Australasian Meat Industry Employees' Union v G & K O'Connor Pty Ltd

Federal Court of Australia|1994-09-30|Before: Marshall J

REASONS FOR JUDGMENT 1 The matter before the Court arises out of a lockout of employees by the respondent, G & K O'Connor Pty Ltd ("O'Connor"), at its premises at Kooweerup Road, Pakenham in the State of Victoria. O'Connor operates an abattoir at these premises. The first applicant, Australasian Meat Industry Employees' Union ("the Union"), is an organisation of employees registered under the Workplace Relations Act 1996 (Cth) ("the Act"). The second applicant is an employee of O'Connor and a member of the Union. The applicants filed an application in the Court on 10 March 1999 in which they sought declaratory and injunctive relief regarding a proposed lockout of employees by O'Connor which was due to commence on 12 March 1999. 2 In a hearing before the Court on 11 March 1999 the applicants sought interlocutory relief regarding the proposed lockout. Upon counsel for the respondent advising the Court that O'Connor did not propose to lockout its employees on 12 March 1999 the applicants did not press their claim for interlocutory relief. The directions hearing in the proceeding was adjourned to 7 May 1999. 3 On 18 March 1999 the applicants filed a notice of motion in which they sought to amend their application and also to obtain injunctive relief regarding a proposed lockout which was to commence on 19 March 1999. The notice of motion was heard on the afternoon and during the early evening of 19 March 1999. Mr Hinkley, of counsel, appeared for the applicants. Dr Jessup QC, with Mr Parry, of counsel, appeared for O'Connor. In light of the importance of the subject matter of the notice of motion being dealt with to finality as soon as possible ex-tempore reasons for judgment are being delivered today.

7 A wage increase of 3 per cent per year over 3 years and some changes to entitlements such as long service leave, accident makeup pay, annual leave and sick leave were sought." 8 On 10 November 1998 O'Connor prepared its proposal for a new certified agreement. In its letter which accompanied its proposals O'Connor said that: "The attached document lists amendments we are seeking to incorporate into our revised agreement. These amendments incorporate elements of significant change to the current agreement. G & K O'Connor Pty Ltd believes these changes are necessary due to the company becoming increasingly uncompetitive in the markets in which it operates. The company has become significantly disadvantaged due to more favourable workplace agreements being put in place by our competitors, particularly non-union processors in Victoria and major national processors operating under union agreements. These circumstances dictate that we are unable to accept your proposed changes to the current agreement. G & K O'Connor has provided steady employment for over 21 years at Pakenham and is committed to providing increased employment in the future. However, our current position operating under the conditions of our 1995 agreement is not sustainable." 9 The changes sought by O'Connor to the certified agreement were significant. They included the removal of the daily hire allowance which would amount to a 10 per cent reduction in wages. It was also proposed by O'Connor that precision slicers would lose a further 7.5 per cent in wages by the removal of the precision slicing penalty. Various other reductions in conditions were sought. 10 On 12 November 1998 a general meeting of the Union's members at the abattoir rejected O'Connor's proposal and resolved to work pursuant to the certified agreement "while negotiations continued". 11 On 24 November 1998 O'Connor served, pursuant to s170MI(2) of the Act, a Notice of Initiation of Bargaining Period on the Union at its branch office. The notice was faxed to Mr Bird by O'Connor's then solicitors. The fax cover sheet referred to the Union incorrectly. It used the word "Australian" instead of the word "Australasian" at the commencement of the Union's name. Presumably the notice was sent to the branch office due to the fact that Mr Bird had earlier signed correspondence which outlined the Union's position. 12 Also on 24 November 1998 a meeting occurred between O'Connor and union representatives, including Mr Davey, the assistant secretary of the Branch. At that meeting Mr Kevin O'Connor stated that O'Connor "was intent on achieving a result to negotiations and would pursue whatever path was required to get that". Mr Allen, the operations manager of O'Connor, then proposed a timetable of meetings for future negotiations which was agreed to. 13 The first of these meetings occurred on 30 November 1998. Mr Allen told representatives of the Union that O'Connor had higher labour costs than its competitors and wished to reduce those costs to improve its competitiveness. 14 A further meeting occurred on 9 December 1998. Mr Allen there stated that O'Connor's labour costs must be reduced to ensure the survival of the company and that it was "not prepared to put its head in the sand and die by strangulation". 15 By letter dated 10 December 1998 Mr Davey wrote to Mr Allen and challenged the basis upon which O'Connor asserted its alleged costs disadvantage. Mr Davey noted that O'Connor had "not put forward any evidence of its profitability or lack thereof". 16 Mr Allen replied by letter dated 14 December 1998. In it Mr Allen said the following to Mr Davey: "You indicate that the Company has not put forward any evidence of its profitability or lack thereof. I can only say this to you: How long do you expect the Company to survive in its current form where: · The cost differential between the Company and many of its major competitors in processing is $22.00-$30.00 per head, multiplied by 150,000 head of cattle per annum; and · Where the competitive pressures are increasing." 17 Another meeting occurred on 15 December 1998 in which negotiations continued but nothing was resolved. The Union insisted that O'Connor provide it with the facts about its competitiveness and profitability. It would be fair to say that a point had been reached where O'Connor was insisting on changes to its costs structure to ensure what it saw as its long term competitiveness. On the other hand the Union and its members were insisting upon O'Connor proving its lack of profitability by reference to its accounting records. 18 In response to the Union's request for documents concerning profitabilty Mr Allen stated in a letter to Mr Davey, dated 17 December 1998, that: "…our argument for the changes we propose relates to competitiveness into the future. We are not obliged and nor is it relevant to provide documents relating to past profitability." 19 Mr Davey replied to that letter, in a letter dated 21 December 1998, and wrote that O'Connor's provision of documents concerning its profits was not a precondition to further negotiations. Mr Davey also said that information about profits was important especially if some employees were expected to accept a 17.5 per cent wage cut. 20 The next meeting occurred on 22 December 1998. At this meeting Mr Davey said that the only way the workers would accept a pay cut would be for the company to open up its books and convince them that the pay cut was necessary. 21 The following meeting occurred on 5 January 1999. Mr Davey there outlined some proposed concessions by the Union in exchange for a 3 per cent wage rise. The Union's members later that day resolved to reject O'Connor's demands for a wage decrease but to negotiate in relation to O'Connor's demands for reductions in certain conditions. 22 Various pieces of correspondence were exchanged between O'Connor and the Union during January and February 1999 without agreement being reached on any issue. 23 On 5 March 1999 O'Connor delivered to the branch office and served on its employees a Notice of Protected Action pursuant to s170MO of the Act. The notice advised of a lockout to commence on 12 March 1999. The lockout was said to relate to "the bargaining period instituted by G & K O'Connor Pty Ltd on 24 November 1998". The notice was served by letter dated 5 March 1999 upon Mr Davey. 24 The letter to the employees advised that they would not be required to attend work before the commencement of the lockout but that they would be paid in accordance with the certified agreement until the lockout commenced. From 9 March 1999 until 19 March 1999 the employees were paid their minimum weekly entitlements in accordance with the certified agreement. 25 On 11 March 1999 O'Connor advised its employees by letter that it withdrew the Notice of Protected Action of 5 March 1999. It also advised employees that they were not required to attend at or perform any work but would be paid in accordance with the certified agreement. 26 Also on 11 March 1999 O'Connor's solicitors filed a Notice of Initiation of Bargaining Period pursuant to s170MI of the Act in the Australian Industrial Registry. A copy of the notice was served on the federal secretary of the Union in Sydney, Mr Hannan. 27 By letter dated 11 March 1999 Mr Allen wrote to Mr Hannan seeking confirmation that the position of the Union in the negotiations was the same as that taken by Mr Davey and in particular the rejection of the wage cuts proposed by O'Connor. Mr Hannan wrote to O'Connor confirming that Mr Davey's position was the Union's position. The letter also took issue with the view that negotiations were deadlocked and suggested that Mr Davey be contacted to arrange further meetings. 28 Mr Allen wrote to Mr Hannan on 12 March 1999. He reiterated O'Connor's desire for wage cuts, referred to some eleven meetings as having occurred and described the parties as being "fundamentally apart on issues". 29 On 15 March 1999 Mr Kevin O'Connor wrote to each processing employee advising of a lockout to commence on 19 March 1999, being protected action under s170MO of the Act. 30 Notices were served on all, except approximately 25, of the processing employees, by courier, within the 3 day time limit prescribed by the Act. 31 32 The Union made further requests for provision of information from O'Connor concerning its profitability. O'Connor continued to refuse to provide that information. 33 On 18 March 1999 representatives of O'Connor and State and Federal officials of the Union met at the branch office. The meeting lasted for approximately one hour and forty minutes and no concensus was reached. O'Connor reiterated its demand for wage cuts and the Union reiterated its refusal to agree to them in the absence of documents concerning O'Connor's profitability. 34 The lockout remains in place. It would be accurate to describe negotiations as deadlocked.

The Relief Sought 35 The applicants sought leave to amend the application, chiefly to insert what is described as a "second claim". The second claim sought relief in respect of the lockout which is now in place. Dr Jessup did not oppose the Court granting leave to amend the application as contained in the document entitled "Amended Application" which has been filed. Leave is granted for the application to be so amended. 36 The more substantive relief sought by the applicants were orders in the nature of injunctions prohibiting the lockout.

Service on the Branch 37 Mr Hinkley contended that the Notice of Intention to Initiate a Bargaining Period served on 24 November 1998 did not validly initiate a bargaining period under s170MI(2) of the Act. He submitted that service on the Branch was not service on the Union. He referred the Court to s170MI(3)(b) of the Act pursuant to which the Union and not the Branch was a negotiating party. 38 Dr Jessup submitted that the Branch within its local area acts for and on behalf of the Union and that service upon the branch office by O'Connor should be considered as service upon the Union.

39 Given the view I take as to the effectiveness of the second notice to initiate a bargaining period, that is, the one served on 11 March 1999, it is not necessary for the Court to determine whether the first notice was invalid. 40 It is also unnecessary to deal with the submission that the notice was directed to a entity that does not exist, having being directed to the "Australian Meat Industry Employees Union". However it appears to be a point of little merit as the notice did reach an officer of the very union the sender intended it to be sent to.

Genuinely Tried to Reach Agreement 41 Mr Hinkley submitted that the lockout was invalid because the industrial action is not protected action, in that O'Connor did not genuinely try to reach agreement with the Union as required by s170MP(3)(a) of the Act. Mr Hinkley contended that in seeking wage cuts without being prepared to disclose details about its profits O'Connor was not being genuine in discussions. 42 Mr Hinkley also submitted that in determining whether an employer had "genuinely tried" to reach agreement regard could only be had to discussions occurring since the initiation of the bargaining period. Consequently, so the argument ran, in determining whether the lockout was valid one needs to consider whether the only meeting held after the initiation of the second notice and before the lockout involved the employer in a genuine attempt to negotiate. 43 Dr Jessup submitted that O'Connor had "genuinely tried" to reach agreement with the Union before taking protected action. He said that difficulty in reaching agreement was not the same as a lack of a genuine attempt to reach agreement. O'Connor has been negotiating with the Union with a view to replacing the certified agreement since November 1998. Several meetings have occurred since then and an impasse has resulted. Although I believe that Mr Hinkley's submissions disclose a serious question to be tried, in that the points raised are arguable, I do not view them as strongly arguable. I hold that view for the following reasons. 44 By failing to open its books of account to the Union I do not believe that O'Connor can be said to be consequently exhibiting a lack of genuineness in negotiations. Although it may assist the resolution of the dispute between it and the Union if O'Connor showed its profitability or lack thereof to the Union, it does not necessarily follow that it has not "genuinely tried" to negotiate with the Union. In Re Australian Rail, Tram and Bus Industry Union, Print L5622, 30 September 1994, Australian Industrial Relations Commission, Hancock SDP, of the Commission, examined the meaning of "bargaining in good faith" for the purposes of s170QK of the Industrial Relations Act 1988 (Cth). At 3 of the print, his Honour said: "…bargaining in good faith does not require a willingness to make concessions. It is consistent with adopting "a hard line". Equally, it does not imply moderation of demands. It does imply a preparedness to consider seriously offers and proposals made by the other side and to take account of arguments; but if, having done these things, a bargaining party is unmoved, it may still be bargaining in good faith. The inability of parties to reach an agreement is not evidence that either is acting in bad faith. The adoption of a hard line or the making of extravagant demands may evince an underlying intention of obstructing agreement. This tactic would constitute bad faith, but in few cases, if any, could its existence be inferred from the bargaining stance alone." 45 With the alteration of the word "would" to read "could" in the last sentence of Hancock SDP's decision I agree with the views he has expressed. I also presently see no material distinction between the concept of bargaining in good faith and the concept of a genuine attempt to reach agreement. 46 There is no doubt that O'Connor has taken a hard line and refused to moderate its demands for an extraordinary wage cut of surprisingly large proportions. However there is a lack of evidence, as the evidence currently stands, which points to a lack of preparedness to consider seriously any offers and proposals made by the Union. On the issue of wages the Union sought a 3 per cent increase. There is nothing before me to indicate that that position was not seriously considered by O'Connor before it was rejected. 47 Consequently, on the current state of the evidence, I do not believe there exists any more than a barely arguable case that O'Connor did not genuinely try to reach agreement before taking protected action. 48 I am also of the view that Mr Hinkley's submission that one can only have regard to negotiations that have occurred since the initiation of the second bargaining period in determining whether O'Connor "genuinely tried" to reach agreement before the lockout is only barely arguable. My view, at the moment, is that Dr Jessup's submission that s170MP(3) of the Act imposes no temporal limit is the preferable one. In support of his submission on this aspect of the case Dr Jessup referred the Court to s170MO(6) of the Act which permits notice of protected action to be given before the start of the bargaining period. If notice of a lockout can be given before a bargaining period commences it follows that the Act did not intend the negotiations, to which it refers in s170MP of the Act, to be only those that occurred after the initiation of a bargaining period. It is possible on Day 1 for notice of protected action to be given of a lockout to occur on Day 8, with the bargaining period not being initiated until Day 2. If the validity of a lockout depended on negotiations after the bargaining period was initiated then the ability to give notice of a lockout on Day 1 would be absurd. 49 Notwithstanding the above analysis, the very terms of s170MP(3)(a) of the Act suggest no temporal restriction of the kind submitted to exist by Mr Hinkley. The section relevantly provides that: "A lockout of employees by an employer is not protected action unless the employer has, before the employer begins the lockout: (a) if the employees are members of an organisation or organisations that are negotiating parties - genuinely tried to reach agreement with the organisation or organisations." 50 The relevant attempts to reach agreement are not confined to a time before a bargaining period was initiated. Further, there appears to be no reason, as a matter of policy, for such a restriction. A party to a negotiation may see an initiation of a bargaining period as a belligerent act towards it. It may often be tactically prudent to negotiate until it seems that agreement will not be reached before a bargaining period is initiated. Section 170MO(6) of the Act would assist if protected action becomes a realistic alternative at short notice.

Jurisdiction to give Injunctive Relief 51 Dr Jessup submitted that the only jurisdictional basis for injunctive relief in the current circumstances arose from s170NG of the Act. Section 170NG of the Act provides that: "An eligible court may grant an injunction requiring a person not to contravene, or to cease contravening, a penalty provision." 52 Section 170NC of the Act is a penalty provision. So far as is material it provides that a person must not take unprotected industrial action with intent to coerce another person to agree to make an agreement. Mr Hinkley submitted that O'Connor, in the instant circumstances, has taken unprotected action, by way of a lockout not sanctioned by the Act, with a view to obtaining the Union's agreement to a new form of industrial regulation on O'Connor's terms. I am satisfied that the Court has jurisdiction to grant injunctive relief should it consider it appropriate, after a consideration of whether there is a serious issue to be tried and where the balance of convenience lies. 53 The second jurisdictional basis for injunctive relief relied on by Mr Hinkley was the Court's jurisdiction pursuant to s39B(1A)(c) of the Judiciary Act 1903 (Cth) to grant such relief in the context of a claim for a declaratory relief in the substantive proceeding. This source of power was discussed by the Full Court in Transport Workers' Union of Australia v Graham Meyrick Lee, [1998] 756 FCA. 54 Dr Jessup contended that the second jurisdictional basis for injunctive relief was not available. It is unnecessary to decide this issue. If I had been of the view that the applicants had been entitled to injunctive relief such relief may have been given pursuant to s170NG of the Act without the need for resort to s39B(1A)(c) of the Judiciary Act 1903 (Cth).

Serious Question to be Tried 55 As previously stated, I am of the view that the matters raised by Mr Hinkley which put in issue the validity of the lockout are arguable. However for the reasons expressed above I do not consider them, on the current state of the evidence and submissions, to be strongly arguable. Factors going to the balance of convenience must be assessed having regard to the Court's view on the issue of whether there is a serious question to be tried. In support of such an approach I rely upon the judgment of Woodward J with whom Smithers and Sweeney JJ agreed in Bullock v Federated Furnishing Trades Society of A/asia (1985) 5 FCR 464, at 472 where his Honour said: "…when it becomes necessary to consider the balance of convenience, it is, I believe, quite proper to continue to bear in mind the apparent strength of the applicants' case; the two legs of the test need not be considered in isolation from each other. Thus an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even. A more doubtful claim (which nevertheless raises "a serious question to be tried") may still attract interlocutory relief if there is a marked balance of convenience in favour of it."

Balance of Convenience 56 In this matter I consider the balance of convenience to be slightly in favour of the granting of interlocutory relief. I hold this view because of the evidence that the locked out employees will be deprived of income during the course of the lockout. A significant countervailing factor which almost equally tends in the opposite direction is the ability of the Union to invoke the Commission's jurisdiction to suspend or terminate the bargaining period thus ending the protected status of the lockout. 57 In any such application the Union may more fully put its submissions and bring forward further evidence, if available, on the allegation that O'Connor has not "genuinely tried" to reach agreement. It may seek to cross-examine O'Connor representatives on that issue. It is also possible for the Union to re-enter negotiations and put a new counter-offer to O'Connor, the response to which may result in a breakthrough in the dispute.

Conclusion 58 In the words of Woodward J in Bullock (on the current state of the evidence, based on what was put to me in an urgent hearing by way of submission, which in turn required a judgment to be delivered as soon as was reasonably practicable) I am of the view that the applicant's claim is "a more doubtful claim which nevertheless raises 'a serious question to be tried'". However I am not of the opinion that the balance of convenience in favour of the claim is "marked". In my view what exists before me is a more doubtful claim with a slight edge on the balance of convenience. Based upon Bullock it is not a case which, on balance in the exercise of the Court's discretion, is appropriate for injunctive relief. 59 The result of this matter unfortunately perpetuates the stalemate in negotiations or at least does little to resolve the dispute. Should the applicants wish to revisit their claim for injunctive relief based on additional evidence or further submissions, I will reserve liberty to apply on short notice. I will also adjourn that part of the notice of motion which relates to employees who were not served with lockout notices 3 days prior to the commencement of the lockout as required by the Act. 60 It also should be noted that the Court's judgment in this matter is not an approval of the tactics of either of the negotiating parties or an industrial vindication of the actions of an obviously hard-line employer. Rather it stems chiefly from the Court's view as to the legality of O'Connor's actions as distinct from any moral judgment about its seemingly extravagant demands. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall .

Counsel for the Respondent: Dr C N Jessup QC with Mr F Parry

Solicitor for the Respondent: Dunhill Madden Butler

Date of Hearing: 19 and 22 March 1999

Date of Judgment: 22 March 1999 (ex-tempore as revised from the transcript)

Workplace Relations Act 1996(Cth)

Industrial Relations Act 1988(Cth)

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