Federal Court of Australia Act 1976 (Cth), s.31A(1)(b) and (2)(b)

Federal Magistrates Act 1999 (Cth), s.17A(1)(b) and (2)(b)

Federal Magistrates Court Rules 2001(Cth), r.13.10(a)

Workplace Relations Act 1996 (Cth), ss.400(5)&(6), 407 (1)(b) and (2)(zi), 413, 728 and 841, and Part 11

Australian and International Pilots Association v Qantas Airways Limited [2006] FCA 1441

_Australian Services Union v Electrix Pty Ltd (_1999) 53 IR 43; [1999] FCA 211

ALHMWU & Ors v Cranbourne RSL Sub-Branch Inc (1999) FCA 1425

Australasian Meat Industry Employees Union v Peerless Holdings (2000) 103 FCR 577; [2000] FCA 1047

Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146; [2006] FCA 1352

Bishop v Ropolo Services Pty Ltd (2006) 153 FCR 357; [2006] FCA 592

Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276; [2002] FCA 349

Duncan v Lipscombe Child Care Services Inc (2006) 150 IR 471; [2006] FCA 458

Hocking v Bell [1947] HCA 54; (1947) 75 CLR 125

Hocking v Bell [1945] HCA 16; (1945) 71 CLR 430

Maritime Union of Australia v Burnie Port Corporation Pty Ltd (2000) 101 IR 435; [2000] FCA 1189

Maritime Union of Australia v Geraldton Port Authority (1999) 165 ALR; 67 [1999] FCA 899

Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146

Schanka v Employment National (Administration) Pty Ltd (1999) 166 ALR 663; [1999] FCA 1334

Schanka &Ors v Employment National (Administration) Pty Ltd (2001) 112 FCR 101; [2001] FCA 579

(1)

The application under rule 13.10(a) of the Federal Magistrates Court Rules, 2001 (Cth) for summary dismissal of the application in relation to the Second Respondent be dismissed.

The substantive application, filed on 9 October 2006, seeks the following orders on the basis set out therein:

"1. In accordance with sections 407(1)(b) and 407(2)(zi) of the Workplace Relations Act 1996 (the WR Act,) the Applicant seeks that pecuniary penalties be imposed on:

(a) the first respondent; and

(b) the second respondent.

And that those penalties be paid to the Commonwealth pursuant to s841 of the WR Act.

2. In accordance with s413 of the WR Act, the Court order that each respondent pay compensation of such amount as the Court consider appropriate for any loss of damage resulting from each contravention to which this Application relates suffered by the subject of each contravention, namely Ms Debbie Franklin and Mr Michael King respectively.

3. The Applicant seeks the above orders on the basis that each of the respondents:

(a) breached section 400(5) of the WR Act by applying duress to an employee, Ms Debbie Franklin in connection with an AWA or was involved in a contravention of s400(5) in relation to the employee w within the meaning of s728 of the WR Act; and/or

(b) breached section 400(5) of the WR Act by applying duress to an employee, Mr Michael King in connection with an AWA or was involved in a contravention of s400(5) in relation to the employee within the meaning of s728 of the WR Act."

Australian Workplace Agreements ("AWA's") and duress

Section 400 (5) and (6) of the Workplace Relations Act 1996 (Cth) ("WR Act") lies at the heart of the application in this case. Section 400 (5) and (6) of the WR Act provides as follows:

"400 Coercion and duress

...

(5) A person must not apply duress to an employer or employee in connection with an AWA.

(6) To avoid doubt, a person does not apply duress for the purposes of subsection (5) merely because the person requires another person to make an AWA as a condition of engagement."

Application for summary dismissal of proceedings

This judgment relates to an application (as amended) under r.13.10(a) of the Federal Magistrates Court Rules 2001 ("FMCA Rules") by the Second Respondent, Cyberlink Pty Ltd to summarily dismiss the Application in so far as it relates to the Second Respondent.

For the purposes of the summary dismissal no objection was taken to the affidavits filed by the Applicant. Thus, the Court takes the Applicant's case as its highest on the basis of the available affidavit evidence as presently filed: Bernstrom v National Australia Bank Ltd [2002] QCA 231; [2003] 1 Qd R 469.

The Applicant's affidavits filed to which the Court has had regard are as follows:

a) Gayle Naomi Balding, affirmed 9 October 2006

b) Michael Phillip King, sworn 12 December 2006

c) Debbie Lee Franklin, sworn 13 December 2006

d) Abbeygail Beaumont, affirmed 14 December 2006

e) Gayle Naomi Balding, affirmed 14 December 2006

f) Andrew Mark Jones, sworn 14 December 2006

The Court has also had regard to an affidavit filed on behalf of the First Respondent from Gary Paul Correia, sworn 23 November 2006, in which Correia (the sole director of the First Respondent) relevantly says:

"3. The First Respondent engaged the Second Respondent as its agent to provide business and administration support to the First Respondent in connection with the First Respondent's acquisition of the business of the IGA Supermarket, Hilton (IGA Hilton) from Action Supermarkets Pty Ltd (Action).

4. The Second respondent was authorised by the First Respondent to make offers of employment to employees of Action engaged at IGA Hilton (employees). The First Respondent was not directly involved in the process of meeting with any employees and/or making offers of employment to the employees.

5. The First Respondent did not instruct and did not authorise the Second Respondent to apply duress to the employees when making offers of employment to the employees on behalf of the First Respondent": Affidavit of Gary Paul Correia, 23 November 2006.

Debbie Lee Franklin ("Franklin") and Michael Phillip King ("King") were at all material times up to 25 and 22 September 2006 respectively, employees of Action Supermarkets Pty Ltd ("Action") (sometimes referred to as "Metcash") at the IGA Hilton Supermarket ("Hilton Supermarket"): Affidavit of Franklin, para 4; Affidavit of King, paras 6 and 7.

Action sold the Hilton Supermarket to the First Respondent. The Actual Completion Date for the sale is contained in the Agreement for Sale of Business - IGA Supermarket - 285 South Street, Hilton ("Sale Agreement") extracts from which are in evidence: Affidavit of Jones, paras 10 and 11 and Exhibit AJ4, and 25 September 2006: Affidavit of Jones Exhibit AJ4, page 8. It appears from unexecuted copies of AWAs in evidence that employees were to commence employment with the purchaser of the Hilton Supermarket on 25 September 2006: see for example Affidavit of Jones, Exhibit AJ4, page 62.

The Sale Agreement identifies the purchaser of the Hilton Supermarket as Ten Talents Pty Ltd (the First Respondent), and two persons - John Patrick Keeley and Jeffrey Ehrenfeld, as guarantors: Affidavit of Jones, Exhibit AJ4, page 7.

The Sale Agreement required the First Respondent to offer to employ the employees of Action, not less than five business days prior to "Completion" on "total rates of pay no less favourable than the employees current rate of pay": Sale Agreement, Clause 15.1, Exhibit AJ4, page 14. The Sale Agreement does not provide for offers of employment on terms and conditions no less favourable than the employees terms and conditions with Action: see Transcript at page 18.

The First Respondent offered Franklin and King employment in accordance with the terms of the Sale Agreement, but also on the condition that they enter into an AWA: Affidavit of Franklin, paras 31-32; Affidavit of King, para 36.

Franklin and King appear to have been employees, who in their employment with Action, were covered by the terms of the Action Supermarkets Pty Ltd and SDA agreement 2004, ("the Action Supermarkets Agreement"), an agreement certified by the Australian Industrial Relations Commission: Affidavit of Beaumont, Annexure AB1, page 3 Action Supermarkets Agreement, clause 1.3. Both Franklin and King have provided affidavit evidence about relevant events up to 25 September 2006.

The relevant affidavit evidence of Franklin is as follows:

a) she was employed as a Scanning Officer at the Hilton Supermarket until 25 September 2006: para 4;

b) her employment was covered by the Action Supermarkets Agreement: para 5;

c) her work as Scanning Officer included general administrative work, office work, point of sale ticketing and pricing: para 8;

d) on or around June 2006 Franklin attended a staff meeting which was also attended by Jim Kavanagh, a senior employee from Metcash, and Jack Keeley (one of the guarantors for the purchase of the Hilton Supermarket by the First Respondent) at which Kavanagh told the staff that they would not lose any existing terms and conditions as a result of a foreshadowed sale of the Hilton Supermarket: paras 12-14;

e) on or around August 2006 there was a further staff meeting at the Hilton Supermarket led by a person named "Lee", who introduced himself as the "Grocery Co-ordinator" of the "Keeley Group", and who told the staff that they would all be offered jobs with the new owner: paras 16 and 17.

f) In early September 2006 meetings with respect to employment contracts were arranged with staff, and ultimately an interview time was set for her on 15 September 2006: paras 20-21 and 24;

g) ultimately her interview was arranged by a person who introduced herself as Danielle Jackson "Human Resources Person for the new owner": para 24;

h) the interview on 15 September 2006 was with Jackson and a person introduced by Jackson as Leona Ripley, who said that she worked with Jackson: para 26;

i) she was not told that she could have someone with her during the interview and had thought the interview would be "one on one", and therefore felt "intimidated" by two interviewers being present who were "quite unfriendly", contributing to a " feeling of uneasiness" in the absence of a support person for her: paras 28-29;

j) prior to 15 September 2006 she "did not know that AWA's were going to be offered ... and ... had thought that ... employment would continue to be governed by the "Action Supermarkets Agreement": para 31;

k) prior to attending the interview on 15 September 2006 she "did not know" that she "would be required to sign an AWA to keep [her] job": para 32;

l) in the 15 September 2006 interview she felt that she did not have much time, was "under time pressure", and had difficulty knowing what questions to ask concerning the AWA [having been invited to ask questions] when she had not seen a copy of the AWA until the interview and had not been able to compare it to the Action Supermarket Agreement: paras 33-35;

m) the job role she was offered under the AWA described her role as a clerical assistant rather than a shop assistant indicating that she would no longer be a Scanning Officer, which was a more senior role, a fact confirmed by the interviewers who told her that the purchaser did not have positions for Scanning Operators, but in relation to which refused to elaborate further: paras 36-38

n) one of the interviewers in the 15 September 2006 interview told her that she may be required to carry out clerical duties at an office in Jandakot (a suburb some distance away) which would be opened in the future: para 39;

o) she was told in the 15 September 2006 interview that she "would be told [her] duties were at a later stage which would be after [she] had signed the AWA": para 39;

p) she was concerned about the absence of penalty rates under the AWA, as penalty rates under the Action Supermarket's Agreement "considerably boosted" her income, and she was told that "we [the First Respondent] don't pay penalty rates": para 42 paras 40-41 and 43-44;

q) she was concerned by other matters including the apparent lack of future pay rises by reasons of existing high rates of pay; the existence of a probationary period and the non payment of leave loading: paras 45, 47 and 48;

r) on 21 September 2006 she met again with Kavanagh and expressed concern about the lack of provision in the AWA for the setting of minimum/maximum hours of work in a day or week, and later that day expressed concern with respect to possibly having to clock off for tea breaks: paras 53, 56 and 58;

s) then on 21 September 2006, she asked "what happens if I don't sign the AWA?" and Lee said words to the effect "Well then you don't have job with us": para 60;

t) by 22 September 2006 she had not yet had explained to her what work she would actually be doing if she signed an AWA: para 64;

u) on the morning of 22 September 2006 when she indicated to Kavanagh that she did not think she was going to sign the AWA she was asked to make her mind "in the next 30 to 60 minutes": para 67;

v) she would have accepted employment with the First Respondent if she had been given the opportunity to stay on the Action Supermarket Agreement because she believed that that Agreement " had good conditions of employment and regular pay increases": para 69.

King has given the following relevant affidavit evidence:

a) he worked as a dairy assistant at the Hilton Supermarket until 22 September 2006: para 6;

b) he was employed under the Action Supermarkets Agreement: para 8;

c) his duties included stacking the milk and other dairy products, checking product codes, taking and placing orders and ringing orders through and liaising with managers: para 9;

d) in or around 8 September 2006 at a staff meeting Kavanagh told the staff that "the Jack Keeley Group were going to purchase" the Hilton Supermarket and "you are all going to be offered new agreements", or words to that effect: para 15;

e) he attended an interview on 13 September 2006 with a Mr Islip (who said he was from payroll), Jackson (who said she was a human resources person) and Lee (who said he was a manager with the new owner), with Islip saying that the three persons were "from Ten Talents" (the First Respondent), and also referring to them as being from the "Jack Keeley Consortium" of companies: para 25;

f) consequently, he understood that all the interviewers were from the First Respondent, and that he did not hear the name Cyberlink (the Second Respondent) until after he had resigned employment with Action on 22 September 2006: para 26;

g) he was not advised or offered the opportunity to take someone with him to the 13 September 2006 interview, and had he done so he would have taken someone who would have been able to assist him understand the provisions of the AWA, and who could explain them to him: para 27;

h) Islip told him that he had a week to consider the AWA, and that the job he was being offered involved "basically the same duties as your current job but on the terms and conditions of the new AWA": para 31;

i) although he was being offered the same job there were "some significant differences in entitlements" (by inference between the Action Supermarket's Agreement and the AWA): para 31;

j) he was concerned about job security and in particular the effect of the probationary period which he understood to mean would allow the First Respondent to terminate employment without notice during the probationary period: paras 33-35;

k) he was told at the 13 September 2006 interview by Islip words to the effect "if you don't sign the AWA there will not be a job for you on Monday": para 36;

l) prior to the 13 September 2006 interview he had not been told that he would be offered an AWA or that he would be required to sign an AWA to keep his job, nor was he told that he had no choice between signing the AWA or staying on the Action Supermarkets Agreement: para 38;

m) during the interview he felt quite pressured "as though he was being put on the spot": para 38;

n) if he had been offered employment on the basis of the Action Supermarkets Agreement he would have accepted that employment as he found the Action Supermarkets Agreement "to be a better framework for securing ... entitlements", and he was particularly "concerned about job security": para 41;

o) the AWA was a standard form document "not open to negotiation. It was take it or leave it.": para 42;

p) there were entitlements under the Action Supermarkets Agreement that were not provided for in the AWA ("paid meal breaks and paid public holiday pay"), and he felt that he would be unable to rely on any oral assurance given by the First Respondent in relation to these items: para 45;

q) he prefers collective bargaining because he believes "that the union has greater bargaining power and can obtain better entitlements then (sic) through individual negotiation": para 50;

r) during the period he had worked for Action he had relied on union negotiated pay increases and did not like to negotiate for himself: para 51;

s) he felt that he "was taken by surprise by new developments such as being told at the interview that [he] would be required to sign an AWA to keep [his] job": para 59;

t) he felt under "significant pressure" during the interview on 13 September 2006, and during the period immediately prior to the sale of the Hilton Supermarket, that significant pressure relating to the signing of the AWA: para 60.

Law concerning summary dismissal of proceedings

Rule 13.10 of the FMC Rules provides as follows:

"The Court may order that a proceeding by stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:

(a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or"

The gist of r.13. 10(a) is that there is

"no reasonable prospect of successfully prosecuting the proceeding or claim".

In a summary judgment context similar provisions appear in s.17A(1)(b) and (2)(b) of the Federal Magistrates Act 1999 ("FM Act") and s.31A(1)(b) and (2)(b) of the Federal Court of Australia Act 1976 ("FCA Act").

The summary dismissal provisions in s.17A of the FM Act were specifically considered (and rule 13.10(a) of the FMCA Rules also mentioned) in MG Distributions Pty Ltd & Ors v Khan & Anor (2006) 230 ALR 352; [2006] FMCA 666 ("MG Distribution"). In MG Distribution McInnis FM held that s.17A of the FM Act appears to lower the satisfaction threshold entitling this Court to dismiss a claim, but did not necessarily detract from well settled principles concerning summary dismissal. Thus, it was still appropriate to consider those principles in relation to the question of the no reasonable prospect of success test under s.17A of the FM Act, if there is a real question of fact or law to be determined upon which the rights of the parties depended. See MG Distribution, ALR at 360-361 and 361-262 per McInnis FM; FMCA at paras 37-39 and 42-44. The Court went on to observe that:

"summary dismissal ... remains a matter for careful consideration. There is a primary obligation on courts to permit parties to be heard even though there may appear to be strong arguments which have the potential to effectively defeat a claim or a defence." ALR at 363 per McInnis FM; FMCA at para 45 per McInnis FM.

Similarly, and having regard to the nature of this Court, its rules (albeit preceding r.13.10(a) of the FMC Rules in its current form), functions and "philosophy", Lander J has observed that this Court ought be cautious, and not summarily dismiss a claim unless the matter be "clear, beyond any doubt": Rana v University of South Australia [2004] FCA 559; (2004) 136 FCR 344 at 355; [2004] FCA 559 at para 75 ("Rana").

In Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd: (2006) 70 IPR 146; [2006] FCA 1352 ("Boston Commercial") Rares J gave detailed consideration to the phrase "no reasonable prospect of successfully prosecuting the proceeding" (in that case for the purposes of s.31A of the FCA Act). Rares J noted that conceptually the test had "some similarity to the test at common law for determining whether a jury properly instructed could reach a verdict for the plaintiff.": Boston Commercial IPR at 156 per Rares J; FCA at para 43 per Rares J. Reference was made to the decision of the Judicial Committee of the Privy Council: Hocking v Bell [(1947) [1947] HCA 54; 75 CLR 125 at 130-131 per Viscount Simon and Lords Porter, Uthwatt, De Pareq and Oaksey; approving of Latham CJ's dissenting statement in the High Court in Hocking v Bell [1945] HCA 16; (1945) 71 CLR 430 at 441-42 per Latham CJ ("Hocking (HC)"), where Latham CJ said:

"But there must be a real issue of fact to be decided, and if the evidence is all one way, so that only one conclusion can be said to be reasonable, there is no function left for the jury to perform, so that the court may properly take the matter into its own hands as being a matter of law." Hocking (HC) at 441-442 per Latham CJ.

Rares J went on to say that in s.31A cases:

"where there is a real issue of fact to be decided in the sense identified in the above principle, (that is by Latham CJ in Hocking HC at 441-442_) and, possibly where there is a real issue of law of a similar kind, it is obviously appropriate that the matter goes to trial.": Boston Commercial_ IPR at 157 per Rares J; FCA at para 44 per Rares J.

In Boston Commercial Rares J said that if there was, "contested evidence [which] might reasonably be believed one way or the other so as to enable one side or the other to succeed" then "the Court must be very cautious not to do a party an injustice by summarily dismissing": IPR at 158 per Rares J, FCA at para 45 per Rares J. The purpose of the enactment was said by Rares J to be "to enable the Court to deal with matters which should not be litigated because there is no reasonable prospect of any outcome but one": Boston Commercial IPR at 158 per Rares J; FCA at para 47 per Rares J. Thus the discretion to summarily dispose of the proceedings was not enlivened "[u]nless only one conclusion can be said to be reasonable": Boston Commercial IPR at 157 per Rares J; FCA at para 45 per Rares J.

In Boston Commercial Rares J also discussed a court's ultimate aim as being the attainment of justice: Boston Commercial IPR at 158 per Rares J; FCA at para 46 per Rares J; citing Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 at 154 per Dawson, Gaudron and McHugh JJ, and "a key feature of the judicial power under Ch III of the Constitution" being that "the Court be in a position to, and in fact does, quell a controversy": Boston Commercial IPR at 158 per Rares J; FCA at para 47 per Rares J.

The summary dismissal of proceedings power might defeat, not advance, the attainment of justice, if used to prevent the substantive agitation of a controversy in which each side has a reasonable prospect of success_: Boston Commercial_ IPR at 158 per Rares J; FCA at para 47 per Rares J.

In Australian and International Pilots Association v Qantas Airways [2006] FCA 1441 ("Pilots Association") Tracey J in the Federal Court considered Boston Commercial, and summarised Rares J's conclusion as being that section 31A of the FC Act had lowered the barrier somewhat but that: "it nonetheless constituted a difficult obstacle for a respondent to surmount": Pilots Association at para 23 per Tracey J. Tracey J specifically agreed with the principles set out by Rares J in Boston Commercial, and determined to act consistently with those principles in the application of section 31A: Pilots Association at para 23 per Tracey J.

In Pilots Association Tracey J found that the applicant had no reasonable prospect of success and indicated that ordinarily that would justify the dismissal of the proceedings: Pilots Association at para 34 per Tracey J. However, because it was the first time the pleadings had been "subjected to curial scrutiny" Tracey J determined that the "preferable course" was to strike out the further amended Statement of Claim, and grant leave to file a further amended Statement of Claim: Pilots Association at para 34 per Tracey J. Whilst neither the reasons for judgment nor the order make it plain it seems that those orders must have been made under O.11r16 of the Federal Court Rules which Tracey J had adverted to when considering section 31A: Pilots Association at paras 23 and 34 per Tracey J.

In the Federal Court in Commonwealth Bank of Australia v ACN 000 247 601 Pty Limited (In Liq) (formerly Stanley Thompson Valuers Pty Limited) [2006] FCA 1416 Jacobson J said at para 30:

"The authorities relating to the proper construction and effect of s.31A of the Federal Court of Australia Act were exhaustively reviewed by Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australia Pty Ltd [2006] FCA 1352 at [31]- [48]. His Honour stated the relevant principles at [45] and they may be summarised as follows:

In assessing whether there are reasonable prospects of success, the Court must be cautious not to do an injustice by summary dismissal.

There will be reasonable prospects of success if there is evidence which may be reasonably believed so as to enable the party against whom summary judgment is sought to succeed at the final hearing.

Evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects.

Unless only one conclusion can be said to be reasonable, the discretion under s.31A cannot be enlivened."

In Duncan v Lipscombe Child Care Services Inc (2006) 150 IR 471; [2006] FCA 458 ("Duncan") Heerey J in the Federal Court said:

"a fundamental change to the standard to be applied in strikeout applications has been introduced by s. 31A [of the FCA Act]": Duncan IR at 473 per Heerey J; FCA at para 5 per Heerey J.

"Plainly s 31A was introduced to establish a lower standard for strikeouts (either of claims or defences) than that previously laid down by the High Court's decision in Dey v Victorian Railways Commissioners [1949] HCA 1; (1949 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 130, namely that the allegations are "so clearly untenable that [they] cannot possibly succeed)": Duncan IR at 473 per Heerey J; FCA at para 6 per Heerey J.

Heerey J went on to speak of the "former strikeout standard" and to describe s.31A of the FCA Act as "a clear, and different command" in the course of ordering that various paragraphs of the statement of claim be struck out.

In the Federal Court in Fortron Automotive Treatments Pty Ltd v Jones (No. 2) [2006] FCA 1401 ("Fortron (No. 2)") French J respectfully disagreed with the approach to s.31A of the FCA Act adopted by Heery J in Duncan. In Fortron (No. 2) at para 21 French J said:

"Section 31A is not a vehicle for simply striking out parts of pleadings that are deficient. Sections 31A allows for "judgment" or nothing. Alternative remedies with respect to deficient pleadings must be found in the rules of the Court."

This Court respectfully agrees with the views of French J cited above, and adopts them as applicable to summary dismissal applications under r.13.10(a) of the FMC Rules. This judgment or nothing approach must of course be appropriately exercised having regard to the principles established in Boston Commercial Services, and in the manner prescribed in MG Distribution and Rana.

Duress involves the illegitimate application of pressure likely and intended to have the effect of denying the exercise of a person's free will, and in relation to the circumstances of this case, irrespective of whether an AWA is entered into or otherwise: Schanka v Employment National (Administration) Pty Ltd [1999] FCA 1334; (1999) 166 ALR 663 at 680-681 per Moore J ("Schanka 1999"); [1999] FCA 1334 at paras 40-43; Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899; (1999) 165 ALR 67 at 125 per Nicholson J; ("Geraldton Port Authority") [1999] FCA 899 at para 367 per Nicholson J; Canturi v Sita Coaches Pty Ltd [2002] FCA 349; (2002) 116 FCR 276 at 287-289 per Ryan J; [2002] FCA 349 at paras 38-43 per Ryan J ("Canturi"); Bishop v Ropolo Services Pty Ltd [2006] FCA 592; (2006) 153 FCR 357 at 361-362 per Madgwick J; [2006] FCA 592 at paras 17-21 per Madgwick J ("Bishop").

Illegitimate pressure may include unlawful threats, unconscionable pressure, and, in relevant circumstances, lawful conduct: Geraldton Port Authority, ALR at 125 per Nicholson J; FCA at 367 per Nicholson J.

Illegitimate pressure does not exist merely because an offer of employment is contingent upon entry into an Australian Workplace Agreement ("AWA"): WR Act, s.400(6); Bishop, FCR at 362 per Madgwick J; FCA at para 22 per Madgwick J. Whether there is illegitimate pressure is a question of fact determinable in the circumstances of each particular case: Canturi, FCR at 289 per Ryan J; FCA at para 43 per Ryan J. Pressure is not enough: for pressure to amount to duress it must, during the process of offer and negotiation leading to acceptance or non acceptance of an AWA, cross the boundary from normal pressure exerted by a party in the process of offer and negotiation and enter the territory of illegitimate pressure.

A range of factors have been identified by courts in determining whether a party has been subject to duress.

Employment in the same job has been identified as the single most important factor in relation to the application of illegitimate pressure in claims of this type: Schanka & Ors v Employment National (Administration) Pty Ltd [2001] FCA 579; (2001) 112 FCR 101 at 139 per Moore J; [2001] FCA 579 at para 102 per Moore J ("Schanka 2001"). There it was reasoned that employees have a reasonable expectation that positions with a new employer (in this case the First Respondent) entering (to use a neutral term) into an existing business will not be on terms and conditions materially inferior to those under their previous employment (in this case with Action, who are not a party to these proceedings), and that the employee's "relative position in the market place was ... threatened" if "they were threatened with loss of such existing expectations unless they entered into AWA's": Bishop, FCR at 363 per Madgwick J; FCA at para 26 per Madgwick J.

Conduct which puts an employee in the position of "it's the AWA or your job" has been held to be unconscionable conduct giving rise to a serious issue to be tried as to whether it is duress in relation to the employees concerned (under the provisions of the former section 170WG (1) of the WR Act): _Australian Services Union v Electrix Pty Ltd (_1999) 53 IR 43 at 45 per Marshall J; [1999] FCA 211 at paras 15-16 per Marshall J ("Electrix").

In this case:

a) employment at the Hilton Supermarket was only available under an AWA;

b) there was no alternative to enable employment on the terms of a any other form of industrial instrument (for example, the Action Supermarkets Agreement);

c) if the employee did not agree to enter into an AWA the employee continued to be employed by the previous employer (Action), but not in their previous position nor at the Hilton Supermarket; and

d) it was put to both Franklin and King that "it's the AWA or your job" or words to that effect, by representatives of the Second Respondent who were, on the evidence of Correia, acting for the First Respondent.

In this case neither Franklin nor King had the option of keeping their existing position at the Hilton Supermarket on terms other than the AWA. If they could not keep their existing position on those terms, they did not keep their existing position at all, or at least not at the Hilton Supermarket. If Franklin or King did accept the offer of an AWA, they would have to change the location of their workplace because Action no longer had employment for them at the Hilton Supermarket, and in Franklin's case this was what happened.

A change of workplace might arguably constitute termination of an employment contract in certain circumstances: see Macken & Ors, The Law of Employment (5th ed) (Sydney: Law Book Company, 2002) pages 251-252; Webber, Batt's The Law of Master and Servant (5th ed) (London: Pitman & Sons, 1967) page 116. It is arguable that the offer of AWA's only might have effectively amounted to "its the AWA or your job", both as a matter of law, and as matter of practicality.

The prospect of having to work elsewhere, or relocate, or not having a job if relocation was not a possibility, might all be the result of a course of conduct which constitutes a pressure bordering on the illegitimate, dependant on the circumstances.

On the present evidence neither Franklin nor King:

a) had the option of continuing on in their existing position at the Hilton Supermarket if they did not sign the AWA; and

b) were probably faced with a change in the location of their workplace.

These facts were not present in Bishop, a case heavily relied upon the Second Respondent. Bishop is distinguishable on that basis (at least as to the ultimate outcome). However, Bishop also supports the proposition that there may be duress in the conduct (particularly during the September 2006 interviews of Franklin and King) of the Second Respondent's officers or representatives, because that conduct does threaten "the pre-existing status quo": Bishop, FCR 371-372 per Madgwick J; FCA at para 64, by threatening to remove Franklin and King from their respective and specific positions at the Hilton Supermarket.

The Second Respondent argued that there was no evidence of duress, particularly because the pre-existing status quo was unchanged in that Franklin and King would still be employed and paid by Action. This approach is too simplistic, and contrary to authority which makes it clear that the focus is on any conduct which threatens the actual position in which the employee is employed, and the actual terms and conditions (including, for example, the location of the workplace) on which the employee is employed: Bishop, FCR 371-372 per Madgwick J; FCA at para.64;

The present evidence (taken at its highest for present purposes) can, if reasonably believed, suggest that:

a) Franklin and King might have had a reasonable expectation of employment in their pre-existing positions on similar terms and conditions (and even, possibly - albeit faintly suggested - the same terms and conditions); and

b) the conduct of the Second Respondent (acting on behalf of the First Respondent), through its officers or representatives, did, and was intended to, threaten that reasonable expectation, which was essentially of the maintenance of the pre-existing status quo.

The evidence in relation to this factor cannot be said to be one way against a prospect of successful prosecution of the claim. There is sufficient evidence to give rise to the possibility of a real and not fanciful prospect of the claim succeeding, either alone or in combination with other factors.

Any prior relationship between the Second Respondent and Franklin and King (such as and including that arising from the process of offering AWA's and conducting interviews in relation to those offers) may be significant, and may warrant examination of the circumstances of the conduct said to constitute duress: Maritime Union of Australia v Burnie Port Corporation Pty Ltd [2000] FCA 1189; (2000) 101 IR 435 at 451 per Ryan J; [2000] FCA 1189 at para 71 per Ryan J (and see also para.72); Bishop, FCR at 362 per Madgwick J; FCA at para 23 per Madgwick J.

The relationship between offeror (the Second Respondent) and proposed employee (Franklin and King) may also be a factor to be assessed in relation to duress. Absent acceptance of an AWA, the provisions of Part 11 of the WR Act provide that where there are existing industrial instruments in place, and the employees at the time of transmission are entitled to benefits of the industrial instruments, those industrial instruments transmit from the old employer to the new employer on employment by the new employer of the employees of the old employer.

It is arguable that the transmission of business provisions in the WR Act might be said to be such as to create a special relationship between an offeror and potential new employee, particularly where the relevant industrial instrument would ordinarily apply to the potential new employee, absent the offer and acceptance of employment on the terms of an AWA only, and where, as here, Franklin and King arguably had a reasonable expectation of ongoing employment in their pre-existing positions.

In the circumstances, there is sufficient evidence that a claim of duress might succeed on the basis of this factor, if not alone, then perhaps in combination with other evidence.

Actual, or threatened, reduction in employee entitlements, or opportunities which might be afforded an employee in their employment, might be a relevant factor in a consideration of duress: ALHMWU & Ors v Cranbourne RSL Sub-Branch Inc (1999) FCA 1425 at paras 33-34 per Ryan J ("Cranbourne RSL"). Although Cranbourne RSL dealt with existing employees being offered AWA's by their existing employer, the principle with respect to a consideration of duress in the context of entitlement reduction is applicable in other circumstances where AWA's are offered, including to the existing employees of a business being purchased by a new employer.

Both Franklin and King gave evidence of possible reductions or loss of opportunities under the AWA being offered by the Second Respondent on behalf of the First Respondent. There is also the evidence concerning change of workplace location to be considered.

The evidence on this factor is not all one way, and does not support there being no real prospect of success in prosecuting the claim on the basis of this factor, either alone, or in combination of other factors. Furthermore, there appeared in argument a possible dispute about whether or not there was a reduction in entitlements or opportunities (and specifically as to pay rates) such as to make it inappropriate for the Court to summarily dispose of the proceedings.

Another factor which must be considered is whether or not there was an opportunity to negotiate, either in relation to an alternative form of industrial instrument (other than an AWA) or to negotiate in a particular manner or form: Schanka 2001 FCR at 139-140 per Moore J; FCA at paras 104-105 per Moore J. There is evidence that Franklin and/or King:

a) wished to continue employment with the First Respondent on the terms of the Action Supermarkets Agreement;

b) considered that there was no opportunity to negotiate with the First Respondent (represented by officers of the Second Respondent); and

c) felt unable to negotiate alone, and unequal in bargaining ability.

Once again the evidence available might support the successful prosecution of the claim, based on this factor, or at least this factor in combination with other factors.

Power disparity and the use of any power disparity, is a factor in assessing whether or not there has been duress: Bishop, FCR at 363 per Madgwick J; FCA at paras 24-25 per Madgwick J; Canturi, FCR at 300 per Ryan J; FCA at para 88 per Ryan J; and includes the potential for illegitimate economic pressure, which ought not be found lightly: Bishop, FCR at 363 per Madgwick J; FCA at para 25 per Madgwick J, citing the observation of Finn J in Australasian Meat Industry Employees Union v Peerless Holdings Pty Ltd [2000] FCA 1047; (2000) 103 FCR 577 at 589; [2000] FCA 1047 at para 54.

Rightly or wrongly (and it is not presently necessary for the Court to determine which), there is a view that the employer-employee relationship entails a power of disparity, or as it is often put, an inequality of bargaining power. It has long been thus. Blackstone considered the master-servant relationship to be one of status: William Blackstone, Commentaries on the Laws of England (1765) vol 1, pages 410-420. 245 years ago Lord Henley LC spoke of necessitous men not truly free (to exercise their will), but open to submission to any terms the crafty may impose: Vernon v Bethel [1762] EngR 18; (1762) 2 Eden 110 at 113. Modern Australian labour law academics and eminent legal writers have adverted to the inequality of employee bargaining power: Creighton & Stewart, Labour Law An Introduction (3rd ed) (Sydney: Federation Pres, 2000) pages 4-5; Macken, The Employment Revolution (Sydney: Federation Press, 1992) chapter 7; Ludeke, The Line in the Sand. The long road to staff employment in Comalco (Melbourne: Wilkinson Books, 1996) pages 1-2. That background simply reinforces the appropriateness of the consideration of power disparity as a possible factor in conduct allegedly causing duress.

There is evidence of indicators of a power disparity and the possible use of that power disparity by the officers and representatives of the Second Respondent (acting on behalf of the First Respondent) in relation to the offer and negotiations concerning entry into an AWA. They include:

a) the nature of the possible employer/employee relationship (as discussed above) but particularly in circumstances where there is a sale and purchase of a business, and Franklin and King were having to make decisions concerning employment arrangements for the future;

b) the fact that seemingly the only choice for Franklin and King was between employment on an AWA at the Hilton Supermarket and a continuation of employment with Action in another location somewhere else;

c) the circumstances of the September interviews, and the possibility that duress might have been applied or existed by reason of the time frames imposed (which were various - sometimes days, at other times hours and minutes) in which Franklin and King had to decide whether to accept the offer of entry into an AWA, without which acceptance there would be no employment at the Hilton Supermarket;

d) the possibility that there was pressure exerted during the course of the interviews and pre-sale period and that employees were, or felt, intimidated;

e) the failure to provide information, particularly where that information was relevant to an employee's desire to know and understand what the employment being offered under the AWA involved; and

f) assurances by officers of the Second Respondent that certain express written conditions of the AWA would not be enforced (namely the probationary period, time off in lieu and not having to clock off for tea breaks), and the refusal to confirm the oral assurances in writing.

In relation to this factor it can not be said the evidence is all one way in favour of summary dismissal of the proceedings. Nor can it be said that the prospects of success in relation to this factor are merely fanciful. This factor does not favour summary dismissal of the proceedings against the Second Respondent.

For the purposes of s.728 of the WR Act there is sufficient evidence, for present purposes, to establish that the Second Respondent was "involved in" the alleged contravention of s.400(5). In particular this relates to the evidence of Correia, and Franklin and King concerning the conduct of the officers and representatives of the Second Respondent (acting on behalf of the First Respondent) in relation to the offer and negotiations for entry into an AWA, including the actual arrangement and conduct of the September interviews.

At this stage the Court is only considering whether there is evidence, which if reasonably believed, might enable the Applicant to succeed at final hearing against the Second Respondent.

Having considered all of the affidavit evidence referred to above, and having given particular consideration to evidence in relation the factors considered above, the Court concludes that, if reasonably believed, that evidence and those factors indicate that the claim against the Second Respondent:

a) is not fanciful so as to preclude the prospect of successful prosecution of the claim;

b) has a real prospect of being successfully prosecuted; and

c) is not one where the evidence leads to the conclusion that only one outcome is reasonable; and

d) the alleged duress was arguably not "merely because" entry into an AWA was a condition of engagement (see s.400(6), WR Act), but because of other possible factors (discussed above), plus entry into an AWA being a condition of employment.

The discretion to summarily dismiss the claim is thus not enlivened, and the Second Respondent's application under r.13.10(a) of the FMC Rules for summary dismissal of the Application as against the Second Respondent must be dismissed.

The Court will hear the parties as to any application for costs.

The Court orders that the application under rule 13.10(a) of the Federal Magistrates Court Rules 2001 (Cth) for summary dismissal of the application as against the Second Respondent be dismissed.

I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Lucev FM