Bluescope Steel v Australian Workers Union, New South Wales

LEGISLATION CITED: Industrial Relations Act 1996

Australian Workers' Union NSW v Bluescope Steel (AIS) Pty Ltd (2006) 151 IR 153 BHP Steel (AIS) Pty Ltd (now known as Bluescope Steel (AIS) Pty Ltd) and The Australian Workers' Union, NSW [2006] NSWIRComm 263 Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales (No 2) (2004) 136 IR 48 CASES CITED: Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales [2006] NSWIRComm 274 Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales [2005] NSWIRComm 260 Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales (2006) 153 IR 176 Bluescope Steel Ltd (formerly BHP Steel Limited) v Australian Workers' Union, New South Wales (No 2) (2005) 141 IR 329 Director-General, Department of Education and Training v New South Wales Teachers' Federation [2000] NSWIRComm 103

PROSECUTOR Mr R Warren of counsel Solicitor: Ms J Sutherland BlakeDawsonWaldron LEGAL REPRESENTATIVES:

DEFENDANT Mr A Hatcher of counsel Solicitor: Ms R May Slater & Gordon

BLUESCOPE STEEL (AIS) PTY LTD v AUSTRALIAN WORKERS' UNION, NEW SOUTH WALES (NO 3)

Application by Bluescope Steel (AIS) Pty Ltd for summons to show cause under s 139 of the Industrial Relations Act 1996

1 In Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales [2006] NSWIRComm 274, a judgment given on 25 August 2006, the Court considered allegations in a summons to show cause under section 139 of the Industrial Relations Act 1996 issued by Bluescope Steel (AIS) Pty Ltd ("the prosecutor") that the Australian Workers' Union, New South Wales ("the AWU"), its officers, employees and members had contravened dispute orders made by Commissioner Connor on 23 April 2004 under s 137 and s 138 of the Industrial Relations Act in matter No IRC 2434 of 2004. 2 In its judgment, the Court found as follows: (1) On 27, 28 and 29 April 2004, contrary to Order 2 of the dispute orders made by Connor C on 23 April 2004, the AWU and its officers did not cease and refrain from organising and encouraging industrial action. (2) On 27, 28 and 29 April 2004, contrary to Order 3 of the dispute orders made by Connor C on 23 April 2004, the AWU and its officers did not take all reasonable and necessary steps to ensure compliance with Order 1 of those orders. (3) On 29 April 2004, contrary to Order 1 of the dispute orders made by Connor C on 23 April 2004, the AWU and its members employed in the coke oven batteries, did not cease and refrain from taking industrial action. (4) On 27 and 28 April 2004 the AWU and its officers acted in contravention of the dispute orders made by Connor C on 23 April 2004. (5) On 29 April 2004 the AWU its officers and its members employed in the coke oven batteries, acted in contravention of the dispute orders made by Connor C on 23 April 2004. 3 The matter was subsequently listed for hearing for the purpose of considering what action should be taken pursuant to s 139(3) of the Act in relation to the contraventions of the dispute orders by the AWU. This judgment concerns the question of penalty. 4 The principal issue that emerged in the course of the proceedings was whether the Court should find that the circumstances were such that the Court should take no action on the contravention.

5 The Court's power to decline to take any action in relation to the contravention of a dispute order derives from s 139(3)(a) of the Act, which is in the following terms: 3) The Commission may, after hearing any person who answered the summons to show cause and considering any other relevant matter, do any one or more of the following: (a) dismiss the matter if it finds that the dispute order was not contravened or if it finds that the circumstances were such that the Commission should take no action on the contravention, …

6 The circumstances upon which the AWU relied for its submission that the Court should take no action on the contravention relate to the reasons why this Court originally found it had no jurisdiction to entertain the prosecutor's application: see Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales [2005] NSWIRComm 260, a judgment given on 28 July 2005. The primary basis upon which the Court found it did not have jurisdiction was because the dispute order made by Connor C did not apply to the alleged industrial action that occurred on 27, 28 and 29 April 2004, but rather the orders applied to industrial action connected to what the Court considered was a separate industrial dispute that occurred on 22-23 April 2004. 7 This 'separate' dispute involved strike action by production employees employed by the prosecutor at the Coke Ovens of Port Kembla Steelworks. The employees were members of the AWU. The strike was in protest at the dismissal of an employee, Mr Methuisela Malufuka, an operator, for allegedly threatening behaviour towards a supervisor. 8 On 23 April, after hearing the parties, Connor C issued a certificate of attempted conciliation and made the dispute orders that are the subject of these proceedings. It may be noted the Commissioner's orders came into effect on and from 6.00pm on Friday, 23 April 2004 and were to remain in force until Monday 24 May 2004 unless, on formal application, they were varied or rescinded in the meantime. Following a meeting of the striking employees to consider the Commissioner's orders, a return to work was effected at about 6.30 pm on 23 April. 9 On 27 April 2004 a notice convening a stop work meeting of all members of the "combined steel unions" was circulated within the steelworks calling a stop work meeting at 7.30 am on 29 April 2004. The agenda of the meeting was to hear a report on enterprise bargaining negotiations and outsourcing on Coil Handling. The meeting on 29 April was subsequently held and it was resolved to take strike action. On 30 April, following proceedings before a Full Bench of the Commission, the striking employees returned to work on 30 April. 10 The Court, as presently constituted, took the view in its decision of 28 July 2005, that the dispute involving the dismissal of Mr Malufuka was separate to the dispute that occurred between 27 and 30 April and, consequently, as the dispute order made by Connor C did not apply to the later dispute, the Court had no jurisdiction to hear and determine the prosecutor's application alleging contravention in respect of the later dispute. 11 In Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales (2006) 153 IR 176, a judgment given on 7 June 2006, the Full Bench found that the Court at first instance was wrong. Whilst the Full Bench did not expressly say so, it is apparent from a reading of the judgment as a whole that the Full Bench was of the view that the orders made by Connor C on 23 April 2004 in relation to the Malufuka dispute applied with equal force to the dispute that arose on 27 April and which continued until the return to work on 30 April. 12 It was on the basis of the Full Bench's decision and the remittal of the matter to the Court as presently constituted, that I proceeded to consider whether the AWU, its officers, employees and members had contravened the Commissioner's dispute orders of 23 April 2004 and consequently made the findings set out at [2] of this judgment. 13 Prima facie, the findings in [2] hereof would attract a penalty under s 139(4) of the Act. The complicating factor, however, is that there was evidence in the proceedings that certain officers of the AWU believed the dispute orders made by Connor C did not apply to the events of 27-30 April 2004 but were limited to the Malufuka dispute. It was, primarily, on this basis that counsel for the AWU contended that the Court should take no action on the contraventions found to have occurred between 27 and 29 April 2004 because the officials honestly held a belief that "the orders had no application to the industrial dispute which was the subject of the findings of contravention." 14 Counsel for the prosecutor, on the other hand, contended that the AWU, through its officials, could have been in no doubt that the orders were to remain in force for one month from 23 April and that the orders were not limited to the Malufuka dispute but rather applied to the organising and taking of any industrial action during the period the orders were in force. 15 Mr Darryl Anderson was the Acting Branch Secretary of the Australian Workers' Union, New South Wales Port Kembla, South Coast and Southern Highlands Branch when he swore his affidavit in the proceedings in July 2004. In referring to the industrial action that occurred on 29 April 2004 Mr Anderson deposed that: As the stop-work meeting and the subsequent picket line was a consequence of the EBA negotiations, I did not have a view that in any way the action taken by the members was breaching the Dispute Orders issued by Commissioner Connor on 23 April 2004. As (sic) I maintained a belief that those orders related solely to the alleged unfair dismissal of Mr Malufuka. 16 Mr Anderson was cross-examined about this statement that he believed the orders related only industrial action associated with the dismissal of Mr Malufuka. The relevant extract from the transcript of proceedings is set out below: Q. At what time do you say you formed the belief that these orders didn't apply to the behaviour of the 29th and 30th? A. When the members - when I read the orders to the members and they returned to work my belief was that we complied with the orders and that was it, and that was to be the end of it. Return to work over the orders that were issued in relation to Neil Malufuka.

Q. You knew the orders continued for a month, though, didn't you? A. Yes. Q. Because you had submitted to the Commissioner that they be reduced from three to one month? A. Yes. Q. And at the time you made that submission for the reduction in the orders you said words to the effect, "if I can just address now, the company's application for orders. I think from my opinion for the Union side of the argument, I believe that three months [is] a long time for and an area that very rarely has industrial problems. I think some of the decisions being made by management may point to more industrial problems but I think the history is good. They are very reluctant to have disputes and have dug in for one of their mates on this occasion and to send a message of the way they are being treated by the staff. I think that three months seems a long time for orders if the Commission has to issue orders I would argue that they should be a shorter term". You say that you believed that they didn't apply to the disputation on 29th and 30th from the day they were complied with on the 23rd. Is that how I understand your evidence? A. I'm sorry, could you repeat that? ... Q. Let's just deal with the 29th at the moment. The question that I asked you initially was, when did you form the belief that those orders didn't apply? Just return to that basic question? A. I couldn't say definitely when I formed the belief, but when there was a general stoppage my thoughts were that it didn't apply, the orders didn't apply. I really can't say with any volition I really thought of it at the time.

Q. Is that your position, you never thought of it? A. Well, I believe, as I said, when there was the general stoppage that, I couldn't say for certainty I thought of it at the time, I'm saying my belief was, I know I had a belief that if there was a general stoppage that they were two separate issues. I think I have answered that a few times. … Q. Did you seek any advice as to the operation of the orders that were made by Commissioner Connor? A. No. Q. So, did you return to the orders. That is, did you look at a copy of the orders to remind you of the terms of the orders when you were on that picket line? A. No, I don't recall, but I don't believe I did. ... Q. You formed the belief as to the operation of those orders without seeking any advice? A. I believe that I overheard in the past on different occasions where there is a general stoppage and there is departments that have orders it just doesn't apply. I had it in my head that was the case. Whether that's right or wrong, I don't know. Q. You didn't check the orders by rereading the orders to see whether your belief was right or wrong, did you? A. I didn't have them on me for a start. As I said I went straight from a meeting at MM Metals to the pickets. ... Q. You are the author of the bulletin which went out in May 2004. I ask you to have a look at this document, sir? A. Yes, it is an update, I think, yes. Q. The date on that seems to be cut off, do you recall when that was? Is that 14 May? A. I can't recall.

Q. Any way that was advising persons of Mr Malufuka's unfair dismissal hearing that was going to be heard? A. Yes.

Q. The Union lodged a dispute notification about a number of matters, and that the company will be taking legal action against the Union because of the dispute following a dispute over Malufuka's dismissal. And you say there quite clearly Commissioner Connor handed down orders that no industrial action for one month? A. Yes.

Q. You didn't say in that bulletin anything about this purported belief of yours that the orders didn't apply to other industrial action, did you? A. The intention of the bulletin, it's just an update on Mr Malufuka's hearing, really. Was only supposed to be a short note to let people know what was going on about that, from memory.

Q. That's not just quite updating Mr Malufuka. Point 3, that is advising members of the company taking legal action, isn't it. And it was in the context of you advising the members the company was taking legal action that you quite clearly say Commission Connor handed down orders there be no industrial action for one month? A. Yes.

Q. And there is nothing in there about your so-called belief that the orders related only to Mr Malufuka, is there? A. I don't think I would write my beliefs in the bulletin. This was just about updating the facts and what was happened, what occurred since I had last seen the fellows? 17 Mr Andrew Gorman was an official of the AWU. He deposed that to his knowledge the stop work meeting of 29 April 2004 was not called to discuss Mr Malufuka's dismissal, nor was the resolution to stop work related to that dismissal. 18 Mr David Bell was the prosecutor's Coke Making Manager. He deposed that on 29 April 2004 he said to Mr Formosa and Mr Burns, two AWU delegates on the picket line: You know that there are security cameras here. You need to allow Essential Services into the Works. I remind you that there are orders in place that there be no industrial action. 19 Mr Bell indicated that Mr Formosa responded by saying: We understand. It's not a Coke Making issue, it is a BlueScope issue. There is not much we can do about it. 20 Mr Formosa, in his affidavit, denied the response as Mr Bell had recalled it and said the words he used were to the effect: This is nothing personal, its got nothing to do with Mr Malufuka, this is a dispute about why Bluescope won't participate more in the EBA negotiations. 21 Thomas O'Toole was the prosecutor's 4, 5 and 6 Coke Ovens Batteries Operations Manager. Mr O'Toole said that following the issuing of the dispute orders he spoke to certain individual operators, including Mr Burns an AWU delegate, and explained to them that the orders meant that the employees could not take strike action before 24 May 2004. Mr O'Toole also said in his evidence he had a conversation with Mr Formosa on the picket line and said to him: I would have thought the orders last week meant you shouldn't do this. 22 Mr O'Toole said that Mr Formosa replied: Its two different things. One's about one thing, the other about another. 23 It would appear that both Mr Bell and Mr O'Toole held the belief that the orders made by Connor C on 23 April applied to the industrial action on 29 April. Mr Formosa appeared to be of the view that there were two separate disputes and it may reasonably be inferred that he considered the dispute orders did not apply to the "dispute about why Bluescope won't participate more in the EBA negotiations." 24 Apart from Mr Bell and Mr O'Toole there was no other indication from the prosecutor on 27, 28 or 29 April that it considered the Coke Oven employees were acting in contravention of the dispute orders. One would have expected either a formal communication from the prosecutor to the AWU at least protesting about the contravention. Further, surprisingly, it does not seem the prosecutor was of the view at the time of its appearance before the Full Bench on 29 April 2004 that the industrial action taken by the Coke Oven employees on that day was in contravention of the dispute orders made by Connor C on 23 April. If it had been, it surely would have expressed that view to the Full Bench in the proceedings in an endeavour to have those employees ordered immediately back to work, the Coke Ovens being critical to production. No such view was expressed. 25 The most probative evidence about whether the AWU, through its officials, believed it was not acting in contravention of the dispute orders on 27, 28 and 29 April 2004 was that of Mr Anderson. The evidence of Mr Gorman and Mr Formosa was somewhat oblique on the issue and is not, on its own, a proper basis to form any proper conclusions. 26 On the face of it, Mr Anderson appears to have held an honest belief that the orders made by Connor C only applied to the Malufuka dispute and after encouraging, and succeeding in achieving, a return to work on 23 April, Mr Anderson believed that his Union had complied with the orders. 27 That Mr Anderson may have held such a belief is not, with respect to the Full Bench decision given on 7 June 2006, surprising. The issue of whether a dispute order, ostensibly made in respect of particular industrial action by a limited group of employees over a particular dispute, could have application to later industrial action arising out of a dispute about a different subject matter involving all steel works employees (albeit such industrial action occurring during the period the dispute order applied), had not previously been the subject of any ruling by the Commission. 28 Nevertheless, in order to test the veracity of Mr Anderson's belief it is necessary to consider what occurred in the proceedings before Connor C on 22-23 April 2004 following the notification by the prosecutor of a dispute in relation to a strike "in protest following the dismissal of an employee" (Mr Malufuka), such dismissal being for misconduct. On 23 April, following the rejection the previous day by the AWU and its members of the Commissioner's recommendation that there be a return to normal work, the prosecutor sought dispute orders.

29 In the course of proceedings on 23 April the issue of the duration of any dispute orders arose. Mr Anderson submitted that a three months' life for the dispute orders was too long and had contended for a shorter term. The prosecutor submitted, in effect, that because Mr Anderson had argued before Connor C for a shorter period that Mr Anderson was aware that any industrial action by Coke Oven employees would be a contravention of the dispute orders. 30 Mr Anderson's submissions regarding a shorter life for the dispute orders have to be seen in context. There was some debate before the Commissioner about how long it was taking for unfair dismissal matters to be heard by the Commission but it does not seem to me that Mr Anderson was contending that because it was taking some months before such matters were dealt with that his Union should have the opportunity of engaging in further industrial action in order to speed up the process. Such a submission would have been roundly criticised by the Commissioner and rightly so. But it is apparent from the transcript of proceedings that the Commissioner did not understand this to be the submission. 31 Mr Anderson also indicated before Connor C that the dispute was not confined to the dismissal of Mr Malufuka, but extended to the conduct of a particular supervisor or supervisors in the Coke Making Department, who it was suspected were involved in "setting up" Mr Malufuka. Part of the reason for the industrial action was to protest at that conduct. In his submissions to the Commissioner, Mr Anderson noted that employees in the Coke Ovens had been "crying out for some time to the company about the behaviour of one of these supervisors in particular, and it has been falling on deaf ears" but that they were: [V]ery reluctant to have disputes, and they have dug in for one of their mates on this occasion, and to send a message of the way they are being treated by the staff there. I think that three months seems a long time for orders, and if the commission has to issue orders I would argue they should be for a shorter term. 32 Commissioner Connor responded to Mr Anderson's submission by stating: I certainly appreciate what you're saying about the length of time involved in this. I don't wish to in any way tie the hands of a group who, with respect, have been far from regular customers of this commission in this sort of manner that's happened… 33 In responding to the issue of the duration of the dispute orders Mr Brotherson, for the prosecutor, accepted that this was a matter for the Commissioner, but stated: We wouldn't want to see any industrial action over this issue, whilst the matter takes its course… 34 I consider the reasonable inference that may be drawn from what was said in the proceedings before Connor C is that the reason for the submission by Mr Anderson seeking a shorter period than three months arose from his concern that his Union's hands would be tied, so to speak, from taking industrial action for three months in the face of continuing, allegedly objectionable, conduct by supervisors that, despite complaints by employees, had not been addressed by the employer. Moreover, I consider both Mr Brotherson and the Commissioner understood that to be the context in which Mr Anderson sought a shorter duration in respect of the dispute orders. 35 It becomes necessary, however, to consider how the Full Bench saw matters in its decision of 7 June 2006. At [32]-[33] of its decision the Full Bench stated: 32 Having rejected the AWU's narrow interpretation of s 137(1)(a), it is not necessary for the purposes of this appeal to determine the scope of the industrial dispute notified in Matter No IRC 2434 of 2004. We do, however, note that based on the evidence before us it appears that the dispute was, in fact, broader than an isolated strike in response to the dismissal of Mr Malufuka, or took place in the context of the broader enterprise bargaining dispute concerning (for the unions' part) general job security and (for the company's part) continuous production. In our view, there was a real connection between the strike action in Matter No IRC 2434 of 2004 and the broader enterprise bargaining dispute. We note, in particular, that the dispute notification referred, baldly, to "strike action by production employees employed by the Company at the Coke Ovens Batteries" and stressed the importance to Bluescope of the continuous operation of the Coke Ovens Batteries. The critical nature of any industrial action of this type to the dispute was reflected in the decision of Connor C that: "It, of course, goes without saying that there should be continuous operations for the coke ovens which are such an integral part of the steelworks operations that any problems in production in that area must have a significant impact across the whole steelworks, especially over the forthcoming Anzac Day holiday period" and in the breadth of the orders made.

33 We accept the submissions of Bluescope that there was no denial of natural justice. Both parties were present and understood that the issue being canvassed before Connor C was the operation of the coke oven batteries unhindered by any industrial action. In particular, the AWU's representative understood the importance to Bluescope of the continuous operation of the coke oven batteries (not the operation of the coke oven batteries free from this particular strike) and understood that this was a factor influencing Connor C's decision. This is clear from the fact that Connor C made the order for a shorter term than that requested by Bluescope on the basis that "the coke ovens have been relatively free from industrial action in recent times". 36 The Full Bench's observations were, of course, obiter and qualified by a reference to how it appeared to the Full Bench. Nevertheless, the views expressed in the foregoing quote must be accorded the weight and respect they deserve. 37 At the time the dispute over Mr Malufuka's dismissal came before Connor C, there was a broader dispute on foot regarding negotiations over enterprise bargaining (Matter No IRC 400 of 2004). Apparently this was the "broader enterprise bargaining dispute" referred to by the Full Bench. The Full Bench considered there was "a real connection" between the strike action being dealt with by Connor C on 22 and 23 April 2004 and the broader enterprise bargaining dispute. It is, with respect, difficult to see how that was the case given that, in its dispute notification, the prosecutor understood the strike to be "in protest following the dismissal of an employee", such dismissal having been for misconduct, and that no mention was made of any broader enterprise bargaining issues at play during the proceedings before the Commissioner.

38 Nonetheless, accepting as I should that there was a connection between the strike action and the broader industrial dispute, there was nothing done or said in the proceedings before Connor C on 22 or 23 April 2004 that could reasonably be construed as having indicated to Mr Anderson at the time that in addition to banning industrial action over the Malufuka dispute, the orders also represented a ban on industrial action in respect of enterprise bargaining and outsourcing in circumstances where those issues became the subject of a plant-wide stoppage after Mr Anderson had achieved compliance with the orders of 23 April. Enterprise bargaining and outsourcing were not the subject of any discourse in the proceedings before Connor C. Nor did the Commissioner, in issuing the orders, indicate that the orders applied to the broader enterprise bargaining dispute. 39 I note the acceptance by the Full Bench that Mr Anderson understood the importance to Bluescope of the continuous operation of the coke oven batteries and understood that this was a factor influencing Connor C's decision and that Connor C made the order for a shorter term than that requested by Bluescope on the basis that "the coke ovens have been relatively free from industrial action in recent times". But I would respectfully contend that does not gainsay the fact that the Commissioner also reduced the duration of the orders because he did not wish to tie the Union's hands for an inordinate period of time given the concern expressed in relation to the alleged conduct of certain supervisors and the alleged failure of the prosecutor to take action in that respect.

40 It must be accepted, as the Full Bench found, that Mr Anderson understood the importance to the prosecutor of the continuous operation of the Coke Oven batteries. But in the same way that Mr Anderson believed the Commissioner did not impose a permanent ban on industrial action in the Coke Ovens, there is room for sufficient doubt that Mr Anderson believed, albeit wrongly, that his Union was not banned by the dispute orders from taking industrial action in the Coke Ovens in circumstances where that industrial action came later in time over plant-wide issues that were not the subject of any consideration by the Commissioner at the time he issued the dispute orders. 41 In these circumstances, I do not perceive that any of the conclusions I have reached in this judgment are inconsistent, or in conflict, with the Full Bench decision.

42 In addition to his submission that officials of the AWU held an honest and genuine belief that the dispute orders of 23 April did not apply to the events of 27-30 April, Mr Hatcher of counsel for the AWU submitted: Of course we are now in a position where the Full Bench has made the legal position clear. My client will in the future be able to conduct itself with the benefit of that decision on the basis of a proper understanding of the scope of dispute orders once made. So that I can assure the court that my client has that full understanding of the legal position and has that full understanding of what at least potentially if not actual dispute orders can require to do even in relation to the unrelated dispute. So that the court can be assured that the misapprehension or misunderstanding which my client previously had has been removed by the decision of the Full Bench and there can be no excuse for my client in the future that it didn't understand the position. And that we say is a corrective matter which the court can take into account in determining any issue of penalty. 43 In the context of that submission Mr Hatcher referred to two decisions Director-General, Department of Education and Training v New South Wales Teachers' Federation [2000] NSWIRComm 103 and Bluescope Steel Ltd (formerly BHP Steel Limited) v Australian Workers' Union, New South Wales (No 2) (2005) 141 IR 329. In relation to the first of these decisions, counsel drew the Court's attention to what Marks J said at [8] and [9]: 8 In my judgment I concluded that "the respondent simply did not intend at any stage to comply with the dispute orders." Accordingly, it may be assumed that the respondent had wilfully disobeyed the dispute orders issued by Deputy President Sams. Prima facie, therefore, the contravention was a serious one. 9 Notwithstanding the serious nature of the contravention I am, however, persuaded to accede to the application made by Mr Crawshaw for two principal reasons. The first and, in my view, the most significant is the apology made by the respondent, the New South Wales Teachers' Federation and its declaration of belief in and willingness to uphold the integrity of the Industrial Relations Commission of New South Wales. Such a public acknowledgment and declaration should ensure that the New South Wales Teachers' Federation will not engage in any activity or conduct of any kind in the future which will lead it to contravene any orders of the Industrial Relations Commission of New South Wales. 44 In relation to the second judgment, attention was drawn to [2]-[5]: 2 In its judgment on appeal dated 27 August 2004 this Full Bench held that the failure to dispatch the urgent product to Electrolux breached clause 9 of the Enterprise Agreement between the company and the AWU and was in breach of one of the dispute orders made by Commissioner Connor: see Bluescope Steel Limited v The Australian Workers' Union, New South Wales [2004] NSWIRComm 222. We have now received the submissions and evidence filed by the parties on the issue of penalty for the AWU's breach of the dispute orders. 3 The company has asked that this Commission impose a penalty at the "top of the range" on the AWU for breach of the dispute orders under s 139 of the Industrial Relations Act 1996. The maximum penalty for the offence is $10,000.

4 In deciding what approach to take to the fixing of the penalty we take into account the following: 1. This particular work, being the dispatch of urgent product, was important to the company, as the AWU and the employees concerned all knew. 2. Clause 9 of the Enterprise Agreement (since replaced by a consent award) was part of an agreement made between the AWU on behalf of its members and the company. The AWU, on behalf of its members, had agreed that the terms which it contained would be honoured. As the Commission has consistently emphasised, the quality of observance of such agreements is both 'strict' and solemn. 3. In an affidavit sworn for the purpose of these proceedings, Mr Andrew Gillespie, the Port Kembla, South Coast and Southern Highlands sub-Branch Secretary of the AWU, said that the breach occurred because Mr Darryl Anderson, the acting Branch Secretary was not conversant with aspects of dispatch or meeting urgent customer needs as required by clause 9. Mr Gillespie also said that the Union (and, therefore, also its members) has become fully aware of its obligations in relation to urgent dispatch, and the Union will now ensure compliance with urgent dispatch requirements notwithstanding any industrial action. 4. We understand Mr Gillespie to have said that the Union from now on will ensure that the AWU and its members will comply with the obligations created by clause 9 of the Enterprise Agreement, now contained within the Award. 5. The importance of deterring the Union and its members from engaging in a similar breach of their obligations and dispute orders in the future.

5 In these circumstances, even though (contrary to the AWU's submissions) this is plainly a serious offence, we have decided to defer imposing any penalty to give the Union and its members a chance to demonstrate their commitment to honour the agreement made with the company, knowing that Mr Gillespie has said he will do everything within his power to make sure that urgent product is dispatched as required by the Award. We have fixed a period of two years for this purpose but we will relist the matter, on application, within that period if there is any further industrial action after today at the steelworks by the Union contrary to the terms of any order, award or agreement. 45 Obviously, counsel for the AWU, in drawing attention to the two judgments, was submitting that there were precedents for not imposing a penalty under s 139(4) of the Act, even in circumstances where the contravention was held to be serious. 46 Penalties have been imposed on the AWU on three occasions in the past two years as a consequence of the conduct of its Port Kembla, South Coast and Southern Highlands Branch at the prosecutor's steel works in Port Kembla: BHP Steel (AIS) Pty Ltd (now known as Bluescope Steel (AIS) Pty Ltd) and The Australian Workers' Union, NSW [2006] NSWIRComm 263 (subject to appeal); Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union, New South Wales (No 2) (2004) 136 IR 48; Australian Workers' Union (NSW) v Bluescope Steel (AIS) Pty Ltd (2006) 151 IR 153. Moreover, imposition of a further penalty was deferred pending demonstration by the AWU that it was committed to observing the terms of an industrial agreement: Bluescope Steel Ltd (formerly BHP Steel Limited) v Australian Workers' Union, New South Wales (No 2) (2005) 141 IR 329. 47 The imposition of penalties for contravention of dispute orders and industrial instruments are exceedingly rare in the New South Wales system of industrial regulation. The highly successful system of conciliation and arbitration embodied in the Industrial Relations Act and the ready access industrial parties have had to those dispute resolution mechanisms, has meant that, in the vast majority of cases, resort to unlawful industrial action simply does not come into contemplation. 48 Whilst international competitive pressures and other factors have placed enormous strain on the relationship of the industrial parties this Commission, and its predecessors, over many years have recognised the importance of the industrial area of Wollongong, centred on the steel works, and has placed, and continues to place, a priority on the need to provide resources to assist in resolving industrial disputes at what has, from time to time, been a volatile site. That is why it is difficult to understand why the Port Kembla, South Coast and Southern Highlands Branch of the AWU found it necessary, on the occasions that it has, to eschew the processes of the Commission when the Commission has gone out of its way to make itself available and accessible in order to avoid industrial disruption at the steel works and the consequential loss of production, reduced competitiveness and hardship to employees and their families.

49 In any event, its recent record does not place the AWU in a favourable light in circumstances where there has been a further contravention of the Commission's orders and the Court is asked to exercise its discretion against imposing a further penalty. There was after all, as Mr Warren of counsel for the prosecutor submitted, clear contraventions of the dispute orders by the AWU.

50 I have decided, nevertheless, not to impose any penalty in relation to the contraventions found to have been committed by the AWU on 27, 28 and 29 April 2004. Having heard all of the evidence in this matter and having had the opportunity to see Mr Anderson in the witness box, I consider Mr Anderson did have an honest and genuine belief the orders did not apply and that there was a reasonable foundation for that belief. I have also had particular regard to Mr Hatcher's submission that the AWU now has a proper understanding of the scope of dispute orders once made, that it regrets the misunderstanding, that it will regulate its conduct accordingly and that there can be no excuse in the future that the AWU did not understand the position. 51 In the absence of a clear-cut case that a penalty is warranted I would be concerned that if a penalty were imposed, justice would not be done and would not be seen to be done with potential adverse industrial consequences for the relationship between the industrial parties at the steel works. No order as to costs.

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