Balding v Ten Talents Pty Ltd & Anor [2007] FMCA 145

Balding v Ten Talents Pty Ltd & Anor [2007] FMCA 145 - FMCA 2007 case summary — Zoe

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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:

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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.

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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.

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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:

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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:

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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:

At a glance

Court

Decision date

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Judgment (82 paragraphs)

Balding v Ten Talents Pty Ltd & Anor [2007] FMCA 145 (15 February 2007)

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Legislation Cited (4)

Cases Cited (15)