Patrick Stevedores & Ors v Maritime Union of Aus

[1998] HCATrans 128

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M29 of 1998

B e t w e e n -

PATRICK STEVEDORES OPERATIONS NO 2 PTY LTD

First Applicant

LANG CORPORATION LTD

Second Applicant

STRANG PATRICK HOLDINGS PTY LTD

Third Applicant

NATIONAL STEVEDORING HOLDINGS PTY LTD

Fourth Applicant

PLZEN PTY LTD

Fifth Applicant

INTRAVEST PTY LTD

Sixth Applicant

CUMBERLANE HOLDINGS PTY LTD

Seventh Applicant

EQUITIUS PTY LTD

Eighth Applicant

JAMISON EQUITY LTD

Ninth Applicant

SERENADE PTY LTD

Tenth Applicant

SCARABUS PTY LTD

Eleventh Applicant

PATRICK STEVEDORES HOLDINGS PTY LTD

Twelfth Applicant

PATRICK STEVEDORES OPERATIONS PTY LTD

Thirteenth Applicant

and

MARITIME UNION OF AUSTRALIA

First Respondent

PETER BREUKERS, JAKE HAUB and KIERAN COYLE

Second Respondent

PATRICK STEVEDORES NO 1 PTY LTD (Under Administration)

Third Respondent

PATRICK STEVEDORES NO 2 PTY LTD (Under Administration)

Fourth Respondent

PATRICK STEVEDORES NO 3 PTY LTD  (Under Administration)

Fifth Respondent

NATIONAL STEVEDORING TASMANIA PTY LTD (Under Administration)

Sixth Respondent

CHRISTOPHER D’ARCY CORRIGAN

Seventh Respondent

WILLIAM CLAYTON

Eighth Respondent

ROBERT DUNN

Ninth Respondent

NATIONAL FARMERS FEDERATION

Tenth Respondent

PCS OPERATIONS PTY LTD

Eleventh Respondents

PCS RESOURCES PTY LTD

Twelfth Respondent

P & C STEVEDORES PTY LTD

Thirteenth Respondent

DONALD GORDON McGAUCHIE

Fourteenth Respondent

PAUL XAVIER HOULIHAN

Fifteenth Respondent

JAMES WILLIAM FERGUSON

Sixteenth Respondent

COMMONWEALTH OF AUSTRALIA

Seventeenth Respondent

PETER KEASTON REITH

Eighteenth Respondent

Application for special leave to appeal

BRENNAN CJ
GAUDRON J
McHUGH J
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 30 APRIL 1998, AT 10.07 AM

(Continued from 28/4/98)

Copyright in the High Court of Australia

BRENNAN CJ:   Yes, Mr Burnside.

MR BURNSIDE:   If the Court pleases, there are three things I want to do this morning.  The first is to tie up a few loose ends left over from Monday and Tuesday.  The second is to make one further substantive submission, which is dealt with in our outline but which we have not dealt with in oral argument.  The third is to deal with any questions that your Honours may have in connection with any of the matters we have argued.

Can I start with the loose ends.  On Tuesday your Honour Justice Callinan asked us what would be the circumstance in the event that the administrators came to the legitimate view that some of the employees were redundant.  I think I told your Honour that that could adequately be dealt with pursuant to the liberty to apply which is reserved to the parties.  However, I should have added, and did not, that there would be open to him, on seeking liberty to apply, to ask the judge to let the matter go to the awards grievance procedures, in which case it would be swiftly dealt with by the Commission in the ordinary way.  The liberty to apply would simply be, as it were, a safety valve to make sure that that was not done to the prejudice of any of the other parties to the litigation.  So that his Honour would very likely not have to be involved in dealing with the difficult questions that your Honour suggested might arise.

CALLINAN J:   Which ones?  He would still have to consider the substantive question whether the disengagement, as it were, of the labour were justified.  He still might have to consider that.

MR BURNSIDE:   Of course, but that is the sort of question, in our submission, which is perfectly appropriate for the judge having the carriage of the matter to decide.  Since the orders are prima facie there to protect the rights of the parties pending trial and judgment, it is appropriate that the judge with the carriage of the matter should have that degree of supervisory control, without having to be involved in the fine detail of whether or not this employee or that employee should be made redundant.

GAUDRON J:   Do I take it that there are award provisions and/or provisions in the enterprise agreement which set up procedures in the event that the services of employees are to be terminated for redundancy and there are also - I take it that there are provisions in the Workplace Relations Act.

MR BURNSIDE:   Yes, there are grievance procedures in the award which cover all of the employees.  I cannot answer offhand about the agreement that operates at the Melbourne wharves.

GAUDRON J:   Is there not some requirement in the Workplace Relations Act as to notice, consultation, et cetera, in the event of termination for redundancy?

MR BURNSIDE:   The requirement as to consultation certainly arises under clause 43 of the award and that is sufficient for the purpose.

GAUDRON J:   As you understand it, there is not an unfettered discretion in any event at his stage to terminate employment?

MR BURNSIDE:   That is so, by operation of clause 43 of the award.  The other thing which also arose out of a question Justice Callinan asked the other day:  your Honour drew attention to the fact that on 17 March Mr Clayton had sent a letter couched in fairly general language to the employees in reference to the risk that the employer companies might be in breach of their contractual obligations.

CALLINAN J:   He said they were in breach.

MR BURNSIDE:   Yes, although he did not identify the contracts or the obligations, and I mentioned to your Honour at the time that we had written letters to the companies asking them what was going on in relation to suggestions that they were going to dismiss their work force or move assets.  The first of those letters was sent on 30 March this year and it is found in volume 2 at tab 3H.  This is exhibit JBB 8 to the affidavit of Mr Bornstein, sworn on 14 April and what that did was to put before the court the material that had been before the court in action VG 42, the previous week.  The letter of 30 March, which I referred to - - -

CALLINAN J:   It is JBB 4, I think.

MR BURNSIDE:   That is right, but beware JBB 8 under tab H is a number of documents in VT42.  One of those is itself another affidavit of Mr Bornstein, which in turn has exhibits and it is exhibit JBB 2 to that affidavit.  It is dated 25 March 1998, addressed to Mr Corrigan.  Your Honours will see that it refers to the fact that:

In the last couple of weeks the members of the Union employed at Port Botany have engaged in protected industrial action -

GAUDRON J:   Which numeral?

MR BURNSIDE:   It should be document 3 tab H.

HAYNE J:   Behind an exhibit marking sheet JBB 2?

MR BURNSIDE:   Yes, and that itself is comprised within JBB 8 of the later affidavit.

CALLINAN J:   That is the letter 25 March, is it?

MR BURNSIDE:   Yes, so it is several weeks after the letter we referred to the other day.  It refers to the - yes, it is a week after - it refers to the proposition that:

In response to that industrial action you have issued in the press a number of threats to terminate the entire workforce of the Patrick group of companies.

Such threats are a matter of grave concern to the union and its members -

It then refers to the requirements of clause 43 of the award, to a duty of the employers to notify change and to discuss change, and it refers to recent breaches of clause 43 by the Patrick companies.

It then asks at the foot of the second page for information in writing no later than 4 o’clock on 27 March:

a.  an undertaking that Patrick Stevedoring will comply with its obligations under Clause 43 of the award;

b.  confirmation that Patrick Stevedoring has not made a definite decision to introduce major changes that are likely to have significant effects on its employees;

c.  an undertaking that Patrick Stevedoring (including Patrick Stevedores No 1 Pty Limited and Patrick Stevedores No 2 Pty Limited) will not be terminating the employment of its workforce in the next month;

d.  an undertaking that, in particular, Patrick Stevedoring will ensure that discussions and notifications in accordance with Clause 43 of the Award will occur well in advance of any proposed or actual termination.....

e.  an undertaking that neither you nor other management or representatives of Patrick are discussing, negotiating or otherwise dealing with any other company or entity in relation to the possible sale, takeover or closure of Patrick’s operations.

The response to that letter dated the 27th is the next document in the exhibit.  It acknowledges receipt of the letter of 25 March.  It says:

I anticipate responding as soon as possible, which I expect will be no later than Tuesday, 31st March, 1998.

And it is signed by Mr Corrigan and then on 30 March, as promised, the next document is his substantive response, which reads:

Dear Mr Coombs,

I refer to your letter of 25th March 1998 in which you allege that:

“[I] have issued in the press a number of threats to terminate the entire workforce of the Patrick group of companies”.

BRENNAN CJ:   Where do we find that one?

MR BURNSIDE:   I beg your pardon, your Honours.  It should be the next sheet after the 27 March letter.  It is within the same exhibit.

HAYNE J:   Not in mine.

BRENNAN CJ:   I think we are lacking it.

HAYNE J:   The next one is 30 March Mr Coombs to Vice President Ross, not Corrigan to Coombs.

MR BURNSIDE:   That is under the exhibit sheet JBB 4.

HAYNE J:   Yes, but no earlier sheet at least in my volume.

GAUDRON J:   Nor in mine.

BRENNAN CJ:   Nor in mine.

MR BURNSIDE:   We do have copies here.  The exhibit unquestionably included that letter.  Why it had not been reproduced in the appeal book, we do not know since we did not prepare the appeal book.  But may I hand up these documents.  These are simply copies of the affidavit of Mr Bornstein sworn on 6 April which, itself, is part of the exhibit we have been referring to, and it contains the exhibits I am now referring to.

BRENNAN CJ:   Thank you.

McHUGH J:   Is the letter you are referring to a letter of 3 April?

MR BURNSIDE:   No, it is a letter of 30 March.

McHUGH J:   Of 30 March.

KIRBY J:   And it was part of the exhibit?

MR BURNSIDE:   Yes, it was, part of exhibit JBB 3 to the affidavit of 6 April which, itself, is an exhibit to the 14 April affidavit but I have now handed up the 6 April affidavit and if you look at exhibit JBB 3 to that, that exhibit should be two letters, a letter of Mr Corrigan dated 27 March and a letter of Mr Corrigan dated 30 March.  Do your Honours have that?

BRENNAN CJ:   Yes.

MR BURNSIDE:   The letter of 30 March is addressed to Mr Coombs and it simply reads:

I refer to your letter of 25th March 1998 in which you allege that:

[I] have issued in the press a number of threats to terminate the entire workforce of the Patrick group of companies.

I have not issued such threats.

Yours sincerely -

which, in answer to your Honour Justice Callinan’s question of the other day, really does fail to meet the point and gives an idea of the sort of response we might have got even if we had thought to imagine the possibility that there were some other agreements in place about which we should ask questions.  It left, of course, the substance of the earlier letter entirely undealt with.

KIRBY J:   Was that substance ever dealt with in any subsequent correspondence before the matter came before Justice North?

MR BURNSIDE:   No.  Well, in the same exhibit we wrote a further letter on 3 April seeking undertakings in substantially the same terms.  We got no response.  We issued the motion three days later.  The day after the motion was issued, the events of 7 April occurred.  I am sorry, in answer to your Honour Justice Kirby, there was no substantive response to the letter at all.  It must be assumed, in the circumstances, that, when the letter was written on 25 March, when the responses were made on 27 and 30 March, that planning for the events of the 7th were well in hand.  Clearly, the events of September 1997 were directly picked up and should have been mentioned in responses to the letter of 25 March but, plainly enough, were not.

The next matter I wish to refer to is in connection with the construction of Part XA of the Act generally.  Can we draw attention to the fact that it is clearly remedial, or beneficial legislation which ought to be construed to give it its fullest beneficial effect.  We refer, in our outline, to Waugh v Kippen.

BRENNAN CJ:   What is this to show, Mr Burnside?

MR BURNSIDE:   It shows the approach with the Court should take in construing the provisions of legislation of this sort, although it refers to a predecessor provision, and it is a decision of the Full Bench of the High Court saying that the approach to be taken is that it should be construed so as to give the fullest relief, which the fair meaning of its language will allow, and that is particularly to be found at page 164 of Waugh v Kippen.

BRENNAN CJ:   Of what volume?

MR BURNSIDE: I am sorry, it is 160 CLR 156 at 164. This was concerned with the penal provision in what can broadly be described as regulations for occupational health and safety. At page 164, Chief Justice Gibbs and Justices Mason, Wilson and Dawson said:

A construction of the rule that would require an employer to have regard to the risk of injury to a particular worker finds support in the character of the Act as legislation concerned with furthering industrial safety.  In that character it should be construed “so as to give the fullest relief which the fair meaning of its language will allow”, to use the words of Isaacs J. in Bull v Attorney‑General.....On the other hand, there is the consideration, to which McPherson J. referred, that a breach of cl. 25 is attended with a penal sanction.  The modern approach in construing penal statutes was stated by Gibbs J. (as he then was) in Beckwith v The Queen as follows:

“The rule formerly accepted, that statutes creating offences are to be strictly construed, has lost much of its importance in modern times.  In determining the meaning of a penal statute the ordinary rules of constructions must be applied, but if the language of the statute remains ambiguous or doubtful the ambiguity or doubt may be resolved in favour of the subject by refusing to extend the category of criminal offences ‑ ‑ ‑

GUMMOW J:   I am not sure there are any “rules of construction” myself.

MR BURNSIDE:   That is probably right - “methods of approach” might be better.  Their Honours went on:

In the course of argument, the question arose whether the two principles of interpretation to which we have referred come into conflict in the present case and if so, how the conflict is to be resolved.  If such a conflict was to arise, the court must proceed with its primary task of extracting the intention of the legislature from the fair meaning of words by which it has expressed that intention, remembering that it is a remedial measure passed for the protection of the worker.  It should not be construed so strictly as to deprive the worker of the protection which Parliament intended that he should have.

In our submission, that is the approach which should guide the Court in interpreting the provisions of 298U in the event the Court has any doubt that those provisions are apt to deal with the circumstances of this case.

The next small point we wanted to deal with was that the suggestion arose on Tuesday, I think, that one effect of the orders might be to enforce compulsory unionism for the duration of the orders.  In our submission, that is simply not the effect of the orders.  It misunderstands the orders.  The orders operate until trial to require that the identified employees remain employees.  It is not conditioned on their remaining members of the Union and it does not require them to be retained as employees by reference to them being members of the Union.  It is the fact that the applicants are members of the Union but the orders would still persist for their benefit even if some or all of them cease to be members of the Union.  It is not a provision that compels Union membership.  His Honour Justice North dealt with that precise proposition at pages 25 to 26 of his reasons and, in our submission, he did so correctly.

The fourth point we would deal with is the question of solvency.  I do not want to reopen the question in any detail, but we have provided to the Court this morning a short memorandum which deals with the proposition of companies under external administration trading while insolvent.  I would simply say two things about it.  First of all, in addition to the matters we have put in that memorandum, we would add reference to the power of a provisional liquidator to carry on the business of a company - and that is given by section 472(4)(a) - and the power of a liquidator to carry on the business of a company - section 477(1)(a) - and it must be assumed that companies to which liquidators or provisional liquidators are appointed, in many if not most cases, will be insolvent.  A provisional liquidator is not even caught by personal liability as an administrator would be.

So, in our submission, there is simply nothing in the proposition that there is an absolute barrier to making orders which could or might or do have the effect of requiring the companies to trade whilst insolvent.  I have already made submissions to the effect that the orders do not have that effect, in any event, but even if they did it was within his Honour’s discretion to make them and there is no legislative barrier to them being made.

In that connection we have also provided for the Court’s assistance a sheet which is not as nice looking as it should be, but it sets out briefly some references to the evidence of the principal events of this case.  It is a single sheet that starts in March 1997.  It should enable your Honours to find readily the evidence which supports the detail of the major events from March 1997 through to April 1998.

And finally in reference to solvency, can I draw the Court’s attention to what was said by Justice North at page 17 of his reasons, about point 7, Given that the applicants have accepted, I think, that they are bound by his Honour’s findings of fact, we would say that the paragraph in the centre of page 17 of the reasons are a substantial, if not, insuperable, obstacle on this part of their application.  His Honour said:

The costs of the administrators have been provided, for the moment, by payment of $350,000 from Patricks to the administrators. If work commenced as a result of an injunction, revenue would be generated immediately to pay any further expenses of the operation. It was first suggested by Patricks that any revenue would have to be paid to a secured creditor as the result of a crystallisation of a charge consequent upon the appointment of administrators. But counsel for the administrators drew attention to section 440B of the Corporations Law, which may prevent such an effect.

GAUDRON J:   But, in any event, did the charge not simply require the other companies in the Patrick Group - did the notice simply not require the other companies of the Patrick Group to pay moneys then owing to the Patrick employers to the security trustee?

MR BURNSIDE:   The charge did not directly require that, but we would say by operation of law and the right of exoneration, the effect is the same and his Honour was told by the administrators that, in effect, the charge would not impede the payment of the receivable to the employer companies.  His Honour proceeded on that footing.  And he went on:

In any event, the administrators are able to apply for relief against a chargee under Div 7 of Part 5.3A of the Corporations Law.  The evidence is that the labour cost of the operation constitutes most of the expense of the employers’ business.  Further, Mr Butterell has sought payment of $10 million of the $14 million to $16 million owing to the employers by other Patrick companies as a result of the BPAs.  He is currently investigating recovery of this sum.  Mr Clayton also made a demand for this sum shortly before he appointed the administrators.  If it is paid, any non-labour expenses of running the business, apart from the administrators’ costs, will be easily met from it.

McHUGH J:   Does that not indicate an error of principle, because, on the evidence, the money owed by the other Patrick companies would seem necessary to meet the liabilities to employee’s entitlements, such as long service leave, annual leave, and so on?  It may not count much in the end, but I think his Honour may have misunderstood what could be appropriately done with it.

MR BURNSIDE:   Well, with respect, your Honour, that was never put to him.  His Honour’s attention, so far as I can recall, was never drawn to the fact that the employee entitlements were not otherwise provided for.  The first reference to that, in fact, happened on Tuesday afternoon in this Court.  Second, the state of the evidence, in our submission, really does not enable this Court or his Honour to resolve that question with any degree of confidence and this Court, certainly, should not be trying to unravel the facts if the Patrick companies did not put them sufficiently clearly at first instance.

It is an interesting thing, and I say this without intending criticism of my learned friends, but it is extraordinary how this hearing has developed as if it were hearing of the injunction application.  It is a remarkable thing for a special leave application to involve such a painstaking picking through the evidence, in order to see what the facts are on a special leave application.  It is quite remarkable, in our submission, interesting but ‑ ‑ ‑

McHUGH J:   This is like the old fashioned special leave applications of years ago, when one argued the special leave and the appeal point ‑ ‑ ‑

KIRBY J:   You say it is remarkable by modern standards?

MR BURNSIDE:   By modern standards.  I am tempted to ask if it reflects a change in direction, because special leave days will change character.

BRENNAN CJ:   They will change the time they take too.

MR BURNSIDE:   Yes, it will be a special leave week.  I do have a serious submission to make about that very point, but if I may, I will develop it later.  It is the one substantive submission I want to make apart from clearing up these loose ends, and it is a matter in which, in our submission, the Court ought to be very concerned.

BRENNAN CJ:   Could you tell me this while you are speaking about the financial situation, was there any evidence as to any provision that was made by the Patrick Group or by the Patrick employer companies, in particular, to meet the possible cost of redundancy if, in the event, the employees would have their employment terminated?

MR BURNSIDE:   The evidence simply does not enable that question to be answered, and may I make this additional point?  The employees are probably in the worst position to try and adduce evidence directed to that end.

BRENNAN CJ:   I appreciate that, I was only asking, was there any evidence?

MR BURNSIDE:   The answer is no, and there ‑ ‑ ‑

McHUGH J:   There may not be any express evidence, but really on what we know about the case it is as plain as a pikestaff that they did not leave any money in the companies to deal with redundancies.

MR BURNSIDE:   It depends on what you mean by money.  Perhaps to cover redundancies you do not have to leave a fund of money that is earmarked for that purpose.

McHUGH J:   I appreciate that, but nevertheless, the capital of this company or of these employing companies, a substantial amount of it was returned to its shareholders, so that it was no longer available for creditors, potential creditors or employees.  If there was a downturn in the company’s business, it had running costs, employment bills to meet and very limited shareholder’s funds after the share buyback.

MR BURNSIDE:   Yes.  Let me proceed from that hypothesis for the sake of argument.  In our submission, that circumstance should not have exercised his Honour’s mind.  It was not brought to his attention but, had it been, it should not have exercised his mind in exercising his discretion against the orders sought by the employees.  The fact that their interests have been neglected by the employer companies previously should not lead the Court to exercise a discretion against their interests now.

McHUGH J:   Well, I was putting it as a point in your favour.  I am sorry.

MR BURNSIDE:   Well, I accept it as a point in our favour then.  It was not clear, your Honour.  I apologise.

McHUGH J:   And it is a point that must on any view affect the administrator’s discretion, because one aspect of this case is that, if he does terminate the employment of the workers, the companies may have greater liabilities than they do even if they have to trade for some time at a loss.

MR BURNSIDE:   That is certainly so.

GAUDRON J:   And there is evidence to that effect, is there not?

MR BURNSIDE:   I am sorry?

GAUDRON J:   Is there evidence to that effect?

MR BURNSIDE:   It is inherent in the nature of the liability.  If the only liability they have is provisions for employee entitlements, those will fall due if the employees are terminated - self‑evident.  It is fair to say that as a matter of proper accounting they are a liability whether deferred or current.  But the problem is much more immediate if they are made current by terminating the work force.

BRENNAN CJ:   Well, this is a puzzling situation.  You say that these are accounting liabilities.  If they are accounting liabilities, there is no way in which the capital of those companies that had those liabilities could properly have been reduced.

MR BURNSIDE:   We accept that.

BRENNAN CJ:   If there be substance in the allegation that is made as to a conspiracy to procure the termination of the employment, then the withdrawal of the $60 to $70 million expended in the share buyback was a withdrawal of funds which the employer companies necessarily must have had retained in order to meet that liability.

MR BURNSIDE:   Yes, and part of the relief we seek is a declaration that that disposition of capital was void as being a fraud on creditors, namely, the employees.

BRENNAN CJ:   Yes.

MR BURNSIDE:   There is one other matter I wanted to mention in connection - - -

McHUGH J:   But given all that, why should not the judge as a matter of principle have approached it on the basis that even though he put order (4) in place freezing what Operations could do, he should nevertheless have left it for the commercial judgment of the administrator to make a decision, whether or not this company should continue to trade or not.

MR BURNSIDE:   We would submit that the effect of the orders is to leave it to the commercial judgment of the administrator in this way.  The orders were necessary if they were to preserve the position in a way that would enable the applicants to be able to seek effective relief at trial.

McHUGH J:   I accept that they leave the administrator with that discretion, but in one respect his discretion is hampered by the fact that he is obliged to keep employees on.

MR BURNSIDE:   But subject to his liberty to apply, your Honour.

McHUGH J:   Well, that does not mean he can make a commercial judgment about it.  He has got to apply to a court.

MR BURNSIDE:   He has got to apply to a court and explain why the commercial circumstances require a modification of the orders and, in our submission, it is perfectly appropriate ‑ ‑ ‑

McHUGH J:   But why, in industrial proceeding, should his judgment be fettered in that way?  Why should not the administrator have a judgment and if he exercises it adversely to the interests of anybody then they - a person affected - has the remedy under whatever the section is, 1412, of the Act?

MR BURNSIDE:   The answer to that is the circumstances which may lead him to make that commercial judgment might be circumstances artificially created by the Patrick companies or others who are interested to see the companies in administration fail and it is appropriate that the judge should be in a position, at least to be able to see whether the circumstances are artificially created or genuine commercial circumstances and in saying that I am not reflecting on the propriety of the administrators at all, but the artificiality of the circumstances which they have to deal with commercially.

Now, in our submission, it is not really a fetter to any significant extent on the discretion of the administrator that the judge should have supervision of the larger landscape within which the administrators have to operate, given the nature of the allegations in this case.

GAUDRON J: There is another aspect to that issue, is there not, Mr Burnside? If you approach these orders through section 289U on the basis that they are necessary to remedy the effects - they being the words of the relevant subsection - then why would it not be the case that whatever discretions are conferred by the Corporations Law, which presumably in this instance is a State law, just give way?

MR BURNSIDE:   It is not even a matter of giving way.

GAUDRON J:   Just have no operation to the extent of any inconsistency are simply invalid pursuant to section 109?

MR BURNSIDE:   We do not need to go that far, your Honour, because, in our submission, any statutory discretion has to be exercised by reference to the general law of the land, as your Honour Justice McHugh noted in ‑ ‑ ‑

McHUGH J:   Waters.

MR BURNSIDE:   ‑ ‑ ‑ Waters.  It is an uncontroversial proposition, if I may say so, with respect, and we would have thought that the administrators must in any event, in this case or any other case, exercise their discretion ‑ ‑ ‑

GUMMOW J:   Does not that just mean that those questions would be caught up in any application under 1321?

MR BURNSIDE:   Yes, they would and the question then becomes whether as a matter of his Honour’s discretion it is preferable to have a regime in existence which has the administrators going to him in order to open the gate to their commercial decisions or whether they have to go ‑ ‑ ‑

GUMMOW J:   But if you have got 1321, why do you need order (5)?

MR BURNSIDE:   Using 1321 simply means that there will be a proliferation of proceedings each time a decision needs to be considered by the court and one would hope that the docket system would lead to the same judge hearing each of the appeals that might have to be brought, but that is simply a more complex path to exactly the same result.

GUMMOW J:   But it preserves his room to move, as it were.

MR BURNSIDE:   Well, with respect, we should have thought it might restrict his room to move, because he makes a decision and then finds himself caught up in an appeal process.

GUMMOW J:   Well, he obviously deals with people before he makes the decision, because he has got 1312 in the background and, hopefully, they are sensible people.

MR BURNSIDE:   Yes.  But may I make this point, your Honours?  We are now debating a fairly subtle distinction in approach to achieve the ultimate result of ensuring that the people who control the larger landscape do not put the administrators in an artificial position where decisions are made in good faith which operate - - -

McHUGH J:   But they can do that in any event, even under the present orders.  As I pointed out to you on Tuesday, if Operations wants to, if it is prepared to bleed financially, itself, it can go close to putting you out of business.

MR BURNSIDE:   Yes.  Well, that is matter, if it happens in the future, will need to be dealt with.

McHUGH J:   Yes, I know.

BRENNAN CJ:   Mr Burnside, the relevance of this to us is, of course, to get the legal principle accurate.

MR BURNSIDE:   Yes.

BRENNAN CJ:   The consequences may well be of a kind that you are describing, but we are concerned with the necessary principle as to guide the formulation of the orders, if any.

MR BURNSIDE:   Well, may I say, your Honour, that the relevant legal principle seems to be what orders are appropriate to preserve the rights of the litigants pending trial.

GAUDRON J:   Is that right?

MR BURNSIDE:   That is our primary basis for seeking and supporting the orders.

GAUDRON J:   Are you working through 23 - - -

MR BURNSIDE:   Section 23 of the Federal Court Act?

GAUDRON J:   Yes.

MR BURNSIDE:   Yes, in aid of the relief which is ultimately made available by, amongst other things, 298U.

GAUDRON J:   Yes.  You are not talking about orders necessary for the effective exercise of jurisdiction of the kind involved in Mareva and Jackson v Sterling Industries; you are talking about ordinary interlocutory injunctions in aid of the existing rights and liabilities of the parties, are you?

MR BURNSIDE:   Well, it is both, if I may say.  The effective remedies ‑ ‑ ‑

GAUDRON J:   Well, I think there may be a difference in approach, depending on which you say it is.

MR BURNSIDE:   In order to have available, effectively, the remedies given by 298U, it will be necessary that the employer companies remain in existence and that the work force remain intact, in our submission.  In order to give effective remedies, the orders which we have presently obtained are the minimum which are necessary, in our submission.  Then the question is, what is the best way of implementing those orders, recognising the reality that the administrator will need to be able to make commercial decisions.  In our submission, it was open to his Honour, at first instance, either to leave those matters of judgment to be dealt with by appeals under 1321, or to deal with it by reserving liberty to apply.  There can be, in our submission, no error of principle in choosing one or the other of those courses, and it is important ‑ ‑ ‑

McHUGH J:   That may be debatable, Mr Burnside, because the Act gives the administrator the discretion.  Prima facie one would think that one would start with a proposition that he could exercise his discretion subject to an appeal against it.  You want to turn it round the other way and say he cannot exercise a discretion until he goes and gets the approval of the court.

MR BURNSIDE:   If he is concerned to exercise his discretion in one specific part of the overall range of his discretions, it is our submission that it is appropriate that he should approach the court before making a final decision.  In our submission, there is nothing that says that is improper, and the only question is whether it was reasonably within the range of his Honour’s discretion to provide that regime.

GAUDRON J:   Can I take you up on that because I seem to have a different perspective, and that is this.  If you take the view that the orders are made as orders necessary to do something, is not the ultimate question then whether it was open to Justice North to form the view that they were necessary?  If you say yes, it was open to his Honour to form that view, then it seems to me that is the beginning and the end of the matter.  If you are talking in the realm of necessity, there is then no room for balance of convenience or whatever other issues may be taken into account.

If you approach it on the basis of ordinary interlocutory orders, and the powers and discretions conferred by Part 5.3 of the Corporations Law are powers and discretions to be exercised against the background of the general law, and one would have thought only conferred to the extent that they were not conferred inconsistently with a valid State law, then why is consideration of the powers and discretions anything more than the practicalities of the orders or the balance of convenience which, prima facie at least, would not seem to raise any matter of high principle?  It seems purely to be discretionary considerations, and the question would then be:  can it be said that in selecting one approach rather than the other his Honour erred in principle?

MR BURNSIDE:   Well, your Honour, even on a Mareva injunction, as we understand it, the court considers the balance of convenience.  The power to make the order comes from the ability to make such orders as are necessary to preserve the purity of the court’s process.  Once you have identified logically the need to take steps to ensure the court’s ability to provide effective justice in the cause, then you look at the discretionary considerations and, in our submission, his Honour did exactly that.

There is of course another source of power for the orders preventing the dismissal, that is, preventing the administrators from dismissing summarily, and that is that that dismissal is itself the last stage of the conspiracy we allege, and the Court clearly has got a direct power to prevent, by injunction, the furtherance of a conspiracy, and once that order is made, then it becomes a matter of considering the balance of convenience to see whether the administrator should be stuck with a work force for which he has no use, or whether orders should be made, preserving the matter pending trial, which put the work force to work and, in our submission, then the balance of convenience is all one way, because it would be a remarkable thing to require him to keep on the work force rather than dismiss them in furtherance of a conspiracy and then prevent them from having any effective work to do.  And, of course, it is clear from the evidence before his Honour, and it is in Mr Butterell’s first affidavit, that unless restrained by the Court he would dismiss the employees immediately.

BRENNAN CJ:   What, if any, are the statutory or award limitations on the power of dismissal?

MR BURNSIDE:   Relevantly, for this purpose, you cannot dismiss a person for a reason that includes a prohibited reason, namely, membership of a union, amongst other things.

BRENNAN CJ:   Yes.

MR BURNSIDE:   There are provisions in the 170 ‑ ‑ ‑

BRENNAN CJ:   Obviously in the context of the administrator’s action, it would be a question of termination for redundancy, would it not?

MR BURNSIDE:   Yes.

BRENNAN CJ:   Are there any, and what, limitations on the power to dismiss for redundancy?

MR BURNSIDE:   Would your Honour pardon me a moment.

GAUDRON J:   Does the award not require consultation?

MR BURNSIDE:   Yes, it does.

GAUDRON J:   And dispute procedures, grievance procedures?

MR BURNSIDE:   There are grievance procedures in the award, yes.  Division 3 of Part VIA of the Act is concerned with termination.  An employer cannot terminate an employee if that:

termination was harsh, unjust or unreasonable.

One of the considerations in determining whether it was “harsh, unjust or unreasonable” is whether the employee was surplus to the requirements of the employer.  That is found specifically in section 170CG(3)(a).

BRENNAN CJ:   Another factor would be whether or not they were in a position to make the redundancy payment.

MR BURNSIDE:   That would certainly be so, since the operation of that division is discretionary; that is to say, the redundancy is simply one of the matters to take into account.  Obviously, if the dismissal were to occur in circumstances that would ensure that the redundancy payments were not available, that might be a powerful consideration for not permitting that dismissal.

BRENNAN CJ:   Are there any award provisions to which we should have our attention drawn?

MR BURNSIDE:   I do not believe so.  The only parts of the award that were before Justice North were those parts which imposed on the Patrick employers obligations to notify of change and to consult in relation to change.  That is primarily in clause 43, and that is the clause which we say was contravened, when they did all of these things in secret.

GAUDRON J:   Clause 8 of the enterprise agreement, which I have under JBB 2, provides that:

the Company -

and I assume that is the employers or one or more of them -

will provide security of employment for permanent employees throughout the term of the agreement.

And that if:

the size and composition of the workforce in the event of loss of business or facilities or through the introduction of the change -

the agreement is to be reviewed in accordance with clause 43, and:

Reductions in the size of the permanent workforce shall be processed in accordance with the Retirement and Redundancy Agreement or the Voluntary Early Retirement Scheme contained in Schedule 3, and through discussions with the unions and employees.

MR BURNSIDE:   Yes, that is so, and that agreement, of course, operates only in relation to employees in Melbourne and operates only in relation to PS1 and PS2, who were relevantly Melbourne employees.  Contravention of the agreement is pleaded in paragraphs 24 and following of the statement of claim as some of the unlawful acts on which we rely.  Breach of the award, of course, is also pleaded separately as other unlawful acts in pursuance of the conspiracy.  The other matter - I think this discussion arose out of a discussion about solvency, and I did want to mention one other piece of evidence which is, as it were, negative evidence, about solvency.

Given that the people who are best placed to give the Court evidence about the true financial position of the employer companies or the employer companies themselves, we subpoenaed Mr Clayton to produce documents and give evidence.  The subpoena included a request that he bring management accounts of the employer companies up to 30 March this year, and annual accounts to the end of the financial year, 30 September 1997.  He did not produce any of those documents.

HAYNE J:   What reason or excuse was given for failure to produce in answer to the order?

MR BURNSIDE:   None.  He just said he did not have them; could not get them.  To complete that, may I just draw reference to page 88 of the transcript of Mr Clayton’s evidence?  He refers to items 6 through 11 of the subpoena which includes the accounts I have referred to.  He just said, “It’s my understanding that those documents are with the administrator”, although the administrator’s evidence clearly shows no hint that he has been able to get accounts of that description.

Quite the contrary.  The administrator complains that he has not been given information that he requires by the director.  I wanted then to turn, if I may, to the scope of the orders made by his Honour in support of the proposition that each of the orders he made was, in our submission, within the range of his available discretion and that is a discretion that the Court should not interfere with.

GUMMOW J:   Can we just look briefly at the undertakings as to damages?  It followed Practice Note (3) of the Federal Court as to the form of the undertaking and the undertaking does not go to third parties, the usual undertaking, so your understanding, I thought, was that it did in accordance with the State Supreme Court practice.

MR BURNSIDE:   Yes.  It is just a habit of mine, yes.

GUMMOW J:   Yes, but it does not seem to do so in the Federal Court, so some adjustment would be needed to accommodate it to your understanding, I think.

MR BURNSIDE:   Yes, I will get those instructions, your Honour.  In relation to (1), (2) and (4), (1), (2) and (4) operate together, in effect, to preserve the business which the employer companies had until 7 April.  They do not secure the position against the Armageddon that Justice McHugh has hinted at, but they go as far as possible to restore the practical position that existed up until 7 April and, in our submission, given the object which they were designed to serve, they were the least that was required and they were entirely appropriate and, in our submission, they were within the scope of his Honour’s discretion, given that he was seeking to preserve to trial the rights of the applicants.

Order No (3), I think, was criticised because it provides for no termination of the labour hire agreements without giving 14 days written notice.  The obvious operation of that is to protect the Patrick companies against the possibility that for some reason quite unconnected with the litigation and unconnected with the conspiracy the employer companies breach their obligations under the labour supply agreements.  The provision of 14 days notice is to preserve to the parties the possibility of challenging before his Honour the propriety of any proposed termination for other reasons not yet identified.

All that was urged on his Honour in relation to that was that if events changed in some unforeseen way so that it was right that the stevedoring companies should be able to terminate those agreements, then they can give notice and, if it is required to approach the court, then that can be done in order to see whether the notice is good or not.  So that really protects the Patrick companies, in our submission.

McHUGH J:   I understand the force of that, but order (3) is curiously drawn to achieve that object, is it not, because one would have thought that order (2) prevents them in any event from terminating the labour hire agreement specified in paragraph 3 and it seems to be a further order which does exactly what order (2) does?

MR BURNSIDE:   Order (2) requires them to continue to treat them as on foot.  Order (3) is predicated on the proposition that they are on foot and allows the stevedoring companies to say, “Look, you have breached clause such‑and‑such of these agreements because your men are all sort of lying around drinking beer all day instead of working.”

McHUGH J:   Yes, I appreciate that is what is there, all I am saying to you, it does not seem to be worded in a way that one would expect it to be worded to achieve that object.

MR BURNSIDE:   All I can say, your Honour, is that no complaint was made at first instance about the wording and there was no real debate about the intended effect.  Order No (5) is simply the order that the employment of the employees not be terminated by the companies in administration.  I think it is self‑evident why we require that and, in our submission, it is justified in order to prevent the conspiracy from being played out.  It is qualified by the liberty to apply, which would enable the administrator to say, “Well, look, we want to dismiss them because of their redundancy”, and his Honour could then, in an appropriate case, give leave to them to go to the Commission in order to see whether or not particular redundancies were justified, as any employer would be required to do.

Order (6), in our submission - and I think I mentioned this the other day - is not a true Mareva, although it has the characteristics of one.  Its primary purpose is to prevent internal rearrangement of capital and assets so as to sidestep the effect of the present orders pending trial.  The events of late September last year and of April this year demonstrate how easily the objects of the Act can be circumvented by internal rearrangement of assets.  In our submission, (6) is entirely appropriate to prevent that from happening again and thwarting the applicant’s attempt to invoke the jurisdiction of the Court.

In the case of each of the orders (1) to (6), it is our submission that the purpose of the orders is clear; the purpose is entirely appropriate, was within his Honour’s discretion, and there is no error of principle disclosed by the orders being in those terms.  Before I move on to the substantive point I wanted to make ‑ ‑ ‑

GUMMOW J:   Well, what about the additional order made in the Full Court?

MR BURNSIDE:   That is order No (3)?

GUMMOW J:   Yes.

MR BURNSIDE:   In our submission, that order was not necessary because the undertaking given did not itself contravene the relevant provision.  We did not oppose it being made because, for the reasons advanced on Tuesday afternoon, it is our submission that that operates to the benefit of any other creditors there may be, because what it does effectively is to postpone the unpaid employees’ rights to the rights of all other unsecured creditors.  So, for what little effect it has, it is beneficial to other creditors and should not be the subject of any interference by this Court.

GUMMOW J:   But you say it was not essential?

MR BURNSIDE:   We say it is not needed.

GUMMOW J:   Because the undertaking would have been enough, and would have been ‑ ‑‑

MR BURNSIDE:   No, because the undertaking does not itself contravene the provision that prevents a person from exempting the administrator from liability.

GUMMOW J:   Exactly.

GAUDRON J:   But you say the undertaking is sufficient, or perhaps would be sufficient, if extended so that it indemnified other creditors against any loss that they might ultimately suffer in consequence of the orders being given effect?

MR BURNSIDE:   We may have been talking about two different undertakings.  The undertaking I understood Justice Gummow to be mentioning was the undertaking not to hold the administrators personally liable.  That undertaking, in our submission, does not have the effect of exempting them from liability in contravention of the law.  The Full Court was concerned about it and so made order (3).  That order, we say, was not necessary but if it is needed, it is in aid of an undertaking which, itself, is beneficial to all other creditors because it postpones the rights of the employees.

GUMMOW J:   Now, assume you are wrong about the efficacy of that undertaking.  Would, nevertheless, an expanded undertaking, as Justice Gaudron mentioned, that meet the case?

MR BURNSIDE:   Yes, it would, and we have instructions to offer that undertaking in the form that is ordinary in Victoria, that is to say, applying to any person who suffers damage by reason of the orders being made.

GUMMOW J:   Yes, thank you.

MR BURNSIDE:   Can I then move to the one substantive point that we wanted to address today and have not previously addressed.  It is interesting on the third day of a special leave application to be reminding the Court of the test for special leave, especially where the leave is sought to appeal against a discretionary interlocutory order.  In our submission, it is plain enough on all the authorities that the test on appeal against a discretionary order is whether the discretion so far miscarried as to demonstrate that the judge made an error of principle.

GAUDRON J:   Well, that is the same test, whether it is an application for special leave or an appeal, is it not?

MR BURNSIDE:   Yes, although we would draw from Justice Gummow’s decision in Marsden that when you are looking at the question of special leave to appeal against an urgent interlocutory discretionary order, the barrier is about as high as it gets.

GUMMOW J:   There is also requirements of general public importance which can be overwhelming, I suppose.

MR BURNSIDE:   Of course. But your Honours, can we say this: there is no doubt that the facts which give rise to these questions are facts which are a real interest and concern to the Australian public and no doubt they are of significance to the Australian economy. However, the test is whether the legal issues are of general public importance and, in our submission, the legal issues to which these facts give rise are commonplace. They occur in an unusual shape because they are thrown up by very unusual facts but at the foundation, the principle is really whether the Court could and should make orders designed to preserve to the applicants the possibility of securing a proper vindication of their rights at trial. The question is whether the applicants at trial will be able to secure the relief which 298U makes available, the relief which the Statute of Elizabeth makes available, the relief which would otherwise be justified under section 1324 of the Corporations Law:  will any of that relief, apart from damages, be realistically available to the applicants if these orders are not made?

Although the question arises in unusual circumstances, it is a question which is a relative commonplace, because the courts have always said that they will preserve the subject matter of the litigation and make such orders as are needed to preserve the rights of the parties pending trial.

McHUGH J:   That is correct at a high level of abstraction, but drop down one level and this case does involve some very important issues.  Order (4), for example, is an extremely wide order.

MR BURNSIDE:   Well ‑ ‑ ‑

McHUGH J:   I doubt if you will find any case in the books where a person has been restrained in the circumstances that these defendants are.  I am not saying for a moment that you are not entitled to the order, but it is a far‑reaching order where there is no obligation to supply labour, but nevertheless a court orders it not to deal with anybody else, the result being to put economic pressure on the person to do what it had a contractual right not to do.

MR BURNSIDE:   Yes.  Whilst it is true that it had a contractual right to get its labour wherever it liked, for years it has not done so.  It is only in a position to do so because of the unlawful transactions of last September.  If it is allowed to do so now, then the inevitable result is that the companies in administration will go broke.  It is inevitable because ‑ ‑ ‑

McHUGH J:   I know, but that is an argument about jurisdiction, an argument about merits.  But when one looks at all the issues involved in this from a special leave point of view, that sort of order, the insolvency of the employment companies and then the wider economic effects, it seems to me that it is an arguable case for special leave.

BRENNAN CJ:   But there is nothing else - really, you have the question of whether an interlocutory mandatory injunction lies to prevent the occurrence of further damage in a completed tort.

MR BURNSIDE:   Well, with respect, your Honour, we should have thought that was uncontroversial, but in any event ‑ ‑ ‑

BRENNAN CJ:   Well, there is plenty of authority that says that it is quite controversial.

MR BURNSIDE:   In any event, the same mandatory order would be justified to prevent the completion of the tort.

BRENNAN CJ:   Of conspiracy.

MR BURNSIDE:   Of conspiracy.

BRENNAN CJ:   There is one case that says it.

MR BURNSIDE:   One case that says you can do that?

BRENNAN CJ:   Yes.

MR BURNSIDE:   Gulf Oil?  I am sorry, I was referring to Gulf Oil which is clear authority for the proposition that you can stop a conspiracy when you find it.  We would have thought, with respect, it would be a very surprising proposition if the Court thought it could not stop a conspiracy when it found it.

BRENNAN CJ:   Yes.

MR BURNSIDE:   That, with respect, would not be controversial, in our submission; unusual because you generally do not find the conspiracy until it is too late.  But it just happens that we found this one in time and, in our submission, the Court should not have the slightest trouble in stopping the conspiracy and then it is, with respect, a very short step to saying, “We will also stop its effects in order to make sure that when the parties come to trial, they can get the relief which 298U promises them”.

BRENNAN CJ:   I understand the force of your argument.  I am just saying that there are some questions there lurking; not lurking, right in the front.

MR BURNSIDE:   Yes.  Well, I think the only other thing I can say is that the Court has helped the applicants expose some interesting questions which do arise on the facts, but the question then is whether this would be a suitable vehicle for special leave, given the uncertain state of the evidence, as must be when it comes from an interlocutory hearing, and especially must be when it comes from an interlocutory hearing where most of these issues were not debated. 

In our submission, in the event that the Court granted special leave here, it would be not surprising for other litigants in other cases to say, “Well, look, our case might not be as large scale as that one, but they got a very quick hearing and they got the luxury of three days in order to rummage through the evidence and have a look at things that the trial judge might have looked at.  Why shouldn’t we have the same luxury?”, they might argue.  No doubt every litigant who approaches this Court regards their matter as having major importance and the legal issues might arise just as powerfully in cases of less public interest.  But the fact that the case arises in circumstances where the public is deeply interested to see what will happen does not necessarily make this a case appropriate for special leave, in our submission.

Whilst one might at first blush look at the orders made by Justice North and say, “Well, remarkable orders.”, the sense of surprise, I submit, dissipates when you begin to see the facts which gave rise to the need for those orders and this Court, in our submission, should deal with this application by refusing special leave, at least on the footing that however interesting the questions, the case is not an appropriate vehicle for ventilating those questions and perhaps the time when those questions need to be ventilated will be after a trial when all of the facts are properly exposed and the subject of findings, which findings can have been properly tested by an intermediate appellate court.  But this, with respect, seems to us a strikingly inappropriate case for a grant of special leave, no matter how interesting the matter is to the general public. 

Unless there are any other matters on which I can help the Court, those are our submissions, if the Court please.

BRENNAN CJ:   Thank you, Mr Burnside.  Yes, Mr Gyles.

MR GYLES:   Your Honours, can I firstly deal with some miscellaneous matters and then come back to some perhaps more central issues.  My learned friend said that Mr Clayton did not produce documents.  The answer was given in the evidence to which he pointed.  He said he had given those to the administrator and the administrator, your Honours, was not asked about those documents, 299 to 304.

BRENNAN CJ:   Mr Gyles, as you know, the Court is under time pressures and it is necessary for us to tell you that your time for reply will be limited to an hour.

MR GYLES:   If your Honour pleases.  The second miscellaneous point, your Honours:  the question of the Commonwealth’s liability for the tort of conspiracy was raised by his Honour the Chief Justice.  My learned friends, of course, have sued the Commonwealth and that is the position before this Court.  There has been no application made to strike them out.  Might I say also, your Honours, that in view of the decision of this Court in Northern Territory v Mengel (1995) 185 CLR 307 at 345 to 348, it would be a very difficult argument to put. Once there can be Commonwealth liability for intentional torts, it is difficult to see why there should be any distinction drawn in the case of conspiracy. In any event we, with the applicant of the case, will certainly join forces to keep the Commonwealth there.

Your Honours, the next issue which was raised was the question of undertakings given on behalf of parties to a representative action.  Justice Gummow suggested that the answer might lie in Part IVA of the Federal Court Act.  We have looked at that part and looked at Order 72 and there is no reference to the problem.  Your Honours, we have looked at the Law Reform Commission Report, which lead to the introduction of the part, and we have done such periodical searches as we have been able to and can find no reference anywhere, including the United States, to the problem.  I am not suggesting, your Honours, that there is not such a discussion, but we have been unable to find one, and we respectfully submit that, as a matter of principle, (a) before the opt-out provisions have been given effect to, there is no ability to give undertakings or there is no implied authority, I should say, to give undertakings, which means that we are in an impossible position so far as enforcement of those undertakings are concerned, and query, your Honours, whether undertakings to damages can ever be given in relation to parties other than the named parties.

Next, your Honours, the March/April procedural history of the matter has been adverted to on a number of occasions and Mr Justice North sets it out, your Honours, at pages 2 to 4 of his judgment, but it may not have been clear to your Honours, because your Honours do not have VG42 before you, that the earlier proceedings related to Webb Dock and there is no suggestion that prior to the transactions taking place there was any more general case made of which the third parties here had any notice.  Your Honours, another miscellaneous point is that section 298V does not apply in proof of a conspiracy.

Next, your Honours, my learned friend has not referred to any case in which an injunction is being granted in relation to conspiracy.  My learned friend mentioned the Gulf Oil Case and I will come back to that in a moment.  The only case which has been referred to is that referred to by his Honour the Chief Justice of the motor trader case in British Motor Trade Association v Salvadori (1949) 1 Ch 556. Now, your Honours, the only subsequent reference to that case that we have been able to find - and again I would not pretend to be exhaustive, your Honours - have been on the inducing breach of contract point, so far as we can see, and this includes the textbooks to which we have had access or to which we have looked at. It does not appear to be regarded as an authority on the tort of conspiracy; rather it deals with the tort of inducing breach of contract. Now, that is not to say that ‑ ‑ ‑

GUMMOW J:   Well, conspiracy was to bring about a number of breaches of contract.

MR GYLES:   Quite, I mean, it is a case which requires examination, of course, your Honours, but it appears to have had a fleeting life.  Your Honour the other case which was referred to of Gulf Oil (1987) 1 Ch ‑ ‑ ‑

BRENNAN CJ:   327.

MR GYLES:   Yes, Posner’s Case was at 25, the case your Honour mentioned which I do not think I will stay to examine, your Honours, but Gulf Oil is at page 327.

Your Honours will see that, in Gulf Oi,l apparently the issue of the relevant jurisdictional basis was accepted, and the question argued was whether the defamation exception applied, and the court held no.  So that, it is not really an authority on the point which is before the Court here.

May I, your Honour, then turn to some of the more fundamental questions which are involved in my learned friend’s submission, and the first, your Honours, is that, in our respectful submission, for Mr Justice North’s orders to be open to him on the basis argued by my learned friend, which is section 23, this Court would need to depart from the view of the majority in Jackson v Sterling Industries 162 CLR 612. Now, my friend has mentioned Jackson v Sterling Industries.  We relied upon it in‑chief, my friend has mentioned it, but has not gone to it and has not explained to your Honours how it can be that these orders stand with it.  Your Honours will appreciate that Jackson v Sterling Industries does not deal with the Thomson point, that is, our statutory construction point.

GAUDRON J:   I think I referred to it in my judgment in the case.

MR GYLES:   In Jackson.

GAUDRON J:   In Jackson - the statutory construction - your Honour may have.  I am sorry if I have missed that.

GUMMOW J:   At 641.

MR GYLES:   Yes, Thomson’s Case was referred to, but Jackson, itself, did not involve a situation where there was any statute which it might be argued imposed its own code, so Jackson does not deal with that problem, which is at the heart of our submissions.

GUMMOW J:   They were claiming relief in Jackson under the Trade Practices Act, were they not?

MR GYLES:   Yes, your Honour.  Yes, quite, but section 80(2) - well, your Honour, I will take that on board, if I may?  But it was not argued there that the statutory framework ousted the jurisdiction of section 23.  I limit myself to that submission for the moment.

GAUDRON J:   But I dealt with the problem of their reconciliation at page 642, at least as it arose in that case.

MR GYLES:   My submission, your Honour, is it was not such a case, that is all.  Now, moving on from there, your Honours, I respectfully submit that ‑ well, perhaps it may be quicker if I take your Honours to some passages and then come back to what I submit the principle is, because it really does lie at the heart of our approach to the case.  The first point to note, your Honours, in the Chief Justice’s decision, the third paragraph, he stated the question in convention terms - that is 616, point 3:

Here the issue was whether the form of interlocutory relief granted by Sheppard J. was appropriate to keep the matter in statu quo pending a determination of the claim to final relief.

So that, we submit, is the principle, which is a settled principle.  Your Honours, the judgment of Justices Wilson and Dawson, at the foot of 617:

One important result of viewing the Mareva injunction in this way is to emphasize the limits of the remedy.  Its use must be necessary to prevent the abuse of the process of the court.  As Ackner L.J. pointed out in A. J. Bekhor & Co. Ltd. v Bilton, the Mareva injunction represents a limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it.  He cannot beforehand prevent the defendant from disposing of his assets merely because he fears that there will be nothing against which to enforce his judgment nor can he be given a secured position against other creditors. 

And, your Honours, importantly:

The remedy is not to be used to circumvent the insolvency laws.

Then at 619, your Honours, their Honours say: 

It cannot be suggested that either the power to grant relief under s 23 or an implied power to grant an abuse of process extends to the creation and enforcement of rights in addition to those for the protection or enforcement of which the jurisdiction of the Court is invoked.  The power given by s 23 is expressly limited to the making of orders -

et cetera.  Their Honours go on:

It has been a criticism of the Mareva doctrine that it constitutes an enlargement rather than the fulfilment of a court’s function.

Your Honours, the paragraphs referred to in Meagher, Gummow and Lehane, in our submission, neatly summarise a number of the criticisms which can be made of these orders:

The criticism has not generally prevailed but it serves to emphasize the limited scope of the Mareva injunction.  It exists not to create additional rights but to enable a court to protect its process from abuse in relation to the enforcement of its orders.  It is neither a species of anticipatory execution nor does it give a form of security -

et cetera.  His Honour Justice Brennan at 621, the first full paragraph:

The power to grant such an injunction does not support the making of an order which goes beyond what is in reasonable protection of a legal or equitable right which the court may enforce by judgment.

And your Honour then went on to explore the reason in principle why the order was wrongly made.  All of their Honours, so far, agreed with Justice Deane.

Now, your Honours, Justice Deane was the Justice who examined how the facts of the case intersected with principle and, in our respectful submission, an understanding of Justice Deane’s analysis in that case would require an answer adverse to my learned friend in this case, for this reason.  The end result - your Honours may recall that the facts were these:  the judge at first instance found that the defendant was apparently disposing of assets, but he was satisfied that, in effect, he had a string on those assets which could not be ascertained.  So that what his Honour did - and there were problems of self‑incrimination, which complicated the matter as well - what his Honour did was to order that there be a fund, in effect, created which would be less than the total amount of the assets which had been in the control of the defendant.

Now, Justice Deane analyses the situation in this way.  He said, “In one sense, what the judge did was more merciful than stopping any disposition of any assets, because it did not involve self‑incrimination and it left it up to the defendant as to how the money was provided”.  And, in that sense, more merciful or not, it achieves the same result as might have achieved by an appropriately framed order, based upon appropriate factual findings, which will restrain disposition, and his Honour said, “The limits of section 23 are breached by any order which goes beyond restraint”.  You cannot create a situation under section 23, that is not to maintain any status quo, that is to do what you cannot do.

Now, your Honours, it would take me too long to read the passages from his Honour which establish that proposition and, with respect, it is self‑evident when one looks to the facts.  Now, that was the point upon which this Court divided.  Justice Gaudron and Justice Toohey were in the minority.  They said that you could do this and, with respect, that is the argument now advanced and that is the argument for Mr Justice North’s orders.  He is not restraining, in any sense at all, your Honours, for the various reasons we have outlined.  He is creating a situation, not restraining anything and to say in a very loose commercial sense he is merely - I think my friend’s words a few moments ago were “maintaining the business as it was”, that is only, your Honours, with respect, a very loose understanding of the situation.

GAUDRON J:   If you accepted the source of orders of the kind under consideration in Jackson is section 23, that is a statutory source, where in section 23 is there to be found any word limiting such orders to orders in restraint?

MR GYLES:   Your Honour, for the purposes of argument at this stage of the case all I can put is that that was the decision of the majority in that case.  My friend has not asked your Honours to review it.  What your Honours are being asked to do, with respect, is to adopt the view of the minority in that case and to read section 23 as a charter for rewriting events and we submit it is in the teeth of it.

BRENNAN CJ:   I do not read it that way when I look at 625 point 5 Justice Deane says:

Put in positive form, it appears to me that, when an order for the preservation of assets -

which was what was involved there -

goes beyond simply restraining the defendant from disposing of specific assets until after judgment, it must be framed so as to come within the limits set by the purpose which it can properly be intended to serve.

MR GYLES:   Your Honour, all I can do is submit that that is the gravamen of his Honour’s decision and that it will apply in the present case.  Furthermore, your Honours, one of the elements of that is that this sort of relief can only be granted in furtherance of a legal or equitable right.  Now, let me for the purposes of argument assume that that may include appropriate statutory right, one still has what might be called The “Siskina” limitation on section 23.  That was, in my submission, the foundation or one of the foundations for the view of the minority in this case and your Honour the Chief Justice said so expressly.  Now, the arguments here, your Honours, in my respectful submission, turn Jackson on its head and turns “Siskina” on its head.

CALLINAN J:   Mr Gyles, one of the problems about that and it is in a different context, I think, is the observation or what was said by Sir Harry Gibbs in Ascot Investments Pty Limited 148 CLR 337 at page 354 where his Honour said at about point 7:

There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties -

and then these words:

or to require them to perform duties which they were not previously liable to perform.

Now, bearing in mind this is a conspiracy case, it seems to me that what his Honour said later in qualification of that might be a difficulty for you because his Honour said specifically:

The position is, I think, different if the alleged rights, power 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.

Now, his Honour seems to think that in the case of a sham - obviously a conspiracy would be embraced by that - some perhaps exceptional reach should be given to the ancillary powers of a specialist court or a court exercising power under a special statute.

MR GYLES:   Your Honour, that is an argument which relates to the width of 298U, I would respectfully submit, and relates to final relief.  It is not, of course, irrelevant to consideration of the reach of section 23.  But my point at the moment is that so far as section 23 is concerned, it is a section which relates to the maintenance of the status quo by orders which are in substance negative.  Now, your Honours, I am not putting of course that there may not be cases where that can be achieved, or needs to be achieved, by way of a mandatory injunction.  That is well understood and the limits of that have been explored and his Honour Justice Gummow looked at that sort of problem in Businessworld Computers v Telecom 82 ALR 499. I do not go to it at the moment, your Honours. But it is one thing to say you restored the status quo by pulling out or restoring a telephone connection, which was that case, or, let us say you have somebody building a structure right across somebody’s land, you may say, well, in certain circumstances you should remove that. That is well understood. But what section 23 cannot do, with respect, is to endeavour to create by accommodation of judicial orders and undertakings a new situation which varies from any situation which has ever existed.

Now, your Honours, so far as one other aspect of the interim relief is concerned and to which I should draw attention, I put my submissions earlier about section 298U(2) and the interim injunction there. My learned friend’s reference to section 1324 of the Corporations Law provides another very good illustration of the fact that this section, section 298, does not have the effect which is argued. Section 1324, your Honours, of the Corporations Law follows fairly closely section 80 of the Trade Practices Act, and section 1324 contains subsections (3) and (4) which, in express terms, deal with the situation which is simply not dealt with in 298. Section 80 of the Trade Practices Act has the same express powers. Section 1324 has these same express powers in relation to the grant of power to make statutory injunctions. They are simply absent from section 298.

What is being done here is to seek to fill what is perceived as a gap but is, in reality, the legislature simply not granting that power, and that buttresses the case we put earlier, your Honours, about the inability of 298U(2) to be used for interlocutory purposes.  Now, your Honours, if we are wrong in that and there is some power to intervene in this way, your Honours need to focus on the final relief which is available and to see whether, as we submit it is, it is not open to conclude that this relief was necessary to give effect to that final relief.

The first point to be made, your Honours, directly relates to the matter put to me by his Honour Justice Callinan.  The Full Court at page 6 dealt with the argument that was advanced by us that Ascot required 298U to be construed as not affecting third party rights, and agreed with it.  This was mentioned by me very early on on Monday, your Honours.  There has been no cross‑appeal, there has been no challenge to that finding by our learned friend in his submissions and, indeed, before one could even begin to depart from the Full Court’s view, it would be necessary to take account not only of Ascot but of the cases which have followed it in this Court of Ross‑Jones v Green, look at the cases which preceded it in this Court and before one would come to the view that there could be the possibility.

Your Honours, the sort of difficulties which are involved in what has been called unscrambling the eggs can be appreciated by considering some of the evidence.  I do not do more than tell your Honours where that can be found.  It is William Hara’s affidavit, volume 2, tab 7.  If your Honours take account of paragraphs - and I will give your Honours the paragraph numbers - 13(a) to (e), 14, 16, 17, 18, 22, 27, 41 and 45(c).  Then the next affidavit, volume 2, tab 11, paragraphs 4 and 5, and Mr Butterell, volume 3, tab 15, tab C has the National Stevedoring sale.

Your Honours, consideration of the contracts which are there referred to show that they involve and the novation of them involve stevedoring contracts, leases and subleases, labour contracts with third parties and relationships with the port corporations and with the external banks, because the banks had security which was rearranged and reorganised.  It is of course obvious that there would, in running this sort of business, be considerable ordinary unsecured creditors as well.  I refer to that, your Honours, to indicate the unlikelihood that there would be the sort of ancillary power which is here appealed to conferred by 298U, but we take our stand on the basis that the Full Court is with us on that point.

If that be correct, we are looking at a conspiracy case, a conspiracy case where the relief will be damages and/or an injunction restraining the final step.  There is no suggestion in the two cases which we have looked at about conspiracy - and there have been no others suggested - which would indicate any ability to make positive reconstruction orders in relation to a common law conspiracy claim.  There is no suggestion that equity would do that.  What it might do, absent the insolvency problems, is it may restrain the dismissal but it would mould the damages to take account of what the situation is and, your Honours, we submit this really is not the answer to this case.

Whilst ever, your Honours, the Mareva injunction in the form of order (6) remains, and there can be no escape of value out of the group, and there is no threat of that, your Honours.  No one is suggesting Patrick is going to give away its assets; the fear is it is going to reorganise them.  Now provided that no value escapes from the group, your Honours, then there can be no ultimate damage done.  His Honour the Chief Justice this morning was raising the question of the redundancy payments.  Now that has not occurred yet.  But provided that the group’s assets remain as they are, then if, against our submissions, one can do all of the unscrambling one likes, then it is available for that to happen.  Take the share buyback, which is the point that particularly was referred to this morning.  If there is the ability to unscramble all of those eggs, then so be it, your Honours.  If that means that a company under a scheme of arrangement or in liquidation is stayed, the administration ended and the company becomes solvent again, that is one situation.  If that means that the redundancy payments can be funded in that way, that is another thing.  But, your Honours, it is far too early to be stepping in and interfering with a business situation.

If the result of these orders is to deter people from using Patricks, one does not have to imagine, what my friend called, the Armageddon scenario here at all, although we certainly, of course, point out that we cannot be forced to continue business in any particular form or at all, but let us just assume a normal situation where the marketplace says, “Because of these orders, because of the fact that you are doing business through an administrator with this work force, which we have known over the last 10 years, we are simply going to give our business to other people.”  That may be the worst possible thing for everybody in this case.  Furthermore, your Honours will understand, the evidence from Mr Butterell is that he is negotiating with the Commonwealth Government in relation to an offer by them to fund all of the redundancies to give 100 cents in the dollar.  Now these orders will no doubt, of course, send that out the window.  Now, it is a very bold court ‑ ‑ ‑

BRENNAN CJ:   All of these interesting consequences that you are foreshadowing may have some legal implications?

MR GYLES:   Yes, your Honour.

BRENNAN CJ:   What are they?

MR GYLES:   The legal implications of those matters, your Honour, is that what I am putting is that there is no element of this final relief which requires these orders, and, indeed, these orders, as a matter of principle, may make that final relief more difficult.

McHUGH J:   It has seemed to me, for some little time now, that you are addressing this Court as if you were addressing Justice North at first instance.  You have got to find an error in the learned judge’s judgment, either in a lack of jurisdiction, or an error of legal principle.

MR GYLES:   Yes, and, your Honour, the argument I have advanced ‑ ‑ ‑

McHUGH J:   Well, none of the matters that you seem to have put to me go to either of those matters, Mr Gyles.

MR GYLES:   Well, your Honour, I have not put them very well, because the argument is this:  even assuming against myself section 23, or even 298 runs in an interlocutory way, it is necessary that the orders of Justice North were necessary to preserve the ability to grant the final relief and I say, as a matter of principle, the answer is no, and I was examining, your Honours, what alternatives were open.  I have said no 298U.  I have said what we are left with is a conspiracy, that can be damages or a negative order.  These orders are not necessary for any of that final relief.  If, contrary to all of that, you can have a total unscrambling, then there is nothing which would prevent that being done, absent these orders.  Absent these orders, with the exception, if you like, of the Mareva which stops value from leaving the group.  I mean, if the Court, contrary to our submissions, has all the power of final relief, then it can do so; it can make the parties rescind, restore and so on and so forth.

BRENNAN CJ:   You mean that in six months time, if the situation were left unaffected by the orders, there would be viable employer companies in the position to continue the employment of the work force and to take back control of the stevedoring?

MR GYLES:   No, your Honour, that is not the test, your Honour.

BRENNAN CJ:   I thought you said that, if the unscrambling took place, all of these things could be put back to square one.

MR GYLES:   No, your Honour.  Your Honour, what I said was that these orders do not help, at all, in relation to the grant of that final relief.

McHUGH J:   Why not, because the hypothesis upon which his Honour’s judgment proceeds is that in six months, or whenever the trial takes place, there may be no effective employee companies.  The workers are sacked, the company is then in liquidation.  And what have you got to do?  Get it out of liquidation?  May even be struck off the register.

MR GYLES:   No.  Your Honour, that can be stopped.  That can be stopped, your Honour.  There is no problem about any of that.  The organisation exists.  The real question of principle is whether, as the Chief Justice put to me, a judge, at an interlocutory stage, is entitled to endeavour to bring about a commercial result which simply cannot be achieved.  I mean, you cannot eschew a business, and there is no - the employees, your Honours, as individuals will remain.  The Union is not entitled to any particular coverage.  The individuals will remain.

If they have other jobs then they have the opportunity of electing.  Assuming the power which is sought to be exercised exists, then whatever value existed in September can be restored to these companies, and they will have, then, the benefits of that situation.

McHUGH J:   Mr Gyles, your difficulty is that you come in with the burden of a finding, admittedly only at an interlocutory level, that your clients and others are malefactors.

MR GYLES:   Your Honour, I do not, and I know that has been put against me consistently, and I submit that is a quite inappropriate way of looking at it.  What his Honour has found is an arguable case with a grey, your Honour ‑ ‑ ‑

McHUGH J:   Yes, well I appreciate that.  That is what I said, at an interlocutory level.

MR GYLES:   Yes, but that is not a finding against me of malefactor, your Honour, it says its a ‑ ‑ ‑

McHUGH J:   Well, it is a finding for the purpose of considering interlocutory relief.  It is a provisional finding, no doubt.

MR GYLES:   It is possible that that will be found, your Honour, that is all it means.

McHUGH J:   Yes, but the orders are made on the hypothesis that such a finding can be made.

MR GYLES:   Your Honours, can I, perhaps before going back to that point, just deal with some other aspects of final relief.  My learned friend referred in his submissions to 298Y, although it is not pleaded and was not a basis relied upon below, and it is my submission that 298Y would plainly be construed as not relating to third party contracts, and its effect does not depend upon court order in any event, it just happens.  Now, your Honours, the definition of “industrial instrument” in 298B, your Honours, is plainly between employer and employee, and the reasons why the Full Court below agreed that 298 would be limited to - would not extend to third party dealings, is as true here as it is in relation to 298Y, with even greater force than with 298U.

If you had a statutory voidness of the complex commercial arrangements here, your Honour, that would lead to extraordinary results and could not have been anticipated.  Indeed, the explanatory memorandum, your Honours, of which we have copies, if I could hand them to your Honours indicate, your Honours, that 16.45 give no hint of any reach of this section going beyond employer/employee.

GAUDRON J:   The industrial realities, if one looked to them, are such that there would be many cases in which it would, in fact, be third party agreements that would be in issue and it is not a big issue in this case, but I just say that, for example, your ordinary boycott, one would have thought, is exactly what is intended to be caught.

MR GYLES:   Your Honours, my learned friend mentioned two other sources of power. The first was section 1324 of the Corporations Law.  That, your Honours, was not a matter which either court below dealt with and I would submit it would be inappropriate to deal with that.  There are very significant problems about the use of that section, your Honours, as to some of which there are conflicting decisions in the courts below, that is whether 1324 has any application at all to section 232 and, if it does, whether it has any application prior to proving insolvency in the case of a creditor and, your Honours, we respectfully submit that it would not be right to rely upon that unargued, an unargued basis for jurisdiction.

Your Honours, so far as section 172 of the Property Law Act is concerned, that was expressly abandoned by my learned friend as a basis for his application for interlocutory relief before the judge at first instance.  Now, your Honours, we respectfully submit ‑ ‑ ‑

BRENNAN CJ:   Excuse me.  Is that agreed, Mr Burnside?

MR BURNSIDE:   Yes.

MR GYLES:   I am sorry, your Honour.  Page 194 of the transcript, your Honour.

MR BURNSIDE:   We told Justice North that it was not necessary for him to concern himself with the allegations under 172 for the purpose of interlocutory relief.  Of course we did not abandon it as a source of available final relief.  The point which is now being debated, of course, was not debated below.  If it had been suggested that his Honour had no power to make orders of the sort which he was being urged to make, we would have identified every source of power available at trial in aid of which the interlocutory orders were sought.

BRENNAN CJ:   Yes.

MR GYLES:   That, your Honours, was - this Court is hearing an appeal from the Full Court of the Federal Court.  At page 194 of the transcript his Honour indicated his attitude before Mr Justice North.  This was not a matter which my friend argued below, nor a matter which the Full Court relied upon below.  Now, your Honours, it is our submission that one of the established limits of court orders is you cannot do indirectly what you cannot do directly.  The Court cannot compel the stevedoring companies to remain in business or in business in any particular form and it cannot compel the funding of a loss‑making subsidiary or, indeed, any subsidiary by a parent company, in particular, I might say, a public company.

Clause 4 is an avowed attempt to do just that by economic pressure and cannot be justified on any other basis and I would submit that to do so would be to have the Court’s processes lent to achieving collateral objectives, that being recognised plainly by his Honour and by the court below.

Your Honours, put perhaps succinctly, it is not necessary for the grant of final relief that the work force remain in tact, working in precisely the same way as they always worked.  That cannot be achieved, it is impractical to achieve it.  The individuals remain and if relief can be accorded to them, it can be accorded to them, and they can make their own election as to whether they wish money or reinstatement or whatever might be available at that time, bearing in mind that if the powers are as wide as my friend suggests they are, then the upstream companies can be ordered to restore the value to the downstream companies.  There is no suggestion that these creditors, these parties who would be creditors, would not be completely aware of what is going on in relation to these companies and could not have any liquidation.....or a scheme of arrangement reviewed if that were to take place.  It is a settled principle that you cannot order parties to carry on business, in my respectful submission.

Now, your Honours, may I also point this out:  orders 1 and 2 amount to compelling specific performance of agreements not capable, we suggest, of that order, at the behest of a third party, there is no mutuality and, in a varied form.

BRENNAN CJ:   The claim is not in contract.

MR GYLES:   No, your Honour, I appreciate that, but I am putting to you, fundamental points here.  The contract is ordered to be carried out in  varied form and at the behest of somebody else.  Now, your Honours, there are performance requirements in this contract.  There is also a provision that if a company is in administration they should come to an end, and that is a perfectly normal commercial result.  Why?  Because a person with stevedoring business may not wish to have, would normally not wish to have, an insolvent company to do business with, because if there is a breach of contract, on its part, caused by the failure of the labour company to perform, it will have no recourse.  Your Honours, in other words, it is a third party compelling performance of a contract, but a varied contract.

Your Honours, in the remaining moments may I explore some of the consequences of the trading whilst insolvent point? May I put the submission, your Honours, that the fundamental aspect of that is section 588G of the Corporations Law, which reflects a policy which has been a feature of the insolvency law, for as long as anybody can remember, that entities, whether they are individuals or corporations, should not trade whilst insolvent.  That is the fundamental question.  The administration, your Honours, in a sense, is a temporary alleviation of that position, but on the footing that the administrator remains liable for the debts, and this part is the result, of course, of a law reform commission, the Harmer Report.  What we have done, your Honours, is to copy for the Court the passages which are relevant to this issue; I do not pretend, your Honour, that they are a full account of this report or even of this part, there is quite a section of the report which deals with the administration, but it is clear, your Honours, that the centrepiece of this aspect of it is the personal responsibility of the administrator.  Of course it can be relieved in appropriate circumstances, but it is a centrepiece.

Now, your Honours, the judge below found insolvency.  There was no challenge to that finding, and the Full Court made no different finding, and, as your Honours saw the other day, it is supported by the evidence of Butterell, Clayton, Hara and the accountant engaged by the Union.  There was no occasion to explore the niceties of that, your Honour, below, although the natural tendency of this Court to wish to be informed had led to it probing into the evidence.  It is not really relevant.  The judge found insolvency. 

Now, in those circumstances, the law says you cannot trade.  Administration, which is a temporary interruption to the insolvency, in a sense, puts the matter in charge of a professional who can trade in his discretion, but bears the responsibility for doing so subject to his indemnity.  The result of the administration will either be to send the company back to its own position, where 588G will have its place, or there will be a scheme of arrangement, or there will be liquidation, provisional or final.

Your Honours, that is a code of dealing with things which has been, in one form or another, part of insolvency law as long as there has been bankruptcy around the place.  The nature of the office of administrator is dealt with not only by the Law Reform Commission reports, your Honours, but by the cases to which we referred in our outline of argument dealing with the grant of leave to sue.  They, your Honour, appear at page - sorry, your Honours, I will pick up the paragraph, your Honours - but we have included in our authorities, your Honour, the cases which deal with that point.  They are numbers 9, 10 and 11, and the issue is dealt with and the cases are referred to, your Honours, in the court below - the Full Court - at the foot of page 8 and the balance at page 9.  We submit that the analysis of the administrator’s position in those cases is - - -

KIRBY J:   Did you say case 11?  Case 11 is empty in my - - -

MR GYLES:   Your Honours, cases 9, 10 and 11.

KIRBY J:   Which is 11?

MR GYLES:   In Part B, Pioneer Water Tanks, your Honour.

KIRBY J:   All the numbers restart.

MR GYLES:   Part B, yes.

KIRBY J:   Yes, the pagination - - -

MR GYLES:   Particularly Terranora, your Honour.  Particularly case No 9, Mr Justice Davies.  Your Honour, that brings us to the question as to whether there is any inconsistency, in any relevant sense, between the Corporations Law and the Workplace Relations Act. 

Now, your Honours will recall that in Jackson v Sterling Industries, two of their Honours said that Mareva injunctions were not to displace insolvency law and it may be ‑ the general principles of the coexistence of statutory regimes has been dealt with in many cases.  May I mention a couple to your Honours, without taking your Honours to them?  Associated Minerals Consolidated v Wyong Shire Council (1975) AC 538,at 553 to 554, and the decision of this Court in Rose v Hvric (1963) 108 CLR 353 at 360, your Honour, are two of them.

The general principle is that, provided both statutory regimes can be given effect to, you do so and you assume that - take the Workplace Relations Act.  It operates in a world of statutory and common law principles and it has its own impact, for example.  The administrator, we would accept for the purpose of our argument, could not, for an invalid reason, terminate an employee.  But, to the same extent, the Workplace Relations Act, it would be assumed as a matter of construction, would not displace the general insolvency provisions which in one form or another have always been part of the law.

Your Honours, are we or are we not faced with a section 109 point?  Justice Gaudron says we are, Justice Kirby floats it and says he does not really raise it.  We, your Honours, say as a matter of construction that it is obvious that you do not displace any relevant provision of the Corporations Law because of the Workplace Relations Act.

GAUDRON J:   Well, if they are in direct conflict you must.

MR GYLES:   Well, if they are you must, yes, quite.

GAUDRON J:   And if 289U is predicated on necessity.

MR GYLES:   And so construed.

GAUDRON J:   And necessity directs something that cuts across the director’s powers and duties.  They must go under a State law.

MR GYLES:   Well, your Honours, that also requires some examination of the scheme of the CorporationsLaw to see whether it is only State law.  But let me assume for the purposes of argument it is, I submit that it does.  Your Honours will recall also that 298W, I think, was referred to earlier, which deals with the topic of other laws and gives no hint that this is to prevail over existing regimes, State or federal.

We submit, again, your Honours, that the purpose of the Workplace Relations Act is to regulate employer and employee relationships, not to deal with Corporations Law or insolvency law, and that the Court would not construe the Act with any wider operation than that.  Your Honours, it cannot be assumed that the Workplace Relations Act is the central piece of Commonwealth legislation. It is one piece of Commonwealth legislation and this part has the purpose of freedom of association.  It is not a part which would - and there is no necessary inconsistency or any difficulty, we submit, in giving effect to both at the one time in accordance with the authorities.  I think, your Honours, I am perilously close to my time.  I adopt, in so far as it may be necessary to adopt, the reasoning of the Full Court at page 6 in relation to the sham point.

As their Honours said, there is every reason to believe that all of those transactions were meant to be, and did reflect, real transactions.  There would have been no purpose otherwise.  So, from the point of view of - I mean, the effect from a conspiracy point of view may be an entirely different matter.  It may be - one could not argue that these were shams, they have taken effect, they involve all sorts of relationships which we have given effect to.  So, they are not shams within the Ascot sense.  To the extent that that is correct, as we submit it is, that would mean that if, ultimately, the conspiracy is found then the damages would, presumably, take account of that effect, if it were an illegitimate effect.  The inability to obtain that relief would mean that you would have to pay full damages.  You would not be able to appeal to third party positions to get any discount. 

But we submit that at an interlocutory stage of the case, and at the final stage of the case, you would not, for that reason, construe 298U in a way differently to that which the Full Court construed it.  Again, we submit, your Honours, that if the question is necessity, and we submit that is the principle, then there is no basis upon which - proper basis of principle that his Honour could have found that.  One, your Honour, other point that I raised this morning, there was a question as to the impending redundancy situation, and I thought my friend, at one stage, suggested that they should have been a provisioned expense.  At least he was capable of being, I understood him as saying.  We submit that is wrong, that the provisioned expenses are long service leave and the ordinary on-costs which are incurred as the employees’ service continues.  Redundancy is another matter.

McHUGH J:   Well, that is so, but what I was putting is that this company reduced its working capital - well, more than its working capital - it reduced its capital in the form of its shareholder’s funds from between $60 and $70 million, depending on what version you accept, to something like $2 or $3 million, and so it was, for practical purposes, a shoestring operation.  It really did not have the capital which would enable it to meet any of the sorts of declines in business that befall corporations from time to time, during their life.  One of them may be the necessity to get rid of a large part of your work force, which would create a substantial liability in the employing companies, and what have you got, something like $2 million, $3 million in shareholders’ funds to pay that out.

MR GYLES:   Well, that was the position on 1 October, your Honour, and, of course, it is worse now.

McHUGH J:   I know.

MR GYLES:   Your Honour, that view of the facts will need to be examined at trial, of course.  It is not particularly a matter pleaded at the moment and, I mean, at the moment it has not arisen and this is why I came back to put this proposition, that provided that the group’s position has been made no worse by this, then the Court loses no power.  That is the point I tried to put earlier, your Honours, because if the value has not gone externally, it is within the group and, if value needs to be restored because of that factor and if there is power to do so, then it can be done, or, if the damages need to be paid to make up for it, that will be the case, but it is a slightly different form of charge than the one with which we have been charged, but, your Honours, the upstream companies have the money and, therefore, if conspiracy succeeds, it will be paid by way of damages.

Furthermore, your Honours - and the Court has raised this - the evidence before his Honour is that this may not ever happen because the Commonwealth have made an offer to fund the redundancies in accordance with ‑ ‑ ‑

McHUGH J:   I know, but the judge took the view that the interests of the employees in retaining their jobs was perhaps more important than getting an award of damages.  Now, that was a judgment he made.

MR GYLES:   We are here to examine the principles, your Honour.

McHUGH J:   Perhaps many waterside workers would prefer to have their job and work for the rest of their days rather than obtain a very substantial sum of money which would be the equivalent of a lifetime’s wages.  Many might.  I mean, waterside working used to be - probably still is - a very dangerous occupation.  You can fall down holes.  You can trip over equipment on ships.  You can be hit by cargo.  There are a lot of things that can happen to you.

MR GYLES:   Let that be so, your Honour, but the question of principle here is in the period between now and trial - the first question is between here and trial we say there is no necessity to do anything.  The companies will continue to exist and if there is power to restore value to those companies it will exist.  That is the first point.  Secondly, even if that be a legitimate objective, as Justice Sheppard’s objective was in Sterling, even if it is an objective you would like to achieve, it cannot be achieved by the means which have here been utilised.

McHUGH J:   Let me put to you one aspect that perhaps cannot be restored and that is management.  You said the other day a lot of managers have gone.

MR GYLES:   No, what I said was that there was evidence that they threaten to leave.

McHUGH J:   Well, in six or eight months time you have got a shell company there that then makes orders transferring assets in the business back, but you have got no management.  You may have the employees, you have got no management.  Once the management goes, then it requires a considerable effort to rebuild another management team and these orders, on one view, will at least assist in keeping that structure in force.

MR GYLES:   Your Honour, with respect, the evidence which was before the Full Court established that the managers were leaving if these orders come into effect.  Because of what has happened in the last six months, they will not stay.  If they are forced to work with this work force, they will go.

McHUGH J:   Well, if they go, well then, on the present orders, the liquidator will make use of the liberty to apply provision.

MR GYLES:   Your Honours, may I come back to the fundamental principle:  if the companies are insolvent, nobody can be forced to fund them and nobody can be forced to give them work and by no order can managers be forced to stay.  I mean, it would be ‑ ‑ ‑

McHUGH J:   Nor can they be forced to come back, Mr Gyles, in eight months’ time.

MR GYLES:   Or tomorrow if they give effect to what they say, that they will not work with this work force.  So that we respectfully submit that the trial judge fell into the error of principle of endeavouring to recreate a situation he would like to see, that is, people in jobs with a solvent employer

with a lot of work.  That, your Honour, is simply impractical.  It is futile and this Court should recognise and give effect to that error of principle.

BRENNAN CJ:   Thank you, Mr Gyles.  The Court is indebted to counsel for their assistance in this matter.  The Court expects to be in a position to deliver its decision in this matter at 11.30 am on Monday next.  In those circumstances, are there any further applications?

MR GYLES:   Yes, your Honour.  I would ask that the stay be extended until that time.  I will see what my learned friend’s attitude is, your Honour, but we would need to refer to evidence which was below and before the Full Court, of course.

BRENNAN CJ:   I say we expect to be in a position to deliver at 11.30.  It is hoped that that expectation will be fulfilled, of course, but the order would be until delivery of the judgment.

MR GYLES:   Yes, your Honour.

MR BURNSIDE:   The applicants are obviously placed in a very difficult position.  They have now been out of work for three weeks.  In the event that the Court did deliver judgment on Monday, we can understand the force of the desirability of avoiding chopping and changing, although the position at the moment seems to be that no one is working on the waterfront and the applicants are available to work on the waterfront.  It is our submission, your Honours, that there may in fact at the moment be no real reason to grant a stay.  Initially the stays were granted because they were predicated on the fact that the replacement work force was on the spot.  That is not the case at the moment.  At the moment it seems to be that no one is working and cargo is piling up, a very different position, and it may be, with respect, your Honour, that there is no further justification for any further stay at all, unless the Patrick Companies can suggest some reason.

Their previous grounds have gone away.  Your Honours should be aware of the fact that, even though we are now talking only of a matter of another few days, for the applicants, every one of them and their families, it has been a very long time out of work.

BRENNAN CJ:   I do not think you need press that point, Mr Burnside.  The Court is conscious of the need for expedition in this matter.  But counsel would also appreciate the complex nature of the litigation, and the need for this Court to give the arguments their proper consideration.

MR BURNSIDE:   Yes.  Well, can I merely say this, your Honour:  it seems to be the fact that the original basis for a stay has disappeared.  The undesirability of having work forces changing over is not a reality any more.  In the ordinary way of things, it is our submission there is no reason for granting a stay.  In the ordinary way, of course, a stay is not granted unless a positive reason is put forward.  There is no inconvenience pointed to, and there is no legal right which would be jeopardised if a stay is not granted.

GAUDRON J:   Mr Burnside, if one were of the view - and I just raise this tentatively - that the applicants should be put in a position to resume work if the administrators so elect, that would only require a partial lifting of the stay, would it not?

MR BURNSIDE:   Yes, or a modification of the terms of it and, if I may say, with respect, that seems an eminently sensible idea, so that the administrator is neither forced to put the employees to work, nor prevented from doing so.

KIRBY J:   But is not the reality that given the proximity of likely handing down the decision, the administrator will just do what everybody else will do and wait for the decision?  I mean, it would be a very bold step, would it not, to move in advance of the decision?

MR BURNSIDE:   Well, not necessarily, your Honour, because, as I say, the original basis on which previous stays have been granted, seems to have disappeared because the alternative work force is no longer there.

MR GYLES:   Your Honours, may I just say this.

KIRBY J:   Well you are telling us this from the Bar table.

MR GYLES:   This is absolutely without any evidence, and it is contrary to our instructions, your Honour.

KIRBY J:   The marginal cost of a few more days in the history of this saga is small and everybody, including counsel and the Court and the judges below have bent their efforts to deal with the matter quickly.

MR BURNSIDE:   Your Honour, no litigants in the history of this country have probably got better service from the court system than the litigants in this case.  The trial judge made his decision a week ago yesterday, I think it is.  The only thing I can say in relation to what your Honour said is that the marginal cost for the parties, as litigants, may be small; the marginal costs for each individual worker is greater than perhaps any of us can imagine, but beyond that there is nothing further I can urge in support.  There are no further submissions we wish to say about that, except to adopt Justice Gaudron’s suggestion as a resolution.  If the Court pleases.

BRENNAN CJ:   Thank you, Mr Burnside.  I take it the usual undertakings are given.

MR GYLES:   Yes, your Honour, I continue that, your Honour.

BRENNAN CJ:   By majority the Court extends the stay until the delivery of judgment in this matter.

MR BURNSIDE:   If the Court pleases.

BRENNAN CJ:   The Court will adjourn.

AT 12.30 PM THE MATTER WAS ADJOURNED