The Australian Workers' Union v Esso Australia Pty Ltd

[2017] HCATrans 151

[2017] HCATrans 151

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M187 of 2016

B e t w e e n -

THE AUSTRALIAN WORKERS’ UNION

Appellant

and

ESSO AUSTRALIA PTY LTD (ABN 49 000 018 566)

Respondent

KIEFEL CJ
GAGELER J
KEANE J
NETTLE J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 10 AUGUST 2017, AT 2.15 PM

Copyright in the High Court of Australia

MR H. BORENSTEIN, QC:  If the Court pleases, I appear with MR P.C. ROZEN, for the appellant.  (instructed by Maurice Blackburn Lawyers)

MR F. PARRY, QC:  If the Court pleases, I appear with MR M.J. FOLLETT, for the respondent.  (instructed by Clayton Utz)

KIEFEL CJ:   Yes, Mr Borenstein.

MR BORENSTEIN:   Thank you, your Honour. If the Court pleases, this matter calls for a consideration of the proper construction of the requirement for intent to coerce which appears in sections 343 and 348 of the Fair Work Act. If I could ask the Court to turn to page 184 of the joint appeal book, his Honour Justice Buchanan sets out the relevant statutory provisions which are involved. Starting at paragraph 166, his Honour sets out section 343 and your Honours will see it prohibits a person in these terms:

(1)A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to:

(a)exercise or not exercise, or propose to exercise or not exercise, a workplace right; or

(b)exercise, or propose to exercise, a workplace right in a particular way.

That provision is then noted to be:

a civil remedy provision ‑

And then subsection (2) provides that:

(2)      Subsection (1) does not apply to protected industrial action.

Section 348 is set out a little bit further down the page on page 185, and it reads:

A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to engage in industrial activity.

That section is also noted to be:

a civil remedy provision ‑

His Honour notes, and we draw attention to the fact that:

s 348 contains no equivalent of s 343(2) –

The references in 343 to the exercise of a workplace right direct one’s attention to section 341 which is set out at paragraph 169 of the judgment.  It defines workplace right.  Your Honours will see it starts off in subsection (1) by providing:

(1)      A person has a workplace right if –

Then, relevantly, in paragraph (b):

(b)is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument –

Then there is an explanation of what is meant by a:

process or proceedings under a workplace law or workplace instrument

Relevant to the present case, the respondent relied on subsection (2)(e) which is the:

making, varying or terminating an enterprise agreement;

So, that is the workplace right which was alleged to be the subject of the coercion under section 343.

Now, proceedings were brought under 343 and also brought under 348 and the industrial activity which is referred to in 348 – which was relied on in this case – is set out at page 186 of the appeal book at paragraph 170.  Relevantly, it reads:

A person engages in industrial activity if the person:

. . . 

(b)      does, or does not:

. . . 

(iv)comply with a lawful request made by, or requirement of, an industrial association;

Then, in relation to this particular case, what was alleged as the industrial activity was the failure to comply with a lawful request by the union to enter into an enterprise agreement or, alternatively, an enterprise agreement on certain terms.  So, in a sense, the two processes replicated each other in substance.

The proof of the intent is the subject of a reverse onus under section 361 and 361 is set out at the bottom of page 186.  The Court will see that in subsection (1), it provides that:

(1)      If:

(a)in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and

(b)taking that action for that reason or with that intent would constitute a contravention of this Part;

it is presumed that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.

So, effectively it casts the onus on the union in this case.  This proved that it had the offending intent under each of the two sections, 343 and 348.

Now, as I said, proceedings were brought against the union alleging a contravention of each of the two sections on three occasions, based on various acts of industrial action that were taken on three days in March 2015 around the time when the various orders were made that we spoke about this morning.

The charges were upheld.  It was held at first instance and following on appeal that the court was satisfied that the unions had taken the action with intent to negate the choice of Esso in relation to the making of the enterprise agreement.  And the issue that arises in this appeal is whether or not it is necessary in order to make out the element of intent to coerce to establish that the respondent to a charge intended to take acts, or to do acts, which would have the character of being unlawful, illegitimate or unconscionable.

Now, that phrase is the phrase that was adopted in the Full Court and at first instance and has been adopted some time in the Federal Court as a characterisation of action which is said to be coercive for the purpose of these two sections.  And it derives broadly from the common law concerning economic duress and coercion, particularly as it was explained by Justice McHugh in the Crescendo Case.

The factual circumstance in the present case is that the particular officials or representatives of the organisation, the union, took various forms of industrial action and took it on the basis that they understood that it was covered by the industrial action notice which they had been given.

Now, if I can perhaps just remind the Court of some matters that Mr Parry referred to this morning.  Your Honours will recall that one of the elements of taking protected industrial action was that the party taking the action is required to give a notice under section 414 of the Act, identifying the nature of the industrial action that was to be taken.  And in the present case, such a notice was given on 3 February 2015 and, relevantly, it provided that the union and its members at the particular location were going to take industrial action in the form of a ban on de‑isolation of equipment.

The action which was actually taken by the various individuals who took it involved a refusal to manipulate various valves on various pieces of equipment as part of a process of shutting them down and then bringing them back on line, to do with maintenance work and what have you.  There was a factual argument in the trial about whether those acts that they undertook fell within the description of a de‑isolation of equipment as was notified in the section 414 notice.  The trial judge and the Full Court held that it was not.

The argument from the various individuals who took the action was that when they took the action they subjectively believed that the action they were taking was in fact covered by the description of de‑isolation of equipment, and if it had been it would have been protected.  Because it was not protected it was then capable of being characterised as being unlawful, illegitimate or unconscionable in the sense I described a few minutes ago.  The critical question that arose then was whether they intended to take action which was unlawful, illegitimate or unconscionable or whether the intention which they had was to take action which was lawful. 

The court below, both at first instance and on appeal, held that all that was required to be established to satisfy the intent element of the contravention was that there was an intent to coerce in the sense of an intent to negate the will of Esso by the actions in relation to the making of an enterprise agreement.  So the point of departure between the two parties was whether it was necessary additionally to prove that there was an intent to negate the will by doing acts which could be characterised as unlawful, illegitimate or unconscionable.

KEANE J: So is your contention that one should read section 343, for example, as with intent unlawfully to coerce?

MR BORENSTEIN:   No, we would not read it that way, your Honour.  What we would say is the phrase is “take action with intent to coerce”.  The content that we would argue for in the phrase “intent to coerce” is an intent to do acts which would be characterised as being unlawful, illegitimate or unconscionable, such that they would satisfy the test of coercion.

KEANE J:   So what is required is an intent as to the legal characterisation of the conduct?

MR BORENSTEIN:   No, an intent to do acts.

KEANE J:   Having a particular legal character.

MR BORENSTEIN:   But the party doing the acts does not need to be aware of the legal characterisation.  We are not arguing that they have to intend a particular legal outcome.  What we are arguing is that they need to intend to do acts which, from outside, can be characterised as qualifying to be relevantly unlawful.

KIEFEL CJ:   Why does that mean any more than intend to do the acts that they do, in the way that you have put it?  I thought that your case was really that they have to know or be aware that the circumstances of their conduct makes that conduct coercive.  They have to have a knowledge.

MR BORENSTEIN:   No.

KIEFEL CJ:   That is not your case?

MR BORENSTEIN:   No, that is not our case.  Our friends put that as our case but that is not our case.

KIEFEL CJ:   I am having a little difficulty following what the intention has to be then.  Would you mind going over it again?

MR BORENSTEIN:   I will endeavour to be clear. 

KIEFEL CJ:   Can you formulate it in a proposition?

MR BORENSTEIN:   I beg your pardon?

KIEFEL CJ:   Could you formulate it again for me?  I think you did before.

MR BORENSTEIN:   Yes.  I was just going to see if I can assist by ‑ we would formulate it perhaps in the way in which it is set out in paragraph 7 of the statement of propositions.

NETTLE J:   In other words, the union must know that the acts which it intends to commit in order to bring about a result are unlawful, illegitimate or unconscionable.  Is that it?

KIEFEL CJ:   It must be, must it not?

MR BORENSTEIN:   No, well, I am sorry I am confusing the Bench.  We seek to invoke the approach to the identification of intent which was explained ‑ ‑ ‑

NETTLE J:   Well look, there is no doubt they intended to do the acts which they did.

MR BORENSTEIN:   They intended to do the acts.

NETTLE J:   What is it that they did not know which you say they needed to know in order to intend to do the offence?

MR BORENSTEIN:   They did not need to know that they were unlawful.

NETTLE J:   They needed to know that they were unlawful, you say.

MR BORENSTEIN:   They did not need to know that they were unlawful.

NETTLE J:   What is it that they did need to know?

MR BORENSTEIN:   That they were doing acts and that in their belief those acts were covered by the formulation of industrial action of which they had given notice.

NETTLE J:   They had a particular legal characterisation?

MR BORENSTEIN:   No, a factual characterisation.  They gave notice ‑ I am sorry to do this ‑ they gave notice that they were not going to perform de‑isolations on equipment.

NETTLE J:   Yes.

MR BORENSTEIN:   They had to have a belief that the actions that they were doing as a matter of fact, fell within the description of the de‑isolation of equipment and if that was their belief, subjectively, then had that belief been borne out, that action would not be culpable.

NETTLE J:   So, you say it is a mistake of fact rather than ‑ ‑ ‑

MR BORENSTEIN:   Yes, it is a mistake of fact, and we say that if, in order for the intent to be established, it must be established that they took action which they knew was outside the description of the action which they had notified.

NETTLE J:   Factual description.

MR BORENSTEIN:   Factual description, and there was a whole argument at the trial, as I have said, about what was encompassed in that factual description and there was a finding that what they did fell outside that, but there was a lot of evidence and we have footnoted it in our propositions, where people said, I did this because I thought it was covered by the description.

NETTLE J:   Yes.

MR BORENSTEIN:   We say that where that is established by the employees, that that disproves the culpable intent to coerce.

KIEFEL CJ:   Is there a difficulty that to succeed you need to somehow read that into the provision for the offence of coercion, whereas one would expect perhaps to see it stated as a defence separately from the offence, because that is what it is, it is in the nature of a defence, is it not? 

MR BORENSTEIN:   Well, we have a reverse onus and maybe that blurs the line but can I perhaps endeavour to explain how we say this works by reference to a decision of the court below by Justice Merkel in the Seven Network Case which is in tab 3 of the folder. This is the only occasion on which prior to the case this sort of situation has arisen and Justice Merkel was dealing with an antecedent of section 343 which was section 170NC of the Workplace Relations Act which is, to all intents and purposes, in the same terms.

This was a case where the Union was seeking to take protected industrial action against the Seven Network but in order to do so, it had to have members at the Seven Network who were validly members of the organisation.  It transpired that the members of the union who had enrolled at Seven Network were not eligible to be members and therefore were invalid and the argument in the case was, whether the union officials who were organising the industrial action were aware factually of that situation or were not and that went to the question of whether they were taking the action with intent to coerce, and at page 386 of the report at paragraph 30, Justice Merkel addresses the question of how the intent provision works.

Your Honours will see at paragraph 31 his Honour explains the argument that was going on in that case where his Honour said:

Although the respondents do not dispute that the action threatened, if taken, would not have been protected action under the Act, they claim that s 170NC(1) was not contravened by them because their intent and belief, albeit wrong, was that the action they threatened was protected action. The respondents’ contention requires consideration of the meaning of the phrase “intent to coerce” –

His Honour then goes on to refer to some authorities in the criminal area.  He says:

It is well established that a person intends to commit a crime or an offence where it is that person’s aim or purpose to bring about its constituent elements.  In He Kaw Teh v The Queen . . . in discussing the difference between general or basic intent (which relates to the doing of the act involved in an offence) and special or specific intent (which relates to the results caused by the act done), Brennan J stated:

“In statutory offences, general or basic intent is an intent to do an act of the character prescribed by the statute creating the offence; special or specific intent is an intent to cause the results to which the intent is expressed to relate.  Both general and specific intent may be established by knowledge: the former by knowledge of the circumstances which give the act its character, the latter by knowledge of the probability of the occurrence of the result to which the intent is expressed to relate.”

Then, his Honour Justice Merkel says:

Section 170NC is a statutory offence based on an intent to “coerce”, that is, to do an act of the character prescribed by the section. Thus, the requisite intent is established by knowledge of the circumstances which give the act in question its coercive character, rather than knowledge of the probability of the result.

Then, his Honour refers to the joint judgment in Giorgianni and says:

in discussing the element of intent in the offences of aiding and abetting and counselling and procuring, [their Honours] stated:

“Intent is an ingredient of the offence of aiding and abetting or counselling and procuring and knowledge of the essential facts of the principal offence is necessary before there can be intent.  It is actual knowledge which is required and the law does not presume knowledge or impute it to an accused person where possession of knowledge is necessary for the formation of criminal intent.

Then, if I can go to the next paragraph in the quote:

offences require intentional participation in a crime by lending assistance or encouragement.  They do not, of course, require knowledge of the law and it is necessary to distinguish between knowledge of or belief in the existence of facts which constitute a criminal offence and knowledge or belief that those facts are made a criminal offence under the law.  The necessary intent is absent if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence.

Then, if I can go down to paragraph 35:

Similarly, the intent required for the purposes of s 170NC relates to actual knowledge of the circumstances that made the conduct in question coercive conduct.  For the reasons stated in Giorgianni, if the person in question had such knowledge, that person will not escape liability by establishing that he or she believed that the conduct was lawful. I would add that my view of s 170NC is consistent with its purpose of proscribing conduct, other than protected action, which is intended to prevent “free bargaining” ‑

Then, at paragraph 37, his Honour says:

Accordingly, subject to the qualification in respect of wilful blindness, intent for the purposes of s 170NC(1) requires that the person have actual knowledge of the circumstances that make that person’s conduct coercive.

Then, at paragraph 43 his Honour summarises:

It follows from the foregoing discussion that Seven Network must establish that:

(a)the respondents’ threats of industrial action were made with intent to negate Seven Network’s choice by the exertion of pressure that was, in the circumstances, unlawful, illegitimate or unconscionable; and

(b)the respondents had actual knowledge of the circumstances that made their conduct coercive in the sense discussed in (a) above.

So, we seek to apply that reasoning in the present case by saying that in order for the union people to have been liable they needed to have knowledge that what they were doing did not fall within the description in their action notice and if they did not know that, then they did not have an intent to coerce within the meaning of the section.

KEANE J:   How is what you just said consistent with what Justice Merkel says at paragraph 35?  It requires actual knowledge of the circumstances that made the conduct coercive, you have that knowledge, you do not escape liability by establishing that you believe it was lawful.

MR BORENSTEIN:   But the reference there to lawful, your Honour, is the legal consequence and the distinction ‑ ‑ ‑

KEANE J:   Well, that it was covered by the notice.

MR BORENSTEIN:   No, that is not a legal consequence, your Honour.  The legal consequence is that if it was not covered by the notice, it was unprotected industrial action.  That is the legal characterisation of it.  The distinction which He Kaw Teh and Giorgianni were drawing was between knowing the facts that  might make up the contravention or the crime, but not needing to know the legal characterisation or the legal consequences.

NETTLE J:   It is getting very technical, but the question of what is unprotected industrial action is a question of law, at least in part, is it not, because the terms are not used in the normal sense of the English language.

MR BORENSTEIN:   That is right.

NETTLE J:   It is Blue Metal Industries, so it becomes, at least in part, a question of law as to whether the particular action in question is or is not protected industrial action.

MR BORENSTEIN:   We accept that, your Honour, but ‑ ‑ ‑

NETTLE J:   So thus in the end it is conceivable that the mistake the union has made was not a mistake of fact but rather one of law, the legal characterisation of the actions of which they were aware?

MR BORENSTEIN:   No, with respect, that is not the distinction which the case is – which I have just read extracts ‑ ‑ ‑

NETTLE J:   I am not talking about that; I am talking about basic principles of what is a question of fact and law.

MR BORENSTEIN:   Well, the question of fact is, for example – relating it to the facts of this case, the question of fact is, if I manipulate valve X, is that as a matter of fact doing something that is de‑isolation of the – or part of the de‑isolation of the equipment?

NETTLE J:   It depends.  If de‑isolation is used as in the ordinary sense of the English language then, according to Blue Metal Industries, it is a question of fact.

MR BORENSTEIN:   Yes.

NETTLE J:   If it is used in a special sense, it is a question of law or at least so in part.

MR BORENSTEIN:   Well, it may be, your Honour, but we would submit that according to the analysis in Agfa‑Gevaert which quotes from Pozzolanic, even if it is a technical word – a non‑legal technical word, the resolution of it is a question of fact and your Honour in the Court of Appeal made reference to that in the Baiada Case.

We would say that the determination of what is or what is not de‑isolation in a workplace is a non‑legal question of fact and we say that on the authorities which Justice Merkel referred to, if they made a mistake about those facts, that is not a mistake of law, and if they subjectively believed that they were doing something that was covered by the protected action ballot, then that exculpates them.  That exculpates them because we as lawyers or others standing back making an objective assessment of what is going on in legal terms, say, well, if what they believed was true, then it would not be unlawful industrial action.

KIEFEL CJ:   You accept that it is essential to your argument that the question was one of fact?

MR BORENSTEIN:   Yes.  That is the purpose of drawing attention to these cases.  We accept that an error of law is no excuse and I know that our friends in their submissions have at great length characterised our position as being referrable to that.  But we have been at pains to explain that our case is based on these people having made an error of fact, and the error of fact was that what they were doing fell within the description in the notice.

Now, we have given the Court in the statement of propositions a series of paragraph references to the judgment, and I do not need to take the Court’s time up going through them, but the Court will see it is at footnote 7 on page 2 of the notice, and in each of those cases you will see that his Honour Justice Jessup notes the evidence of the participants.  Does your Honour have that?

GAGELER J:   Footnote 7 to what?

MR BORENSTEIN:   To the statement of propositions. 

GAGELER J:   Thank you.

MR BORENSTEIN:   Sorry.  Your Honours will see that in each of those paragraphs, his Honour records the evidence of the different individuals and their evidence about their belief that what they were doing was part of the de‑isolation process.  So, for example, at page 45 of the appeal book in the judgment of Justice Jessup, in paragraph 49, he sets out part of an application which Esso had made to the Commission seeking to get orders from the Commission under section 418 on the basis of what the union was doing.  And, at ground 4.7, they record that:

the local delegate Rob Steed and the Victorian Branch Secretary Ben Davis, confirmed that: (i) the Action was in place; and (ii) the Action would continue because the AWU regarded the Action as part of the notified ban on de‑isolation –

That is just one example.  At paragraph 55, you have a similar discussion, and at paragraph 58, again there is a notation about the individuals whose evidence has been recounted, expressing their belief that what they were doing was covered by the notified industrial action. 

KIEFEL CJ:   But cannot an intention to coerce coexist with a belief that it is covered by the notice?  Put it this way, the sections comprehend that coercion can be part of a process of bargaining but they say that the offence of coercion does not apply when industrial action in that process is protected.  But if one reads the section, it is an intention – you can intend to coerce, surely, at the same time as believing that it is protected.  You can intend to bring pressure to bear and to have an effect upon someone but believing that you are immune because it falls within the notice.

MR BORENSTEIN:   I understand what your Honour is putting.  We say that the answer to that proposition is this.  The use of the word “coerce” here connotes the use of means that are unlawful, illegitimate or unconscionable.  So, where the exception refers to “intent to coerce” it does not just mean an intent to pressure or overbear the will or negate choice, or what have you.  It also includes the means by which that is done and that is why if the means by which it is done is protected action, it does not qualify under the description of coercion.

KIEFEL CJ:   But, then the exemption would be redundant.

MR BORENSTEIN: Your Honour, there is an interesting point about the exemption which the Court below did not really come to terms with and it is this. There is no exemption in section 348. As I said to the Court when I went through sections, in substance the purpose of the alleged coercion in both cases was to pressure the company to enter into the union. Under section 343, it fell under the rubric of workplace right. Under section 348, it fell under the rubric of industrial activity, but the substance was the same.

It would be a curious thing – and something that the court did not grapple with – if you could have an exemption – I am sorry. It would be a curious thing if you started from the proposition that all action, including protected action, was coercive and that you escaped liability under 343 only because of subsection (2), and then you come along to section 348 where you are accused of doing exactly the same thing for substantively the same reason and because there is no subsection (2), you would be culpable.

We say that a better analysis is to look at the meaning of the word “coerce” in the section and in section 343(1) to take note of the fact that it carries with it the meaning that attaches to the means by which the persuasive pressure is being exerted. If the means are not unlawful, illegitimate or unconscionable because, for example, they are protected industrial action, then it would not be coercive. Now that has the consequence, we accept, that makes subsection (2) superfluous. Unless you do that, it creates a very strange comparison.

EDELMAN J:   It is not really that strange, is it, because the subject matter of 343 and 348 is different.  One could contemplate a parliamentary intention to have the provision of 348 which is not subject to a defence of or an exclusion of protected industrial action.

MR BORENSTEIN: But if 348 allowed one to coerce in order to procure the other side to enter into an enterprise agreement in exactly the same way as you can do it under section 343, it is very difficult to understand why there would be a defence in one and not in the other.

EDELMAN J: Because you would expect that then it would be action that would be brought under the more serious, section 348.

MR BORENSTEIN: But here they are brought under both. There was argument below about whether it was permissible to bring under both or whether the section 343 indicated an intention that that was the only provision where you could coerce to enter into an enterprise agreement and the court held against that proposition. I am trying to remember whether that formed part of our application for special leave or not but, in any event, the court was satisfied that you could do both to achieve the same end. If that is right then we would say that it is a strange outcome, but depending on which section you proceed under or if, as here, you proceed under both you might win under that and lose under that.

If they are both able to be used to achieve the same end – that is, to complain about pressuring to enter into an enterprise agreement – it is hard to imagine why the defences would not be the same.

EDELMAN J:   There are many, many, many examples of different offences in law where the same conduct could amount to both of the offences, that there would be a defence or an exclusion in one and not in the other, because they are directed to different circumstances and different purposes generally, even if they might apply in a different way to one particular instance.

MR BORENSTEIN: That is a possibility, your Honour, I have to accept, but the other possibility is that it may just be surplusage. I understand that is a conclusion that the Court would not come to readily, but the alternative is that it would mean that, as a general rule, the taking of protected industrial action would be characterised as coercive and it would only be in circumstances where there was an explicit exclusion like subsection (2) in section 343 that you would escape culpability.

So if, for example, in the case of section 348, there was protected industrial action being taken it would mean that a company could even then come along and make a claim that “you are coercing us under section 348 because you are trying to pressure us into signing an enterprise agreement”, and they would succeed, and that would be entirely at odds with the whole scheme of the Act, because the whole purpose of taking protected industrial action, which is sanctioned under the Act, is to allow it as a tool in bargaining where there is pressure being exerted one way and the other.

So, those sort of considerations underlie our submission that when you come to give meaning to the term “coerce” and “intent to coerce”, if the action that is being pointed to is in fact protected industrial action, then it would not fall under the description of the sections of being action which is coercive.  But that is at another level than our primary proposition which is about the knowledge of the individual actors, about what they were doing and how as a matter of fact it came within the description of the action which they were proposing under their protected action notice.

NETTLE J:   Sorry to come back to this, Mr Borenstein, but why is it that the question of whether the particular process in question is or is not accurately to be described as the protected sort of action that existed is one that is not a question of law?

MR BORENSTEIN:   Why is it not?

NETTLE J:   Why is it not?  Facts fully found, question whether it answers the legal description of the categorised protected industrial action in question.

MR BORENSTEIN:   Because it is not a legal description, it is a factual description.  It is not a question of law what the word means, it is a question of fact, and these people have mistaken what its meaning is as a matter of fact.  That is the difference, we say.

KIEFEL CJ:   Could we step back?  What is the question the person asks themselves?

MR BORENSTEIN:   The question of fact is whether ‑ ‑ ‑

KIEFEL CJ:   What is the question the person asks themselves, just the question?

MR BORENSTEIN:   Yes, sorry.  Does what I am proposing to do or do, come ‑ ‑ ‑

KIEFEL CJ:   Put it in words though, does ‑ ‑ ‑

MR BORENSTEIN:   Does manipulating valve X ‑ ‑ ‑

KIEFEL CJ:   Yes.

MR BORENSTEIN:   ‑ ‑ ‑ come within the description of de‑isolation which I put in my notice.  De‑isolation is a description of a process at the workplace.

NETTLE J:   It is a question of fact.

MR BORENSTEIN:   That is what we submit, your Honour.

NETTLE J:   Thank you.

MR BORENSTEIN:   That is really at the heart of the ‑ ‑ ‑

NETTLE J:   It is the argument.

MR BORENSTEIN:   Yes.

NETTLE J:   You win or lose on that at the end of the day.

MR BORENSTEIN:   Yes.  If the Court accepts that where this section refers to an intent to coerce, it has the sort of meaning which Justice Merkel adverted to, derived from He Kaw Teh and Giorgianni and so on, and as your Honour says, it really does come down to that.

We also, in our outline, draw attention to operation of section 361 and I will make this submission briefly – it is in the outline – in the recent decision of Barclay in the Court, the Court considered an operation of section 361 in a different statutory context.  It was dealing with a reason for taking adverse action but the Court will see that 361 operates both in relation to reason for an action and intent and we say that in Barclay, the Court expressed the view that the search was for the actual reason of the alleged perpetrator and we say a similar approach should be applied here to identify the actual intent of the alleged perpetrator.

One does not look at it objectively.  One looks at it in ‑ I hesitate to use the word subjectively, but if one looks at the actual intent of the individual and the evidence that goes to establish that.  Now, the individual may give evidence and that evidence may be accepted and they give evidence, or according to Barclay, the surrounding circumstances may weigh against acceptance of it but the search is for the individual’s actual intention that activated the person.

I should point out just for completeness, in the Seven Network Case, Justice Merkel concluded that he did not believe the protestations of the union officials about their knowledge and your Honours will see that at page 394 at paragraph 59(j) where he says they did not hold the necessary belief that about the facts.

So if we are right in this, then it means that the analysis of the primary judge and the Full Court was wrong. We submit, and your Honours will see it in our outline, that they failed to come to terms with the notion which Justice Merkel had elaborated and which we put to them and they simply dealt with the question of intent on the basis of: was there an intent to coerce simpliciter? And they held that there was and, on that basis, the trial judge and the Full Court upheld the findings against the union, under section 343 and section 348.

So, as we have said, the central point of complaint is that they should have addressed this other question.  If we are right in that, then the findings need to be set aside and we have made a submission about what disposition

might follow from that.  There are logistical problems below because the trial judge has retired and one of the members of the Full Court has gone as well.  But our friends have indicated that their view is that this question of fact was not properly ruled on by his Honour and that there needs to be some explicit findings about it.  We can see the force in that and so we would say that if the Court accepts our submissions about the way in which this should be approached, then the declarations which his Honour made about contravention of these provisions should be set aside and that perhaps the matter should then be referred back to the Federal Court for determination in accordance with the law as it falls from your Honours in the judgment in this matter.  Unless there is anything else I can help you with.

KIEFEL CJ:   Yes, thank you, Mr Borenstein.  Yes, Mr Parry.

MR PARRY:   If the Court pleases.  The concept of intent to coerce has been divided by the Federal Court into two elements and the courts below dealt with it on that basis.  Assuming that the two‑limb test applies we submit the trial judge and the Full Court were correct in finding an examination of intent was relevant to the first element and an examination of objective circumstance is relevant to the second.

Now, the position articulated today is articulated, commencing with propositions about factual arguments in the court below about the effect of a notice and an assumption that simply because there was a belief that the action was de‑isolated it was not protected and because it was not protected it was not capable of being coercive.  Now, we would take issue with both those and we would say that the findings and the analysis followed by the trial judge is important to follow, following its purpose.

My learned friend has, understandably, skated over that.  The case – and this comes from the joint appeal book – the Court has heard some of the background of this matter.  The Court will note that, on page 35 of the primary judge’s decision – he attaches a notice in paragraph 31, which is a notice of intention to take industrial action.  Now, that notice is required under the Act and the index of authority book ‑ “Coercion” ‑ has within it section 414 and 414 is headed “Notice requirements for industrial action” and it reads:

(1)Before a person engages in employee claim action for a proposed enterprise agreement, a bargaining representative of an employee who will be covered by the agreement must give written notice of the action to the employer of the employee.

Further down, subsection (6):

(6)A notice given under this section must specify the nature of the action and the day on which it will start.

This is a notice on court book page 35 which is purported to be such a notice.  One of the bans contained therein was a ban halfway down:

e)An indefinite ban on the de‑isolation of equipment by employees ‑

Now, that became a matter of significant debate below of what activities did that encompass.  The Court will no doubt read through the judgment that there was a debate about the development of the industrial action.  The industrial action commenced off with a ban on particular activities, which we at Esso called de‑isolation, and then as his Honour notes in paragraph 44 on page 41, supervisors were working around that and, accordingly, what happened was the ban was expanded practically, and it was expanded to other activities – air freeing and leak testing, and this is on court book page 42.

Then his Honour sets out some of the history where there is toing‑and‑froing about people and why they are doing what they are doing, and on page 52 of the court book there is a heading “Scope of the respondent’s s 414 notices”.  His Honour then commences an exercise of constructing that notice and its reference to the de‑isolation of equipment.

He commences with evidence about how it was referred to within the operation and whether it had an official meaning and he went through an evidentiary exercise.  He analysed exercise, and on page 59 in paragraph 84 he came to a conclusion:

All things considered, I am not persuaded that, in a normal operational setting at Longford, the term “de‑isolation of equipment” had an accepted, and well‑understood, meaning as proposed by the respondent ‑

being the AWU; and he said:

To the contrary –

and other things.  Then at the bottom of the page he starts looking at what is the purpose of a 414 notice:

The task for the court is not the conventional one of the construction of the document, with a view to understanding what the author intended.  The document with which we are concerned here was a notice:  its purpose was to convey information.  Thus the question is not what the author intended, but what the addressee would reasonably have understood from the terms used in this notice.

He then says that two things follow from this.  If it is ambiguous, there is no reason to give people the advantage of their own ambiguity as it is up to the notifier and:

Secondly, it would not be sufficient for the respondent to establish what its own members understood by the presently contentious expression.

Respectfully, that is where our learned friend today saying this is simply a question of fact, we would submit, does not accurately describe the position.  What is a de‑isolation of equipment had to be construed in the context of the section 414 notice and what it was intended to convey to Esso and he then comes to conclusions in paragraph 90 on page 61 that:

For the above reasons, I would reject the proposition that the expression “de‑isolation of equipment” . . . would reasonably have been understood by the applicant as referring to every aspect of operators’ work that would be performed during the period that the ICC was –

in place.  I will not bore the Court with that.  But it followed from his analysis here that the respondent’s ban on work of that kind was not protected industrial action within the meaning of the Fair Work Act because following the exercise he had conducted he construed the 414 notice did not give notice to Esso of the actual activities that were to be banned.  Now, having made that finding – and our learned friends refer to some of the evidence but respectfully they are just setting out a narrative here of what occurred.

Then his Honour dealt with the 418 orders, which I will not deal with, and then he makes findings ‑ and I have taken the Court in part to these, but there had been findings about the three tranches of industrial action and as he found – he then moved on and analysed at court book page 73 “Protected industrial action”, the effect of section 413(5) which the Court has heard about. But then he makes certain findings on page 82 and 83 and then he turns to the applicant’s case under section 343. He sets out 343 and he deals with what was the allegation of what were contraventions of 343, and that is set out in paragraph 156.

His Honour then went on and what he deals with then is the Seven Network Case which my learned friend has quoted from today, and respectfully, my learned friend – well, respectfully, his Honour the trial judge came to rather different conclusions about what it meant than my learned friend has submitted.  My learned friend submits that it assists his case.  His Honour below formed the view that it more assisted the position taken by him; that is, that the second provision – the second element, as it might be called, had to be assessed objectively.

Importantly, his Honour dealt with one other matter that has been submitted today concerning the effect of action being protected, and his Honour dealt with that on court book page 85 at the bottom of the page.  He is dealing with part of his Honour Justice Merkel’s decision and he sets out a tranche of that.  In paragraph 163 he says:

With respect, I would regard the first four sentences in this paragraph from his Honour's reasons as unexceptionable.  I do, however, regard the fifth as problematic.

Now, the fifth is the one that starts:

If the conduct relied upon is a threat to take action that is protected action the reason why the threat may not breach the section will be because the making of the threat to take protected action, for example by the giving of notice under s 170MO, does not have the element of unlawfulness, illegitimacy or unconscionability required to establish a breach of s 170NC(l).

Now, his Honour did not agree with that.  As he says in paragraph 163, he would have expressed it as follows, and I quote:

"If the conduct relied upon is a threat to take action that is protected action the reason why the threat will not breach the section will be because the section does not apply to protected action."

He is taking up the point that the Chief Justice raised.  Now, he is doing two things there.  He is drawing attention to the section not operating in respect of protected action because of the exclusion, but he is also not accepting the proposition that simply because action is protected it may not have the element of unlawfulness, illegitimacy or unconscionability.

That is, action can ‑ his Honour does not see – and there is other paragraphs further on – does not see the status of the action as being protected as relevant or determinative of the question as to whether the industrial action was unlawful, illegitimate or unconscionable.  So, he then continued with this analysis and made conclusions about how it would be exculpatory if at the point – and at paragraph 164, which I will not read – to them and he took the view that the prospect ‑ at the bottom of page 86:

the prospect of the action being protected industrial action is neither a necessary nor a relevant element in so much of s 343 as is tied to the intent of the respondent. If the elements laid out in subs (1) are established, subs (2) will save the respondent from liability only if the action was – or, in the case of action which has not yet occurred, would be – in fact protected industrial action.

Respectfully, we would submit, that his Honour was correct.  Now, his Honour then dealt with the proposition about Barclay and I am not going to read 166.  At 166 he deals with the question which arises in this appeal, about:

the “subjective” element in the operation of s 343(1).

As he says:

The two elements, as summarised by Merkel J . . . are set out in para 161 above.  That the actor have actually intended to induce the putative target to agree or not to agree to do certain things, and to apply such pressure as would negate choice in that regard, is uncontroversial.  But the question arises:  is it also necessary that the actor have intended that his or her action be unlawful, illegitimate or unconscionable?  I would hold not.  These adjectives reflect legal characterisations of the action organised or taken.  From Seven Network it is clear that it will not be exculpatory for the actor to prove that he or she believed that the action was lawful.  It follows, in my view, that it will be sufficient for an applicant to establish that the action organised or taken was, or would be, unlawful, illegitimate or unconscionable.  It need be no part of an applicant’s case to establish that the actor intended – ie consciously in the sense conveyed –

in Barclay’s Case:

that his or her action should be characterised in these terms.

He then refers to the reverse onus.  He then refers to the respondent being a corporation and he then ‑ ‑ ‑

NETTLE J:   Just before you move on, Mr Parry, his Honour appears to pass over – or not contemplate in paragraph 166 – the question of whether, in point of fact, the subject actions could be accurately described as de‑isolation of equipment.  He seems to go straight to the final legal analysis of whether the perpetrator believed and, therefore, intended to do something which was unlawful, illegal or immoral.  At least, it is put against you – and there appears to be something in it – that there is a sort of an anterior question of whether because the union wrongly believed that the subject actions fall within the factual description of de‑isolation equipment they were not aware of the objective facts which would render it unlawful, illegal or immoral because it was unprotected action.

MR PARRY:   Your Honour, the proposition that has been put against us makes the assumption that the protected status of the action precludes it being coercive, that is, illegitimate, unlawful or unconscionable.

NETTLE J:   Yes.

MR PARRY:   His Honour was not following that analysis.  His Honour was following an analysis that the action – one should look at the action and ask, is it coercive insofar as is may be unlawful or illegitimate or unconscionable.  Once one has made that assessment, you might say, yes, it is ‑ and I was going to take your Honour to why his Honour was finding that ‑ and then you would ask, the coercion is made out in subsection 343(1).  Then the next question is, is it protected?  Because, if it is protected, that is a total defence. 

NETTLE J:   It appears from Justice Merkel’s judgment in Seven and thus far I had understood the judge in that case to have agreed that the accused needs to know and, in a sense, understand accurately the objective facts on which he has based the contention that the action was unprotected.

MR PARRY:  No, we would submit, that is not the analysis his Honour Justice Jessup followed and I have taken the Court to where this was excluded.  He has deliberately excluded that on page 86.  He has deliberately rebutted that proposition from Justice Merkel’s decision and he has gone on to analyse this in terms – and he has rebutted that proposition in paragraph 163.  He is then going on and dealing with the intent, is the intent there, and he then sets out the evidence in 169 that the intent – that is the intent of a Mr Davis and then the evidence of Mr Davis is set out.

Now, with respect, the evidence set out by Mr Davis does not descend to the sort of level that has been asserted.  He is simply saying, I believe we were taking protected industrial action.  It does not go to the level that has been argued today.  So, Mr Davis simply says, I believe the action we were taking was protected and we were trying to advance our industrial interests.  His Honour found that that was not – did not rebut the reverse onus.

NETTLE J:   That is as high as the evidence goes, is it, paragraph 16 in the affidavit and 170 of the reasons ‑ I believed it was protected action?

MR PARRY:  That is as far as the evidence of Mr Davis went, although there was oral evidence given.  I do not recall that it went to any greater detail than that.  Mr Davis was the State Secretary of the AWU.  He was not a worker at Esso.  He was the author of the notice.  Now, Mr Davis was aware of certain circumstances and that appears on court book page 89.  He was aware there was going to be a major shutdown and he was aware that the taking of industrial action was going to have an impact.  That impact was going to be significant because there was going to be a shutdown.  His Honour, in paragraph 174 made findings on page 89:

I find that the intent . . . was to apply sufficient direct pressure on the applicant to cause it to act otherwise than in the exercise of its own free choice.  It was to cause it to agree to terms in a prospective enterprise agreement to which it would not, as a matter of choice, have agreed in the absence of that pressure.

So, that is effectively a finding with regard to the first element, as it were.  Now, over the page, his Honour went on and said:

In my view, that application of pressure was illegitimate. 

The argument today has been advanced on some unlawful basis.  The actual finding that his Honour made was the application of the pressure was illegitimate.  It is important to appreciate why he came to the finding he did that the application of the pressure was illegitimate.  He says, and I quote:

In every respect, the bans and stoppages notified on 3 February 2015 involved refusals by the employees concerned to perform some aspects of their required, customary, duties pursuant to their contracts of employment.  The obligation to serve lies at the heart of any employment relationship.  The conclusion that it is illegitimate for an employee to refuse to serve as a means of extracting beneficial terms from his or her employer is one that will rarely be difficult to draw.  On the facts of the present case, when, to use Mr Davis’s concession, the employer was in a vulnerable position, this conclusion is readily to be drawn, and I do so.

There he makes the finding in paragraph 176:

For the above reasons, I find that the industrial action notified by the respondent on 3 February 2015 was organised with intent to coerce the applicant to make an enterprise agreement, or to make one on terms acceptable to the respondent.

Now, it is important to appreciate at this stage that the industrial action that was notified on 3 February commenced on 12 February.  His Honour was finding that that had been organised with intent to coerce.  Of course his Honour then deals, in paragraph 177, with the consequences of it being protected.  By the terms of 342, that industrial action was not in breach of the section if it was protected action within the meaning of the Fair Work Act.  He is giving effect, clearly, to subsection (2).

Until the morning of 7 March 2015 the industrial action notified on 3 February 2015 was protected.  Thereafter, because of the operation of 413(5), as discussed above, it was not protected.  To the extent of this industrial action, it was taken between 7 and 17 March and therefore the organising of it by the respondent amounted to a contravention of 343 of the Fair Work Act.  Then there were other bans that occurred which his Honour then turned to.  In paragraph 178 he turned to:

the industrial action that was not covered by the respondent’s letter . . . namely, the bans on air freeing and leak testing, and on bleeder valve manipulation.

Those are concepts that his Honour had found following a construction of the section 414 notice that they were not giving notice to Esso of.  They were outside the 414 notice following his construction exercise.  The consequence of that – he then refers to section 361 and then, as he says there, he looked at who was the decision‑maker, where the intent came from.  There is limited evidence about that ban; it is set out as best it could about intent on 90 and 91 in paragraphs 180 and 181.  Again, his Honour found illegitimacy in paragraph 182 for the same reason as is set out in paragraph 175. 

Then there was the ban, the third tranche, the ban on the manipulation of bleeder valves imposed on 7 March 2015.  He deals with that again on court book page 91 in paragraph 184.  Again, the evidence as to intent was sparse.  He set that out as best he can – he set out the evidence about Mr Tschugguel who was one of those involved with that, in paragraph 185.  Mr Rawnson did not give evidence in the case, which is a problem not for us but for the appellant where there is reverse onus.  Again, he came to a conclusion about illegitimacy. 

Here, we submit that his Honour was following an approach of making an assessment of whether the threatened industrial action was unlawful, illegitimate or unconscionable. He was finding it illegitimate and then, in our submission, section 343 operates. He effectively found an intent to coerce. It seems little in doubt that the union knew of the facts that made the conduct illegitimate. No doubt they knew of what is set out in paragraph 175.

So then he asked is the defence available?  Is there a protected status?  In some respects he has found yes; in others no.  His findings and his conclusions and declarations largely reflect those findings with regard to contraventions.

He then went on and dealt with 348 and in 348 the court had their attention drawn to “does not include subsection (2)”.  They both followed different paths - 343 it is a history; 348 was a new section introduced into the Fair Work Act when it came in, along with the introduction of a concept of industrial activity, again, notwithstanding the fact that there was no subsection (2).

We were the applicant in that case.  We made it clear it was no part of our case to make any allegation about the organisation of industrial action that was protected, for the obvious reason that there is section 415 of the Act, which gives immunity from suit to actions that are protected and he found there were contraventions of 348.  The Full Court commenced their analysis of this issue at 184 ‑ ‑ ‑

NETTLE J:   I am sorry, before you pass from 348, Mr Parry, is it conceivable that taking action against the persons who induce him to engage in industrial action could be protected industrial action?

MR PARRY:   No, for this reason, because – well, I am not sure that would come within section 19.  I took the Court today to section 19 and ‑ ‑ ‑

NETTLE J:   I wonder if that is why 348 lacks a subsection (2) because what is there is incapable of applying to industrial action because inducing people to do those things with exclusive right could not be taking industrial action or protected industrial action.

EDELMAN J:   Would that work with 347(b)(iv)?

NETTLE J:   That is the question.

MR PARRY:   Well, that may well be right – section 347(iv) – of (b)?

EDELMAN J:   Yes.

MR PARRY:   Yes, it may well.  Page 184 is where the Full Court dealt with this and they set out various of the arguments and adopted a similar approach to the trial judge.  He examined, at the bottom of page 187, paragraph 178:

I propose to examine first how the primary judge approached the matter –

and he then set out, commencing obviously before that, with the proposition at 176:

it should not be accepted that it is necessary to establish that a person intended to act unlawfully etc.  Nor would it be a defence to show that a person believed their action would be, or was, lawful.

He then goes on and deals with how the trial judge dealt with the matter.

KIEFEL CJ:   I think you can take it that we have read the judgment.  Perhaps you could ‑ ‑ ‑

MR PARRY:   He deals with the common law of coercion and economic duress in paragraph 188.  The effect of common law on the belief actions were protected we included within our authorities – Spira v CBA and Electricity Generation v Woodside and there are common law cases to that effect.

Our position is that the correct approach to the construction of 343 and 348 is the intent to coerce.  The scope of that prohibition is limited by the legal approach to the concept of coercion.  Coercion only applies if the law objectively considers the conduct is unlawful, illegitimate or unconscionable.  As his Honour Justice McHugh had said in Crescendo, the categories are not necessarily closed.

Now, we take the position that the analysis of the Full Court and his Honour below were correct.  Indeed, it would be a curious outcome as having views about concepts that are indeterminate would be difficult.  Further, identifying the essential facts which make something unlawful is not necessarily the same as identifying the essential facts which make something illegitimate or unconscionable. 

The Court would be conscious of the existence of lawful means, illegitimacy and tests of proportionality which were referred to most recently by Justice Reeves in a case, ABCC v CFMEU [2017] FCA 157 at 142 to 152 - again, a recent case. I just refer to it generally because it deals with this concept of illegitimacy and indeed industrial action can be illegitimate. So it is an example of a case where the court below, the Federal Court, has found illegitimacy, notwithstanding the action taken was lawful.

GAGELER J:   Is one way of putting your submission in the present case that the findings of the primary judge here were that there was coercion, relevantly, because of illegitimacy and not because of unlawfulness?

MR PARRY:   Yes.

GAGELER J:   If that is right, then perhaps there is no factual basis for the argument that is sought to be put by the appellant.

MR PARRY:   That is so.  There has been an argument raised today about a genuine belief about a notice acting - operating in a certain way, that is that somehow a genuine belief about a notice operating in a certain way has a particular effect or exonerates a person – “exculpates” is the word used.  We say that the Fair Work Act operates on the basis that action is either protected by a valid notice which meets the requirements or it is not protected.  If it is protected, there is a complete defence to 343(1) and 348.  If not, if the notice does not operate that way, the actor is liable.  Now, that is the way both 343(2) and section 415 operate.

EDELMAN J: Section 343(2) must operate more broadly than that, must it, because if the 343(2) only applies to protected or to carve out protected industrial action that actually occurs, then that would mean 343(1) could be invoked where there is a threat to engage in protected industrial action but not where there is actual organisation or taking of protected industrial action.

MR PARRY:  Well, your Honour, it refers to “must not organise or take, or threaten to organise or take, any action” and I submit that subsection (1), when it is referring to “action”, the action is naturally referring to exemption – is naturally referring to protected industrial action.  I do not read it more broadly than that, your Honour. 

Indeed, the case has been referred to of Electrolux which was a decision of the High Court. Now, that concerned a belief that the unions in that case had that the proposed enterprise agreement was certifiable, was capable of certification. There was an issue about one of the clauses within it. Ultimately, the Court found that the proposed agreement could not have been approved therefore industrial action taken in support of it was in breach of the predecessor, the 343 being section 170NC. So, a genuine but ultimately mistaken belief that the agreement was capable of certification did not mean the conduct was not coercive.

Indeed, when this legislation wants to give immunity or protection based on good faith or reasonable belief it does so and the Court will see, even within the sections we are dealing with, section 409(1)(a):

Employee claim action for a proposed enterprise agreement is industrial action that:

(a)is organised or engaged in for the purpose of supporting or advancing claims in relation to the agreement that are only about, or are reasonably believed to only be about, permitted matters –

Now, practically that met what occurred in Electrolux.  It protected people taking industrial action on the basis of a reasonable belief.  Similarly, with regard to – the Court has heard a bit about protected action ballot orders.  Well, section 460 of the Act gives an immunity and the heading is “Immunity for persons who act in good faith on protected action ballot results”.  That is in our book.  Where it becomes – if people act in good faith on the declared ballot results and take industrial action and that is later quashed then no action can lie against them.  So, when this Act wants to say people can act in good faith and rely on things, it does so. 

Now, there is an enthusiasm by our learned friends to get this sent back to the Federal Court.  We do not share that enthusiasm.  Our submission is that the trial judge when he approached this took the view that, as I have submitted, the threat of actual protected action was not a contravention because of subsection (2). 

In our written submissions in paragraph 16 the Court of Appeal in Victoria in National Workforce said there was much to support that finding.  So, further, as we have submitted, the trial judge’s finding was that organising employees not to work according to their contracts was illegitimate.  Clearly, that conduct, we would say, would be unlawful as well.  It would be tortious and inducing breaches of contract.

Whether it was protected or not would not change either of those conclusions.  The essential facts which made that conduct illegitimate or unlawful were clearly known to the AWU.  They knew the employees normally did the ban work under their contracts and they knew they were organising them not to do it in a way which would interfere with business and cause loss to Esso.  In our submission, that is the start and end of the relevant inquiry.  Also, employees and officials were told of this as found by his Honour in appeal book 51 at paragraph 62. 

Further, and in any event, even if we are wrong about that, the respondent does not agree that it is a fact constituting the ingredients making the conduct illegitimate or unlawful if the relevant officers knew that the bans actually imposed fell outside the expression “de‑isolation of equipment” in the notice served on Esso. 

As his Honour’s analysis, which I have taken the Court to, shows, that notice has to be construed in light of how it is to be read by Esso.  It was clearly not a factual question.  It was a construction issue and the argument as advanced focuses on unlawfulness.  Again, on the facts, the relevant officers knew of the facts constituting the ingredients which made the conduct illegitimate.   

The legal construction of the words in the notice – what they conveyed to Esso as a matter of law  – was ultimately a legal question.  Protected industrial action is not created by intent or knowledge or understanding of the sender of the notice.  It is created by the actual effect of the notice at law, properly construed. 

The AWU are here, essentially using their description of the so‑called essential fact as another way of saying knowledge of characterisation is protected or unprotected. If the only point in contention is do the bans fall inside or outside the notice, the AWU are, in essence, saying that they had to know it was unprotected and, hence, know it was unlawful, including, relevantly, knowing how the notice would be construed by the Court. If they believed it was protected – again, contrary to a belief about protection because of a belief they thought the bans fell inside the notice – that would ignore, respectfully, section 343(2) and the analysis in Electrolux.

The existence of the notice was clearly of impending industrial action was a fact, that it contained reference to de‑isolation bans was a fact.  The particular bans in place, and what work they involved and what work they did not involve was also a fact and known to the AWU.  Whether that notice given was a valid or effective notice so as to satisfy section 413(4), which in turn asks does the notice satisfy 414(6) is, in our submission, a legal conclusion. 

Put another way, whether the bans actually imposed were de‑isolation bans – and I put that in inverted commas - on the proper construction of the notice – is a legal question and the answer is a legal conclusion drawn from essential facts.  It is respectfully not to the point whether the bans were de‑isolation per se but whether they were de‑isolation within the meaning of the notice construed in the way a notice, as a communicator of information to a recipient, is.  

Finally, even if the Court decided all these issues and decided them all adversely to Esso, this part of the proceeding would still need to be remitted to the Federal Court.  We would submit that the beliefs that were asserted below were challenged and we submitted below that the trial judge not accept that evidence.  That was not decided because his Honour below decided that was not necessary.  If the Court pleases, that is our submission.  Unless I can assist the Court further.

KIEFEL CJ:   Yes, thank you, Mr Parry.  Any reply, Mr Borenstein?

MR BORENSTEIN:   If the Court pleases.  Many of the references which our friend gave the Court to the judgment of the trial judge demonstrate that the trial judge’s approach in his analysis of what Justice Merkel did in the Seven Network Case failed to appreciate Justice Merkel’s emphasis on the need to identify the belief of the facts by the alleged perpetrators.  My friend took the Court to paragraph 159 at page 84, where his Honour set out relevant extracts from Justice Merkel’s judgment, and then at paragraph 164 his Honour said that Justice Merkel:

did not hold that it was exculpatory if, at the point in time when the action was organised or taken, the putative respondent had actual knowledge of circumstances that brought, or would bring, that action within the concept of protected action in the legislation.

We say that that finding appears to be starkly at odds with what Justice Merkel wrote, and I will not read this, but just give your Honours the references.  At paragraph 33, which I did read before; paragraph 35, which I also read before; paragraph 37; and paragraph 43 – and we struggle to find any treatment by his Honour of the propositions which emerge from the passages which Justice Merkel extracted from He Kaw Teh and from Giorgianni.

There seems to be a slippage into questions about whether the individuals thought or believed or intended that their actions would be lawful or unlawful and so on, and this is the very ground which, in our case, we seek to separate from the proposition we wish to advance.  I will not repeat the proposition, but simply make the point that we were concerned with the perception of the individuals or belief of the individuals about facts, not about the legal characterisation of those facts. 

So we say that there are real concerns about the analysis which Justice Jessup applied to the case, and this appears quite starkly, for example, at paragraph 166 on appeal book page 87 where his Honour says in the middle of the paragraph at about line 8 on the page:

But the question arises:  is it also necessary that the actor have intended that his or her action be unlawful, illegitimate or unconscionable? I would hold not.

Now, that is not the argument which we were having.  It is not the argument which we had here.  This is what I mean by the slippage.  Unfortunately, and with the greatest respect, this seems to infect the rest of the analysis because then when you move on, as our friend took the Court to the material on pages 88 and 89, at paragraph 171, for example, there is reference to evidence about Mr Davis’ belief that the industrial action would be protected, and then there are similar statements from the other witnesses.

Now, there is reference in these paragraphs to evidence which is in the earlier paragraphs that I have given the Court references to about comments made by Mr Davis and the other delegates that they were taking the action on the basis that they believed it came within the description of de‑isolation in their notice.

KEANE J:   Well, they seemed to have said that they were taking the position - in their discussions with the Esso people they said they were taking the position that the notice covered the particular activity.

MR BORENSTEIN:   Yes.

KEANE J:    Did anyone actually give any evidence, did any of these people actually give evidence that it was their belief at the time that the notice that they had given conveyed that the activities that were not covered were?

MR BORENSTEIN:   They all gave evidence of their belief that what they were doing, the particular activities which were later found to be improper, was covered by the description.  They gave evidence about that and it is referred to in those paragraphs that I gave your Honours in‑chief, and that includes Mr Davis.

KEANE J:   And did they give evidence that it was their belief that Esso understood that to be so?

MR BORENSTEIN:   I do not think they gave evidence in those terms because they were questioned about the meaning of the term in the broad rather than, did you believe Esso believed this?  They were not questioned about that. 

The argument below really revolved around what was the meaning of the term and the people from the union side said, we understand this is the meaning of the term.  People from the Esso side came along and said, we believe this is the meaning of the term.  But on that point – and I did want to address this point in reply – we would say that the term had a meaning to Esso and it had a meaning to the employees.

KEANE J:    What do you say about his Honour the primary judge’s finding at paragraph 84 at page 59 of the appeal book?

MR BORENSTEIN:   He was not persuaded about that.  That is a finding which we challenged and we lost in the Full Court.

KEANE J:   Yes:

To the contrary, at least in a practical context involving the identification of work and tasks, the term related to de‑isolation as such.  When air freeing and pressure testing were required to be carried out, they were referred to in terms ‑

MR BORENSTEIN:   Yes, that is his Honour’s finding.

KEANE J:   Well, that being a finding, is that not a finding that the notice did not convey ‑ was not apt to convey to Esso the intention not to carry out air freeing and pressure testing by simply referring to de‑isolation?

MR BORENSTEIN:   Your Honour, his Honour has expressed himself here again not by saying that in terms this is what it conveyed or did not convey to Esso but in terms of the debate which was had which was what does it mean, simpliciter. 

Even accepting that, we say that when you come to the question of the subjective intent of the alleged perpetrators under the section and it is an intent to coerce, not just to overbear the will but to coerce, and as I said earlier, when you look at Crescendo – and we have Crescendo at tab 4 of the book ‑ at page 46 there is a discussion based on the older authorities which says you can overbear will without it being coercive.

So it is not enough simply to say that an attempt to coerce equals an attempt to overbear the will.  It will be coercive depending on the character of the action.  So, for that reason, when you analyse the required intent to coerce in the sections, the individuals have to be shown to know subjectively that they are doing actions of a kind which would be legally characterised, but they do not have to know the legal characterisation, as being unlawful, illegitimate or unconscionable.

Now, in circumstances where they gave evidence and if that evidence is accepted that they thought that de‑isolation meant X and that what they were doing formed part of that de‑isolation, then on the cases in the High Court on intent they would be exculpated because they had not subjective intent to take action which would amount to coercion.

GAGELER J:    They had no subjective intention on that hypothesis to take action that would be unlawful.  That is certainly so.  The difficulty, or at least a difficulty for you here is his Honour’s finding at paragraph 175 where the relevant limb of coercion is not the unlawfulness of the conduct that applied the pressure but the illegitimacy of the conduct that applied the pressure.  On one view, his Honour’s findings just sidestepped your appeal entirely.

MR BORENSTEIN:   Well, on one view, they do, your Honour, but we would say that that needs a closer examination.  His Honour explains that it is illegitimate because they are withholding their duties as employees under the contract and what have you.  Now, that is not consistent with the way in which the case was put to him by Esso, and your Honour will find that at 156, because there they rely on the organisation of the action and the imposing of the bans as being – excuse me – yes, as not being protected industrial action.  So, the claim was put on the basis that it was coercive because it was not protected industrial action.

Now, even apart from that though, if the facts which the individuals do believe subjectively, which is that there is a notice of protected industrial action which refers to a term and we are taking action which fits in, in our view, in that term, that would be an answer, we would say, and would certainly have to be taken into account which it was not here, as to whether it was illegitimate or not, in terms of subjectively – I am sorry. 

If conduct of that kind which was accepted as being believed subjectively by the individuals, would that be characterised objectively as illegitimate, and we would say that if their subjective beliefs were true, then they would not amount to illegitimacy because they would create a situation where they had an excuse not to be going to work and that excuse in legal terms was that the action would have been protected industrial action and as we say, the case was put on the basis that they were coercing because they were taking unprotected industrial action.

NETTLE J:   Is there anywhere where the evidence given by the union officers as to their subjective belief as to the nature and qualities of the acts to be committed goes any higher than what is set out in the extract from the affidavit in paragraph 170 of the first instance judgment?

MR BORENSTEIN:   Which paragraph, your Honour?

NETTLE J:   Paragraph 170.

MR BORENSTEIN:   Yes, your Honour.  So, if we take, for example, Mr Davis, and we go to paragraph 46 of the primary judgment – this is at paragraph 46 on page 42.  So, this is the first occasion where things were done which were said not to be covered by the notice, and your Honour will see the account there that is given by the judge based on the evidence he heard:

Messrs Dunbar and Mackie met with Messrs Steed and Jackson.

Steed and Jackson were two of the delegates:

Mr Steed told Messrs Dunbar and Mackie –

who are from Esso:

that it was the respondent’s position that the de‑isolation ban included air freeing and leak testing –

NETTLE J:   Yes, I understand that.  That is the point that Justice Keane made a little earlier.

MR BORENSTEIN:   Yes.

NETTLE J:   Is there somewhere where the union officer puts his hand on his heart and says, I thought this was of a particular kind?

MR BORENSTEIN:   I cannot recall, your Honour, I must say.  I cannot recall whether someone said it in those terms but there was evidence of this kind where they expressed a belief that what they were doing was covered.  And then you go down the page and the last sentence in that paragraph, and this is evidence from Mr Kristeff, who is the Esso man:

telephoned Mr Davis, who confirmed what Mr Steed had said.

Sorry, the sentence before:

Mr Steed reiterated that this was the respondent’s position, and that its members would refuse to perform air freeing or leak testing –

The evidence about the argument in that meeting was you are doing something that is not covered by the notice, and the union are saying, yes, it is.  This is a summary of the exchange.  Mr Davis is roped into the discussion.  The management person rings Mr Davis and Mr Davis confirms what Mr Steed told him about the application. 

KEANE J:   They are advocating their position.  They are stating and advocating a position.  They are not saying what they believe.  Mr Borenstein, advocates do it all the time.

MR BORENSTEIN:   Your Honour, I did not mean it in that sense.  Can I use a colloquialism and say that this is an account of an exchange that took place between workers and management on site, and in terms of the language it might be appropriate to cut them a bit of slack, if you like, in terms of the finesse with which they choose their words.

NETTLE J:   Not when they are seeking to bring themselves within a defence.  You would expect them to give direct viva voce or at least affidavit evidence that “that was my honest belief”.

MR BORENSTEIN:   I am sorry, I thought Justice Keane was referring to what was reported as having been conveyed at the meeting.

NETTLE J:   No, he is contrasting the fact that someone asserts their position with someone’s deposition on oath as to what they truly believed.

MR BORENSTEIN:   Your Honour, I cannot really assist on that particular point except to perhaps direct attention to page 92 in, again, the account of the evidence of Mr Tschugguel.  I am sorry, I have to correct that.  At paragraph 180 of page 90 his Honour gives an account of his evidence.  He says:

Mr Steed gave no evidence in chief about the intent with which he imposed this ban.  He took the view that it was covered by the notice of 3 February 2015, from which I could not infer, in the absence of specific evidence from him, that the ban was not intended to place pressure upon the applicant -

So his Honour is focusing on the intent to pressure.  Then, on page 92, where after the extract from Mr Tschugguel’s evidence, he says:

Although this evidence was given with reference to bans covered by the respondent’s notice of 3 February 2015, the whole point, in Mr Tschugguel’s view of things, of the ban on the manipulation of bleeder valves was that it was comprehended by the existing ban on the de‑isolation of equipment. 

I do not have the actual transcript to direct your Honour’s attention to.

NETTLE J:   Thank you.

MR BORENSTEIN:   Can I say this, perhaps, in the hope that it assists?  It may be that the account or the summary which is contained in the judgments does not fully reflect in specific terms what was said by the individuals in their evidence at the trial.

KIEFEL CJ:   I do not think that is at all helpful by way of reply, Mr Borenstein.  If a witness has said something which supports your submission, we would expect you to be able to take us to it immediately.

MR BORENSTEIN:   And I cannot do that, your Honour, I have to say.

KIEFEL CJ:   Thank you.

MR BORENSTEIN:   I was going to say in closing that if our legal submission is right and if the search here is for the subjective beliefs about the actions of the alleged perpetrators, we would say that on a review of the passages in the judgments which our friend has taken you to, it is not apparent that the courts below had addressed that question squarely. 

If the Court finds that that is so and there has been a failure to properly address that question, then we would say that - we would submit respectfully that the appeal should be upheld and that the matter should be remitted back and any questions about the issues which your Honours have been raising with me latterly would be addressed and they would be addressed in the light of the guidance which the Court gave in relation to this question of what intent should be. 

The final point that I want to make is that the section talks about an intent to coerce and it is important, in our respectful submission, to give meaning according to the authorities to the word “coerce” in conjunction with the question of intent and we submit that the analysis which Justice Merkel undertook in Seven Network does that and respectfully the analysis below failed to do that.

EDELMAN J:   Just before you sit down, on that meaning of “coerce” the twofold approach that one sees in the authorities, does that come from anywhere other than Justice McHugh’s judgment in the context of the action for economic duress at common law?

MR BORENSTEIN:   Your Honour, it emerged – and Mr Parry will correct me if I get this wrong but it emerged in some cases in the Federal Court dealing with duress, probably in the late 80s and Justice Merkel’s judgment was resorted to for ‑ ‑ ‑

KIEFEL CJ:   Justice McHugh’s judgment.

MR BORENSTEIN:   I am sorry, Justice McHugh’s judgment, I apologise - Justice McHugh’s judgment was referred to to aid in giving meaning to the notion of coercion.  A point we make in our outline though is that the courts – in coercion ‑ in the tort of coercion…..economic duress, the court is not concerned with intent, it is concerned with effect and the legislation here has made clear and the explanatory memorandum points to as well that here it is not concerned with the effect, it is concerned with the position of the accused, the perpetrator, and the perpetrator’s intent.  So there is that disconnect, if you can call it a disconnect, between the common

law approach and the statutory approach but that gives all the more emphasis to giving the meaning to intent to coerce.

KIEFEL CJ:   Thank you.  The Court reserves its decision in this matter and adjourns to 2.15 pm on Monday, 14 August.

AT 4.12 PM THE MATTER WAS ADJOURNED