John Holland Pty Ltd v The Maritime Union of Australia [2009] FCA 437 | Case summary

The following words be struck out of paragraph 5 of the First to Fifteenth Respondents' Defence filed 25 July 2008, namely: 'and the First to Fifteenth Respondents further say that the purported agreement described as the "CDS Collective Agreement" was not a valid agreement for the purposes of the Workplace Relations Act 1996' Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT 1 The matter presently before the Court is a Notice of Motion filed by the applicant on 17 December 2008. It seeks an order that paragraph 5 of the First to Fifteenth Respondents' Defence filed 25 July 2008 be struck out. 2 The proceedings were commenced by an Application filed 5 March 2008 which was supported by a Statement of Claim filed on the same day. An Amended Application was filed on 29 May 2008 which was supported by an Amended Statement of Claim also filed on that day. 3 Paragraph 5 of the Amended Statement of Claim provided as follows: '5. The employment of each of the Third to Sixteenth Respondents is subject to the provisions of the Construction Diving Services Pty Ltd (Bluewater) Employee Collective Agreement 2007, ("the CDS Collective Agreement") registered under the provisions of the WR Act [a reference to the Workplace Relations Act 1996 (Cth) ('the Workplace Relations Act'].' 4 In paragraph 6 it was alleged that the third to sixteenth respondents were 'each members of the First Respondent' and in paragraph 3 it was alleged that the second respondent 'is and was at all material times employed by the First Respondent in the capacity of the Sydney Branch Secretary'. 5 In paragraph 4 of the Amended Statement of Claim the applicant alleged that each of the third to sixteenth respondents was employed by Construction Diving Services Pty Ltd to perform diving work at or about the applicant's construction activities at Kurnell and Botany in New South Wales, which construction activities were pursuant to a contract with Sydney Water to construct a desalination plant at Kurnell. 6 Paragraphs 23 - 26 of the Amended Statement of Claim provided as follows: '23. CDS [a reference to Construction Diving Services Pty Ltd] employs divers under the provisions of the CDS Collective Agreement. 24. The CDS Collective Agreement is in force until the 20 December 2012. … 25. The CDS Collective Agreement applies to the exclusion of any other instrument and exclusively regulates the conditions of employment of divers employed by CDS. … 26. The CDS Collective Agreement prohibits extra claims for improvements in wages or conditions during the period the agreement is in force. …' 7 Paragraph 5 of the First to Fifteenth Respondents' Defence filed 25 July 2008 provided as follows: '5. Paragraphs 5, 23, 24, 25 and 26 are denied and the First to Fifteenth Respondents further say that the purported agreement described as the "CDS Collective Agreement" was not a valid agreement for the purposes of the Workplace Relations Act 1996.' 8 The Sixteenth Respondent has not taken any part in the proceedings to date. 9 The applicant's case concerns industrial action said to have been taken in early March 2008 by the third to sixteenth respondents which industrial action was said to have been contrary to the CDS Collective Agreement and to have been otherwise unlawful. It is unnecessary for present purposes to say any more about the applicant's claims for relief. 10 The basis upon which the applicant has sought an order striking out paragraph 5 of the First to Fifteenth Respondents' Defence filed 25 July 2008 was succinctly recorded in the applicant's Outline of Submissions as follows: '10. The Applicant submits that the Respondents are not entitled to plead paragraph 5 of the Defence because: (a) on the proper construction of the WR Act the contention that the CDS Collective Agreement is not a valid agreement for purposes of that Act is wrong; (b) it is an impermissible attempt by the Respondents to "approbate and reprobate" by the advancing of a contention which is inconsistent with an earlier assertion by and on behalf of the Respondents made to the Australian Industrial Relations Commission (AIRC) in order to procure a benefit for the Third to Sixteenth Respondents. Before the AIRC, it was contended that the said Collective Agreement applied, and that it created enforceable rights in, inter alia, the Third to Sixteenth Respondents. 11. It is in the interests of justice that the Respondents not be allowed to prosecute paragraph 5 of the Defence at the hearing of the suit and thus avoid the unjustifiable requirement for the Applicant to deal with irrelevant and unmeritorious issues - thereby adding to the complexity, duration and cost of the suit. Accordingly, the provisions of s.31A FCA [a reference to the Federal Court of Australia Act 1976 (Cth) ('the Federal Court of Australia Act')] and O.19r2 [presumably intended as a reference to Order 29 rule 2] and O.11r16 [of the Federal Court Rules] ought be engaged to strike out the embarrassing pleading .' 11 Further reference to s 31A of the Federal Court of Australia Act and Order 19 rule 2 and Order 11 rule 16 of the Federal Court Rules is to be found in paragraph 2 of the applicant's Outline of Submissions which included: 'The Notice of Motion seeks to draw upon the jurisdiction and authority given to the Court by Section 31A FCA and O.19r2 [presumably intended as a reference to O.29r2] and O.11r16 FCR.' 12 Upon the hearing of the applicant's Notice of Motion filed 17 December 2008, the applicant eschewed its earlier reliance upon the Court's power to order summary judgment in respect of any part of the proceeding under s 31A(1) of the Federal Court of Australia Act and upon Order 29 rule 2 of the Federal Court Rules which allowed for orders to be made by the Court for the separate decision of any question in the proceeding before the trial. 13 The applicant based its claim for relief in respect of paragraph 5 of the First to Fifteenth Respondent's Defence exclusively upon the powers of the Court contained in Order 11 rule 16 of the Federal Court Rules which provided as follows: '16 Where a pleading - (a) discloses no reasonable … defence …; (b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or (c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceeding order that … any part of the pleading be struck out.' 14 The applicant contends that the Construction Diving Services Pty Ltd (Bluewater) Employee Collective Agreement 2007 (referred to as 'the CDS Collective Agreement') was an employee collective agreement within the meaning of s 327 of the Workplace Relations Act and, accordingly, a workplace agreement within the meaning of the Act (see the definitions of 'workplace agreement' and 'collective agreement' in s 4 of the Act). 15 It submits that an employee collective agreement was lodged with the Workplace Authority Director in accordance with s 344 of the Workplace Relations Act on 20 December 2007 (the date of its receipt by the Workplace Authority) and that by that lodgement the agreement came into operation within the meaning of s 347 of the Workplace Relations Act. The applicant placed particular reliance upon s 347(2). 16 The first to fifteenth respondents' written submissions in response to the strike out application included the following: '9. The respondents will submit at the final hearing that no employee collective agreement was made for the purposes of s327 of the WR Act. In particular, it will be submitted that for there to be an employee collective agreement there must be an act between the employer and the employees collectively of coming to a mutual arrangement. 10. The facts on which the respondents intends to rely to make good this part of the defence that there was no valid agreement are as follows: a. There was no decision making process for employees in respect of the approval of the purported collective agreement; b. There was no decision of employees to enter into the purported collective agreement; c. No person was authorised to enter into a collective agreement on behalf of employees; d. No person did enter into a collective agreement on behalf of the employees; e. There was no agreement between CDS and the relevant employees so as to give rise to an employee collective agreement. … 16. The respondents contend that in order for an employee collective agreement as contemplated by s327 to come into existence: a. there must be identifiable parties; b. the parties must have an employer employee relationship; c. there must be a process through which eligible employees collectively determine whether to agree to the proposed agreement; d. That process must be completed; e. If an individual is to represent the employees in entering into the agreement that employee must be authorised by other eligible employees to do so; and f. There must be an agreement between the employer and the employees collectively to be bound by the terms of the agreement.' 17 Section 341 of the Workplace Relations Act relevantly provided as follows: '341(1) An employer contravenes this subsection if: (a) the employer lodges a workplace agreement …; and (b) the agreement has not been approved in accordance with section 340. (2) Subsection (1) is a civil remedy provision.' 18 The relevant requirement for approval of an employee collective agreement in s 340 of the Workplace Relations Act was expressed as follows: '340(2) An employee collective agreement … is approved if: (a) the employer has given all of the persons employed at the time whose employment will be subject to the agreement a reasonable opportunity to decide whether they want to approve the agreement; and (b) either: (i) if the decision is made by a vote - a majority of those persons who cast a valid vote decide that they want to approve the agreement; or (ii) otherwise - a majority of those persons decide that they want to approve the agreement.' 19 In passing I would observe that s 340(2)(b) does not mandate that a meeting be held in order to enable a decision to be made by a majority 'that they want to approve the agreement'. Selection of the manner in which approval for an employee collective agreement would be sought under s 340 was a matter for the employer (see s 337(4)(a)). 20 Other pre approval requirements in respect of an employee collective agreement were set out in ss 337 and 338 of the Workplace Relations Act. 21 Once an employee collective agreement was approved in accordance with s 340 of the Workplace Relations Act, the employer was required by s 342(1) to lodge the agreement with the Workplace Authority Director within 14 days after the approval. Sections 342 - 346 relevantly provided: '342(1) If … an employee collective agreement … has been approved in accordance with section 340, the employer must lodge the agreement, in accordance with section 344, within 14 days after the approval. … 344(1) The employer in relation to a workplace agreement lodges the workplace agreement with the Workplace Authority Director if: (a) the employer lodges a declaration under subsection (2); and (b) a copy of the workplace agreement is annexed to the declaration. (2) An employer lodges a declaration with the Workplace Authority Director if: (a) the employer gives it to the Workplace Authority Director; and (b) it meets the form requirements mentioned in subsection (3). (3) The Workplace Authority Director may, by notice published in the Gazette set out requirements for the form of a declaration for the purposes of paragraph (2)(b). (4) A declaration is given to the Workplace Authority Director for the purposes of subsection (2) only if the declaration is actually received by the Workplace Authority Director. … (5) The Workplace Authority Director is not required to consider or determine whether any of the requirements of this Part (other than Division 5A) have been met in relation to the making or content of anything annexed to a declaration lodged in accordance with subsection (2). 345(1) If a declaration is lodged under subsection 344(2), the Workplace Authority Director must issue a receipt for the lodgment. (2) The Workplace Authority Director must give a copy of the receipt to: (a) the employer in relation to the workplace agreement; … … 346(1) An employer that has received a receipt under section 345 in relation to a collective agreement must take reasonable steps to ensure that all persons whose employment is subject to the agreement when the employer receives the receipt are given a copy of the receipt within 21 days. …' 22 Section 418 of the Act provided for the making of regulations in relation to, amongst other things, the signing of workplace agreements by persons bound by those agreements, or representatives of those persons. 23 Regulation 8.13 of the Workplace Relations Regulations 2006 (Cth) ('the Regulations') relevantly provided: '8.13(1) For paragraph 418 (e) of the Act, an employer must obtain the signatures of: (a) for all workplace agreements - the employer … in relation to the agreement; and (b) in addition to paragraph (a): (i) if the workplace agreement is an employee collective agreement - a representative of the employees to the agreement … … (2) For subregulation (1), a signature to the workplace agreement must be accompanied by: (a) the full name and address of each person signing the workplace agreement in accordance with subregulation (1); and (b) an explanation of the person's authority to sign the workplace agreement. … (5) The validity of a workplace agreement is not affected by a failure to comply with subregulations (1) and (2).' 24 By virtue of s 333(b) of the Workplace Relations Act an employee collective agreement was 'made' at the time when the agreement was approved in accordance with s 340. 25 Under s 347(1) of the Act a workplace agreement came into operation on the day the agreement was lodged with the Workplace Authority Director. 26 By virtue of s 347(2), such an agreement: '… comes into operation even if the requirements in Divisions 3 and 4 [ss 334-341] and section 342 have not been met in relation to the agreement.' 27 By virtue of s 351 of the Act a workplace agreement that was 'in operation' relevantly bound the employer in relation to the agreement and all persons whose employment was, at any time when the agreement was in operation, subject to the agreement. 28 Under s 349 of the Workplace Relations Act an award had no effect in relation to an employee while a workplace agreement operated in relation to the employee. 29 When in operation, a workplace agreement bound all persons whose employment was subject to the agreement, regardless of whether an individual employee cast a valid vote deciding, or otherwise decided, that the employee did not want to approve the agreement and of whether an individual employee was an employee of Construction Diving Services Pty Ltd at the time when the CDS Collective Agreement was made. 30 Section 347(4) of the Workplace Relations Act relevantly provided: '347(4) A workplace agreement ceases to be in operation if: (a) it is terminated in accordance with Division 9; or … (ba)the Workplace Authority Director decides under section 346M that the agreement does not pass the fairness test and the employer who is bound by the agreement does not take the action referred to in subsection 346R(2) within the relevant period (as defined in subsection 346R(7)) in relation to the agreement; or (bb)the Workplace Authority Director decides under section 346U that the agreement as varied does not pass the fairness test; or (c) the Court [a reference to the Federal Court of Australia] declares it to be void under paragraph 409(a).' 31 Section 347(5) then provided: '347(5) A collective agreement ceases to be in operation in relation to an employee if it has: (a) passed its nominal expiry date; and (b) been replaced by another collective agreement in relation to that employee. …' 32 Section 409 of the Workplace Relations Act was to be found in Subdivision C of Division 11 of Part 8 which comprised ss 408-414. By virtue of s 408 the Subdivision applied to a contravention by a person of a civil remedy provision in relation to a workplace agreement, several of which were listed in s 408. One such civil remedy provision was s 341(1) (see [17] above). 33 In the event that the Court were to exercise its power to make an order declaring a workplace agreement to be void under s 409(a), such an order would only take effect from the date on which the order was made or a later datespecified in the order (see s 409(a) and s 412(1)). 34 The gravamen of the applicant's challenge to paragraph 5 of the First to Fifteenth respondents' Defence seems to me to lie in the inclusion of the words 'and the First to Fifteenth Respondents further say that the purported agreement described as the "CDS Collective Agreement" was not a valid agreement for the purposes of the Workplace Relations Act 1996.' 35 In the foregoing statutory context senior counsel for the applicant put his case in respect of the current motion as follows (transcript of 23 March 2009 p49-50): '… when there's such a restriction on the statutory relief available declaring an agreement void it would be curious indeed if the legislature had intended to leave open an alternate means of having an agreement … declared void … [under] general law. … it can't be enhanced by pleading it in defence if the action is not available by declaratory relief or otherwise it's not available as a matter of defence. … … …If our client is to be put to establishing the validity, we need to rely on materials that obviously aren't in our possession and may not be readily obtainable. For instance, … the agreement may have been by a show of hands. How does our client get access to the show of hands for the purpose of proving validity? It's hardly surprising that the legislature would intend that for third parties [such as John Holland Pty Limited] the agreement is taken to be valid so long as it stands.' 36 The applicant submitted that until an order of the court was relevantly made, if otherwise permissible, declaring the CDS Collective Agreement to be void under s 409(a), it was taken to be in force. The applicant further submitted that it would be embarrassing to allow a party which had, in other proceedings, sought to rely upon the validity of the agreement to assert its invalidity. It was further argued that requiring the applicant to prove that the CDS Collective Agreement had been duly approved in accordance with s 340(2) of the Workplace Relations Act would cause delay in the proceeding that ought not to be permitted. 37 A copy of what was said to be the CDS Collective Agreement was put into evidence on the hearing of the Notice of Motion filed 17 December 2008 (see paragraph 8 of the affidavit of Malcolm Davis affirmed 17 December 2008 and Annexure E thereto). It is highly doubtful that Annexure E was a copy of the CDS Collective Agreement as lodged with the Workplace Authority Director. Annexure E is an unexecuted and undated document with minor tracked changes noted throughout, which had a cover page reading: 'Construction Diving Services Pty Ltd (Bluewater) Employee Collective Workplace Agreement 2007' That page was followed by two pages identifying the contents of the document with references to the relevant clause numbers included. Those pages were numbered i and ii. An 18 page document then followed. At the foot of each page the following appeared: 'CDS Bluewater Employee Collective Workplace Agreement 2007 Final - 30 November 2007' 38 Clause 2 recorded the 'SCOPE' of the agreement as follows: 'This Agreement applies to all employees of Construction Diving Services Pty Ltd ("the Company") engaged in the classifications set out in Schedule 1, who are engaged by the Company on the Bluewater desalination plant project.' 39 By clause 3 of the form of agreement provision was made for it to take effect on and from the date of lodgement and to 'remain in force for a nominal term of five years from that date'. 40 Page 16 made provision for an authorised representative of Construction Diving Services Pty Limited to sign the agreement on its behalf and page 17 made provision for an authorised representative of the employees to be bound by the agreement to sign the agreement on their behalf. As previously mentioned the form of agreement (Annexure E) was neither executed nor dated. 41 However, the agreement which was said to have been made and to have come into operation was the subject of consideration in proceedings C2008/2281 before Commissioner Redmond in the Australian Industrial Relations Commission in an application under s 496(1) between Dempsey Australia Pty Ltd and the first respondent for an order against industrial action (see Annexure F to Mr Davis' affidavit). It seems clear that these proceedings were before Commissioner Redmond on 3 March 2008, 5 March 2008 and 6 March 2008. The transcript of proceedings on 5 March 2008 became Exhibit NMA (part 1) and the transcript of proceedings on 6 March 2008 became Exhibit NMA (part 2) on the hearing of the motion presently before the Court. 42 On 5 March 2008 Mr C McArdle announced an appearance in those proceedings with Mr Fitzsimons and Ms C M Howell (referred to as Ms Howells in the transcript) announced an appearance with Ms T White of Slater and Gordon and Mr W Smith of the Maritime Union of Australia, the first respondent in the proceedings presently before the Court. Ms Howell is junior counsel for the first to fifteenth respondents on the hearing of the current motion. 43 The transcript for 5 March 2008 included paragraphs numbered 1-1099 and that for 6 March 2008 included paragraphs numbered 1100-1766. In relation to the identification of the parties the following appeared: 'PN48 THE COMMISSIONER: Now, Mr McArdle, you might help me as to who is the applicant. The original notification did say Dempsey Australia Pty Ltd. PN49 MR MCARDLE: Well, Dempsey Australia Pty Ltd conduct the marine yard at Botany. Dempsey Australia Pty Ltd is a related body corporate of Construction Diving Services Pty Ltd, which is the employing entity if you like, the service company of the employees concerned. The directors of the two companies don't 100 per cent overlap. They have substantially the same number of directors. They fit every criteria of a related body corporate. But my friend raises a good point, which is quite a valid one, which is answered in our draft order that we've prepared. We seek an order on behalf of the party to the agreement, that is Construction Diving Services Pty Ltd, that will be the order that we seek. PN50 THE COMMISSIONER: All right. PN51 MR MCARDLE: An affected organisation is Dempsey Australia Pty Ltd because they're the tenant of the yard that is currently being picketed, but the employees of the company that's being picketed is Construction Diving Services Pty Ltd. … … PN64 MS HOWELLS: There was another matter I wished to raise … and that is in respect of the orders which have been provided. The order 3.1(d) is binding on employees of CDS the constitutional corporation who are eligible to be members of the union. I am instructed on behalf of the union, I am not instructed on behalf of any individual employees, be they union members or not. … PN65 THE COMMISSIONER: Yes. Mr McArdle, do you know whether these people are all members of the union or are there individuals that may not be? Because if there are individuals that are not members of the union you seek to have them bound by this order then I'm obligated to make sure they get a copy of the order so they can defend it. PN66 MR MCARDLE: It has been represented to us throughout, in fact that's the issue at hand, that the union represents all 14 persons. … … PN73 MS HOWELLS: Commissioner, Mr McArdle hasn't really addressed the point I was making, which is actually the scope of the order sought, is employees of CDS who are eligible to be members of the union. I am not representing those individuals. PN74 THE COMMISSIONER: Yes. If I made the order it would only be those who are members of the union, yes. …' 44 At PN88 Ms Howell indicated to Commissioner Redmond that there was 'an issue about the procedure that was followed in respect of the approval of the agreement' and that there was an issue about 'whether the agreement was validly approved'. 45 On 5 March 2008 Mr Brian Fitzsimons, who was apparently the project manager representative for Construction Diving Services Pty Limited, gave evidence before Commissioner Redmond in the then applicant's case in which he identified his place of business as the Sydney Desalination Marine Yard, Fishburn Road, Botany. He had apparently made an affidavit in the proceedings in the Australian Industrial Relations Commission, which became Exhibit MC1, before the Commissioner. Mr Fitzsimons was cross examined by Ms Howell about the making of what was said to have become the relevant employee collective agreement. 46 In further evidence in chief given by Mr Fitzsimons at PN128 et seq reference was made to a document having been lodged that was signed on behalf of the divers. A copy of the document 'actually lodged at the Workplace Authority' was apparently obtained from the Workplace Authority and tendered. The signature on behalf of the divers on the document was identified as that of Scott Bedford (the third respondent in the current proceedings) and it was the original of this document that was apparently lodged with the Workplace Authority. Ms Howell indicated that the Maritime Union of Australia had no objection to the tender of the document whereupon a copy of the signed agreement became Exhibit MC2 before Commissioner Redmond. 47 On 19 January 2008 the Workplace Authority Director appears to have issued a receipt for the lodgement of an employee collective agreement purportedly in compliance with her obligations under s 345(1) of the Workplace Relations Act. That receipt was issued to: 'THE TRUSTEE FOR DEMPSEY FAMILY TRUST CONSTRUCTION DIVING SERVICES PTY LTD' 48 The receipt included the following: 'This receipt confirms that the Workplace Authority has received a declaration from THE TRUSTEE FOR DEMPSEY FAMILY TRUST on 20/12/2007. The employer has declared that a copy of an employee collective agreement named CONSTRUCTION DIVING SERVICES PTY LTD (BLUEWATER) EMPLOYEE COLLECTIVE WORKPLACE AGREEMENT 2007 was provided to the Workplace Authority. … The employee collective agreement will now be considered to see whether the Fairness Test applies … We will write to you again soon to tell you whether the Fairness Test applies to the agreement. … Once completed, we will write to you to let you know whether or not the agreement has passed the Fairness Test. …' (See annexure MJD-1 to the further affidavit of Malcolm John Davis affirmed 29 January 2009) 49 Under cross-examination further evidence was given by Mr Fitzsimons as to the making and lodgment of the agreement at PN202 et seq. His evidence included: 'Now, you've referred in paragraph (a) to a correction that had to be made to the draft agreement? --- Yes. Did you make that correction or did someone else? --- Yes, the office in Mackay made the correction. And do you know when they did that? ---- It was before the 13th [of December 2007], yes. In between the 5th and the 13th?---Yes. Are you aware or do you say that the corrected agreement was then given to the employees?---Yes. And who did that?---Nicole [a reference to Nicole Dempsey] ... And you say that because she told you?---Probably what we gave them was a revised - at the back of the agreement there's schedule 1, which has got the rates. Right, okay?---What we actually found was that when the guys had signed it we found that the divers, their rate and the divers assistant were mixed up. So you found that after they'd signed the document?---Yes. … … At no stage were you told that Mr Edwards had authority to speak for the other divers?---No. This is what's happened in this thing is that we had the discussion with the living away from home allowance because that was an issue because some of the guys hadn't been paid it. When that got resolved we actually got that tidied up and everybody was then happy with the agreement because the agreement basically said if you live away from home you get that. We then signed it and then discovered the error with the divers rates, and then that was tidied up, and that's where we are. … So what I was putting to you, Mr Fitzsimons, is that no one on behalf of the employees communicated to you that Mr Edwards was authorised to speak on behalf of the other divers?---Mr Edwards did. … Now, Mr Edwards you say signed the agreement which was filed with the Workplace Authority on 13 December, is that right?---Well, no. I think we'll find that what was filed was Scotty's, that's the one that got lodged, because the one that Glen signed had the mix up with the rates. … So the one that was lodged - and just tell me if you need to have a look at it - was signed by you?---Scotty. Yes, and Scott. And Scott Bedford?---Correct. … And no one suggests that Mr Bedford had authority to act on behalf of the other employees?--- At that time all the employees had signed it individually because there was confusion as to whether, actually whether all the employees had to sign it or whether one could sign it on one's behalf (sic). So all the guys signed the agreement individually as well. Now, have you retained a copy of the version of the agreement that was signed by Mr Edwards?---Yes, I believe there could be one on site, yes. I haven't seen it for a while but I believe there was. … Do you know what date Mr Edwards signed that document?---That's just as I said to you, on or about. On about 13 December?---Yes, on or about the 13th, yes. But the one that you filed signed by Scott Bedford also appears to have been signed on the 13th?---Yes. So that all occurred on the same day?---It possibly did, yes. So Mr Edwards signed an agreement with the error in it and subsequently at some point, possibly on the same day, Mr Bedford signed his version?---It may well have been, yes, Glen maybe signed it the day before … yes. … … Now, these are individually signed agreements. Were they the agreements before the diving rates for the two classifications were changed or after? ---After. Now, if I can just ask you to have a look at BF2, which is the declaration received from the Workplace Authority. Before I ask you that perhaps, who actually lodged the agreements?---It was posted. Was that Ms Dempsey or yourself, or who was responsible for that?---Nicole posted it. [cf the evidence of Nicole Dempsey on 6 March 2008 at PN1477-PN1515] Now, you submitted a declaration to the Workplace Authority along with the agreement?---Yes. And who was responsible for filling in the declaration?---I did. … … Now, just having a look at the receipt you'll see that the declaration was received from the trustee for the Dempsey Family Trust?---Sorry, which page is that? This is page 28?---Yes. Now, why did you lodge it on behalf of the - why did you fill in the declaration on behalf of the trustee for the Dempsey Family Trust?---We didn't. We filled it in on behalf of Construction Diving Services. The Workplace Authority came back with - actually said this is how the Workplace Authority's receipted it back to us. Why would they get the idea? Do you have any idea why they would have done that? What was in the documentation that would have given them that?---It was Construction Diving Services and an ABN number. … So you've got no idea why the workplace authority would say that they received a declaration from the trustee for the Dempsey Family Trust?---No, when we actually phoned, we phoned in January chasing it up and the Workplace Authority told us they were reviewing the EBA (sic) numbers. And what did you understand that to be reference (sic)?---They actually told us they were checking to see the ABN number related to Construction Diving Services. Would that suggest to you that the ABN forwarded to them was the ABN number for the Dempsey Family Trust?---No, when we got this back I just assumed that it's the Construction Diving Services. …' 50 The first respondent called evidence before Commissioner Redmond on 5 and 6 March 2008 which put in issue the sufficiency of the steps taken to constitute approval of the agreement and to satisfy the requirements of Regulation 8.13 and s 344 in respect of lodgment of it, but these challenges have to be considered in light of Regulation 8.13(5) and ss 340(2)(b)(ii) and 347(2). 51 On 6 March 2008 an order was made by Commissioner Redmond directed at stopping the industrial action of which Construction Diving Services Pty Limited's had complained. That order bound Construction Diving Services Pty Limited, the Maritime Union of Australia (the first respondent in the present proceedings), officials, delegates, employees and agents of the Union including Warren Smith (the second respondent in the current proceedings) and employees of Construction Diving Services Pty Ltd, a constitutional corporation, who were eligible to be members of the Union. Commissioner Redmond's order came into effect at 7:30pm on 6 March 2008 and was expressed to cease to have effect at 5:00pm on 22 March 2008. 52 In the foregoing context the first respondent as agent for the fourth, fifth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth respondents in the current proceedings filed an application in the Australian Industrial Relations Commission on 20 March 2008 seeking to have a dispute resolution process conducted. In that application it was alleged that the terms and conditions of employment pursuant to which the claims on behalf of the identified respondents sought relief were 'covered by the CDS Bluewater Employee Collective Workplace Agreement 2007'. 53 The applicant contended that the identified respondents who sought relief as employees of Construction Diving Services Pty Ltd together with the first respondent as agent for those employees ought not to be permitted to challenge the validity of the CDS Collective Agreement in circumstances where they brought their claims before the Australian Industrial Relations Commission in reliance upon it. 54 Whilst the signed agreement that was lodged with the 'Workplace Authority', a copy of which became Exhibit MC2 before Commissioner Redmond, was not tendered in evidence on the hearing of the current motion, it seems clear that on or about 13 December 2007 a number of copies of the agreement were signed by employees of Construction Diving Services Pty Ltd engaged on the Bluewater desalination plant project. It further appears that a copy of the agreement signed by Mr Scott Bedford purportedly on behalf of the employees on 13 December 2007 was lodged by Nicole Dempsey by post with the Workplace Authority and, by inference, the Workplace Authority Director. It would appear that it was received on 20 December 2007. 55 Whilst, on the pleadings as they presently stand, further evidence could, theoretically, be given in relation to the making of the relevant employee collective agreement, the parties to it, its lodgement with the Workplace Authority and its coming into operation, there has been no suggestion that the agreement relied upon by the applicant has ceased to be in operation by virtue of one or other of the matters referred to in s 347(4) of the Workplace Relations Act. 56 In the circumstances, the applicant submits that the CDS collective agreement came into operation on the day that it was lodged with the Workplace Authority Director and that it came into operation even if the requirements in ss 334-342, including those referred to in s 344 (incorporated by reference to them in s 342) of the Workplace Relations Act and the requirements of Regulation 8.13 were not met in relation to the agreement (see s 347(2) and Regulation 8.13(5)). 57 Whilst The State of Queensland v J L Holdings Pty Limited (1997) 189 CLR 146 ('J L Holdings') was a horse of a different colour, there were some observations made in that case that are germane to what may constitute a proper exercise of the Court's powers under Order 11 rule 16. In J L Holdings proceedings had been commenced in this Court in January 1994 seeking damages of approximately $60 million. Numerous causes of action had been pleaded. In June 1995 the primary judge had directed an extensive review of the pleadings to enable each party to prepare a final set of pleadings and in July 1995 orders were made for the filing of those pleadings in late 1995. At a directions hearing in March 1996 the primary judge foreshadowed the fixing of trial dates. It was anticipated that the hearing would occupy some four months. At a directions hearing in May 1996 the State of Queensland applied for leave to further amend the Defence. Hearing dates for the trial had by then been fixed, dates which might be lost if the amendment were allowed. Were the Defence to be amended the hearing might have been extended from a likely four months to six months. The primary judge refused leave to amend the Defence. An application for leave to appeal against the refusal of the primary judge to grant the application for leave to amend the Defence was granted by a Full Court, but it then proceeded to dismiss the appeal. The State of Queensland applied to the High Court for special leave to appeal from the judgment of the Full Court. The High Court indicated that it proposed to hear the application for special leave to appeal and the appeal at the same time. It did so on 2 December 1996 ordering, on that day, that there be a grant of special leave to appeal, that the appeal be allowed and that the respondents in the proceedings, the State of Queensland and another, have leave to amend their Defence. The Court's reasons for judgment were not handed down until 14 January 1997. 58 In the reasons for judgment of Dawson, Gaudron and McHugh JJ their Honours observed at 154: 'If it is arguable, the applicants should be permitted to argue it, provided that any prejudice to JLH might be compensated by costs.' 59 Earlier at 154 their Honours said: '… nothing in that case [Sali v SPC Ltd (1993) 67 ALJR 841 - a case concerning the refusal of an adjournment] suggests that those principles [proper principles of case management that may have particular relevance to an adjournment application] might be employed, except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable. Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim.' At 155 their Honours repeated the importance of achieving justice when they said: 'Justice is the paramount consideration in determining an application such as the one in question.' 60 In considering the application of Order 11 rule 16 of the Federal Court Rules to the applicants' strike out application in respect of paragraph 5 of the first to fifteenth respondents' Defence, it seems to me that like considerations should apply to those which were considered to be appropriate in J L Holdings. Firstly, the Court should determine whether the issue/s raised in paragraph 5 of the Defence is/are 'fairly arguable'. Secondly, the Court should address the attainment of justice in the circumstances. 61 It may be assumed that the power conferred upon the Court by Order 11 rule 16, as with other powers conferred by the Federal Court Rules, was granted out of a recognition of the traditional role of judges 'to do justice according to law' (per Kirby J in J L Holdings at 167). 62 If questions arise on the pleadings which are 'serious and disputable' I would consider them to be 'fairly arguable' (see per Gibbs J, as his Honour then was, in Theseus Exploration NL v Foyster (1972) 126 CLR 507 at 515). 63 A court asked to strike out all or part of a pleading needs to be careful to ensure that giving effect to the application does not prevent a party from making a case which it is entitled to make. One has to err on the side of caution lest one deprive a party of a case which, in justice, it ought to be able to bring (per Sheppard J, with whose reasons for judgment Jenkinson and Drummond JJ agreed, in Trade Practices Commission v Pioneer Concrete (Qld) Pty Limited (1994) 52 FCR 164 at 175). 64 If an application to strike out a pleading involves a prolonged and serious argument, the judge hearing the application should, as a general rule, decline to proceed with the argument unless he not only harbours doubts about the soundness of the pleading but, in addition, is satisfied that striking out will obviate the necessity for a trial or will substantially reduce the burden of preparing for trial or the burden of the trial itself (per Lord Templeman in Williams and Humbert Ltd v W & H Trademarks (Jersey) Ltd [1986] 1 AC 368 ('Williams and Humbert') at 435-436). 65 In Williams and Humbert two cases were dealt with together. In the first, the primary judge ordered that a defence be struck out and in the second he ordered that an application to amend a defence should be dismissed. An appeal to the Court of Appeal was dismissed by a majority and a subsequent appeal to the House of Lords was dismissed unanimously. The hearing of the applications before the primary judge in relation to the pleadings occupied some 7 hearing days. 66 In the House of Lords the appellants submitted that the application to strike out was misconceived and that the relevant issues should have been addressed under R.S.C. Order 33 rule 3 (the equivalent of Order 29 rule 2 of the Federal Court Rules) rather than Order 18 rule 19 (the equivalent of Order 11 rule 16 of the Federal Court Rules). Lord Templeman recognised the force of the argument. He said that the issues raised on the appeals were more appropriate to be decided under the separate questions rule rather than the strike out rule. He proceeded to observe at 436-437: 'Nevertheless no harm has been done. In the Chancery Division the application under Ord. 18, r. 19 was heard in open court. Both parties were well apprised of the serious and lengthy questions involved and were armed with leading counsel and the appropriate authorities. … In these circumstances the difference between the investigation undertaken by the judge under Ord. 18 r. 19 was no different from the investigation which would have been involved in the trial of an issue under Ord. 33, r. 3. If the application had been started under Ord. 18, r. 19 and the judge had required an alternative application under Ord. 33, r. 3 the time involved would have been the same.' His Lordship proceeded to draw attention to the fact that the matter had been fully argued before the primary judge and fully considered by both the Court of Appeal and the House of Lords. 67 Lord Mackay of Clashfern expressed his general agreement with the approach adopted by Lord Templeman in the following terms, at 441: 'If on an application to strike out it appears that a prolonged and serious argument will be necessary there must at the least, be a serious risk that the court time, effort and expense devoted to it will be lost since the pleading in question may not be struck out and the whole matter will require to be considered anew at the trial. This consideration, as well as the context in which Ord. 18, r. 19 occurs and the authorities upon it, justifies a general rule that the judge should decline to proceed with the argument unless he not only considers it likely that he may reach the conclusion that the pleading should be struck out, but also is satisfied that striking out will obviate the necessity for a trial or will so substantially cut down or simplify the trial as to make the risk of proceeding with the hearing sufficiently worth while.' 68 Whilst it seemed to me that the question of whether or not the so-called 'CDS Collective Agreement' was a valid agreement or not for the purposes of the Workplace Relations Act 1996 (Cth) ('the Workplace Relations Act') should be determined as a separate question under Order 29 rule 2 of the Federal Court Rules separately and before the trial in the proceedings, the parties were content to have the issue addressed in a strike out application under Order 11 rule 16 of the Federal Court Rules. The matter was fully argued by senior counsel for the respective parties, with further assistance provided by counsel for the intervener. I am satisfied that striking out part of the Defence, if appropriate, would substantially cut down or simplify the trial in this case, especially bearing in mind that the applicant was not itself a party to the relevant agreement. 69 In Commonwealth of Australia v Dixon (1988) 13 NSWLR 601 an action had been instituted in the Victorian Registry of the High Court of Australia by a member of the armed forces who alleged negligence in relation to the surgical amputation of a leg in Sydney in 1965. The High Court ordered that the proceedings be remitted to the Supreme Court of New South Wales. By way of defence the Commonwealth of Australia raised: (a) s 14(1)(b) of the Limitation Act 1969 (NSW) which provided that a cause of action in tort was not maintainable if brought after the expiration of a limitation period of six years from the date on which the cause of action first accrued; (b) s 5(6) of the Limitation of Actions Act 1958 (Vic), which provided that no action in tort should be brought after the expiration of three years after the cause of action had accrued; and (c) s 63 of the Limitation Act 1969 (NSW) which provided that on the expiration of a limitation period for, inter alia, the cause of action in tort, the cause of action was extinguished. 70 Hope JA concluded that none of the defences were available to the Commonwealth. Samuels JA considered that the defence under s 14(1)(b) of the New South Wales Limitation Act should not be struck out, but that the other defences were not available to the Commonwealth. Mahoney JA concluded that the defence under s 5(6) of the Victorian Limitation of Actions Act was available to the Commonwealth but did not express any view as to the defences under the New South Wales Act. In the circumstances Hope JA expressed the opinion that it was not proper to say that the defences under either s 5(6) of the Victorian Act or s 14(1) of the New South Wales Act were so clearly untenable that they could not possibly succeed. In relation to the defence under s 63 of the New South Wales Limitation Act, Samuels JA agreed with the reasons for judgment of Hope JA. In the result the Court of Appeal set aside the orders of the primary judge striking out the defences under s 5(6) of the Victorian Act and s 14(1) of the New South Wales Act. A cross-appeal in respect of the defence under s 63 of the New South Wales Act was allowed whereupon the defence under that section was struck out. 71 The significance of the agreement relied upon by the applicant in this case as an employee collective agreement, to which it was not a party, is to be found in s 494 of the Workplace Relations Act which relevantly provided: '494(1) From the day when: (a) a collective agreement; … … comes into operation until its nominal expiry date has passed, an employee, organisation or officer covered by subsection (2) must not organise or engage in industrial action (whether or not that action relates to a matter dealt with in the agreement or determination). (2) For the purposes of subsection (1), the following are covered by this subsection: (a) an employee who is bound by the agreement …; (b) an organisation of employees that is bound by the agreement …; (c) an officer or employee of such an organisation acting in that capacity. … (4) Subsections (1) and (3) are civil remedy provisions. (5) The Court may make one or more of the following orders in relation to a person who has contravened subsection (1) …: (a) an order imposing a pecuniary penalty on the person; (b) injunctions, and any other orders, that the Court considers necessary to stop the contravention or remedy its effects. … (7) An application for an order under subsection (5), in relation to a contravention of subsection (1), may be made by: … (c) any person affected by the industrial action; or … …' 72 In the Amended Statement of Claim the applicant alleged that on or about 3 March 2008 to 9 March 2008 the third to sixteenth respondents refused to perform any work for Construction Diving Services Pty Limited at the Bluewater Project and that such refusal constituted industrial action in relation to which it was entitled to relief under s 494(1) of the Workplace Relations Act. 73 In addition the applicant alleged that the first and second respondents were involved within the meaning of s 728 in the contravention of s 494 of the Workplace Relations Act by the third to sixteenth respondents. Section 728 of the Workplace Relations Act provided as follows: '728(1) A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision. (2) For this purpose, a person is involved ina contravention of a civil remedy provision if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced the contravention, whether by threats or promises or otherwise; or (c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or (d) has conspired with others to effect the contravention.' 74 Under s 420(1)(c) of the Workplace Relations Act a refusal to perform any work at all by employees who attend for work may constitute industrial action which is proscribed by s 494(1) of the Workplace Relations Act. 75 The applicant's case is that as a 'person affected by the industrial action' alleged but not 'the employer concerned' (see s 494(7)), it was entitled to apply for relief under s 494(5) of the Workplace Relations Act in respect of the alleged contravention of s 494(1). 76 The applicant placed considerable reliance upon my judgment, at first instance, in Shop Distributive and Allied Employees' Association v Karellas Investments Pty Ltd (No. 2) [2007] FCA 1425, which was affirmed on appeal by Moore, Marshall and Tracey JJ in Shop Distributive and Allied Employees' Association v Karellas Investments Pty Ltd (2008) 166 FCR 562 ('Karellas'). 77 Karellas Investments Pty Limited was the proprietor of two retail grocery stores which traded under the 'IGA' banner, one of which was located at Cremorne and the other at Blaxland in the State of New South Wales. The Shop Distributive and Allied Employees' Association ('the union') alleged that Karellas contravened s 341(1) of the Workplace Relations Act when it lodged an employee collective agreement ('the 2007 Agreement') with the then Employment Advocate which it was said had not been approved in accordance with s 340 of the Act. 78 At [82] I found that certain representations said to have been made by Karellas were false or misleading. I found that the employees of Karellas were misinformed in relation to the 2007 Agreement when contrasted with an earlier 2003 Agreement. In the circumstances it was found that all of the persons employed by Karellas in April 2007 whose employment would be subject to the 2007 Agreement, if approved, were not given by Karellas a 'reasonable opportunity to decide' whether they wanted to approve the 2007 Agreement or not. Accordingly, the 2007 Agreement was not approved within the meaning of s 340(2) of the Act, notwithstanding that a majority of those employees who cast a valid vote may have decided that they wanted to approve the 2007 Agreement. At [101] I said: '101 … Nevertheless, s 347 of the Act made it clear that the 2007 Agreement came into operation on the day that it was lodged with the Employment Advocate and that it did so notwithstanding that, relevantly, the requirements of s 340(2)(a) had not been met in relation to it.' 79 The Full Court's consideration of the effect upon an employee collective agreement of a failure to meet the requirements of ss 334-342 of the Workplace Relations Act in relation to the agreement (see s 347(2)) is to be found at [23]-[29] of its reasons for judgment. Inter alia, the Full Court referred to passages from the Explanatory Memorandum to the Workplace Relations Amendment (WorkChoices) Bill 2005 at paragraphs 844 and 947-950. Relevantly, the Full Court said: '23 … The question that arises … is whether the failure of the employer to satisfy the requirements of s 340(2)(a) has any consequences under the Act, and, if so, what those consequences are. 24 One possible consequence may be that the employer becomes liable to a penalty for contravention of s 341. This will occur if the employer lodges the agreement with the prescribed statutory authority. … 25 Of greater current importance is the question of whether Karellas' failure to satisfy the requirements of s 340(2)(a) (if it did so fail) meant that the employee collective agreement that it lodged with the Employment Advocate on 1 May 2007 had not been "made". Plainly, one of the requirements that would enable it to be said that the agreement had been approved, for the purposes of the Act, would not have been met. Nonetheless, the agreement came into operation, in accordance with its terms, on and from the date of its lodgment. Section 347(2) so provided. By s 351, it was and remains binding on the employer and its relevant employees. If it is alleged that such an agreement has not been approved, a person who has standing under s 405 may seek certain forms of redress. One of them, as already noted, is the imposition, on the employer, of a civil penalty under s 341. Another is an order, under s 409(a) of the Act, declaring that the workplace agreement is void. Any such order operates prospectively: see s 412(1). 26 This review of the legislative provisions leads strongly to the conclusion that Parliament intended that an employee collective agreement will be treated as having been made and having come into operation notwithstanding a failure, on the part of the employer, to meet its obligations under s 340(2) of the Act. … … 28 … it cannot be said that for the purposes of the Act, an employee collective agreement has not been made on the basis that one of the preconditions for treating it as having been approved by the relevant employees has not been met. … The legislation treats collective agreements that have been lodged as having been made and approved unless and until they are set aside by order of the Court. 29 … Section 333 is not intended to operate so as to render non-existent, for all purposes, collective agreements that have been lodged in circumstances in which statutory conditions, such as those prescribed by s 340(2), have not been satisfied.' 80 The first to fifteenth respondents do not challenge the correctness of the Full Court's judgment in Karellas. 81 In paragraph 15 of the first to fifteenth respondents' submissions on the current motion they said: '15. In Karellas, what was considered was the effect of non compliance with s 340(2)(a). It is correct, as the applicant and intervener note, that s 347(2) had the effect that an agreement came into operation on lodgement regardless of failure to comply with Part 8 Divisions 3 and 4 and s342 of the WRA. Section 340(2)(a) fell within Division 4. However, because the respondents allege that the requirements of s327 were not met, and that which was lodged was not an employee collective agreement, the applicant and intervener must go significantly beyond the reasoning of the Full Court in Karellas to succeed in the present motion.' 82 Whilst the first to fifteenth respondents correctly observed that Karellas concerned the effect of non compliance with s 340(2)(a) of the Workplace Relations Act, it is clear from the reasons for judgment of the Full Court, albeit obiter in this regard, that no distinction is to be drawn between non compliance with s 340(2)(a) and s 340(2)(b) of the Act. 83 However, it seems to me that there are other questions that may arise that are unrelated to the process whereby the alleged employee collective agreement came to be approved, made and lodged in this case, which are not covered by s 347(2). These include: (a) Was the alleged employee collective agreement lodged with the Workplace Authority Director? (b) If so, when was it lodged? (c) By whom was it lodged? (d) Was the person lodging the alleged employee collective agreement the employer referred to therein? (e) Was the alleged employee collective agreement an employee collective agreement within the meaning of s 327 of the Workplace Relations Act? 84 It does not seem to me to be open to the applicant to argue that it would be an abuse of process for the third, sixth and fifteenth respondents to raise these questions on the hearing of the proceedings. Furthermore, I am by no means satisfied that the fourth, fifth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth respondents and, in particular, the first and second respondents are precluded from raising these issues by virtue of any reliance that may have been placed upon the CDS Collective Agreement in the APPLICATION TO HAVE A DISPUTE RESOLUTION PROCESS CONDUCTED, dated 20 March 2008, which was filed in the Australian Industrial Relations Commission. 85 The applicant's challenge to paragraph 5 of the first to fifteenth respondents' Defence overlooks, amongst other things, that in paragraph 5 of the Amended Statement of Claim the applicant has alleged that the CDS Collective Agreement was 'registered' under the provisions of the Workplace Relations Act when the key to the operation of an employee collective agreement is 'lodgement', not 'registration'. 86 Furthermore, I am unable to see how any injustice could be said to arise from the applicant being put to proof in respect of the facts and matters alleged in paragraph 23 of the Amended Statement of Claim. Nothing that was said in Karellas or that is to be found in s 347(2) of the Workplace Relations Act bears upon that paragraph. 87 In relation to paragraphs 24, 25 and 26 of the Amended Statement of Claim I cannot see that any injustice would flow from the first to fifteenth respondents denials of the facts and matters alleged in those paragraphs being allowed to stand. All of those seem to me to relate to the proper construction of the CDS Collective Agreement, rather than its coming into operation. 88 However, I cannot see how any issues going to the process whereby the employee collective agreement was said to have been approved, made or lodged, could be said to be 'fairly arguable'. In the circumstances set out above, no injustice would be done if the first to fifteenth respondents were denied the opportunity to raise questions going to process which, in my opinion, are doomed to failure. 89 In my opinion the first to fifteenth respondents ought not to be allowed to rely upon alleged non compliance with the requirements in relation to the process whereby employee collective agreements may be lawfully approved, made and lodged such as are referred to in subparagraphs (a) - (d) inclusive of paragraph 10 of the first to fifteenth respondents' written submissions referred to above and in subparagraphs (c) - (f) of paragraph 16 of those written submissions. 90 The denials of paragraphs 5, 23, 24, 25 and 26 of the Amended Statement of Claim which are to be found in paragraph 5 of the first to fifteenth respondents' Defence filed 25 July 2008 should be permitted to stand. However, the words 'and the First to Fifteenth Respondents further say that the purported agreement described as the "CDS Collective Agreement" was not a valid agreement for the purposes of the Workplace Relations Act 1996' should be struck out. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

John Holland Pty Ltd v The Maritime Union of Australia

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