Maritime Union of Australia v CSL Australia Pty Ltd
[2002] FCA 513
•26 APRIL 2002
FEDERAL COURT OF AUSTRALIA
Maritime Union of Australia v CSL Australia Pty Limited [2002] FCA 513
INDUSTRIAL LAW – whether employer threatened to dismiss employees for a prohibited reason, or for reasons that include a prohibited reason – whether employer’s conduct was carried out because employees were entitled to the benefit of an industrial instrument – employer had agreed to sell and reflag the vessel CSL Yarra to a related company which would operate it with a foreign crew - distinction between the cause (or proximate) reason/s for the conduct and the operative (or immediate) reason/s for the conduct
PRACTICE AND PROCEDURE – onus of proof – reversal of onus where allegation that conduct carried out for a prohibited reason, or for reasons that include a prohibited reason –Workplace Relations Act 1996 (Cth) s 298V –when reverse onus discharged
Workplace Relations Act 1996 (Cth) ss 298A, 298D(c), 298F(2), 298K(1), 298L(1), 298T, 298(U), 298(V), 349
Evidence Act 1995 (Cth) s 140
Federal Court Rules O13 r 2(7), O13 r 2(8)Greater Dandenong City Council v Australian Municipal Clerical and Services Union (2001) 184 ALR 641 discussed
Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 cited
Davids Distribution Pty Ltd v National Union of Workers (1999) 165 ALR 550 cited
Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 followed
General Motors-Holden’s Pty Ltd v Bowling (1977) 51 ALJR 235 referred to
Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 referred toMARITIME UNION OF AUSTRALIA AND AUSTRALIAN INSTITUTE OF MARINE AND POWER ENGINEERS v CSL AUSTRALIA PTY LIMITED (ACN 080 378 614)
N1638 OF 2001
BRANSON J
26 APRIL 2002
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N1638 OF 2001
BETWEEN:
MARITIME UNION OF AUSTRALIA
FIRST APPLICANTAUSTRALIAN INSTITUTE OF MARINE AND POWER ENGINEERS
SECOND APPLICANTAND:
CSL AUSTRALIA PTY LIMITED (ACN 080 378 614)
RESPONDENTJUDGE:
BRANSON J
DATE OF ORDER:
26 APRIL 2002
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT the application be dismissed.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N1638 OF 2001
BETWEEN:
MARITIME UNION OF AUSTRALIA
FIRST APPLICANTAUSTRALIAN INSTITUTE OF MARINE AND POWER ENGINEERS
SECOND APPLICANTAND:
CSL AUSTRALIA PTY LIMITED (ACN 080 378 614)
RESPONDENT
JUDGE:
BRANSON J
DATE:
26 APRIL 2002
PLACE:
SYDNEY
REASONS FOR JUDGMENT
THE PROCEEDING
By an application dated 19 December 2001 the applicants have sought declaratory and other relief in respect of an alleged breach by the respondent of s 298K of the Workplace Relations Act 1996 (Cth) (“the WRA”). The applicants allege that the respondent has threatened to sack the crew of the vessel CSL Yarra for the reason, or for reasons that include the reason, that the members of the crew are each members of an industrial association and entitled to the benefit of an award and a certified agreement under the WRA. It is not in dispute that the respondent has agreed to sell the vessel CSL Yarra to a related company and that the vessel will, when sold, operate under a foreign flag and with a Ukrainian crew. The respondent has pleaded, in effect, that the reason for the decision to sell and reflag the CSL Yarra was to move the vessel into, and operate it as part of, the international fleet of self-unloading bulk carriers controlled by the group of companies of which the respondent is a member. It denies that its decision was taken for the reason, or for reasons that include the reason, alleged by the applicants.
THE PARTIES
Each of the applicants is an organisation of employees registered pursuant to the provisions of the WRA. The first applicant (“the MUA”) has constitutional coverage and membership of eighteen members of the crew of the CSL Yarra, namely two chief integrated ratings, twelve integrated ratings, two cooks and two chief stewards. The second applicant (“the AIMPE”) has constitutional coverage and membership of eight members of the crew of the CSL Yarra, namely the engineers.
The respondent (“the Company”), which owns the CSL Yarra, is an Australian company which is a wholly owned subsidiary of Auscan Holdings Pty Limited, another Australian company. Auscan Holdings Pty Limited is a wholly owned subsidiary of Canada Steamship Lines Holding BV, a corporation in the Netherlands. Canada Steamship Lines Holding BV is a wholly owned subsidiary of Canada Steamship Lines Inc (“CSL Inc”) a Canadian corporation. CSL Inc is a wholly owned subsidiary of the CSL Group Inc, a Canadian corporation (“CSL Group”).
STATUTORY PROVISIONS
Part XA of the WRA, which consists of ss 298A‑298Z(5), is entitled “Freedom of Association”. The specific objects of Part XA are identified in s 298A as:
“(a)to ensure that employers, employees and independent contractors are free to join industrial associations of their choice or not to join industrial associations; and
(b)to ensure that employers, employees and independent contractors are not discriminated against or victimised because they are, or are not, members or officers of industrial associations.”
Division 2 of Part XA of the WRA is concerned to identify the conduct to which the Part applies. Relevantly s 298D(c) provides that the Part applies to “conduct carried out with a purpose or intent relating to a person’s membership … of an organisation”. Section 298F(2) provides that the Part applies to conduct carried out with a purpose or intent relating to:
“(a)the fact that an award, a certified agreement or an AWA applies to a person’s employment; or
(b)the fact that the person is bound by an award, a certified agreement or an AWA.”
It was not suggested by the Company that Part XA of the WRA does not apply to the conduct the subject of this proceeding.
Section 298K(1) of the WRA relevantly provides:
“An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following:
(a)dismiss an employee;
….”
A “prohibited reason” is defined for the purposes of the WRA by s 298L(1). That subsection relevantly provides:
“Conduct referred to in subsection 298K(1) … is for a prohibited reason if it is carried out because the employee, independent contractor or other person concerned:
(a)is, has been, proposes to become or has at any time proposed to become an officer, delegate or member of an industrial association; or
…
(h)is entitled to the benefit of an industrial instrument or an order of an industrial body ….”
For the purposes of Part XA of the WRA, an “industrial instrument” means:
“an award or agreement, however, designated, that:
(a)is made under or recognised by an industrial law; and
(b)concerns the relationship between an employer and the employer’s employees, or provides for the prevention or settlement of a dispute between an employer and the employer’s employees.”
Division 6 of Part XA, which consists of ss 298T-298V, is concerned with remedies for breaches of the Part. Section 298T(1) provides for an application to be made to this Court for orders under s 298U in respect of conduct in contravention of the Part. Section 298T(2) authorises the application to be made by an organisation of which a person is a member where the contravention of the Part arises by virtue of the operation of section 298D or section 298F. No question was raised in this proceeding as to the standing of the applicant to make the application to the Court.
Section 298U authorises the Court to make one or more of the following orders in respect of conduct in contravention of Part XA:
“(a)an order imposing on a person or industrial association whose conduct contravened or is contravening the provision in question a penalty of not more than:
(i)in the case of a body corporate - $10,000; or
(ii)in any other case - $2,000.
…
(d)an order requiring the person or industrial association not to carry out a threat made by the person or association, or not to make any further threat;
(e)injunctions (including interim injunctions), and any other orders, that the Court thinks necessary to stop the conduct or remedy its effects;
(f)any other consequential orders.”
On the issue of proof of the reason for conduct, s 298V provides:
“If,
(a)in an application under this Division relating to a person’s or an industrial association’s conduct, it is alleged that the conduct was, or is being, carried out for a particular reason or with a particular intent; and
(b)for the person or industrial association to carry out the conduct for that reason or with that intent would constitute a contravention of this Part;
it is presumed, in proceedings under this Division arising from the application, that the conduct was, or is being, carried out for that reason or with that intent, unless the person or industrial association proves otherwise.”
Section 349 of the WRA provides:
“1. Where it is necessary to establish, for the purposes of this 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, 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 RELEVANT CONDUCT
The conduct of the Company upon which the applicants rely for the purpose of this proceeding is that outlined in pars 30 - 33 of their statement of claim. Omitting the particulars provided, pars 30 - 33 of the statement of claim read as follows:
“30.On or about 13 December 2001, Chris Sorenson [sic], Managing Director of the Respondent, sent a letter to the Federal Secretary of the Second Applicant and to each crew member employed on the CSL Yarra on behalf of the Respondent.
31.The letter was to the effect that the Respondent intended to sell the CSL Yarra and cancel its Australian coastal trading license. The sale of the vessel was to occur on or about the 27th December 2001. Consequently, all of the crew positions on the vessel were likely to be surplus to the Respondent’s requirements and terminations of the employment of the crew of the CSL Yarra were expected to begin on 27 December 2001.
32.On 17 December 2001, Michael O’Leary, the Deputy National Secretary of the First Applicant, met with Chris Sorenson [sic] in Melbourne, together with other officials of the MUA and Ian Matthews, an official and representative of the Second Applicant. At this meeting, the contents of the letter referred to in [30 and 31] above were confirmed.
33.The Respondent, through Chris Sorenson [sic], also informed the representatives of the Applicants present that the vessel was to be sold to CSL Asia Investments Ltd; the Australian crew of the CSL Yarra, like the crew of the CSL Pacific previously, would be replaced with a foreign crew; in this case a Ukrainian crew; that the vessel would continue to do work in the Australian coastal trade and that the object of the exercise was to achieve a lower unit labour cost and remove the application to the vessel of the current certified agreements.”
By its defence the Company admitted pars 30-32 of the statement of claim and said that it also sent a letter in identical terms to the letter referred to in par 30 of the statement of claim to the MUA on or about 13 and 17 December 2001.
Paragraph 33 of the Company’s defence reads:
“As to paragraph 33 of the statement of claim, the respondent:
(a)admits that:
(i)Chris Sorensen informed the representatives of the applicants present that the vessel was to be sold to CSL Asia;
(ii)the Australian crew of the CSL Yarra would be replaced with a Ukranian [sic] crew; and
(iii)the vessel could do work on the Australian coast where cargo and permits were available; and
(b) otherwise denies the paragraph.”
The pleadings thus make it clear that there is a very limited dispute between the parties as to the relevant primary facts. It was not disputed by the Company that by its admitted conduct it threatened to dismiss those of its employees who crew the CSL Yarra. What is in dispute is the reason or reasons for the conduct of the Company. Section 298V of the WRA (see [10] above) places the onus of proof on this issue on the Company.
It is appropriate to mention that it was established at the hearing that on 19 December 2001 (ie the date on which the originating process in this matter was filed) the Board of Directors of the Company resolved that the Company would sell the vessel CSL Yarra to CSL Pacific Shipping Inc at a price to be approved. The Board of Directors further resolved on that day that upon the sale of the vessel, amongst other things, “the Company will terminate all the Australian crew”.
The statement of claim in this matter is undated but it was filed on 15 January 2002. It makes no mention of the meeting of the Board of Directors of the Company held on 19 December 2001. However, in the course of the final submissions of the applicants, Mr Shaw QC, senior counsel for the applicants, submitted that “as a matter of law that [ie the resolution of the Board of Directors of 19 December 2001] is the operative and relevant decision for the purposes of your Honour’s consideration”. Following it being drawn to Mr Shaw’s attention that the statement of claim makes no reference to the meeting of the Board of Directors of 19 December 2001, Mr Shaw applied to amend the statement of claim to include the decision of the Board of Directors within the conduct of which complaint is made.
Order 13 rule 2(7) of the Federal Court Rules has since 14 December 2001, subject to conditions not here relevant, allowed amendments to be made which add a new claim for relief, or a new foundation in law for a claim for relief, if the new claim for relief or new foundation in law arises, in whole or in part, out of facts or matters that have occurred or arisen since the commencement of the proceeding. Further O13 r 2(8) now allows a pleading to be amended even if the amendment pleads a matter or fact which has occurred or arisen since the commencement of the proceeding. It was therefore unnecessary for inquiry to be made as to whether the resolution of the Board of 19 December 2001 occurred before or after this proceeding was commenced.
After hearing argument from Mr Dixon SC in opposition to the proposed amendment, I refused to allow the amendment to be made. I took into account particularly the serious nature of the proceeding (ie proceedings claiming, amongst other things, the imposition of penalties and an injunction restraining the implementation of a significant business decision), the fact that the application was made very late (ie after the close of evidence and during the course of the applicants’ final submissions in reply) and the fact, as I accepted it to be, that the Company may have adduced additional, or different evidence, had it been placed on notice that the applicants alleged that the resolution of the Board of Directors of 19 December 2001 was passed for a prohibited reason or for reasons that included a prohibited reason.
RELEVANT INDUSTRIAL INSTRUMENT
It is admitted on the pleadings that the parties are bound by the Maritime Industry Seagoing Award, an award made pursuant to the WRA. It is further admitted that:
(a)at all material times the CSL‑MUA Enterprise Agreement 1999 (“the MUA Certified Agreement”), an agreement made pursuant to s 170LJ of the WRA and certified pursuant to s 170LT of the WRA by the Australian Industrial Relations Commission (“AIRC”), bound the MUA and the Company and provided for the levels of remuneration of the members of the MUA employed on CSL Yarra; and
(b)at all material times the CSL Australia Pty Limited Engineer Officers Enterprise Agreement 1999 (“the AIMPE Certified Agreement), an agreement made pursuant to s 170LJ of the WRA and certified pursuant to s 170LT of the WRA by the AIRC, bound the AIMPE and the Company and provided for the levels of remuneration of the members of the AIMPE employed on the CSL Yarra.
Each of the Maritime Industry Seagoing Award, the MUA Certified Agreement and the AIMPE Certified Agreement is an “industrial instrument” within the meaning of Part XA of the WRA.
REASONS FOR THE THREATENED DISMISSAL
I do not understand the applicants to have pressed their allegation that the conduct of the Company on which they rely was conduct carried out because the members of the crew of the CSL Yarra are each members of an industrial association (see s 298L(1)(a)). To the extent, if any, that they did, I am satisfied that the Company by its evidence has proved otherwise. It is necessary, therefore, to give detailed consideration only to the allegation that the Company’s conduct was carried out because the crew members are each entitled to the benefit of an industrial instrument (s 298L(1)(h)).
As is mentioned above (see [3] above), the Canadian corporation CSL Group is the ultimate parent company in the group of companies of which the Company is a part (“the CSL group).
Roger Morgan Jones (“Mr Jones”) has been the President of CSL International Inc (“CSL International”), another company in the CSL group, since March 1992. As President of CSL International, Mr Jones carries ultimate responsibility for managing the international business of Canada Steamship Lines (ie its business of operating ships outside of Canada). Mr Jones has also been a director of the Company since May 1999. In addition he is a director of each of CSL Group, Canada Steamship Lines Holdings BV, Auscan Holdings Pty Limited and other companies in the CSL group.
An organisational chart showing the management structure for the CSL group shows that Mr Jones reports directly to the Chief Executive Officer and President of CSL Group. The chart also shows that David King (“Mr King”), Managing Director of CSL Asia Shipping Pte Ltd, reports directly to Mr Jones and that Christopher Thomas Sorensen (“Mr Sorensen”), Managing Director of the Company, reports to Mr King. Mr Jones described Mr Sorensen as reporting to him through Mr King. Mr King is also a director of the Company.
Mr Jones gave evidence concerning his relationship with Mr King and Mr Sorensen as follows:
“[t]hese people do report to me so I certainly expect them to speak their minds and to give me their full opinions etcetera about what courses of action they should take but in the final analysis when I make a decision when we have decided on a course of action I expect the people who are working for me to support that and to go forward.”
He said that a situation had not arisen in which this had not happened. Mr Jones was not cross‑examined with respect to this evidence and I see no reason not to accept it.
Mr Jones gave evidence, which I accept, concerning the making and implementation of the decision to sell the CSL Yarra. His evidence was that the decision to sell the CSL Yarra to another company in the CSL group, register it in the Bahamas and replace its Australian crew with a Ukrainian crew was made by him in the first week of December 2001. His evidence was that, after he had made his decision, he contacted Mr King and Mr Sorensen by telephone to advise them of his decision. He left it to them to implement the decision, although a few days before 19 December 2001 he did instruct Mr Sorensen to conduct a Board meeting of the Company to formalise the decision to sell and reflag the CSL Yarra.
Mr Sorensen’s evidence in this regard, which I also accept, confirmed the evidence of Mr Jones. Mr Sorensen gave evidence that, following his appointment in August 2001 as Managing Director of the Company, he began to give consideration to developing a proposal, for the consideration and approval of Mr Jones, under which the CSL Yarra would be sold to another CSL entity, re-registered to become a foreign flagged vessel and recrewed with a Ukrainian crew. He further gave evidence that in early December 2001, during a telephone conversation with Mr Jones, Mr Jones said to him words to the effect:
“Go ahead with the reflagging of the Yarra. I’ll leave the timing of the actual reflagging to you and David.”
In addition Mr Sorensen gave evidence that prior to 19 December 2001 he had a telephone discussion with Mr Jones during which Mr Jones said words to the effect:
“As part of the sale process of the Yarra, you should ensure that a board meeting is held to formalise the sale and that adequate directors are available.”
I am satisfied that the conduct of the Company upon which the applicants rely for the purpose of this proceeding (see [12] above) was conduct undertaken by Mr Sorensen to implement, in part, instructions given to him by Mr Jones. In the circumstances, in my view, the relevant reason (or reasons) for the conduct within the meaning of s 298K(1) of the WRA (see [6] above) is the reason (or reasons) for the decision of Mr Jones referred to in [26] above. This approach accords with that taken by the Full Court in Greater Dandenong City Council v Australian Municipal, Clerical and Services Union [2001] FCA 349; 184 ALR 641 (“Greater Dandenong”) in which the operative cause for the conduct of the Chief Executive Officer of the Council who terminated the employment of a number of council employees was regarded as the decision of the Council which rendered the terminations inevitable (see, for example, per Wilcox J at [88]-[89]. This does not mean that Mr Sorensen’s evidence is irrelevant. To a significant degree, Mr Jones acted on advice provided to him by Mr Sorensen. It is, in the circumstances, appropriate to have regard to that advice in the context of Mr Jones’ evidence.
Mr Sorensen gave evidence, which I accept, as follows. Throughout Mr Sorensen’s employment with the Company, its business on the Australian coast has been comprised of voyage fixtures (ie a contract with a customer for a particular voyage confirmed by a fixture note). The standard operating practice of companies in the CSL group engaged in the international business of the group is to seek to enter into contracts with customers for two to three years. The Company, whilst Mr Sorensen has been its Managing Director, has been negotiating with its principal customers for fixed term contracts but to date these efforts have been unsuccessful. Mr Sorensen identifies a major obstacle in the way of the Company obtaining the fixed term contracts which it seeks as the desire of its customers for the Company to commit to having sufficient shipping capacity in the region to meet the customers’ respective forecast requirements. However, the Company’s estimate of the total requirements of its Australian customers is that they are sufficient to utilise fully only about 1.4 ships of the capacity of the CSL Yarra and the CSL Pacific, the two vessels presently available to the Company. It is appropriate to note here that the CSL Pacific, then known as the River Torrens, was sold by the Company to another company in the CSL group and it is presently operating on a time charter to the Company with a foreign crew. If the Company commits to keeping the CSL Yarra and the CSL Pacific in the region it will need to look for additional work for the vessels, as without additional work the continued operation by the Company of the vessels will be unsustainable. Mr Sorensen expressed the opinion that “if the CSL Yarra is reflagged and recrewed then the prospects of CSL Australia of [sic] being able to obtain further work at viable freight rates for the CSL Yarra … would …be substantially enhanced”. Mr Sorensen referred to the Company being “subject to significant competition for the carriage of cargoes on the Australian coast from Australian and foreign flagged vessels”.
I am satisfied, having regard to Mr Sorensen’s evidence, and to memoranda prepared by him (some aspects of which are confidential and thus not appropriate to reproduce in these reasons for judgment), that Mr Sorensen held, and continues to hold, the view that a significant factor which would contribute to the prospects of the Company being able to obtain further work for the CSL Yarra at viable freight rates were the vessel to be reflagged and recrewed would be the lower cost of employing an Ukrainian crew as opposed to an Australian crew. By way of example, in a memorandum of 24 October 2001 sent to Mr Jones and Mr King, Mr Sorensen on more than one occasion contrasted the cost of employing an Australian crew with the costs of employing a significantly larger Ukrainian crew. In the same memorandum Mr Sorensen stated:
“My longer term plan is that we need two ships to support the growth in the business and with two low cost vessels this task is going to be more achievable.”
Under cross‑examination Mr Sorensen agreed that one of the factors in his thinking in formulating the proposal to reflag the CSL Yarra was the higher cost of employing Australian seamen when compared with foreign seamen. He was reluctant to accept that crew cost was a major factor in his thinking. However, in my view, Mr Jones rightly formed the view with respect to Mr Sorensen’s memorandum of 24 October 2001 (apparently received by Mr Jones in the United States of America on 23 October 2001), as his affidavit evidence discloses that he did, that:
“[t]he thrust of Mr Sorensen’s position was based on the benefits to be obtained from the reduction in the cost of operating the vessel which would flow from it being crewed by a Ukranian [sic] or mixed Australian and Ukranian [sic] crew instead of the existing Australian crew.”
Considerable time was spent at trial exploring the issue of whether Mr Sorensen may have made an admission on behalf of the Company on 17 December 2001 that the decision of the Company was based on a desire to reduce labour costs. On that day Mr Sorensen addressed the crew of the CSL Yarra and certain representatives of the applicants on the topic of the Company’s proposals concerning the CSL Yarra. In view of my finding that the person who made the decision to sell and reflag the CSL Yarra was Mr Jones, the weight which could be attributed to any admission made by Mr Sorensen as to the reason for the decision would be limited. However, in view of the time spent on the issue, it is appropriate that I record my finding, reached on the balance of probabilities, that Mr Sorensen did not make the admission sought to be established by the applicants. This finding is based primarily on the following. Mr Sorensen denied making the admission. No contemporaneous notes of the meeting record the making of the admission. I am satisfied that Mr Sorensen chose the words that he used on 17 December 2001 carefully as he was aware that the crew and the Company would scrutinise them with care. The weight to be attributed to the affidavit evidence of witnesses for the applicants concerning the alleged admission is diminished by the form in which much of that evidence was given. The affidavit evidence filed on behalf of the applicants touching on this issue was in a number of instances in identical form and in language which I am satisfied does not reflect language ordinarily used by the deponents. I consider it is more likely than not that the evidence was not in each case the product of an independent recollection of the deponent.
The critical evidence concerning the reason or reasons for the conduct of the Company upon which the Company relies is the evidence of Mr Jones. Mr Jones gave affidavit evidence, which I accept, that in late 2001 it was his view that:
“[u]nless the operating status of the CSL Yarra could be altered to make it viable for it to more effectively compete for business in the Australian coastal market and/or in other markets in the region so as to be able to make up the projected ‘shortfall’ in work [ie the customers’ estimated total requirements being sufficient to utilise fully only 1.4 ships] or some other solution could be found to the problem created by that projected shortfall, then the sustainability of CSL International’s business in the Australian coastal market was uncertain.”
Mr Jones’ affidavit goes on:
“As I perceived the situation in the period October to December 2001, the operating status of the CSL Yarra was both unsatisfactory generally and not such as to allow it to be operated outside the Australian coastal market because:
(a)CSL International had not been and was not generating acceptable returns on its investment in the vessel. The funds invested in the vessel by CSL International were approximately $8 million and by late 2001 the cumulative losses on its operation over the period since it was acquired in May 1999 exceeded $1.5 million;
(b)The cost of Australian crewing and the unwillingness of Australian crews to undertake routine ship maintenance meant that the CSL Yarra was unable to be properly maintained so that its condition was deteriorating at an unacceptable rate;
(c)The vessel operated with a crew ‘swing’ of between 6 and 8 weeks (depending upon the classification of the crew) instead of the CSL International standard of 4 months;
(d)Unlike CSL International crews generally, the crew of the CSL Yarra were not prepared to ‘dig out’ as part of their routine duties without substantial additional payments;
(e)The fact that it was crewed with Australian crew meant that it could not be integrated with the crewing practices generally prevailing in the CSL International fleet so as to enable free movement of crew between the CSL Yarra and other vessels in the fleet;
(f)The cost of an Australian crew was substantially greater than the typical cost of other crews in the CSL International fleet.
I considered that the changes necessary to address these concerns were such that I did not believe that it would be realistically possible to seek to remedy the situation in any way other than by employing a non‑Australian crew to man the vessel.”
Under cross examination Mr Jones disagreed with the suggestion put to him that one of his reasons for agreeing to the reflagging of the CSL Yarra was to get away from the high level of wages and conditions prescribed under Australian law. He said, in effect, that although the wages and conditions of an Australian crew were not an irrelevant consideration:
“[t]he reason I took the decision to do this now, was because we were now making a decision to keep two ships on the Australian coast in order to try to service our customers. In order to do that I needed to have two ships that were flexible enough to trade internationally and had the cost structures … to be able to trade as part of our fleet and that was the reason I made that decision.”
He went on to say:
“… when we make a big decision like that there are a lot of factors that come into consideration. They are all things that should be looked at, that people who are in charge of CSL Australia in this case need to lay out all of the cost differences, both positive and negative. We had significant redundancy costs when we made this decision. Very, very significant. Those have a much bigger impact on our cash flows than do some of these other things, and there were lots of risks involved. All of those things needed to be looked at, but the reason and there are some things that are part of our – you know, we want to know where we are going to be when we made the decision. But the reason we made it was different. The reason I made it was different, so that’s a point.”
Mr Jones acknowledged on more than one occasion during his cross‑examination that, at the time that he made the decision that the CSL Yarra should be sold and reflagged, he knew the cost differential between an Australian crew and a foreign crew. However, he consistently denied that the cost differential was the reason for his decision. He said that his thinking was that “we needed to have a ship that was capable of trading in Australia and outside of Australia”.
I am satisfied that the difference in cost between an Australian crew and the “typical cost of other crews in the CSL International fleet” was a factor, and probably a significant factor, in Mr Jones’ thinking. It is a factor which he explicitly identified in his affidavit evidence (see subparagraph (f) in [34] above), and also, I find, a factor which informed his thinking with respect to at least the additional factors identified in subparagraphs (a), (b) and (e) set out in [34] above. Nonetheless, I accept that Mr Jones, presumably because of his wider responsibilities within the CSL group, viewed the proposal to sell and reflag the CSL Yarra in a broader context than Mr Sorensen. I am satisfied that what motivated Mr Jones to make his decision was the longer term, strategic advantages which would flow from the CSL Yarra being able to be integrated into the CSL International fleet as an internationally flagged vessel crewed on a consistent basis with the other vessels in the fleet so that it could be utilised in a cost effective way both in and outside Australia.
WAS THE CONDUCT FOR A PROHIBITED REASON?
The critical issue for determination is whether the above findings lead to the conclusion that the threat to dismiss the members of the crew was made for the prohibited reason, or for reasons that include the prohibited reason, that the members were entitled to the benefit of Maritime Industry Seagoing Award and one or other of the MUA Certified Agreement and the AIMPE Certified Agreement (“the industrial instruments”).
It is now clear that s 298L(1)(h) applies both to conduct motivated by the fact that an industrial instrument applies to an employee and conduct motivated by the content of an industrial instrument (Greater Dandenong per Wilcox J at [80], Merkel J at [161] and Finkelstein J at [212]). It is also clear that the remuneration to which the members of the crew of the CSL Yarra are respectively entitled is governed by the content of the industrial instruments and that the content of the industrial instruments means that the cost of an Australian crew is higher than the “typical cost of other crews in the CSL International fleet” (see [34] above). Against this background I turn to consider the proper interpretation of s 298K of the WRA.
Section 298K of the WRA, unlike some of its statutory predecessors, does not create an offence. The civil standard of proof is applicable (see s 140 of the Evidence Act 1995 (Cth)). However, the onus of proof as to the reason for the conduct of which complaint is made is reversed if the applicant proves the relevant conduct (or it is admitted) and makes an allegation that the conduct was carried out for a prohibited reason (s 298V of the WRA – see [10] above). Although s 298V is relevantly expressed in terms of conduct carried out for a prohibited reason, I see no reason to doubt that the onus of proof in respect of the reason for the conduct applies equally to an allegation that the conduct was carried out for reasons that include a prohibited reason. The reversal of the onus of proof reflects Parliamentary recognition of the fact that “the circumstances by reason of which an employer may take action against an employee are, of necessity, peculiarly within the knowledge of the employer” (Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 267 per Northrop J; see also Davids Distribution Pty Ltd v National Union of Workers [1999] FCA 1108; 165 ALR 550 at [109] per Wilcox and Cooper JJ). There is no reason to think that when the proscription of conduct carried out for a prohibited reason was extended to conduct carried out for reasons that include a prohibited reason, it was intended that applicants would not enjoy the benefit of the reversal of the onus of proof in respect of the whole class of proscribed conduct. The contrary was not here argued.
Under s 298K(1) of the WRA it is sufficient for an applicant to show that the conduct of the employer of which complaint is made was undertaken “for reasons that include a prohibited reason”. The employer’s reasons will include a prohibited reason within the meaning of this subsection if the prohibited reason is one of the operative reasons for the conduct whether or not it was the substantial reason for the conduct (Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899; 93 FCR 34 (“MUA v Geraldton”) per R D Nicholson J at [224]). It is necessary for s 298L of the WRA to be construed in the light of the references in s 298K to “reasons that include a prohibited reason”.
In MUA v Geraldton at [294]-[296] R D Nicholson J said:
“I agree with the submission for the GPA [Geraldton Port Authority] that the words ‘for’ in s 298K(1) and ‘because’ in s 298L(1) require a causal connection between the act of the employer which injures the employee in his employment or alters his position to his prejudice and the status of the employee as a union member, in the case of s 298L(1)(a), or as a person entitled to the benefit of the Award or Agreement, in the case of s 298L(1)(h). The inquiry is directed to the reasons of the employer.
I also agree the fact that there is some connection between the employer’s act and the employee’s union membership or entitlement to the benefits of an award does not mean that the employer did the act because the employee was a union member or entitled to the benefit of the award. Whether an employer was actuated by a prohibited reason or reasons which included a prohibited reason is a question of fact. It will often involve questions of judgment and the characterisation of the employer's reasons:cf Wood v City of Melbourne (1979) 26 ALR 430. For example, if an employer made a decision to make his operation more efficient or to facilitate the provision of services to the service users at a lower cost (and for no other reason) that action is not open to the inference of having been taken for reasons which include that the employees are members of a union or have the benefit of an award. The critical question, however, is what were the actual reasons of the GPA and hence of each of its members.
I additionally agree that if members of the GPA were aware and welcomed a reduction in payments of penalty rates or the power and influence of the MUA as a probable, or even inevitable, consequence of its conduct, it does not follow that the GPA engaged in that conduct for reasons which included those reasons: Australian Builders Labourers Federated Union of Workers (WA) Branch v J-Corp Pty Ltd (1993) 114 ALR 551 at 562-565. At that passage the Full Court (Lockhart, Spender and Gummow JJ) relied on the following passage from Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 27 ALR 367 at 383:
‘It suffices, for present purposes, to say that, in my view, the question to be answered in determining whether conduct was engaged in for a ‘purpose’ mentioned in s 45D(1) of the Act is, to adopt the words of Viscount Simon LC in Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942] AC 435 at 444‑5, to be answered not by reference to whether it was appreciated that the relevant conduct might have the specified effect but by reference to the real reason or reasons for, or the real purposes of, the conduct and to what was in truth the object in the minds of the relevant persons when they engaged in the conduct in concert. Insofar as the union was concerned, its purpose must, of course, be determined by reference to the purpose of those through whom it acted.’
….” (emphasis added)
The proper approach to be taken to the identification of an employer’s reason or reasons for undertaking certain conduct was also considered by the Full Court (Wilcox, Merkel and Finkelstein JJ) in Greater Dandenong. In that case, the Council had accepted a tender from an independent contractor, Silver Circle, for the provision of services previously provided by its own employees, and thereafter retrenched certain of those employees. Madgwick J at first instance ([2000] FCA 1231; 101 IR 143) had summarised his conclusions in the following way:
“In this case, to recapitulate, the employer was concerned as to the comparative expense of its employees performing the HACC [home and community care services] work, and knew that the entitlements of those employees to the benefit of the relevant industrial instruments were the main reasons for that comparative expense. The employer also believed that the main reason why the expense might be reduced was that the independent contractor’s employees would be unable to access entitlements of similar value. Further, the employer knew that it was probable that at least some of the contractor’s employees would come from the ranks of the employer’s own subject employees and that the work would be performed in substantially the same ways. Finally, the employer’s agents had attempted to have the employees voluntarily reduce their entitlements. The decisive action was taken only after reference to the employees’ decision to accept that they were, in effect, labourers unworthy [sic] of their present hire.
In my opinion, these facts lead to a positive inference that an operative, if subsidiary, reason for the Council’s actions was that the subject employees had those very entitlements. At the very least, in my opinion, it can safely and without injustice be said that the Council has failed to discharge its s 298V onus of proof of the contrary.”
On appeal Wilcox J at [79] observed:
“Although the details vary from case to case, outsourcing typically involves the engagement of a contractor who carries out a function or operation, previously undertaken by the enterprise itself, in a more efficient way; perhaps by the use of more sophisticated equipment, perhaps by using specialised labour. It will generally be possible for an outsourcing employer, accused of s 298K(1) conduct for a s 298L(1)(h) reason, to negative that reason by proving other reasons for the decision to outsource. What makes this case unusual is that the functions to be undertaken by Silver Circle were exactly the same as those previously undertaken by the council and would be performed by many of the same people and in virtually the same way. It was not suggested that new equipment would be used; the only envisaged ‘efficiency’ was a saving in costs by moving the labour force from the certified agreement to the HACC award.”
At [90]-[91] Wilcox J stated:
“It is factually incorrect to say, as do counsel for the appellant that the HACC employees were not made redundant ‘because of an intentional act by the appellant to change their positions to their prejudice’. Council intentionally took a course that it knew would alter the employees’ position to their prejudice. Upon the basis of Madgwick J’s findings, a principal reason why it took that course was that, while employed by the council, the HACC employees were entitled to the benefit of the award and certified agreement while employees of Silver Circle (even if they were the same people) would not be so entitled.
It is important to note that counsel for the council do not submit the decision of their client was uninfluenced by Silver Circle’s price advantage; they concede it was one of the criteria the council took into account. Nor do counsel suggest that Silver Circle’s price advantage was other than a reflection of the differences in the terms and conditions of the industrial instruments respectively binding the council and Silver Circle. Under those circumstances, it seems to us [sic], to put the matter at its lowest, that it was open to Madgwick J to reach the conclusion (as he did at para 65 of his reasons) that the council ‘has failed in a factual sense to establish that a reason for the dismissal or any other [s 298K] conduct … was not because of the [HACC workers’] entitlement to the benefits of the [award and certified agreement]’.”
Merkel J in Greater Dandenong at [161] stated:
“An employer will have breached ss 298K(1) and 298L(1)(h) where the dismissal or other prejudicial conduct is for the reason that the employer is not prepared to pay the award entitlement of the employee. As an employer is obliged to pay award rates, the employer is expected to be capable of organising its business so as to be able to meet its award obligations. The mere fact that an award increase cannot be passed on or is inconvenient does not relieve the employer of the constraints of ss 298K(1) and 298L(1)(h). Thus, the section can extend to prejudicial conduct which is carried out for the reason that the award rates have made the employer’s business less profitable. However, profitability in this context can involve questions of degree. Thus, where the reason for the prejudicial conduct is that the employer is unable to pay the award entitlement or the employer’s business is not capable of operating at a profit by reason of the entitlement, it is likely that the section will not have been breached. Although I have referred to award entitlements, obviously the same observations apply to other industrial instruments, including certified agreements and Australian Workplace Agreements.”
At [163]-[164] Merkel J said:
“It is also appropriate to observe that common sense answers in determining the reason for engaging in conduct, as with causation issues, can differ according to the purpose for which the question is asked: see Environment Agency v Empress Car Co (Abertillery) Ltd [1999] 2 AC 22 at 29 per Lord Hoffman and J & G Knowles and Associates Pty Ltd v Commissioner of Taxation (2000) 96 FCR 402 at [26]-[27]. In the present case, if the dismissed council employees were asked the reason for their dismissal, they could understandably say it was because they did not agree to reduce their award or agreement entitlements. On the other hand, the council could understandably say it was because of Silver Circle’s lower price. As was pointed out in J & G Knowles at [27], the answer to the question can be assisted by having regard to the purposes or object of the statutory provision under which question arises. In that regard, as explained earlier, the object of the sections in question in the present case is to protect employees’ freedom of association by protecting them from discrimination by reason of their entitlements under an industrial instrument or order.
Further, the cases demonstrate that s 298K is not concerned with the cause of the prejudicial conduct. Rather, it is concerned with the employer’s reason or reasons for engaging in that conduct. Thus, there can be a significant difference between the employer’s subjective reason for engaging in prejudicial conduct and the objective circumstances that led to the employer engaging in the conduct. Where the employer’s reason is inability to pay the award entitlement, the conduct will not breach s 298K(1) because the circumstance that led to the employer engaging in that conduct was the employees’ increased award entitlements.” (emphasis added)
Merkel J at [167] gave the following reasons for rejecting the positive inference drawn by Madgwick J that a reason for the Council’s acceptance of the Silver Circle tender was the Council’s employees’ entitlements under industrial instruments:
“In my view the proper inferences to be drawn from the primary facts found by the primary judge are that an operative reason for the council’s resolution to accept Silver Circle’s tender was its lower price and that a circumstance that led to it accepting the lower price was the higher award and agreement entitlements of the HACC employees. While the higher entitlements may be causally linked to the council’s acceptance of the Silver Circle tender, the evidence does not support the primary judge’s conclusion that they were an operative reason for the council’s acceptance of the tender. No councillor or council document stated that the entitlements were a reason for the council’s acceptance. The inference drawn by the primary judge to the contrary was based on an approach that, erroneously, failed to distinguish between the operative reason for the council acting and the circumstances that led to the price of the in-house bid being higher than the price of the Silver Circle bid. The fact that the councillors were aware of, or considered, those circumstances does not make them a reason for their decision. This is not a case of a council not being prepared to pay award or agreement entitlements or seeking to discriminate against its employees by reason of those entitlements. Rather, it is a case of a council, that is required by law to engage in a competitive tendering process, accepting the most competitive tender which met the objective criteria it specified.” (emphasis added)
However, Merkel J did not find that the Council was entitled to succeed on its appeal. His Honour found that the Council had not adduced evidence to negate the finding made by Madgwick J that the members of the Council who voted in favour of accepting the tender were likely to have held the view that Council’s staff affected by the acceptance of the tender had acted unreasonably in not agreeing to reduce their industrial entitlements. At [180] his Honour said:
“Accordingly, I am satisfied that the council has not established that the evidence accepted by the primary judge warranted the conclusion that the council had discharged the onus cast upon it under s 298V. It must follow that, although the council has demonstrated error by the primary judge in the positive inference he drew, it has not demonstrated that his Honour erred in ultimately concluding, in reliance upon s 290V, that the council breached ss 298K(1)(c) and 298L(1)(h) when it resolved to accept Silver Circle’s tender.”
The third member of the Full Court in Greater Dandenong was Finkelstein J. Finkelstein J, after reviewing the authorities, at [204] stated:
“Thus, there has been an unbroken line of state and federal authority in favour of the proposition that, for the purpose of deciding whether there has been an unlawful dismissal for the reason that an employee is entitled to the benefit of an award or certified agreement, it is necessary to draw a distinction between the ‘reason’ or motive behind the dismissal and what produced that motive.” (emphasis added)
At [209] his Honour observed:
“… the trial judge may not have drawn a sufficient distinction between the immediate reason (motive or purpose) for the dismissals or the acceptance of the tender, and the proximate reason (cause) which explained why that action was undertaken, as is required by cases such as Connington v Kogarah, Grayndler v Broun and Klanjscek v Silver. The mere fact that the appellant was aware that the Silver Circle tender was lower, because Silver Circle had the benefit of lower award rates, may say nothing about the reason for acceptance of the tender or for the ultimate dismissal of the staff.”
Finkelstein J concluded at [216], as had Merkel J at [167], that the inference that an operative reason for the Council’s decision to accept the tender was the entitlement of the Council’s staff to the benefits of an award and a certified agreement was not open to the trial judge. Finkelstein J accepted that the entitlement of the Council’s staff explained the difference in price between the independent tender and the in-house tender but, in his Honour’s view, it was not the motive for the decision.
As to the operation of s 298V of the WRA, Finkelstein J at [218] said:
“… there is a limit to the operation of s 298V. It will cease to have application in a case where there is sufficient evidence to enable the trial judge to make a positive finding whether conduct has been carried out for the alleged reason or with the alleged intent. Put another way, the presumption imposed by s 298V must be drawn when there is not sufficient evidence before the court to permit the judge to determine what are the true facts, that is, true in the sense of being more probable than not. When the judge has that evidence, he cannot resort to s 298V as an alternative to finding facts.”
It is difficult, if not impossible, to identify the ratio decidendi of Greater Dandenong. However, two members of the Full Court (Merkel and Finkelstein JJ) concluded that the learned primary judge had erroneously failed to distinguish between the operative (or immediate) reason for the Council’s conduct and the cause (or proximate reason) for the Council’s conduct. While, as it seems to me, this distinction may in many cases be easier to articulate than to draw, especially in respect of a statutory provision that recognises the possibility of a number of reasons having a causal connection with conduct, I consider that I should be guided by the approach taken by Merkel and Finkelstein JJ who constituted a majority of the Full Court in Greater Dandenong on this issue. I am fortified in my decision to adopt this approach by the fact that the approach appears to me to be consistent with that adopted by R D Nicholson J in MUA v Geraldton (see [43] above).
Adopting the approach identified above, I am satisfied that the Company has proved on the balance of probabilities that the operative or immediate reason (or perhaps reasons) for the conduct of the Company with which this proceeding is concerned was Mr Jones’ desire that each of the CSL Pacific and CSL Yarra should have the flexibility to trade as part of the CSL International fleet not only on the Australian coast but elsewhere in a cost effective way. I do not doubt, indeed Mr Jones did not deny, that in the process of reaching his decision that the CSL Yarra should be sold and reflagged, he gave consideration to the cost differential between an Australian crew and a foreign crew. As mentioned above, that cost differential flows from the content of the industrial instruments. However, it is necessary for me, as R D Nicolson J pointed out in MUA v Geraldton (see [42] above), to characterise the Company’s reasons, which in this case are in reality Mr Jones’ reasons. This exercise of characterisation involves, as his Honour observed, questions of judgment. In my judgment, part of the reason (or perhaps one of the reasons) for Mr Jones’ decision was the desirability, as he saw it, of the CSL Yarra being able to be used in a cost effective way. I am satisfied that he considered that the freedom to crew the CSL Yarra with a crew which did not enjoy the protection of the industrial instruments would contribute significantly to the cost effective utilisation of the vessel. However, it seems to me that the fact that the crew of the CSL Yarra were entitled to the protection of the industrial instruments, while in part a cause of the decision taken by Mr Jones, was not an operative reason for his decision in the sense identified in [54] above. The relevant operative reason, I find, was the need to be able to utilise the vessel in a cost effective way.
I turn to consider the significance, if any, of s 298V of the WRA in the light of the above findings.
In General Motors-Holden’s Pty Ltd v Bowling (1977) 51 ALJR 235 Mason J, with whose judgment Stephen and Jacobs JJ agreed, gave consideration to a provision which can be seen as the predecessor of s 298V of the WRA, namely s 5(4) of the Conciliation and Arbitration Act 1904 (Cth). At 241 his Honour said:
“Section 5(4) imposed the onus on the appellant of establishing affirmatively that it was not actuated by the reason alleged in the charge. The consequence was that the respondent, in order to succeed, was not bound to adduce evidence that the appellant was actuated by that reason, a matter peculiarly within the knowledge of the appellant. The respondent was entitled to succeed if the evidence was consistent with the hypothesis that the appellant was so actuated and that hypothesis was not displaced by the appellant.”
Another area of statutory law in which the legislature has considered it appropriate to reverse the onus of proof is the area of income tax law. In Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 Hunt J gave consideration to the operation of s 190 of the Income Tax Amendment Act 1936 (Cth) which imposed upon the taxpayer “the burden of proving that the assessment is excessive” in the context of an assessment calculated on the basis that certain property had been acquired for the purpose of profit‑making by sale.At 11 his Honour said:
The taxpayer bears no onus to negate each of the objective facts in the evidence which may be consistent with the purpose of profit‑making by sale. Those facts must, as I have said, be considered by the tribunal of fact when determining whether or not to accept the taxpayer’s evidence that his dominant purpose in acquiring the property was not one of profit‑making by sale. But once that evidence of the taxpayer’s purpose is accepted, the other objective facts in the evidence are irrelevant and they must be discarded; the taxpayer has discharged his onus and the reference or the appeal must be allowed.”
In considering the guidance provided by the above authorities in the context of this case it is of significance that s 298V, unlike the statutory provisions considered in those authorities, is concerned to reverse the onus of proof not only with respect to the dominant reason for the relevant conduct but with respect to all operative reasons for that conduct.
It follows, in my view, that the fact that there is in a case of this kind sufficient evidence before the Court to enable a positive finding to be made that a reason, or even the principal reason, for the carrying out of the conduct was not a prohibited reason will not exhaust the operation of s 298V. However, where there is sufficient evidence to enable a positive finding to be made that none of the operative reasons for the carrying out of the conduct was a prohibited reason, this will, in my view, exhaust the operation of the section. I do not understand Finkelstein J in Greater Dandenong (see [53] above) to have intended to convey anything to the contrary.
In this case I have concluded, having regard to the whole of the evidence before me, that, within the meaning of s 298K(1) of the WRA, the fact that the members of the crew of the CSL Yarra are entitled to the protection of the industrial instruments was neither the reason, nor included in the reasons, for the Company’s conduct. The onus placed upon the Company by s 298V of the WRA is thus discharged.
CONCLUSION
The application will be dismissed.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate:
Dated: 26 April 2002
Counsel for the Applicant: Mr J W Shaw QC with Mr A D Searle Solicitor for the Applicant: W G McNally & Co Counsel for the Respondent: Mr H J Dixon SC with Mr M J Steele Solicitor for the Respondent: Blake Dawson Waldron Date of Hearing: 2-5 April 2002 Date of Judgment: 26 April 2002
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