’s affidavit and Attachment D to Ms Thompson’s affidavit.]
Ms Thompson affirmed at [49-50] that:
“I felt that giving Mr Morrow a deadline was the best way to establish either way whether he was prepared to agree to the Site Specific Conditions documents.
At the time, my intention was that if the shift workers did not want to sign the ITEA and Site Specific Conditions, then TMH(NSW) would consider offering the ITEA and Site Specific Conditions to other Field Service Technicians The employees currently working shift work at the Hydro site that did not want to sign the ITEA and Site Specific Conditions would remain employed under their existing AWAs and could be rotated off the shift work at the Hydro site if another employee wanted to fill that role.”
Mr Wilson replied to the email stating:
“Thanks Kaz
That will make him feel like he has had a minor victory.”
And enquired about whether Mr Gould’s increase had been confirmed.
30 April 2009
Mr Wilson gave Mr Morrow the final ITEA.
Ms Thompson attests that she emailed Mr Morrow but no document has been produced and it appears she meant Mr Wilson. Ms Thompson wrote to Mr Wilson in response to his query as to whether Mr Gould’s increase had been approved. She replied, in the email set out at [41] above, that they had not been approved yet, but noted that they needed to proceed anyway to meet the deadline. She also included the condition of the return to field service in the case that the ITEAs were not signed.
I believe that this email demonstrates that TMH was itself taking a deadline approach to the signatures, as opposed to a timeframe, and that it was intending to impose that deadline on its employees.
1 May 2009: The agreement to sign
Mr Morrow called the AMWU to enquire about his rights in relation to the ITEA. He deposed that he was informed that he did not have to sign the ITEA and that TMH could not apply duress or coerce him into signing it, but that there could be difficulties if he did not sign it (Morrow at [74]).
Mr Morrow states that in a conversation with Mr Wilson he noted that he had uncertainties about whether to sign (Morrow at [76]). In a later telephone conversation, in the afternoon, Mr Wilson conveyed to Mr Morrow, Mr Dafo and Mr Gould the threat contained in Ms Thompson’s email to him. In a further telephone conversation with Mr Wilson, Mr Morrow conveyed that the three workers had agreed to sign the ITEA on the following Monday. On 4 May 2009 the ITEAs were signed.
As the respondent submits (at [97(d)]), Mr Morrow’s bargaining position was strengthened through his union membership. Indeed Mr Morrow sought the advice of the AMWU. Whilst he was informed that he was not required by law to sign the ITEA, he was also told that it may be complicated if he did not sign. It is also pertinent to note that the threat of the loss of shift work at the hydro site was posed after Mr Morrow contacted the AMWU.
I believe that the threat posed by Mr Wilson constituted at least part of the reason for the signing of the ITEAs by the three employees. I am also satisfied that as a result of the threat, the employees were placed in a position whereby their bargaining position was diminished to the point at which they signed without the capacity to make a judgment of their best interests.
Factual Comparison to precedent cases
In my opinion the facts in the present matter more closely reflect those in cases in which duress was found to have been applied than those in which it was not established.
The respondent submits that the applicants were in no different situation to Mr Bishop in Ropolo (at [97(f)]), however, there are important distinctions. Mr Bishop had been offered an acting position as a site supervisor, he was then offered the role permanently after only two months in the position, but was required to sign an AWA. Mr Bishop did not sign an AWA. Madgwick J noted that this short timeframe and the nature of the position did not, in the circumstances, allow for a “settled” expectation that he would receive promotion to the position on a permanent basis (at [45]). Madgwick J did find that Mr Bishop had a real choice of either taking the promotion by signing the AWA or returning to his permanent job. The choice in the present matter may appear similar, however, the circumstances were entirely different. The employees had been working at the Hydro site for over three years before the first ITEA draft was given to them. The purpose of the ITEA was not to offer a promotion to the held position, but rather to consolidate in law the role that the workers undertook.
The factual scenario in National Jet Systems is also distinct. The negotiations in the instant case, as outlined above, took place over a period of 2 months. In National Jet Systems, the employer and employees engaged in correspondence over a period of approximately 10 months to negotiate the signing of new AWAs before the employer applied to the AIRC to terminate the employee’s original AWA’s. The employer was successful in that application. The employees did not sign a new AWA. Buchanan J found that none of the employer’s correspondence constituted duress. Significantly, unlike in the instant matter, the employer stated in all correspondence with the employees that they were not obligated to sign an AWA.
However, there was one instance where the communications in that case approached those in the present matter. At [58] – [60] Buchanan J considered a letter replying to an employee as follows:
“On 20 June 2006 the respondent replied to Mr King’s letter of 28 September 2005. The letter mounted an argument that Mr King was bound in some way by the in principle agreement negotiated with the NJS Pilot Group Committee. It suggested that Mr King’s existing AWA had that effect. However, the writer, Mr Roberts, acknowledged the limitations in his assertion in the final paragraph of the letter:
Andrew, the situation of having several Australian Workplace Agreements operative within one group of the workforce is no longer a situation that the Company is willing to tolerate. Whilst I stress that it is your decision as to whether or not to sign the 2005 NJS Pilots AWA, you need to be advised that pilots operating the B717 who are not employed on an AWA that governs the operation of that aircraft, is a position that the Company finds untenable. We intend to proceed further rectify that situation.
Again, the words “[not] willing to tolerate” and “untenable” are strong ones, although they are clearly used to describe the respondent’s view of the situation. A forecast that steps will be taken to “rectify that situation” may not be without some threatening overtones but the law does not generally regard a stated intention to invoke existing legal rights to be duress and nothing more can, in my view, be implied from the statement in the letter.
This letter appears to represent the high point of any unilateral, individual instance of the application of pressure to either Mr King or Mr Kruger.” [emphasis added]
While in the present matter the employees were not reminded of their right to not sign the ITEA and “rectifying” the situation falls short of the present threat to return employees to the position they occupied years before, the emphasised statement may apply in the present case. The respondent submits that “there was no objective entitlement in the AWA (or any other legally enforceable instrument) to work continuously at the Hydro site, or, indeed, any entitlement, in the reverse, by the Respondent to compel them to continue working 24 hour rotating shift work” and that “if the respondent had lost the Hydro work, the Hydro Three would have been moved back into field work”. But this falls short of a submission that the Respondent had the legal right to unilaterally return the workers to their former positions. Such a right may have been hampered by the changed nature of the work performed by the applicants, and the apparent permanency of that change. That is, the applicants may have established a legitimate expectation to continue their shift work at the Hydro site, the threatening of which could constitute duress.
The Respondent’s submission as to whether or not Mr Morrow, Mr Dafo and Mr Gould had a “legitimate expectation” to continue to work rotating shift work at the Hydro site is not entirely helpful. The Respondent submits:
“Legitimate means according to the law. Illegitimate means not legitimate, unlawful. No legal basis explaining why the “expectation” is asserted to be legitimate is given and there was none. No legal basis explaining why this “pressure” is asserted to be illegitimate and there was none. The FWO’s submissions search for a legitimate expectation and in doing so actually highlight what is missing from this situation such that it is not duress – this is that the means was not unlawful, unconscionable or illegitimate”
I do not believe that the cases suggest that illegitimate equates to unlawful. Indeed, the recognition that actions that are not unlawful may be otherwise illegitimate negates this suggestion. This seems to be particularly misleading in the context of the phrase “legitimate expectation”. It seems to me that this phrase refers not to illegality or unlawfulness but rather to fairness.
The doctrine of “legitimate expectation” developed in the context of public law and procedural fairness. In Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273, McHugh J noted at 310 to 311:
“For over 25 years, the courts have held that the rules of natural justice protect the legitimate expectations as well as the rights of persons affected by the exercise of power invested in a public official. The doctrine of legitimate expectations was invented by Lord Denning MR in Schmidt v Secretary of State for Home Affairs. In its original form, it was a device that permitted the courts to invalidate decisions made without hearing a person who had a reasonable expectation, but no legal right, to the continuation of a benefit, privilege or state of affairs. It, therefore, helped to protect a person from the disappointment and often the injustice that arises from the unexpected termination by a government official of a state of affairs that otherwise seemed likely to continue.”
As was recognised in Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 195 ALR 502 per Hayne J at [118], in the United Kingdom the doctrine had begun to develop beyond procedural rights to substantive rights:
“Still later, however, the phrase legitimate expectation has come to be used in very different ways. Instead of being used to describe why procedural fairness should be afforded to a person it has sometimes been used to refer to what matters the decision-maker should take into account in making a decision or, in England, to what decision the decision-maker should reach. This last development, saidto engage concepts of abuse of power, directs attention to whether a person has a legitimate expectation of a benefit which is substantive rather than merely procedural and to whether to frustrate that expectation is unfair.”
Hayne J found that such an extension did not apply to the facts there.
In his judgment in Lam. Callinan J opined:
“[140] In my opinion, the expression “legitimate expectation” is an unfortunate one, and apt to mislead. In the case of Teoh, it was, with respect, a complete misnomer. I am not the only one to question its utility in discourse with respect to rights and obligations of applicants and administrators. Moreover, the necessity for the invention of the doctrine is questionable. The law of natural justice has evolved without the need for recourse to any fiction of “legitimate expectation”. As de Smith, Woolf and Jowell point out a duty to accord natural justice by giving a right to be heard has long been the law of many civilised societies.
That no man is to be judged unheard was a precept known to the Greeks, inscribed in ancient times upon images in places where justice was administered, proclaimed in Seneca's Medea, enshrined in the scriptures, mentioned by St Augustine, embodied in Germanic as well as African proverbs, ascribed in the Year Books to the law of nature, asserted by Coke to be a principle of divine justice, and traced by an eighteenth-century judge to the events in the Garden of Eden. [footnotes omitted]
[141]The expression “legitimate expectation” seems to have been first articulated by Lord Denning MR in Schmidt v Secretary of State for Home Affairs. His Lordship, in my opinion was there doing no more than using the words “legitimate expectation” as a synonym for a right or interest. This is the sense in which Barwick CJ also appears to have understood the expression. In Salemi v MacKellar (No 2) his Honour, after saying that he appreciated the literary quality of the expression better than he perceived its precise meaning and perimeter of application, added:
I cannot attribute any other meaning in the language of a lawyer to the word “legitimate” than a meaning which expresses the concept of entitlement or recognition by law. So understood, the expression probably adds little, if anything, to the concept of a right.
To delve further into this doctrine it may be necessary to show that Mr Morrow, Mr Gould and Mr Dafo had an existing legal right which had been disappointed. It may be possible to demonstrate this through an implied novation, and the fact that the ITEA’s very purpose was a novation of the AWA to reflect the actual role of the employees. However, in the context of duress under the workplace relations legislation, the phrase may be being employed differently.
In Granada Heerey J noted:
“No legal right or legitimate expectation of Ms Wills removed or threatened. Removal or threatened removal of something which can be characterised as a legal right orlegitimate expectation is not an essential element of the concept ofduress under the statute. In any event, with her established pattern of weekend work, an “unwritten agreement” as Mr Taylor termed it, Ms Wills plainly did have alegitimate expectation; cf Jordan v Mornington Inn Pty Ltd (2007) 166 IR 33 at [43]. Of necessity, alegitimate expectation is something less than a legal right.”
It would appear that Heerey J did accept that a form of implied novation could constitute a legitimate expectation. The respondent submits that this understanding of “legitimate expectation” was expressly disapproved of by Buchanan J, but the citation in support of that submission does not in fact take issue with this understanding of a legitimate expectation (see National Jet Systems at [37]-[39]). Buchanan J was referring to unconscionable pressure as “pressure which must pass a legal, not a moral threshold” and was not considering what might constitute a legitimate expectation.
In Ropolo, Madgwick J appeared to use the terms “legitimate expectation”, “reasonable expectation” and “settled expectation” interchangeably but found that such an expectation could not have been disappointed in that case (at [44] to [47]). He also noted that the cases of Canturi and Schanka seemed to “turn upon” the “element of expectation” (at [46]).
It seems to me that the phrase “legitimate expectation” is an unsatisfactory one. Used in the cases relating to duress, such as Granada and Ropolo it is apparent that the term is not being used to express a legal right but rather unfairness that is sufficient to attract legal recognition or protection. It is also not being used in the context of unconscionability, but rather in the context of the reasoning relating to illegitimate pressure found in Schanka. However, the threat to disappoint such an expectation, when it is as well-founded as it is here, does appear to me to fall within the concept of unconscionability and certainly falls within it for the purpose of the industrial relations legislation.
I am of the view that the actions of Toyota Material Handling, in making the signing of the ITEA a condition of continued employment at the Hydro site, where that signing was required within a restricted period of time and where that ITEA whilst regularising a situation that had existed for 3 years was in some degree disadvantageous, constituted an action that could be termed unconscionable. If that assessment is incorrect, I would find the action of Toyota Material Handling illegitimate in the sense described by Buchanan J at [40] – [41].
In summary the court finds that Toyota Material Handling engaged in conduct the effect of which was to leave Mr Morrow, Mr Gould and Mr Dafo with no real choice; this was the intention of Toyota Material Handling; and the conduct was unconscionable or illegitimate. I am satisfied that Toyota Material Handling applied duress, within the meaning of s.400(5), to these employees, and that in doing so breached that section. Having found that duress was applied through applying Buchanan J’s more strenuous interpretation of the term, I believe the same conclusion would have been reached had the authorities following Schanka been considered only.
In regard to the other contraventions pleaded these are a breach of s.337(8), a failure to provide ready access to a workplace agreement. This is pleaded in the Statement of Claim at paragraphs [52 – 54]:
“[52]Pursuant to subsection 337(1) of the WR Act, TMH NSW was required to take reasonable steps to ensure that the Employees either had, or had ready access to, a copy of their ITEA for 7 days before the agreement was approved.
[53]TMH NSW failed to take reasonable steps to provide the Employees with ready access to their ITEAs for 7 days before the agreements were approved.
Particulars
A.TMH NSW provided a copy of the ITEA document and Addendum to each of the Employees on 9 March 2009.
B.TMH NSW provided an amended version of the ITEA document and Addendum to each of the Employees on 30 April 2009.
C.The amended ITEA documents and Addendums were approved pursuant to section 340 of the WR Act on 4 May 2009, less than 7 days after they had been given to each of the Employees.
D.Subsection 337(7) of the WR Act provides that if the content of a workplace agreement is changed, the changed results in a separate workplace agreement for the purposes of section 337 (and the procedural steps set out in subsections 337(1) to (3) must be repeated).
[54]In failing to comply with subsection 337(1) TMH NSW contravened subsection 337(8) of the WR Act.”
I am of the view that the applicant has established by the evidence given by Mr Morrow, Mr Dafo and Mr Gould that the ITEA given to them on 30 April 2009 was a document that was changed from the agreement given to them on 9 March 2009 and that they did not have it for seven days before it was signed. By failing to comply with s.337(1) TMH (NSW) contravened sub-s.337(8) of the post-reform WR Act.
The final claim made against the respondent is a contravention of s.337(9) failure to provide an Information Statement. All three witnesses deposed to the fact that no Information Statement was given to them. There was no evidence that it was provided by the applicant at all. This is not necessary to the finding because as pleaded by the applicant at [55 – 57] of the Amended Statement of Claim no Information Statement was provided to the technicians seven days prior to approval of the agreement:
“[55]Pursuant to subsection 337(2) of the WR Act, TMH NSW was required to take reasonable steps to ensure that the Employees were given an information statement at least 7 days before the agreement was approved.
[56]TMH NSW failed to take reasonable steps to ensure that the Employees were given an information statement at least 7 days before the ITEAs were approved.
Particulars
A.TMH NSW provided an amended version of the ITEA document and Addendum to each of the Employees on 30 April 2009.
B.TMH NSW was aware of the requirement under the WR Act to provide information statements.
C.No information statements were given to the Employees on or after 30 April 2009 and at least 7 days prior to approval.
D.The amended versions were approved pursuant to section 340 of the WR Act on 4 May 2009.
[57]In failing to comply with subsection 337(2), TMH NSW contravened subsection 337(9) of the WR Act.”
The court is of the view that the contravention has been established.
The court notes that insofar as some of the alleged contraventions include action taken against or involving Mr Perry, it has received no evidence from him and cannot be satisfied that any contraventions occurred in relation to him. The applicant’s submissions hardly make mention of him save to say that the meeting of the service technicians on 1 May 2009 took place at his home.
For the avoidance of any doubt, the court has come to the following findings on the contraventions alleged by the applicant:
Alleged contraventions of the pre-reform WR Act:
a)Section 170WH – failure to provide Mr Morrow copies of documents: Contravened. No claim for relief made in Amended Statement of Claim.
b)Section 170VP – false or misleading statement in a declaration: Contravened.
c)Subsection 170WG(1) – Duress in connection with AWA offered to Mr Morrow in 2006: No contravention.
Alleged contraventions of the post-reform WR Act:
a)Section 400(5) – Application of duress in relation to ITEAs offered to Mr Morrow, Mr Gould and Mr Dafo. Contravened.
b)Subsection 337(8) – failure to provide ready access to a workplace agreement: contravened.
c)Subsection 337(9) – failure to provide an information statement: contravened.
The court will make the declarations contained in the orders section of these reasons. It will reserve the question of penalty. The parties are required to file and serve submissions upon penalty within 14 days. If any party wishes to be heard to those submissions application shall be made to my associate for a hearing date with an estimate of time and available dates between now and 30 March 2014.
I certify that the preceding one hundred (100) paragraphs are a true copy of the reasons for judgment of Judge Raphael
Associate:
Date: 18 November 2013
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