Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia - [1998] HCA 30

HIGH COURT OF AUSTRALIA

BRENNAN CJ,
GAUDRON, McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ

PATRICK STEVEDORES OPERATIONS
NO 2 PTY LTD & ORS APPLICANTS

AND

MARITIME UNION OF AUSTRALIA & ORS RESPONDENTS

Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (M29-1998) [1998] HCA 30
4 May 1998

ORDER

Special leave to appeal granted.

Appeal treated as instituted and heard instanter.

Appeal allowed in part.

The orders of the Full Court contained in pars 3 and 5 of the order of the Full Court set aside and in lieu thereof order:

(i)Paragraphs 2, 3 and 5 of the orders made by North J on 21 April 1998 ("the orders of North J") be varied by inserting at the commencement of each paragraph the words: "Subject to par 5A of this order".

(ii)Add as par 5A of the orders of North J the following:
"5A. The orders in pars 2, 3 and 5 of this order are made without prejudice to the powers of the Administrators of the First, Second, Third or Fourth Respondents during the period of administration."
(iii)Add as par 10A of the orders of North J the following:

2.
"10A. Without limiting the generality of the liberty to apply reserved in par 10, reserve liberty to any party to apply in relation to the foregoing orders upon 24 hours written notice to all other parties upon the administration of any of the First, Second, Third or Fourth Respondents ending."
(iv)Add as par 12 of the orders of North J the following:
"12. Orders 1, 2, 3, 4 and 5 of this order shall lapse unless by 4.00pm on 6 May 1998 (or such other time as a Judge shall order before the expiry of that time) the Applicants shall give to the Federal Court of Australia an undertaking by their solicitors or counsel in the terms or to the effect of the undertakings given to the Federal Court but with an amendment of the first undertaking to add after the words 'to pay to any party' the words 'or to any person who is or hereafter becomes a creditor of the First, Second, Third or Fourth Respondents'".

(v)Vary the order contained in par 4 of the Full Court's order by deleting "these orders" and inserting in lieu "the orders of the High Court of Australia".

Remit to the Full Court of the Federal Court any application by a party for an order with respect to costs of the proceedings in the Federal Court.

Otherwise dismiss the appeal.

The appellants pay the costs in this Court of the First to the Sixth Respondents. Otherwise no order as to costs.

Representation:

R V Gyles QC with J E Middleton QC and M P McDonald for the applicants (instructed by Freehill Hollingdale & Page)

J W K Burnside QC with H Borenstein, M Bromberg and M G R Gronow for the first and second respondents (instructed by Maurice Blackburn

& Co)
P B Murdoch QC with J D Elliott for the third, fourth, fifth and sixth respondents (instructed by Phillips Fox)

G P Harris for the seventh and ninth respondents (instructed by Blake Dawson Waldron)

No appearance for the eighth and tenth respondents

J D Merralls QC with J I Fajgenbaum QC and P M Tate for the eleventh, twelfth, thirteenth, fourteenth, fifteenth and sixteenth respondents (instructed by Minter Ellison)

G T Pagone QC with W A Harris for the seventeenth and eighteenth respondents (instructed by Dunhill Madden Butler)

Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Patrick Stevedores Operations No 2 Pty Ltd & Ors v

Maritime Union of Australia & Ors

High Court and Federal Judiciary - Federal Court of Australia - Power under s 298U of the Workplace Relations Act 1996 (Cth) and s 23 of the Federal Court of Australia Act 1976 (Cth) to grant interlocutory injunctions to restrict purported termination of labour supply agreements, termination of employment of employees, obtaining stevedoring services, engaging in conduct having the effect of termination employment of employees, and engaging in conduct having the effect of the divestment of assets or dealing with assets otherwise than in the ordinary course of business.

Equity - Equitable Remedies - Mareva injunctions and other interlocutory injunctions - Whether within jurisdiction of the Federal Court of Australia to grant injunction with the effect of fettering discretion of administrators appointed under Pt 5.3A of the Corporations Law - Whether effect of such injunction requires company to trade while insolvent - Whether injunction necessary to prevent frustration of process - Whether confined to maintaining status quo at the time of making application - Whether available to protect the subject matter of litigation conferring greater rights than when application made - Whether serious question to be tried - Whether appropriate on balance of convenience - Effect on third parties - Exercise of supervisory jurisdiction.

Corporations - Companies - Management and Administration - Appointment of administrators under Pt 5.3A of the Corporations Law - Powers and duties in administration of company - Personal liability in administration of company - Jurisdiction of court fettering discretion of administrators - Jurisdiction of court to make orders compelling administrators to retain employees and to trade while insolvent contrary to responsibilities under the Corporations Law.

Industrial Law - Commonwealth - Stevedoring Industry - Whether restructuring of companies so as to remove assets from employer company with the effect of dismissing, injuring or altering the position of employees by reason of their membership of a union contravenes Pt XA of the Workplace Relations Act 1996 (Cth) - Nature of interlocutory injunctive relief available under s 298U of that Act.

Tort - Joint or Several Tortfeasors - Conspiracy - Whether interlocutory injunction an appropriate remedy - Whether interlocutory mandatory injunction an appropriate remedy.

Corporations Law, Pt 5.3A, s 1321.
Federal Court of Australia Act 1976 (Cth), ss 23, 32.
Workplace Relations Act 1996 (Cth), Pt XA, ss 298K, 298L, 298T, 298U, 298V.

BRENNAN CJ, McHUGH, GUMMOW, KIRBY AND HAYNE JJ.
The Application

This is an application for a grant of special leave to appeal. However, the parties were invited to present as full an argument as would be put on the hearing of an appeal. It has become apparent that issues of general public importance are involved and that special leave should be granted. The issues are complex and, as the reasons which follow will show, important questions of law arise for consideration. These reasons deal with the disposition of the appeal.
The proceeding was commenced in the Federal Court of Australia by the Maritime Union of Australia ("the MUA") a registered Organisation and members of the MUA employed by four companies in the Patrick group against the Patrick group of companies ("the Group") and other respondents. The MUA and the employees[1] obtained interlocutory orders from North J which were designed to protect the employees against imminent termination of their employment. The Full Court (Wilcox, von Doussa and Finkelstein JJ) dismissed an appeal against the orders made by North J and added a further order. This appeal is brought from the judgment and orders of the Full Court.
[1]Hereafter the term "the employees" is used to describe both the employees and the MUA except where the context otherwise indicates.
In order to appreciate the nature of the orders made by North J, it is necessary first to state the statutory provisions on which the employees seek to rely and to recall the facts upon which his Honour proceeded. His Honour's findings of fact were, of course, provisional in nature in the sense that he found there were serious questions of fact to be tried. Those findings are so regarded in this Court. They were not challenged in the argument before us. On those findings, questions of statutory construction, of jurisdiction, of final and interlocutory remedies and of company law arise. We have had full argument upon them. There are circumstances in which, at the interlocutory stage, considered views upon questions of law are appropriate[2]. The present is such an occasion.
[2]Cohen v Peko-Wallsend Ltd (1986) 61 ALJR 57 at 59; 68 ALR 394 at 397.

The Workplace Relations Act

The Workplace Relations Act 1996 (Cth) ("the Act") defines[3] as one of its objects:
[3]s 3(f).
"ensuring freedom of association, including the rights of employees and employers to join an organisation or association of their choice, or not to join an organisation or association".
In pursuance of this object, the Act prohibits an employer from engaging in certain conduct for a "prohibited reason", that is to say, because (inter alia) the employee -
"is, has been, proposes to become or has at any time proposed to become an officer, delegate or member of an industrial association"[4].
[4]s 298L(1)(a).
The proscribed conduct is set out in s 298K(1) of the Act:
"    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;
(b)injure an employee in his or her employment;
(c)alter the position of an employee to the employee's prejudice;
..."
Paragraph (a) covers termination of employment; par (b) covers injury of any compensable kind; par (c) is a broad additional category which covers not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question. Proof of the reason for engaging in the prescribed conduct is the subject of s 298V:
"    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."
A contravention of s 298K(1) is not an offence[5] but the Federal Court of Australia is given a wide jurisdiction to make orders in respect of contravening conduct. Section 298T(1) reads:
[5]s 298X.
" Subject to subsection (4), an application may be made to the Court for orders under section 298U in respect of conduct in contravention of this Part."
Section 298U provides:
"    In respect of conduct in contravention of this Part, the Court may, if the Court considers it appropriate in all the circumstances of the case, make one or more of the following orders:
(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;
(b)    an order requiring the person or industrial association to reinstate an employee, or to re-engage an independent contractor;
(c)    an order requiring the person or industrial association to pay to an employee or independent contractor, or to a prospective employee or independent contractor, compensation of such amount as the Court thinks appropriate;
(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."
The employees submit that a series of steps taken by the members of the Group and by certain officers of the member companies were taken because the employees were members of the MUA. They claim the steps taken altered the position of the employees of four companies in the Group to their prejudice and that, if the intended conclusion of those steps be realised, the employees of those four companies would be dismissed.
The facts
The facts hereafter set out are taken substantially from the reasons for judgment of North J supplemented by evidence that is not presently in dispute.
Prior to September 1997, Patrick Stevedores No 1 Pty Ltd ("PS1"), Patrick Stevedores No 2 Pty Ltd ("PS2"), Patrick Stevedores No 3 Pty Ltd ("PS3") and National Stevedores Tasmania Pty Ltd ("Stevedores Tasmania") carried on the business of stevedoring at various ports in Australia. These are the four Patrick companies ("the employer companies") which employed and continue presently to employ the employees. The profits derived from the carrying on by the employer companies of their respective businesses were substantial: for the year ended 30 September 1996, PS1's after tax profit was $20,431,000, PS2's after tax profit was $9,322,000 and PS3's after tax profit was $6,943,285. The amount of the after tax profit of those companies reflected large future tax benefits but two of the three companies showed significant operating profits[6]. The profits of Stevedores Tasmania do not appear in his Honour's reasons for judgment, but may have been reflected in the profits of PS1 which held 83% of the issued shares in Stevedores Tasmania, the remaining 17% being held by a company outside the Group. After September 1997, with the exception of that 17%, the shares in each of the employer companies were held, directly or indirectly, by Patrick Stevedores Holdings Pty Ltd ("Patrick Holdings"), a member of the Group the ultimate holding company of which was and is Lang Corporation Ltd. In or before March 1998, the Group acquired the minority shareholding in Stevedores Tasmania.
[6]PS1 had an operating profit before tax of $7.4m, PS2 an operating loss before tax of $0.7m and PS3 an operating profit before tax of $2.6m.
In or before September 1997, officers of the Group decided to reorganise the Group in a manner which affected the capital structure, business, debts and inter‑company accounts of the employer companies. The reorganisation was not then known to the employees. First, the employer companies sold their stevedoring businesses to Patrick Stevedores Operations No 2 Pty Ltd[7] ("Patrick Operations No 2") for a price of $314.9 million. The employer companies thus disposed of their property, plant, equipment and all contractual interests save those relating to their employees. The employer companies ceased to carry on the business of stevedores. Their businesses were reduced to the provision of their employees' labour to the stevedore - at first Patrick Operations No 2 and subsequently Patrick Stevedores Operations Pty Ltd ("Patrick Operations"), another wholly-owned subsidiary of Patrick Holdings. The agreements ("the Labour Supply Agreements") under which each employer company supplied labour to Patrick Operations No 2 (and, later, to Patrick Operations) gave the stevedoring company the right to terminate the agreement without notice if there were any interference with, delay in or hindering of the supply of labour[8]. Thus the security of the employer companies' businesses was extremely tenuous. The security of the employees' employment was consequentially altered to their prejudice.
[7]The name of the company has been changed since the date of the sale. Its name at the time was Patrick Stevedores ESD Pty Ltd.
[8]Clauses 2.3(h) and 13(1)(b) of the Labour Supply Agreements.
The Labour Supply Agreements permitted Patrick Operations to obtain labour otherwise than from the employer companies. The agreements were non‑exclusive agreements. But until 7 April 1998 only the labour supplied by the employer companies was used; the right to obtain labour elsewhere was not exercised. In practice the disposition by employer companies of their stevedoring businesses left the carrying on of the actual stevedoring operations in the same state as they were before the Group reorganisation.
The Corporate Legal Counsel to Lang Corporation Ltd gave evidence to North J that the corporate restructuring was "to streamline the business and place it on a more modern footing". He identified various commercial advantages to the Group including being able better to measure the performance of the companies employing the labour and being able to refinance borrowing facilities at lower interest rates than bank rates. He said that the transactions were undertaken at full commercial value and after directors had taken independent legal advice. With reference to this evidence, North J observed[9]:
"There is no express denial that a reason for undertaking the restructure in this particular way was to facilitate the termination of the employees' employment. The reasons given do not explain why clause 13(1)(b) of each LSA took the particular form. Furthermore, the reasons given are not inconsistent with the reason alleged by the applicants. Section 298K(1) requires the prohibited reason to be one reason, but not the only reason. In my view, there is a serious question to be tried that one reason why the employers made the BPAs and LSAs in the form they took and the reason why they appointed the administrators was because the employees were members of the Union, and the employers wanted to dismiss them to replace them with a non-Union workforce."
[9]Judgment at 10.
Although the level of shareholders' funds in the employer companies would have been unchanged by the disposition of the employer companies' businesses at full commercial value, the businesses were exchanged for a receivable, not all of which was received and retained by the employer companies. The effect on the employees might have been less had the purchase price for the businesses of the employer companies been paid to and retained by those companies. But, after applying so much of the purchase price as was needed to discharge intra-Group loans and other debts owing by the employer companies, a significant amount - counsel variously stated the amount as $60 million or $70 million - was expended in buying back shares in the employer companies. Assuming that the buy-back was authorised by s 206B of the Corporations Law and thus avoided[10] the prohibition against a company acquiring its own shares[11], the shares bought back were cancelled immediately after the registration of their transfer[12]. The issued capital and shareholders' funds of the employer companies were reduced accordingly. The result of this restructuring was that somewhere between $60 and $70 million of the capital of the employer companies, which would have been available to finance their business operations, was returned to the shareholders. Apart from the 17% holding of an outside company in Stevedores Tasmania the shareholders of the employer companies were other members of the Group. The $60 to $70 million transferred to these shareholders was no longer available to employees and other creditors or potential creditors of the employer companies in the event of the loss of or significant downturn in the business of the employers. The shareholders' funds of the employer companies were reduced to approximately $2.5 million. It seems that those funds might have been exhausted by April 1998 when the employer companies were placed under administration.
[10]Section 205(1A) of the Corporations Law.
[11]Section 205(1)(b)(i) of the Corporations Law.
[12]Section 206I(3) of the Corporations Law.
The employer companies are said to be owed an amount of $16 million or $17 million by other companies in the Group but the security trustee of the Group's financiers gave notice of a crystallisation of its charge over that debt on the evening of 7 April 1998 - a date of some significance in the history of the relevant events - and counsel for the Group (other than the employer companies) asserted that whatever was owing to the employer companies was exceeded by the liabilities for which the employer companies were bound to provide. The material tendered in evidence before North J was not sufficient to demonstrate conclusively that the employer companies were insolvent at the time when his Honour was sitting. However, North J proceeded on the footing that the employer companies were insolvent.

In early 1998, there were interruptions in the supply of labour which enlivened Patrick Operations' power to terminate the Labour Supply Agreements. On 7 April 1998, that company exercised that power. This action left the employer companies with no work for their workforces to perform. The employer companies, most of their capital having been consumed by buying back their own shares from other members of the Group and their source of income having been taken away by the termination of the Labour Supply Agreements by Patrick Operations, were then put under administration under Pt 5.3A (ss 435A‑451D) of Ch 5 of the Corporations Law. Mr Clayton, the sole director of each employer company[13], resolved that, in the opinion of each of the boards of PS1, PS2 and PS3, the company was then insolvent and, in the opinion of the Board of Stevedores Tasmania, that company was likely to become insolvent: see s 436A(1) of the Corporations Law.
[13]Section 221 of the Corporations Law provides that a proprietary company must have at least one director.
The position of the workforces of the several employer companies thus became parlous in the extreme. Counsel for the Group informed North J that the Administrators of the affairs of the employer companies intended to dismiss the workforce because the employer companies were insolvent. One of the Administrators gave evidence that that was their intention.
In January 1998, the Group had transferred the right to use No 5 Webb Dock in Victoria to companies associated with the National Farmers' Federation ("NFF"). North J found:
"[The Group] also agreed to provide cranes and other equipment to those companies so that they could conduct the stevedoring operations at No 5 Webb Dock. This transaction was seen by the [MUA and its members] as part of a plan by Patricks to replace its workforce. No 5 Webb Dock, they thought, would be used to train an alternative workforce and then that workforce would be used to do the work which the employees had previously done. The [MUA and its members] believed that Patricks had some involvement with the NFF companies."
The events relating to the transfer of use of No 5 Webb Dock and of the equipment to allow the transferee companies to carry on stevedoring operations there had two immediate consequences. First, some of the employees of the employer companies took "industrial action" (by which we assume his Honour meant that they withheld their labour) in some facilities as a protest against the transfer by the Group of No 5 Webb Dock. This was the interruption in the labour supply which enlivened the power of Patrick Operations to terminate the Labour Supply Agreements with the employer companies. Secondly, the MUA and its members (or some of them) filed an application in the Federal Court of Australia seeking relief on the footing that the transfer of No 5 Webb Dock was part of a plan to replace Patrick's workforce.
On 6 April 1998, the Monday before Easter, those applicants filed a notice of motion seeking to prevent the dismissal of the employees of the employer companies - a step which they apprehended was proposed over the Easter period. The motion was set down for hearing on Wednesday 8 April. However, on 7 April 1998, Patrick Operations, having terminated the Labour Supply Agreements with the employer companies, entered into three new agreements for the provision of services to enable Patrick Operations to carry on its stevedoring business. It entered into agreements with KSK Contractors Pty Ltd and PCS Resources Pty Ltd ("PCS Resources") for the supply of labour and with Ganelect Engineering Services Pty Ltd for the provision of consulting services in connection with the maintenance of equipment. Patrick Holdings decided to discontinue funding any of the employer companies. These steps were taken before the employer companies were placed under administration.
Late in the evening of 7 April 1998, the Group published a press release which included the following:
"Patrick today accepted offers and entered into contracts for a range of services from nine separate companies including the National Farmers Federation (NFF) backed P&C Stevedoring which will provide some crane and machinery operators.
...
Patrick has taken steps to ensure all displaced employees of the relevant companies will be eligible to receive their full leave and redundancy entitlements.
...
Patrick expects to continue stevedoring under the new contracted arrangements."
On 8 April, Patrick Operations proposed to continue to carry on its stevedoring business with a new workforce supplied by KSK Contractors Pty Ltd and PCS Resources. This was the position when the employees sought interlocutory relief from North J.
The pleadings to date
At the time of the application to North J for interlocutory relief, the employees had filed their application and amended Statement of Claim. The employees' pleadings seek at the trial of the action orders against the employer companies and other companies in the Group to remedy the effects of what is alleged to be conduct contravening s 298K. In addition to the allegation of conduct contravening s 298K, the employees allege that the sale of the employer companies' businesses, the Labour Supply Agreements and the share buy-back expenditure alienated the employer companies' property with the intent to defraud the employees. The employees seek orders that will undo the Group reorganisation and place the stevedoring business back in the hands or under the control of the employer companies. Interlocutory relief was sought in order to keep the employer companies in existence and to restore, as far as practicable, the situation that existed before the reorganisation of the Group took place.
The employees also allege that the members of the Group, Mr Corrigan (the Chief Executive of Lang Corporation Ltd), Mr Clayton (the Director of the employer companies), Mr Dunn (a Director of Patrick Operations No 2), PCS Resources and other companies that are under the control of the National Farmers' Federation, Messrs McGauchie, Houlihan and Ferguson (who are Directors of PCS Resources and its associated companies) and Mr Reith, the Minister of State for Workplace Relations and Small Business, conspired together by unlawful means - chiefly by conduct in contravention of s 298K(1) of the Act - to injure the employees. These parties are alleged not only to have agreed to alter the position of the employees to their prejudice (in contravention of par (c) of s 298K(1)) but also to dismiss the employees (in contravention of par (a) of s 298K(1)) for the reason that they were members of the MUA. Interlocutory relief was sought to protect the employment of the employees by the employer companies.
The interlocutory relief that was sought by the employees was directed only to members of the Group. Although it was necessary for North J to consider the effect of that relief on persons other than the members of the Group, the first question for his Honour's determination was whether there were serious questions to be tried as between the employees and the members of the Group as to the liability of the members on the causes of action for contravention of s 298K(1) of the Act and in conspiracy. North J found that there were serious questions to be tried as to those causes of action. One of the conditions for the grant of interlocutory injunctions was thus satisfied[14]; the other, balance of convenience, was resolved in favour of the employees. North J accordingly granted interlocutory relief.
[14]American Cyanamid v Ethicon Ltd [1975] AC 396 at 407; Murphy v Lush (1986) 60 ALJR 523 at 524; Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153-154.
The orders made by North J
On 21 April 1998, North J made the following orders:
"UPON THE APPLICANTS by their Counsel undertaking to pay to any party adversely affected by the interim injunctions granted by the Court on the motion, notice of which was filed by the Applicants on 14 April 1998, such compensation if any as the Court thinks just, in such manner as the Court directs -
AND UPON THE APPLICANTS by their Counsel further undertaking that until the hearing and determination of this proceeding, or until further order, they will not engage in any industrial action -
AND UPON THE APPLICANTS by their Counsel further undertaking that they will not hold the administrators appointed to the First, Second, Third and Fourth Respondents personally liable for their wages and other benefits arising from their employment with the First, Second, Third and Fourth Respondents for which the administrators would otherwise incur personal liability as administrators during the course of their administration -
In this undertaking 'industrial action'[15] does not include action by an employee if:
[15]In the Full Court, this definition was amended by inserting after the words "industrial action" the following:
"means 'industrial action' as defined in paras (a) to (d) inclusive of the definition of that term in s 4 of the Workplace Relations Act 1996 but".
(a)     the action was based on a reasonable concern by the employee about an imminent risk to his or her health or safety; and
(b)    the employee did not unreasonably fail to comply with a direction of his or her employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform.
THE COURT ORDERS THAT:
1.     Until the hearing and determination of this Application, or further order, the Fifth Respondent, Patrick Stevedores Operations No 2 Pty Ltd, and the Seventeenth Respondent, Patrick Stevedores Operations Pty Ltd, each by itself, its servants and agents, are restrained from acting upon or giving effect to:
(a)its purported termination of the Labour Supply Agreement made on 23 September 1997 between it and the First Respondent, Patrick Stevedores No 1 Pty Ltd;
(b)its purported termination of the Labour Supply Agreement made on 23 September 1997 between it and the Second Respondent, Patrick Stevedores No 2 Pty Ltd;
(c)its purported termination of the Labour Supply Agreement made on 23 September 1997 between it and the Third Respondent, Patrick Stevedores No 3 Pty Ltd;
(d)its purported termination of the Labour Supply Agreement made on 23 September 1997 between it and the Fourth Respondent, National Stevedores Tasmania Pty Ltd.
2.     Until the hearing and determination of this Application, or further order, the First, Second, Third, Fourth, Fifth and Seventeenth Respondents shall subject to paragraph 4 of these orders[16]:
[16]Transcript of proceedings before North J at 5.
(a)continue to treat the Labour Hire Agreements referred to in paragraphs 1(a) to (d) as remaining on foot and binding upon the parties to those agreements;
(b)    give effect to the terms of those agreements.
3.     Until the hearing and determination of this Application, or further order, the First, Second, Third, Fourth, Fifth and Seventeenth Respondents by themselves, their servants or agents, are restrained from terminating the Labour Hire Agreements referred to in paragraphs 1(a) to (d) for any reason without first giving to the First Applicant 14 days written notice of that intention and the reason for that proposed termination.
4.     Until the hearing and determination of this proceeding, or further order, the Fifth Respondent and the Seventeenth Respondent, by themselves, their servants or agents, are restrained from acquiring the stevedoring services, which until 7 April 1998 they acquired from the First, Second, Third and Fourth Respondents, from any person other than the First, Second, Third or Fourth Respondents.
5.     Until the hearing and determination of this proceeding, or further order, the First, Second, Third and Fourth Respondents by themselves, their servants or agents, are restrained from:
(a)entering into any agreement, arrangement or other transaction; or
(b)taking any action or doing anything;
having the effect that the employment of the employees engaged in their stevedoring business is or will be terminated.
6.     Until the hearing and determination of this proceeding, or further order, the Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and Seventeenth Respondents, by themselves, their servants and agents, are restrained from:
(a)entering into any agreement, arrangement or other transaction, or taking any action or doing any thing, having the effect of divesting itself of their assets or undertaking, otherwise than in the ordinary course of business;
(b)dealing with or otherwise disposing of any of their assets or undertaking otherwise than in the ordinary course of business.
7.    Leave is granted to the Applicants to proceed against the First, Second, Third and Fourth Respondents until further order, for the purpose only of further proceedings, if any, relating to the grant of interim relief.
8.    The Respondents file and serve their Defences by 12 May 1998."
Order 9 provided for discovery within a limited period expiring shortly after 26 May 1998. His Honour added:
"10.   There be liberty to all parties to apply in relation to the foregoing orders upon 24 hours written notice to all other parties.
11.    The directions hearing is adjourned to 10.15 am on 28 May 1998."
The appeal to the Full Court against these orders failed. That Court made a further order that is material to the present application. That order reads as follows:
"Part 5.3A of the Corporations Law operate in relation to each of Patrick Stevedores No 1 Pty Ltd, Patrick Stevedores No 2 Pty Ltd, Patrick Stevedores No 3 Pty Ltd and National Stevedoring Tasmania Pty Ltd in such a way that s 443A(1) is not to operate in respect of services rendered to those companies by employees who are members of the Maritime Union of Australia."
This appeal against the orders of the Full Court is brought by the members of the Group other than the employer companies ("the appellants"). They have joined as respondents the MUA and the personal employees, the employer companies, Messrs Corrigan, Clayton and Dunn, PCS Resources and its associated companies, Messrs McGauchie, Houlihan and Ferguson, Mr Reith and the Commonwealth of Australia. The employer companies were represented by counsel for the Administrators of those companies.
The jurisdiction of the Federal Court
The jurisdiction of the Federal Court under the Act is conferred by s 412(1). Relevantly, that section provides that the Federal Court -
"has jurisdiction with respect to matters arising under this Act in relation to which -
(a)     applications may be made to it under this Act; or
(b)    actions may be brought in it under this Act; or
(c)    questions may be referred to it under this Act; or
(d)    ...
(e)    penalties may be sued for and recovered under this Act; or
(f)     ..."
The terms "matter" and "arising under" are constitutional expressions found, in particular, in s 76(ii) and s 77(i) of the Constitution. Their reach is explained in decisions such as Fencott v Muller[17] and LNC Industries Ltd v BMW (Australia) Ltd[18]. It follows that jurisdiction is conferred upon the Federal Court with respect to a matter which arises under the Act in relation to which an application for orders under s 298U may be made to it. The applications which may be made to the Court under s 298T and the orders which may be made by the Court under s 298U are defined in the same terms, namely, "in respect of conduct in contravention of this Part". Counsel for the appellants submits that those words preclude the exercise of any of the powers prescribed by s 298U unless the Court is satisfied on a final hearing that the contravening conduct has in fact occurred. But s 298T is not defining a condition that must be satisfied before an application can be made or the jurisdiction to hear and determine the application can be exercised; that section is defining the subject matter of the Court's jurisdiction under the Act. Whether or not an application is "in respect of" contravening conduct depends not on the facts that are ultimately found but on the basis of the relief which is sought by the party invoking the jurisdiction. If the relief sought is an order of the kind prescribed in the lettered paragraphs of s 298U and if the basis of the relief is alleged conduct in contravention of Pt XA of the Act, the jurisdiction of the Court is effectively invoked.
[17](1983) 152 CLR 570 at 608-610.
[18](1983) 151 CLR 575 at 581. See also Re McJannet; Ex parte Australian Workers Union (1997) 71 ALJR 1309 at 1310; 146 ALR 567 at 570-571.
True it is that the only person who can engage in conduct contravening s 298K(1) is an "employer" (a term that is defined to include a person who is usually an employer[19]). But applications under s 298U(e), unlike applications made under pars (a) to (d) of s 298U in respect of conduct contravening s 298K(1), can be made against persons other than an employer. Given that an application is "in respect of" contravening conduct and that the Court is empowered to make any order it thinks necessary to remedy the effects of the conduct, the order may be made against persons other than the person who has engaged in the contravening conduct. In so far as the power of the Court under s 298U(e) is to make an order necessary to remedy the effects of contravening conduct, counsel for the appellants may well be correct in submitting that the power conferred by s 298U(e) is exercisable only when those effects have been found to exist. That is the condition upon the power to make a final order; it is not the definition of the jurisdiction to hear and determine an application in respect of alleged contravening conduct. The power to make an interlocutory order is exercised by reference to the relief finally available but that is not, or is not necessarily, to say that the power to make the final order is the source of the power to make an interlocutory order or confines the power to make an interlocutory order.
[19]s 4(1).
Once the jurisdiction conferred on the Federal Court by the Act is invoked, that Court has power under s 23 of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act") to make "orders of such kinds, including interlocutory orders ... as the Court thinks appropriate". That power may be exercised in any proceeding in which the Federal Court has jurisdiction unless the jurisdiction invoked is conferred in terms which expressly or impliedly deny the s 23 power to the Court in that class of proceeding. It cannot be invoked to grant an injunction where the Court acquires its jurisdiction under a statute which provides an exhaustive code of the available remedies and that code does not authorise the grant of an injunction[20]. But this is not such a case.
[20]Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 425-426, 456.
It was emphasised in the joint judgment of four members of this Court in Thomson Australian Holdings Pty Ltd v Trade Practices Commission[21] that s 23 of the Federal Court Act "does not provide authority for granting an injunction where there is otherwise no case for injunctive relief", whether "under the general law or by statute". In Jackson v Sterling Industries Ltd, Brennan J[22] and Toohey J[23] expressed the point as being that s 23 confers on the Federal Court such powers as are necessary or incidental to the exercise of the jurisdiction of that Court. Toohey J also emphasised[24]:
"To formulate the question in the present case by reference to the existence and history of Mareva injunctions tends to obscure the basic question which goes to the power of the Federal Court. Nevertheless decisions relating to Mareva injunctions may throw light on the question of powers arising expressly or by implication from legislation conferring jurisdiction and they may also throw light upon the existence of such powers as may be incidental and necessary to the exercise of that jurisdiction or the powers so conferred."
[21](1981) 148 CLR 150 at 161.
[22](1987) 162 CLR 612 at 620.
[23](1987) 162 CLR 612 at 632.
[24](1987) 162 CLR 612 at 631. See also at 639‑642 per Gaudron J.

Both Thomson Australian Holdings Pty Ltd v Trade Practices Commission and Jackson v Sterling Industries Ltd concerned relief in respect of claims founded upon laws made by the Parliament. Here the claims are for relief under s 298U(e) and in the tort of conspiracy. For present purposes and as indicated later in these reasons, it may be taken that the common law claims in conspiracy are founded either in the accrued jurisdiction as explained in Fencott v Muller[25] or as an associated matter within the meaning of s 32 of the Federal Court Act[26].
[25](1983) 152 CLR 570 at 608-610.
[26]PCS Operations Pty Ltd & Ors v Maritime Union of Australia & Ors [1998] HCA 29.
The orders which the Federal Court is authorised to make under s 298U(e) include an order to "remedy" the effects of conduct in contravention of Pt XA. The final orders sought in the present proceeding include orders which undo the reorganisation of the Group and once more place the stevedoring business now being conducted by Patrick Operations in the hands or under the control of the employer companies. The basis on which that relief is sought is that it is necessary to remedy the reorganisation of the Group in which the employer companies, in alleged contravention of s 298K(1)(c), altered the position of the employees to their prejudice. That remedy is sought in reliance on s 298U(e) of the Act. Similar remedies are sought in reliance on the auxiliary jurisdiction of equity to prevent the commission of a tort or the accruing of continuing damage from a tort committed. Before examining the power of the Federal Court to grant interlocutory injunctions, that Court's jurisdiction to grant final relief of the kind sought by the employees should be considered. The jurisdiction to grant relief in tort - whether at law or in equity - is not conferred by the Act; it is conferred by s 23 of the Federal Court Act or by s 32 of that Act[27].
[27]PCS Operations Pty Ltd v Maritime Union of Australia [1998] HCA 29.
Given that the claims in conspiracy are part of the controversy which, by reason of s 412 of the Act, attracts the jurisdiction of the Federal Court, that Court has jurisdiction to hear and determine the conspiracy claims and to grant the remedies appropriate under the general law[28]. What remedies are available and against whom?
[28]Fencott v Muller (1983) 152 CLR 570 at 608; Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 at 292; PCS Operations Ltd v Maritime Union of Australia [1998] HCA 29.
Although only an employer can engage in conduct contravening s 298K(1), all parties to a conspiracy that the employer companies should engage in such conduct are liable as concurrent tortfeasors[29]. If the conspiracy to perform an unlawful act is completed by the performance of the act, it is only necessary for one of the conspirators to have performed the act or to have procured the act to be performed for an action to lie against all[30]. If damages are recovered, each is liable for the whole amount[31]. The conspiracy alleged - more accurately, the conspiracies alleged - were to engage in two examples of contravening conduct. The first alleged conspiracy was an agreement to reorganise the Group whereby the position of the employees would be altered to their prejudice for reasons which included the reason that the employees were members of the MUA. This would be a conspiracy in contravention of par (c) of s 298K(1). The second alleged conspiracy, which has not yet been brought to completion, was an agreement to take action whereby the employees would be dismissed (by the employer companies) for the reason, or for reasons which included the reason, that the employees were members of the MUA. This would be a conspiracy in contravention of par (a) of s 298K(1). The dismissal of the employees has not occurred. If it were to occur, and the employees were without work and were to find employment difficult to obtain, the consequences for them would be extremely serious. And, of course, if damages were awarded, the measure of damages, having regard to all the usual qualifications and factors in mitigation would be very large. The seriousness of the consequences for the workforce and the magnitude of the damages that might be payable in the event that the workforce is dismissed are relevant in two respects to the relief which the Federal Court might grant under the general law.
[29]Clerk and Lindsell on Torts, 17th ed (1995) at 1272; Fleming, The Law of Torts, 9th ed (1998) at 288; The Koursk [1924] P 140 at 155-156; O'Brien v Dawson (1942) 66 CLR 18 at 27-28, 41; CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013 at 1058; Newcastle (Town) v Mattatall (1988) 52 DLR (4th) 356 at 365; State of New South Wales v McCloy Hutcherson Pty Ltd (1993) 116 ALR 363 at 369; Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 581, 607.
[30]Galea v Cooper [1982] 2 NSWLR 411 at 417.
[31]Rich v Pilkington (1691) Carthew 171 [90 ER 704]; Mitchell v Tarbutt (1794) 5 TR 649 [101 ER 362].
A court whose jurisdiction is invoked in a conspiracy case has power to grant an injunction to prevent the completion or effecting of the conspiracy[32]. Where the acts contemplated by the conspirators have all occurred and the tort is complete, the remedy available to an injured plaintiff is ordinarily limited to the recovery of pecuniary damages[33]. But for over a century it has been established that "there is no rule which prevents the court from granting a mandatory injunction where the injury sought to be restrained has been completed before the commencement of the action"[34]. Where the damage caused by tortious conduct is ongoing and is "extreme, or at all events very serious", a mandatory injunction may issue compelling the wrongdoer to prevent the occurrence of further damage[35]. Here, if attention be focused on the conspiracy to engage in conduct in contravention of s 298K(1)(c) and it is found on trial that that conspiracy was entered into and completed, there would be power to make mandatory orders to prevent damage to the employees flowing from the Group reorganisation. If attention be focused on the conspiracy to engage in conduct in contravention of s 298K(1)(a) and it is found on trial that that conspiracy was entered into there would be power to restrain the dismissal of the employees for a "prohibited reason". These remedies would be available against any or all of the conspirators according to the exigencies of the situation then existing.
[32]British Motor Trade Association v Salvadori [1949] Ch 556; Gulf Oil Ltd v Page [1987] Ch 327; Femis-Bank (Anguilla) Ltd v Lazar [1991] Ch 391 at 397, 400.
[33]See Deere v Guest (1836) 1 My & Cr 516 [40 ER 473].
[34]Kerr, A Treatise on the Law and Practice of Injunctions, 3rd ed (1888) at 50.
[35]Durell v Pritchard [1865] LR 1 Ch App 244 at 250; McManus v Cooke (1887) 35 Ch D 681 at 698; Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 at 810; [1974] 2 All ER 321 at 337; Joyce, The Law of Injunctions, 2nd ed (1872), vol 1 at 439; Daniell's Chancery Practice, 8th ed (1914), vol 2 at 1400.
If the employees were dismissed before trial in contravention of s 298U(a) or pursuant to a conspiracy in contravention of that provision, the damages would be likely to be enormous. The huge amount of the likely damages is a factor relevant to the scope of the relief available against the Group by way of interlocutory injunction.
Interlocutory relief
The powers of the Federal Court under s 23 of its Act are powers "to make orders of such kinds, including interlocutory orders, as it 'thinks appropriate'", as Deane J noted in Jackson v Sterling Industries Ltd[36]. He added:
"Wide though that power is, it is subject to both jurisdictional and other limits. It exists only 'in relation to matters' in respect of which jurisdiction has been conferred upon the Federal Court. Even in relation to such matters, the power is restricted to the making of the 'kinds' of order, whether final or interlocutory, which are capable of properly being seen as 'appropriate' to be made by the Federal Court in the exercise of its jurisdiction."
One limitation on the powers of the Federal Court to grant interlocutory injunctions is that those powers must be exercised for the purpose for which they are conferred. In a later passage of the judgment of Deane J in Jackson v Sterling Industries Ltd[37], his Honour said a power to prevent the abuse or frustration of a court's process should be accepted "as an established part of the armoury of a court of law and equity" and that "the power to grant such relief in relation to a matter in which the Federal Court has jurisdiction is comprehended by the express grant to that Court by s 23 of the Federal Court of Australia Act". But, his Honour observed[38], orders must be framed "so as to come within the limits set by the purpose which [the order] can properly be intended to serve". The Mareva injunction is the paradigm example of an order to prevent the frustration of a court's process[39] but other examples may be found[40]. The moulding of an interlocutory injunction must depend upon the circumstances of each case. As Brennan J observed in Jackson v Sterling Industries Ltd[41]:
"A judicial power to make an interlocutory order in the nature of a Mareva injunction may be exercised according to the exigencies of the case and, the schemes which a debtor may devise for divesting himself of assets being legion, novelty of form is no objection to the validity of such an order."
The general principle which informs the exercise of the power to grant interlocutory relief is that the court may make such orders, at least against the parties to the proceeding against whom final relief might be granted, as are needed to ensure the effective exercise of the jurisdiction invoked[42]. The Federal Court had jurisdiction to make interlocutory orders to prevent frustration of its process in the present proceeding.
[36](1987) 162 CLR 612 at 622.
[37](1987) 162 CLR 612 at 623. See also Jago v District Court (NSW) (1989) 168 CLR 23 at 74 per Gaudron J.
[38](1987) 162 CLR 612 at 625.
[39]Rahman (Prince Abdul) v Abu-Taha [1980] 1 WLR 1268 at 1272; [1980] 3 All ER 409 at 411; Mercedes Benz AG v Leiduck [1996] AC 284 at 299, 306-307.
[40]Gibbs v David (1875) LR 20 Eq 373 at 377-378; Hatton v Car Maintenance Company, Limited [1915] 1 Ch 621 at 624-625; Heavener v Loomes (1924) 34 CLR 306 at 326; Hannam v Lamney (1926) 43 WN (NSW) 68; Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264 at 276.
[41](1987) 162 CLR 612 at 621.
[42]See Tait v The Queen (1962) 108 CLR 620.
Before the September 1997 reorganisation of the Group, the employees of the employer companies enjoyed the security of an award that bound the employer companies which were carrying on the stevedoring businesses of the Group. The security of their employment and of the terms of their employment was dependent, inter alia, on the worth of the employer and the commercial viability of its business. But when, in effecting the 1997 reorganisation, the employer companies disposed of their assets including their stevedoring businesses, reduced their issued capital and disposed of a substantial amount of money by the buy-back of their shares and became the mere suppliers of labour, they exposed their continued commercial viability to the discretion of Patrick Operations No 2 (and later to Patrick Operations) in the event of any disruption in the supply of labour. After the reorganisation, the principal asset of the employer companies was an inter-company debt which appears to have been matched by liabilities in the form of employee entitlements.
Given the weakened financial structure of the employer companies, the commercial death knell of those companies was sounded by the termination of the Labour Supply Agreements by Patrick Operations, the refusal of further funding by Patrick Holdings, the fixing by the security trustee on 7 April 1998 of the charge over any debts actually or contingently owing to the employer companies by Patrick Holdings and the non-payment of the receivable of $16 million or $17 million. If the power of the Federal Court to prevent the frustration of its process was to be effective, extraordinary orders were needed to ensure that, if the employees were successful in the final hearing, the employer companies, from which the employees derived such security of employment as they had, could be maintained in existence as stevedores or as the continuing suppliers of labour in the stevedoring business. If that could not be done, the conduct of the Group which had altered the position of the employees to their prejudice would lead inevitably to the dismissal of the employees.
Presuming, in accordance with s 298V (even without reference to any inference to be drawn from the facts), that one of the reasons for the conduct which weakened and then contributed to the commercial unviability of the employer companies was that the employees were members of the MUA, the Court had power to make orders to prevent irremediable prejudice or damage to the employees pending the trial of the action. The orders made by North J were designed to provide the commercial framework in which the employer companies could be maintained in existence with a workforce that would allow it to carry on the business of supplying labour to Patrick Operations. That was the status quo which his Honour sought to maintain until the time came (if it were to come at all after trial) when orders to re-establish the employer companies either as the stevedore or as the suppliers of labour in the stevedoring business might be made.
However, the granting of those orders as against the employer companies under administration and as affecting the interests of innocent third parties raises further issues for consideration.
The position of the employer companies under administration and the functions of the Administrators
When the employer companies were placed under administration, the Administrators were invested with the powers prescribed by ss 437A and 442A of the Corporations Law. Section 437A reads:
" While a company is under administration, the administrator:
(a) has control of the company's business, property and affairs; and
(b)may carry on that business and manage that property and those affairs; and
(c)may terminate or dispose of all or part of that business, and may dispose of any of that property; and
(d)may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration."
This section reposes in the Administrators the duty of determining whether, during the period of administration, the employer companies should attempt to continue to trade. The employees submit that the Court should not be deterred by the intervention of voluntary administration from giving appropriate interlocutory relief, including orders which - at least in part - undo the Group reorganisation. The alleged insolvency of the employer companies is (so the argument goes) but the last, or next to last step, in the effectuation of a conspiracy to injure the employees of the employer companies by terminating their employment for the reason that they were members of the MUA. An important element of the conspiracy, so it is alleged, was the dismissal of the employees through the innocent agency of the Administrators. It was submitted that North J was right to prevent the dismissal of the employees and to do whatever was necessary to ensure that the employer companies would continue in business, employing the employees until the trial of the action.
It is well established that the jurisdiction of this Court directly conferred by Ch III of the Constitution cannot "be affected by the exercise of the authority of [a] State legislature"[43], nor can a State law diminish the jurisdiction or power conferred on a court by a law of the Commonwealth: by s 109 of the Constitution, the law of the Commonwealth prevails. But the powers of the Federal Court under s 23 are limited to the making of orders that are "appropriate" and that limitation directs attention to the rights and liabilities of the parties to the proceeding under the applicable law, both Commonwealth and State or Territorial laws. The Corporations Law, though substantially uniform throughout Australia, is a law enacted by the Parliaments of the States. How do the provisions of Pt XA of the Act and the Corporations Law operate together?
[43]Commissioner of Stamp Duties (NSW) v Owens [No 2] (1953) 88 CLR 168 at 169 and John Robertson & Co Ltd v Ferguson Transformers Pty Ltd (1973) 129 CLR 65 at 79, 84, 87, 93 cited by Gummow J in Re Residential Tenancies Tribunal (1997) 71 ALJR 1254 at 1279; 146 ALR 495 at 528.
The answer depends on the true construction of the two laws and the fields of their operation. When one law - the Corporations Law - deals with the constitution, administration and assets of a corporation and another law - the Workplace Relations Act - deals with relationships between employers and employees or conduct in which persons engage qua employer or employee, there is not likely to be any general inconsistency between them. Corporations, like natural persons, can be subject to laws governing relationships and conduct. A law of the Commonwealth which governs the relationship of employer and employee does not purport to alter, and would not be construed as intending to alter, a State law prescribing a general regime for the administration of the assets of insolvent companies or the assets of companies which are, or are likely to become, insolvent. Just as the Bills of Exchange Act 1909 (Cth) was held not to be inconsistent with the regime created by the Moratorium Act 1930 (NSW) in Stock Motor Ploughs Ltd v Forsyth[44] and just as the Defence Housing Authority Act 1987 (Cth) was held not to be inconsistent with the relevant provisions of the Residential Tenancies Act 1987 (NSW) in Re Residential Tenancies Tribunal[45], so in the present case the provisions of Pt XA of the Workplace Relations Act and s 23 of the Federal Court Act are not shown to be inconsistent with Pt 5.3A of the Corporations Law.
[44](1932) 48 CLR 128.
[45](1997) 71 ALJR 1254; 146 ALR 495.
There is a substantial reason why that should be so. Part 5.3A and other provisions of the Corporations Law are concerned to regulate the control and distribution of the assets of a company in the interests not only of the statutory entity itself, the company, and its members but also in the interests of the company's creditors. The company is an entity brought into existence to provide the vehicle for organising, deploying and distributing its assets. The Corporations Law prescribes the regime which defines and protects the interest of third parties - the creditors - in the deployment and distribution of a company's assets. Another law which governs conduct in which companies and natural persons may engage and relationships which companies and natural persons may enter should not be construed as intending to affect or modify a regime that affects the interests of third parties. Prima facie, a law which deals indifferently with companies and natural persons does not affect the regimes prescribed by laws dealing with bankruptcy and insolvency; a law of the former kind would have to manifest clearly an intention to affect those regimes before it would be held to do so.
It follows that the orders which might properly be made by the Federal Court under s 298U(e) of the Act or s 23 of the Federal Court Act ought not to interfere with the exercise by the Administrators of their powers in respect of the employer companies provided the Administrators act lawfully. Relevantly, that means that the Administrators cannot dismiss the employees for the reason, or for reasons which include the reason, that they are members of the MUA.

Section 440D(1) of the Corporations Law forbids the commencement or prosecution of proceedings against a company during administration except, inter alia, with the leave of a court. North J gave leave and that was an appropriate order in so far as it allowed the prosecution of a proceeding designed to remedy the effects of an alleged contravention of s 298K(1) of the Act. However, the other orders made with respect to the business of the employer companies during administration require some qualification as will subsequently appear.
The orders appear to assume that the Administrators will remain in office for a significant period of time (if not for the whole of the time until the action is tried). They are also designed to assist the bringing back of the employer companies to profitable operation. Further, the orders (as varied by the Full Court) are intended to relieve the Administrators of personal liability for the wages that the employees of those companies will earn pending the trial of the action.
There are some features of the operation of Pt 5.3A of the Corporations Law which should be noted. First, voluntary administration under Pt 5.3A is intended to be a temporary measure. There are times within which steps in the administration must be taken[46]. Thus, there are times set within which meetings of creditors must be convened[47]. That period can be extended by court order[48] or a meeting of creditors can agree that the meeting will be adjourned. But the meeting cannot agree to adjourn to a day more than 60 days after the first day on which the meeting was held[49].
[46]s 435C(2) and (3).
[47]s 439A.
[48]s 439A(6).
[49]s 439B(2).
Next, the fate of a company in voluntary administration is in the hands of its creditors - at least in the sense that it is that group which decides whether the company will execute a deed of company arrangement or the administration will end or that the company will be wound up[50]. No doubt that is subject to the supervision of the Court in various ways. But in the end it must always be remembered that the company that is subject to voluntary administration is one that the board has resolved is insolvent or is likely to become insolvent at some future time[51]. Any step that the Federal Court takes to prevent the frustration of its jurisdiction must be taken having regard, inter alia, to the interests of creditors of the company. It must also be taken in light of the fact that the board of the company has concluded that its debts cannot be paid as and when they fall due now or at some future time.
[50]s 439C.
[51]s 436A.
Ordinarily, administrators of companies are not in office very long. They must decide quickly whether the company and its business is beyond rescue. If the company or some or all of its business might be rescued, a deed of company arrangement will be proposed. It is the creditors of the company who decide whether the company should make that deed of company arrangement[52]. The administrator will ordinarily become the administrator of the deed but the affairs of the company are then regulated by the deed. Although the creditors may resolve otherwise[53], the deed will ordinarily provide for the application of money received under the deed in the order of priorities that would apply in a winding up[54].
[52]s 439C(a) and Pt 5.3A Div 10, ss 444A to 444H.
[53]Corporations Regulations, reg 5.3A.06.
[54]Corporations Regulations, Sched 8A, par 4.
If the company and its business cannot be rescued, the company will go into liquidation and its assets will be realised and the proceeds distributed among creditors in the manner prescribed by the Corporations Law[55]. The entitlements of employees are then to be paid in priority to the debts of third parties[56].
[55]s 478(1) (winding up in insolvency); s 501 (voluntary winding up).
[56]ss 556, 558.
Although an administrator has power to conduct the business of the company during administration[57] the administrator is personally liable under s 443A for debts he or she incurs in doing so. The administrator then has a right of indemnity against the company's assets[58], ranking in priority to unsecured debts and, generally speaking, debts secured by a floating charge[59]. The administrator has a lien over the company's property to secure that right[60]. But if an administrator forms the view that the company is and is likely to remain insolvent, it is unlikely that a decision would - or ought - be taken to continue trading. Personal liability of the administrator for the debts incurred would be the price of unsuccessful trading by an insolvent company. If the employer companies are indeed insolvent and if there be no prospect of supplying their employees' labour to a stevedore under a profitable contract, the Administrators are not likely to incur debts in carrying on trading, without a third party indemnity.
[57]s 437A(1).
[58]ss 443D, 443E.
[59]s 443E(1).
[60]s 443F.
An administrator has the power to carry on trading though the company is insolvent, the personal liability of the administrator being the protection given by the Corporations Law to the company's creditors. But the statutory protection of the creditors generally cannot be set aside by a court's order in litigation between a plaintiff party and the company purporting to suspend s 443A of the Corporations Law[61]; nor can a court order an administrator to incur, or to run the risk of incurring, a personal liability under s 443A in order to preserve the rights of a plaintiff against the company. The administrator must act impartially as among all parties having or claiming to have an interest in the present or future assets of the company and must make those decisions which, in the light of contemporary circumstances, best serve those interests. It is for the administrator, in exercise of the discretionary powers conferred by s 437A, to decide whether or not to carry on the company's business and the form in which it should be carried on during the administration.
[61]cf the provisions relating to liability for rent: ss 443B(2) and (8).
The central difficulty about the orders made by the primary judge is that they are orders which took away from the Administrators of the employer companies the discretions conferred upon them by s 437A of the Corporations Law. At least on one view of the effect of the orders, they would oblige the Administrators to continue to trade while the employer companies were insolvent. Freeing the Administrators from personal liabilities for wages incurred by employees - pursuant to the undertaking given by the employees - was not to the point. The companies themselves would remain liable for those wages.
It is one thing to restrain Patrick Operations from giving effect to the termination of labour supply contracts and restraining those companies in ways that would, if the employees were to succeed at trial, permit the making of orders that would undo the transactions alleged to have been undertaken as a party to a conspiracy to engage in conduct in contravention of s 298K of the Act. But it is a very different thing to fetter the discretion of the Administrators (and of the creditors) in the exercise of the powers they possess under the Corporations Law. It is for the Administrators and the creditors (including the majority creditors, the employees) to take the decisions about continued trading.
The financial state of the employer companies
A report to the directors of Patrick Holdings tendered in evidence before North J said that following the sale of the employer companies' businesses, the balance sheets of the three employer companies other than Stevedores Tasmania "will consist only of employee provisions, associated future income tax benefit, an intercompany receivable and shareholders funds". It also recorded that following the share buy-back which has been mentioned earlier, the shareholders' funds of those three companies would be reduced to an aggregate amount of $2.5 million. The inter‑company receivable owing to employer companies by other members of the Group does not precisely appear in the evidence but the argument proceeded both in this Court and before the primary judge on the basis that it was of the order of $16 million to $17 million.
The 1997 financial statements of the employer companies were not in evidence. The balance sheets of PS1, PS2 and PS3 for the financial year ended 30 September 1996 show that the amounts then provided for current employee entitlements (such as long service leave, annual leave and the like) totalled $18,915,840. The provisions for non-current employee entitlements added a further $14,566,563. The evidence does not disclose whether the amount required to be provided for employee entitlements was markedly different by April 1998.
Mr Clayton, the sole director of PS1, PS2 and PS3, gave evidence to the primary judge that when he took over control of those companies (in September 1997) he started with all four companies on what he described as "with a level playing field". This, taken with the other evidence, would lead to the conclusion that in September 1997 the four employer companies had balance sheets which had a provision for employee entitlements of about the same amount as the inter‑company receivable owing to them as part of the price for the assets they had sold and a total of the shareholders' funds of PS1, PS2 and PS3 (representing the excess of their assets over liabilities) amounting to $2.5 million[62]. The evidence does not show whether Mr Clayton was taking account of the non‑current liabilities in speaking of a level playing field.
[62]It was not suggested that Stevedores Tasmania requires separate consideration.
According to Mr Clayton the companies incurred running losses of $6 million in the period from September 1997 to April 1998. If that is so, shareholders' funds in the employer companies would be exhausted, the inter‑company debt owing to the employer companies would be taken up by employee entitlements and, given the stated unwillingness of Patrick Holdings and Patrick Operations to continue to support the employer companies as they had until then by paying their wages bills of $2 million per week, there is an obvious basis for the conclusion that PS1, PS2 and PS3 were then insolvent.
Mr Butterell, one of the Administrators, gave evidence before North J that he was of the opinion that, to the best of the information available to him at that time, the employer companies were insolvent. It is apparent that, in forming that conclusion, he took account of the existence of the inter‑company receivable. He had in fact made statutory demand for some or all of that amount. North J proceeded on the premise that, at least after the termination of the Labour Supply Agreements, each of the employer companies was insolvent. Indeed, in considering whether the companies could be conducted profitably, his Honour appears to have concluded that the cash inflows of their businesses would exceed the outflows only if employees did not hold the Administrators responsible for their wages. That is, the companies would be "profitable" only if, to adopt and adapt his Honour's words, the employees were to "sacrifice wages" for a few days each month. On that basis, the companies would be trading while unable to pay their debts as they fell due.
The parlous condition of the employer companies means that a continuation of trading runs the risk of causing detriment to third party creditors or the risk of the Administrators becoming personally liable for any losses incurred. But s 437A confers on the Administrators a power to be exercised in their discretion to continue or to desist from trading. That power is to be exercised in the interests of those affected (general creditors as well as employee creditors and shareholders) and having regard to the object[63] of Pt 5.3A -
"to provide for the business, property and affairs of an insolvent company to be administered in a way that maximises the chances of the company, or as much as possible of its business, continuing in existence; or ... if it is not possible for the company or its business to continue in existence - results in a better return for the company's creditors and members than would result from an immediate winding up of the company."
[63]s 435A.
The orders made by North J fettered the discretion. In particular, order 5 precluded the Administrators from deciding whether, if trading were resumed, it would be feasible to retain the whole workforce of the employer companies. Decisions of that kind are for the Administrators to make, not the Court. They are to be made having regard to all of the circumstances known at the time.
It was submitted on behalf of the employees that if the Administrators wanted to exercise their powers they could always approach the Federal Court pursuant to the liberty to apply that was reserved. If they could justify their proposed course of conduct, the orders could then be varied to permit it. This contention identifies an error in the orders made by the courts below. The Administrators cannot be deprived of the discretion which the Corporations Law reposes in them. True, they must obey the general law in exercising their discretions[64], including the law governing the dismissal of redundant employees, but that is not to say that their discretionary power is subject to court approval. No doubt, a decision made by an administrator may be challenged by appeal under s 1321 of the Corporations Law but there is a radical difference between a challenge to an exercise of discretion under s 1321 and a denial of the administrator's discretionary power without the court's prior approval.
[64]Waters v Public Transport Corporation (1991) 173 CLR 349 at 413.
Section 447A of the Corporations Law empowers the Court to "make such order as it thinks appropriate about how [Pt 5.3A] is to operate in relation to a particular company". Assuming that the Federal Court could exercise that power, it would not support an order taking away the discretionary powers of the Administrators. The Full Court invoked s 447A to support an order to exonerate the Administrators from personal liability under s 443A for wages and other benefits for which the employees (including the MUA) undertook not to hold the Administrators liable. It is unnecessary to consider the validity of the Full Court's order as the order was unnecessary. The undertaking related to the enforcement of claims for wages and other benefits, not the existence of claims susceptible of enforcement. The employees' claims for the wages and the other benefits for which the employer companies would be liable in the event of resumed trading were understood to remain enforceable against the relevant employer companies.
As the orders made by North J were not subject to the power of the Administrators to determine whether or not to resume trading by the employer companies, there was an appealable error which can and will be rectified by the insertion of an appropriate qualification. But before turning to the precise form of the orders to be made, the position of third parties which were affected by the orders made by North J should be considered.
Third Parties
In applications to grant interlocutory injunctions, the court is concerned to examine and in appropriate cases to protect, pending the trial, the moving party's right to relief against that party's opponent. But the rights of plaintiff and defendant are not the only rights considered in determining where the balance of convenience lies. In Wood v Sutcliffe[65] Sir Richard Kindersley V C said:
"whenever a Court of Equity is asked for an injunction in cases of such a nature as this, it must have regard not only to the dry strict rights of the Plaintiff and Defendant, but also to the surrounding circumstances, to the rights or interests of other persons which may be more or less involved: it must, I say, have regard to those circumstances before it exercises its jurisdiction (which is unquestionably a strong one), of granting an injunction."
The principle in Wood v Sutcliffe was approved by Cumming-Bruce LJ in Miller v Jackson[66]:
"Courts of equity will not ordinarily and without special necessity interfere by injunction where the injunction will have the effect of very materially injuring the rights of third persons not before the court."
His Lordship cited with approval a passage from Dr Spry's Equitable Remedies[67]. We too adopt the author's statement:
"the interests of the public and of third persons are relevant and have more or less weight according to the other material circumstances. So it has been said that courts of equity 'upon principle, will not ordinarily and without special necessity interfere by injunction, where the injunction will have the effect of very materially injuring the rights of third persons not before the courts'. Regard must be had 'not only to the dry strict rights of the plaintiff and the defendant, but also the surrounding circumstances, to the rights or interests of other persons which may be more or less involved'. So it is that where the plaintiff has prima facie a right to specific relief, the court will, in accordance with these principles, weigh the disadvantage or hardship that he would suffer if relief were refused against any hardship or disadvantage that might be caused to third persons or to the public generally if relief were granted, even though these latter considerations are only rarely found to be decisive. (Conversely, detriment that might be caused to third persons or to the public generally if an injunction were refused is taken into account.)"
[65](1851) 2 Sim (NS) 163 at 165-166 [61 ER 303 at 303-304]. See also Kerr on Injunctions, 6th ed (1927) at 31-32 and cases there cited; Spry, Equitable Remedies, 5th ed (1997) at 402-403 and cases there cited.
[66][1977] QB 966 at 988.
[67]5th ed (1997) at 402-403.
Miller v Jackson has been approved and applied on a number of occasions in Australian courts[68]. However, the weight to be given to third party interests varies according to the circumstances. In the present case, PCS Resources offered to supply labour knowing that the Group proposed to sever the stevedoring operations from the workforce employed by the employer companies. Although North J made no adverse findings against PCS Resources as to the circumstances in which it entered into the hiring agreement with Patrick Operations on the evening of 7 April, the services which PCS Resources contracted to perform were known by it to be in substitution for the services which the employer companies had theretofore performed. In balancing the interests of the employer companies and their employees against the interests of PCS Resources and their employees, North J was entitled in the exercise of a discretionary judgment to conclude that the injunctions directed to the members of the Group should be made. At all events, there is no reason shown why that exercise of discretion should be overturned on appeal.
[68]Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 at 419 (per Thomas J with whom Campbell CJ and Andrews SPJ agreed); O'Keeffe Nominees Pty Limited v BP Australia Limited [1990] ATPR 41-057 at 51,740-51,741 per Spender J; Gilltrap & Anor v Autopromos Pty Ltd & Anor [1995] ATPR 41-395, at 40,377 per Spender J. See also Perrey v Mordiesel Co Pty Ltd [1976] VR 569 at 576 per Lush J.
The undertakings and orders
The orders made by North J were made on the employees giving three undertakings - first, as to damages, second, that they would not engage in industrial action and third, that they would not hold the Administrator of the employer companies personally liable for their wages and other benefits. It is necessary to say something of the undertaking as to damages and the undertaking about the liability of the Administrators.

Courts should, in my opinion, be cautious in making orders based on special legislation relating to parties of a particular status or in a particular relationship, binding upon persons or corporations not having the requisite status or not being in the relevant relationship. Clear language intending that such special legislation should or may have that reach would usually be required. One reason why this is so is because special legislation (for example, the Family Law Act 1975 (Cth) and this Act, the Workplace Relations Act) usually confers extraordinary and especially focussed powers to deal with situations arising out of the status or particular relationship. Another reason is that it may not always be possible to determine what impact orders may have upon those who in turn have obligations to, or rights in respect of, legal personalities not having the requisite status or relationship, but bound by the orders. Each of these considerations is however subject to the proposition stated by Gibbs J in relation to the operation of the Federal Court Act in Ascot[140]:
"The position is, I think, different if the alleged rights, powers or privileges of the third party are only a sham and have been brought into being, in appearance rather than reality, as a device to assist one party to evade his or her obligations under the Act. Sham transactions may always be disregarded. Similarly, if a company is completely controlled by one party to a marriage, so that in reality an order against the company is an order against the party, the fact that in form the order appears to affect the rights of the company may not necessarily invalidate it."
The extent to which another provision of another statute (s 23 of the Federal Court Act) may be called in aid of the operation of the special statute here (the Workplace Relations Act) in a case in which conspiracy is alleged and relief under the latter act is sought, raises a further question which I do not need to answer in this case.
[140](1981) 148 CLR 337 at 354-355.
In substance, the applicants’ contend that the orders should not have been made for a number of reasons, some of which overlap. I have already touched upon these in part. They include:
(i)the orders are made in respect of the implementation of a tort (of conspiracy), which is, if proved, complete: an injunction in these circumstances, assuming it to be available anyway in respect of a conspiracy, should not be granted here;
(ii)the orders purport to bind persons and corporations who were not employers at any time and to require them to enter into effectively new arrangements with the employer companies;
(iii)the fourth order might not be made as a final order and could not be undone if and when the case is finally disposed of: its purpose is simply to impose economic duress upon the applicants;
(iv)the orders for their operation depend upon the performance of undertakings designed to cure, or in some way make lawful, what would otherwise be unlawful: the carrying on of the business of the employer companies when they are, or may be, insolvent, and the employment of labour upon a basis contrary to the relevant award and the Workplace Relations Act;
(v)that for their operation the orders require the supervision on a regular basis of the activities of the parties in the carrying on of business or, as it was otherwise put in argument, the orders are so uncertain in effect that it would not be practicable for a court to supervise their operation;
(vi)the orders were made in breach of a fundamental rule that preservation of the status quo was all that a court should order in granting an interlocutory injunction: the stevedoring companies, indeed the employer companies were never confined to using the workers who were the represented applicants in the original proceedings;
(vii)the orders were so uncertain that the parties bound by them could not know precisely what they must do to satisfy them; so too the court would be left in doubt in the future whether a contempt may have been committed;
(viii)the more serious the conduct (the conspiracy) is alleged to be, the greater will be the need for assurance as to the necessity for and precision of the orders;
(ix)if the applicants in these proceedings succeed at the trial, restoration to their previous position will be impossible;
(x)the orders purport to impose upon the administrators of the employer companies, obligations at variance with their obligations under the Corporations Laws;
(xi)the orders have the capacity to, and are likely to affect adversely the rights of third parties, such as bankers and other creditors;
(xii)the trial judge made a finding of insolvency of the employer companies: to require them to continue or resume operations would be to require them to trade, in breach of the Corporations Law, whilst they are insolvent;
(xiii)compliance with the orders is likely to be detrimental to the MUA because the reality is that the regime contemplated by the orders will be a deterrent to those who might otherwise deal with the applicants and provide a source of funds to the employers to pay the employees.
There is varying strength in all of these submissions, and some authority to support most of them[141].
[141]See the discussion of defences to applications for interlocutory injunctions in Meagher, Gummow and Lehane, Equity: Doctrines and Remedies, 3rd ed (1992), at [2174].
However, the raising of strongly arguable defences by a respondent to an application for an interlocutory injunction will not ordinarily be enough for the respondent to defeat the application. That flows from the principle that all the applicant need show in the first instance is that there is a serious question to be tried, although the strength of the defences may bear upon the issue of the balance of convenience because the two conditions which an applicant must satisfy are not always capable of discrete treatment. For the purposes of the application and appeal to this Court I will proceed upon the basis that the applicants to this Court must actually make out a complete answer to the contention that the interlocutory orders and injunctions were properly made and granted.
It is a matter of concern that interlocutory mandatory injunctions were sought in respect of an alleged conspiracy, which is, on one view already complete. Cases in which such an injunction will be granted will be rare. Gulf Oil Ltd v Page[142], which was relied upon by the MUA depends upon its own facts, is distinguishable, and provides no support for the orders made here. The injunction granted was a negative injunction. The defendants’ threatened activities were to be carried out pursuant to a conspiracy to injure the plaintiffs by inflicting the maximum possible damage on them in revenge for financial reverses that the defendants had suffered. Sir Nicolas Browne-Wilkinson V-C, a member of the Court of Appeal which decided the case, was to describe its facts subsequently as "bizarre" in Femis-Bank Ltd v Lazar[143]. Even though the facts in Femis were of an unusual kind and a negative injunction only was sought to restrain a defamatory publication pursuant to an alleged conspiracy, his Lordship, in the exercise of his discretion refused to grant the relief claimed.
[142][1987] Ch 327.
[143][1991] Ch 391 at 399.
The only other case cited on this point, British Motor Trade Association v Salvadori[144] is also a case in which the injunction granted was a negative one, and, on examination, it can be seen that the relief was then only granted by way of final relief after the proof of the conspiracy and breach of contract.
[144][1949] Ch 556.
However I am prepared to proceed upon the basis, without deciding it to be so, that mandatory interlocutory injunctions are potentially available in the case of a conspiracy said to be incomplete.
In my opinion one matter that is immediately fatal to the challenged orders is that, for their operation, involving commercial dealings and business decisions on a day to day basis, there can be no certainty as to the way in which they can be carried out. They necessarily involve commercial considerations and decisions with respect to which even the best informed, and most well intentioned commercial minds might differ. Indeed, as the debate proceeded before the Court, it became apparent that further applications to the Federal Court with respect to these matters if the orders stood and were to operate until trial would be inevitable. At one point in his submissions, Mr Burnside QC who appeared for the MUA, referred to a possibility that following a reinstatement of his clients, if there were found to be a surplus of workers, application might be made to North J for permission to dismiss some workers.
In Co-operative Insurance v Argyll Stores Ltd[145] the House of Lords allowed an appeal against an order for specific performance requiring a tenant in a shopping centre to re-open an unprofitable supermarket which it had, contrary to the terms of the lease, closed down. The matters which influenced their Lordships were similar to some which arise for consideration here: the difficulty of drawing up a sufficiently precise order to avoid further litigation and applications to the court; and that the losses to the defendants might far exceed the losses or disadvantages to the plaintiffs, a situation likely to give the plaintiffs an unjust and disproportionate bargaining position (in other words, an ability to impose economic duress). It is right to observe that the situation which the orders granted here create could well have a tendency to impose economic duress upon parties other than the employer parties.
[145][1998] AC 1.
In Argyll, Lord Hoffmann (with whom Lord Browne-Wilkinson, Lord Slynn of Hadley, Lord Hope of Craighead and Lord Clyde agreed) said[146]:
[146][1998] AC 1 at 11-13.
" Specific performance is traditionally regarded in English law as an exceptional remedy, as opposed to the common law damages to which a successful plaintiff is entitled as of right. There may have been some element of later rationalisation of an untidier history, but by the 19th century it was orthodox doctrine that the power to decree specific performance was part of the discretionary jurisdiction of the Court of Chancery to do justice in cases in which the remedies available at common law were inadequate. This is the basis of the general principle that specific performance will not be ordered when damages are an adequate remedy. By contrast, in countries with legal systems based on civil law, such as France, Germany and Scotland, the plaintiff is prima facie entitled to specific performance. The cases in which he is confined to a claim for damages are regarded as the exceptions. In practice, however, there is less difference between common law and civilian systems than these general statements might lead one to suppose. The principles upon which English judges exercise the discretion to grant specific performance are reasonably well settled and depend upon a number of considerations, mostly of a practical nature, which are of very general application. I have made no investigation of civilian systems, but a priori I would expect that judges take much the same matters into account in deciding whether specific performance would be inappropriate in a particular case.
The practice of not ordering a defendant to carry on a business is not entirely dependent upon damages being an adequate remedy. In Dowty Boulton Paul Ltd v Wolverhampton Corporation[147], … Sir John Pennycuick V-C refused to order the corporation to maintain an airfield as a going concern because: … 'It is very well established that the court will not order specific performance of an obligation to carry on a business'. He added: 'it is unnecessary in the circumstances to discuss whether damages would be an adequate remedy to the company'[148] ... Thus the reasons which underlie the established practice may justify a refusal of specific performance even when damages are not an adequate remedy.
The most frequent reason given in the cases for declining to order someone to carry on a business is that it would require constant supervision by the court. In JC Williamson Ltd v Lukey and Mulholland[149] … Dixon J said flatly: 'Specific performance is inapplicable when the continued supervision of the court is necessary in order to ensure the fulfillment of the contract.'
There has, I think, been some misunderstanding about what is meant by continued superintendence. It may at first sight suggest that the judge (or some other officer of the court) would literally have to supervise the execution of the order. In CH Giles & Co Ltd v Morris[150] … Megarry J said that 'difficulties of constant superintendence' were a 'narrow consideration' because:
'there is normally no question of the court having to send its officers to supervise the performance of the order … Performance … is normally secured by the realisation of the person enjoined that he is liable to be punished for contempt if evidence of his disobedience to the order is put before the court; …'
This is, of course, true but does not really meet the point. The judges who have said that the need for constant supervision was an objection to such orders were no doubt well aware that supervision would in practice take the form of rulings by the court, on applications made by the parties, as to whether there had been a breach of the order. It is the possibility of the court having to give an indefinite series of such rulings in order to ensure the execution of the order which has been regarded as undesirable.
Why should this be so? A principle reason is that, as Megarry J pointed out in the passage to which I have referred, the only means available to the court to enforce its order is the quasi-criminal procedure of punishment for contempt. This is a powerful weapon; so powerful, in fact, as often to be unsuitable as an instrument for adjudicating upon the disputes which may arise over whether a business is being run in accordance with the terms of the court’s order. The heavy-handed nature of the enforcement mechanism is a consideration which may go to the exercise of the court’s discretion in other cases as well, but its use to compel the running of a business is perhaps the paradigm case of its disadvantages and it is in this context that I shall discuss them.
The prospect of committal or even a fine, with the damage to commercial reputation which will be caused by a finding of contempt of court, is likely to have at least two undesirable consequences. First, the defendant, who ex hypothesi did not think that it was in his economic interest to run the business at all, now has to make decisions under a sword of Damocles which may descend if the way the business is run does not conform to the terms of the order. This is, as one might say, no way to run a business. In this case the Court of Appeal made light of the point because it assumed that, once the defendant had been ordered to run the business, self-interest and compliance with the order would thereafter go hand in hand. But, as I shall explain, this is not necessarily true."
I respectfully agree with what his Lordship said. I would only add these observations which may well be implicit in his Lordship's remarks. There are sound reasons of public policy why courts should not make orders requiring the carrying on of businesses. Business affairs require mutuality in dealings. The pressure upon courts today is heavy. The role of the courts is the adjudication of cases, not the making, under the guise of supervisory orders, of de facto business decisions.
[147][1971] 1 WLR 204 at 211; [1971] 2 All ER 277 at 284.
[148][1971] 1 WLR 204 at 212; [1971] 2 All ER 277 at 284.
[149](1931) 45 CLR 282 at 297-298.
[150][1972] 1 WLR 307 at 318; [1972] 1 All ER 960 at 969.
Business presents problems with which courts are generally not equipped to deal. A decision which turns out to be a wrong one, or an unfortunate course of action in relation to a commercial activity forced upon a business person by an order of the court, may have a tendency to bring the court into disrepute.
Although his Lordship's observations were made in a case of specific performance, they are equally apposite, probably more so, to cases of interim or interlocutory injunctions of the kind granted here which not only purport to insist upon a return to past contractual dealings, but also purport to order what is effectively the creation and continued operation of new ones. It is obvious that the practical effect of the orders will be to compel the employers to employ only their current workforce (comprised almost exclusively of MUA members), to change and restrict the operation of cll 2.3(h) and 13.3[151] of the LSAs, to compel the applicants to give notice to the MUA when formerly the MUA had no contractual relationship with Patrick Operations, and to preclude the employers from using, for stevedoring tasks previously undertaken by MUA labour, non-union labour that they might be disposed to employ. There is a further difficulty in the way of the operation of the orders of the kind referred to by Dixon J in JC Williamson Ltd v Lukey and Mulholland[152]:
"Probably the true rule is that an injunction should not be granted which compels, in substance, the defendant to perform his side of the agreement when the continuance of his obligation to do so depends upon the future conduct of the plaintiff in observing conditions to be fulfilled by him."
In this case, the continuance of obligations of the applicants, pursuant to the orders, would depend upon the future conduct of the first and second respondents in observing the undertakings given by them and generally their performance on a daily basis in the workplace.
[151]"Termination in other Circumstances
If an application is made to wind up either party, voluntarily or otherwise, or a receiver, receiver and manager, liquidator, administrator or controller (as defined in the Corporations Law) is appointed over any assets of either party, this Agreement willth terminate immediately."
[152](1931) 45 CLR 282 at 299.
In Bethlehem Engineering Export Co v Christie[153], Learned Hand J (with whom Augustus Hand and Chase JJ agreed) discussed decrees of specific performance and injunctions going to the performance of obligations which might be affected by the activities of third parties. Other considerations were relevant there, but some observations of his Honour are pertinent to this case, especially the reference to interwoven performances[154]:
"Every reason which makes a specific performance of the defendants' obligation impracticable applies equally to an injunction conditional on the plaintiff's performance, since the two performances are so mutually interwoven. It may be asked why the same reasoning does not apply to cases in which a principal obtains an injunction against an agent, or an employer against an employee. So it must, if the principal's performance is a condition upon the agent's obligation, and is of a kind which demands the continuous or repeated supervision of a court."
Some of the observations of Isaacs and Rich JJ in Packenham Upper Fruit Co Ltd v Crosby[155] are also apposite here. Dealing with applications for injunctions and a decree of specific performance in respect of a contract allegedly constituted by the membership and articles of association of a co-operative between the members and the co-operative, their Honours said[156]:
" Now, assuming, as this judgment does for the purpose of argument, that, notwithstanding this vague and uncertain result, there exists technically a valid binding agreement to run all the risk mentioned, it seems unarguable that the Court should by a process of equitable interposition, discretionary in the sense of doing what is nearest to justice in the circumstances and nothing highly unreasonable[157], … compel the grower, at the peril of imprisonment, to observe as well as he thinks he can the tortuous scheme framed by the regulations.
Consequently the relief by way of 'specific performance,' as it is termed, which implies ordering the respondent to do something, is inappropriate."
The scheme contemplated by the orders made by North J in this case is an elaborate, if not to say tortuous one, and depends upon many imponderables. On that account also, attempts to implement it are likely to lead to numerous undesirable attempts to invite the court to intervene to solve what are in truth, industrial and business problems, and to impose arrangements which really require mutuality.
[153](1939) 105 F 2d 933.
[154](1939) 105 F 2d 933 at 935.
[155](1924) 35 CLR 386.
[156](1924) 35 CLR 386 at 396-397.
[157]Stewart v Kennedy (1890) 15 App Cas 75 at 105 per Lord Macnaghten; Watson v Marston (1853) 4 DeG M & G 230 at 239-240 [43 ER 495 at 499].

It is obvious that the Court is likely to become enmeshed in the business of the parties if the orders stand. For example, on an application for permission to dismiss some of the workforce (an application which Mr Burnside QC for the MUA foreshadowed as a possibility) the Federal Court would, no doubt, be faced with arguments whether the number to be dismissed was the right number, which employees should be dismissed, whether, if the business had been conducted differently that number, or some lesser number, should be dismissed, and whether bad business decisions or the actions of the applicants or strangers led to the need for a reduced workforce, all matters of day to day business judgment. That the supervising judge might be able to refer some aspects only of such a controversy to an appropriate industrial forum does not provide a sufficient answer. Indeed such a reference could itself delay or complicate the resolution of the controversy and the conduct of the business.
Order 6, the Mareva injunction, requires some separate consideration. The conditions for the grant of a Mareva injunction are those stated by Deane J (with whom Mason CJ, Wilson, Brennan and Dawson JJ agreed) in Jackson[158]:
[158](1987) 162 CLR 612 at 623.
"As a general proposition, it should now be accepted in this country that a 'Mareva injunction can be granted … if the circumstances are such that there is a danger of [the defendant's] absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied'[159]…".
[159]Rahman (Prince Abdul) v Abu-Taha [1980] 1 WLR 1268 at 1273; [1980] 3 All ER 409 at 412 per Lord Denning; Ballabil Holdings v Hospital Products (1985) 1 NSWLR 155 at 160 per Street CJ.
I would also refer to Z Ltd v A-Z and AA-LL[160] in which Kerr LJ warned against any too ready an inclination to grant relief of this kind:
[160][1982] QB 558 at 585-586.
"it is clear that the jurisdiction may be properly exercisable in many cases which are not limited to situations where the defendant is foreign or only has some tenuous connection with this country by reason of having assets here. On the other hand, it would not be properly exercisable against the majority of defendants who are sued in our courts. In non-international cases, and also in many international cases, the defendants are generally persons or concerns who are established within the jurisdiction in the sense of having assets here which they could not, or would not wish to, dissipate merely in order to avoid some judgment which seems likely to be given against them; … the great value of this jurisdiction must not be debased by allowing it to become something which is invoked simply to obtain security for a judgment in advance, and still less as a means of pressurising defendants into settlements."
The conditions for an order in terms of order 6 are not satisfied here. There is no evidence that Lang Corporation Ltd or any member of the group is about to secrete its assets offshore. Nor is there any suggestion that the net worth of the group is in some other way about to be diminished to defeat the first or second respondents or other creditors. The group and each member of it is, in any event, bound by the Corporations Law to deal with its assets in such a way as not to defeat its creditors. Those considerations alone require the discharge of order 6, but there are also these matters which militate against its maintenance. Damages, if the MUA succeeds, do have the potential to be substantial but just how substantial will depend upon many factors and I do not purport to state a catalogue of them when I refer to the following:
(i)proof at the trial of the MUA's case in accordance with the principles governing a grave allegation such as conspiracy[161];
(ii)the extent to which industrial action, even protected industrial action might, in any event, have brought the employers to their knees financially;
(iii) the extent to which redundancy payments may operate to reduce damages;
(iii)the obligation of the MUA to mitigate their loss;
(v) whether competition might have forced the Patrick group out of business;
(vi)in an assessment of exemplary damages the degree to which the conduct of the MUA has been a contributing factor; and
(vii)whether, having regard to the return on, and cost of, shareholders' and financiers' capital, the applicants would have been able to, or indeed would have wished to remain in this, rather than embark upon some other business, or might have decided to make a return of capital to the shareholders and to cause a voluntary winding up of the business.
In short, self evidently, this is a troubled industry in which the futures of some employers and employees would in any event be matters for conjecture. There is no obligation upon any person or corporation to remain in a particular business so long as each takes proper care of his, her or its legal obligations in going out of it. Business people and corporations must be entitled to set a rate of return at a level that they need to achieve to justify the effort and capital employed in a business, in default of which they are entitled to discontinue that business and use their capital and effort elsewhere.
[161]cf Rejfek v McElroy (1965) 112 CLR 517 at 521-522 per Barwick CJ, Kitto, Taylor, Menzies and Windeyer JJ.
Despite all the ingenuity that Courts of Equity may and should bring to the moulding of injunctions to remedy (or halt) unlawful activities, there are situations in which the impracticability and inappropriateness of the supervision by the Court of orders intended to achieve that end are such that the parties must be left to their remedies in damages. In my opinion, this is such a case. This is a case, in which, to put the matter another way, the orders are of insufficient certainty to justify their making. The grounds for the grant of the Mareva injunction were not made out. The orders purport, as a practical matter, to create new, and destroy former contractual rights and obligations. They go beyond the preservation of the status quo. Furthermore, the fact that they are seriously flawed, as a matter of principle, in some respects in view of their interdependence would, for that reason alone point to a serious error in the exercise of his Honour's discretion generally at first instance and they suffer from the defect that if the applicants were to succeed at the trial, restoration to their prehearing position would be a practical impossibility.
It is unnecessary for me to consider any further the other grounds argued by the applicants. For the reasons I have given, and, because the orders under challenge, orders 1 to 6, are so interdependent, I would discharge all of them. Accordingly, the orders I would make would be, application for special leave allowed, appeal allowed, set aside the orders of the Full Court of the Federal Court, in lieu thereof order that the appeal to that court be allowed, and the orders of North J 1 to 6 set aside and discharged.
It would follow from the way in which I would determine the case, the first and second respondents would have to pay the costs of the applicants and the administrator in this Court, the costs in the Federal Court, if any, to be dealt with by that court.