Plaintiff v Defendant

**1 The plaintiff, EnergyAustralia, owns and operates the Yallourn Power Station, which supplies almost one quarter of Victoria's electricity needs.

2 The defendant, the CFMEU, is an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth). Its members include persons employed by EnergyAustralia as unit controllers and assistant unit controllers ("operators") at the power station.

3 EnergyAustralia is currently bargaining with a number of unions, including the CFMEU, for an enterprise agreement under the Fair Work Act 2009 (Cth) ("the Act"), to replace the TRUenergy Yallourn Proprietary Limited Workplace Agreement 2008.

4 On each day between 1 and 5 March 2013, operators substantially reduced the output of one or more of the four coal-fired electricity generator units at the power station. They did so as a result of instructions given to them by the CFMEU, a union of which each of the relevant operators is a member. The CFMEU has instructed the operators to continue to limit the output of the units for an indefinite period.

5 EnergyAustralia says that by instructing its members to reduce the output, the CFMEU has committed, and is threatening to continue to commit, the tort of inducing a breach of contract. On 6 March 2013, it commenced this proceeding, in which it essentially seeks an injunction to restrain the CMFEU from continuing to instruct its members to engage in such conduct; the precise form of injunction sought will be considered later in these reasons. EnergyAustralia says that the balance of convenience is overwhelmingly in favour of the grant of an injunction.

6 The CFMEU says that no such injunction should be granted, because the past and threatened conduct is "protected industrial action", under s 415(1) of the Act. The CFMEU also disputes that the balance of convenience favours EnergyAustralia, and says injunctive relief should also be refused on discretionary grounds.**

**7 On 17 January 2013, the CFMEU applied under s 437 of the Act, for a protected action ballot order, to enable it to ballot its members to see whether they authorised the taking of specified industrial action.

8 On 22 January, Commissioner Jones of the Fair Work Commission ("the Commission"), issued a protected action ballot order, under s 443 of the Act. EnergyAustralia did not oppose the making of the order, so it was made "on the papers", without any hearing being held. The questions which were approved for the ballot were as follows:

(1) An unlimited number of stoppages of work, including consecutive stoppages of work, of between 1 and 24 hours in duration?

(2) An unlimited number of bans on the working of higher duties?

(3) An unlimited number of bans on the working of overtime?

(4) An unlimited number of bans limiting the output of individual generators?

(5) An unlimited number of bans on the issue and/or restoration of permits to work on plant or apparatus?

9 The ballot results were declared on 14 February. A requisite majority of employees approved the taking of each of the types of industrial action listed in the ballot.

10 That same day, the CFMEU gave EnergyAustralia the first written notice, under s 414 of the Act, that its relevant members intended to take the following industrial action:

1. Bans limiting the output of individual generators to two hundred and forty megawatts (240 MW) between the hours of 7.00 am and 9.00 am commencing on Wednesday, 20 February 2013 and continuing on a daily basis thereafter between the same times specified for an indefinite period; and

2. Bans limiting the output of individual generators to two hundred and forty megawatts (240 MW) between the hours of 4.00 pm and 6.00 pm commencing on Wednesday, 20 February 2013 and continuing on a daily basis thereafter between the same times specified for an indefinite period.

11 On 18 February, EnergyAustralia applied to the Commission for orders, under s 418(2)(b) of the Act, stopping industrial action from taking place under the first notice. EnergyAustralia said that the first notice did not satisfy the requirements of s 414, in that the description of the "bans" in the notice was ambiguous.[1]

12 An urgent hearing of EnergyAustralia's application occurred in the early evening of 19 February. Recognising the importance of the issues, and that the case raised some novel issues, at the conclusion of the hearing Commissioner Bissett issued an interim order stopping industrial action until she could come to a considered decision.

13 On 21 February, Commissioner Bissett set aside the interim orders, and declined to make the orders sought by EnergyAustralia. The Commissioner said that, although the decision was "finely balanced",[2] the first notice did satisfy the requirements of s 414, particularly of s 414(6).[3]

14 On Friday, 22 February, EnergyAustralia filed a notice of appeal against the decision of Commissioner Bissett. On Monday, 25 February, permission to appeal was denied by a Full Bench of the Commission. The Full Bench has not yet published any reasons for decision.

15 On 25 February, the CFMEU gave EnergyAustralia a second written notice under s 414. The second notice referred to the following proposed action:

1. Bans limiting the output of individual generators to two hundred and forty megawatts (240 MW) between the hours of 4.00 pm and 6.00 pm commencing on Friday 1 March 2013 and continuing on a daily basis thereafter between the same times specified for an indefinite period.

16 Industrial action was taken by the CFMEU and its members, purportedly under the second notice; the specific action will be discussed later in these reasons.

17 On 5 March 2013, the CFMEU gave EnergyAustralia a third written notice under s 414. The third notice withdrew the second notice, and notified that the following industrial action would be taken:

1. Bans limiting the output of individual generators to two hundred and forty megawatts (240 MW) between the hours of 7 am and 9 am commencing on Monday 11 March 2013 and continuing every Monday, Tuesday, Wednesday, Thursday and Friday thereafter between the same times specified for an indefinite period.

2. A stoppage of work of one (1) hour in duration by day-work employees commencing at 2.30 pm on Wednesday 13 March 2013.

3. Bans on the working of higher duties by day-work employees commencing at 7 am on Tuesday 12 March 2013 and concluding at 4 pm on Wednesday 13 March 2013.

4. Bans on the working of overtime with the exception of overtime for the purpose of operational staffing for plant or apparatus commencing at 7 am on Wednesday 13 March 2013 and continuing indefinitely thereafter.

5. Bans on the issue and/or restoration of permits to work on plant or apparatus commencing at 7 am on Wednesday 13 March 2013 and concluding at 9 am on Wednesday 13 March 2013.

18 EnergyAustralia does not dispute that the CFMEU is entitled to take the actions listed in paragraphs 2 to 5 of the third notice. However, it disputes that the action listed in paragraph 1 is protected industrial action.

19 Apart from awaiting the reasons for decision of the Full Bench, there are no outstanding issues or proceedings currently before the Commission relating to any of the CFMEU's notices, or the industrial action being taken to reduce output.**

**20 Units 1 and 2 have a maximum continuous rating of 360 MW each. Units 3 and 4 have a maximum continuous rating of approximately 392 MW each.

21 Under typical operating circumstances, the output of each unit is controlled remotely by the Australian Energy Market Operator ("the market operator") from a dispatch computer, which is not located at the power station. The automatic generation control system allows the output of the units to move in accordance with both market demands and the bids entered by EnergyAustralia. The units will automatically lower or raise the MW output, depending on the instructions received from the dispatch computer, and without any involvement from management or the operators at the power station. Whilst a unit is being operated under automatic generation control, the role of the operators is primarily to monitor the control systems alarms, via a control system interface.

22 Alternatively, a unit may be operated in co-ordinated control mode. An operator can select this mode through the control system interface if, for example, there is a fault, or maintenance needs to be carried out. To move to co-ordinated control mode, it is first necessary for the operator to disengage from automatic generation control. In this mode, the operator can set the desired output by entering it into the control system interface, but, once the output is selected, the control system automatically controls the output of the units. This is said to be analogous to operating a car in "cruise control" mode, in that, once the desired speed is set, the car will then control the speed itself.

23 The final way to control the output of a unit is by the operator selecting one of the manual operating modes. To move to a manual mode, it is first necessary for the operator to disengage from automatic generation control or co-ordinated control mode.

24 There is no dispute that, in accordance with instructions given by the CFMEU, the following took place:

(a) On Friday, 1 March, only units 1 and 2 were operational, because units 3 and 4 were on scheduled maintenance. At 4.00 pm one of the operators overrode the automatic generation control on unit 2, and made a number of adjustments in order to reduce the output to 240 MW. At about 6.00 pm, the plant operator restored unit 2 from co-ordinated control to automatic generation control;

(b) On Saturday, 2 March, units 1, 2 and 3 were operational. At approximately 4.00pm, the operators overrode the automatic generation control and made a number of adjustments to manually reduce the output on each of those three units to 240 MW. At about 6.00 pm, the operators restored the units from co-ordinated control to automatic generation control;

(c) On Sunday, 3 March, the operators overrode the automatic generation control on units 1, 2 and 3, and manually reduced the output on all four units to 240 MW per unit, between 4.00pm and about 6.00 pm;

(d) On Monday, 4 March and Tuesday, 5 March, the operators again overrode the automatic generation control and manually reduced the output on all four units to 240 MW per unit, between 4.00pm and about 6.00 pm.**

25 EnergyAustralia must establish that there is a serious question to be tried as to its entitlement to relief at the trial of this proceeding.

**26 In this proceeding, EnergyAustralia claims injunctive relief and damages against the CFMEU, on the basis that the union induced EnergyAustralia's employees to breach their respective employment contracts by engaging in the conduct which occurred between 1 and 5 March.

27 In order to establish the tort of inducing a breach of contract, EnergyAustralia must prove at trial that:

(a) A contract existed between EnergyAustralia and each of the relevant employees;

(b) The relevant employees breached their employment contract;

(c) The breaches were persuaded, induced or procured by the CFMEU;

(d) The CFMEU had knowledge of the existence of the contracts; and

(e) The CFMEU intentionally induced each of the relevant employees to breach their contract.

28 For the purposes of this interlocutory injunction application, there is no dispute that the elements of the tort of inducing a breach of contract are established on a prima facie basis.**

The statutory immunity under s 415

**29 The CFMEU seeks to rely on the statutory immunity, which is created by s 415(1) of the Act:

No action lies under any law (whether written or unwritten) in force in a State or Territory in relation to any industrial action that is protected industrial action ...

30 In order for industrial action to be "protected industrial action", the following must be satisfied:

(a) The action must be an "employee claim action", being one that meets the requirements of s 409 (ss 408 and 409(1));

(b) For industrial action to be an "employee claim action", it must be authorised by a "protected action ballot" (s 409(2)); and

(c) A notice must be given, which specifies the nature of the action to be taken (s 414(6)).

31 Here, the protected action ballot authorised various forms of action, including "an unlimited number of bans limiting the output of individual generators."

32 For the purposes of this interlocutory injunction application, EnergyAustralia does not contend that any of the notices is not a valid notice for the purposes of s 414(6). It lost its challenge to the validity of the first notice in the Commission, and does not seek to re-litigate that issue for present purposes.

33 However, EnergyAustralia says that the action taken (and threatened) by the operators does not constitute "a ban", and is therefore not "protected industrial action".

34 I agree with EnergyAustralia that the word "ban" contemplates a prohibition on work, rather than a prescription to perform work in a certain way or to achieve a certain result. That is the plain meaning of the word,[4] as well as being supported by authority.

35 "Ban" is not a term which is defined by the Act. However, the construction contended for by EnergyAustralia is consistent with the definition of "industrial action" in s 19(1) of the Act:

Industrial action means action of any of the following kinds:

(a) the performance of work by an employee in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work;

(b) a ban, limitation or restriction on the performance of work by an employee or on the acceptance of or offering for work by an employee;

(c) a failure or refusal by employees to attend for work or a failure or refusal to perform any work at all by employees who attend for work;

(d) the lockout of employees from their employment by the employer of the employees.

36 That definition draws a distinction between the concept of a ban, and the concept of performing work differently from the usual manner.

37 In Williams v Construction, Forestry, Mining and Energy Union,[5] Jessup J considered whether the workers had engaged in a "ban, limitation or restriction" on the performance of their work, within the meaning of s 19(1)(b). His Honour referred with approval[6] to what a Full Bench of the Commission had said about the meaning of the word "ban" in NMHG Distribution Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union:[7]

The New Shorter Oxford English Dictionary includes the following meaning for the word "ban": "a formal or authoritative prohibition (on or against something)". This meaning accords with the use of the term in industrial relations discourse.

38 Jessup J added that the concept of ban "involves a prohibition which is absolute or categorical, and not merely a matter of inclination or preference."[8]

39 Similarly, in Davids Distribution Pty Ltd v National Union of Workers,[9] the Full Federal Court said that:

Even if the picketing could be described as a "limitation" or "restriction" on the work performed by the truck drivers, it could not properly be described as a "ban"; a "ban" is a prohibition ...[10]

40 EnergyAustralia says that what the operators did in the first week of March was not a ban. They did not withdraw their labour, or refrain from doing something they were required to do. Instead, they took the following positive action to interfere with the control of the units by a third party, namely, the market operator:

(a) They overrode the automatic generation control by the market operator;

(b) They manually programmed the generator units to reduce output to 240 MW; and

(c) After about 2 hours, they manually returned the units to the automatic generation control of the market operator.

41 EnergyAustralia says that the interference by the operators with the control of the units by the market operator does not constitute a "ban" within the meaning of:

(a) The protected action ballot order, as approved by members; or

(b) The second or third written notices to EnergyAustralia.

42 The CFMEU says that I should reject these arguments, and follow the reasoning and reach the same conclusion as the Commission. It is therefore necessary to consider what the Commission actually decided, and on what evidence.

43 The only evidence before the Commission was a 5 page affidavit of Dale Hogarth, the operations manager at the power station, and some oral evidence from Mr Hogarth (which lasted about 20 minutes). The written and oral evidence both focussed on why EnergyAustralia alleged that the first notice was ambiguous. For example, was the two hour period specified in the notice meant to refer to the total time when industrial action would be taken, or the total time at which the units would operate at 240 MW (if the latter, then industrial action would be occurring over a 3 or 4 hour period, because of the time required to reduce and increase generation). Similarly, was the notice referring to "Market Time" or "Eastern Standard Daylight Savings Time", which were one hour different?

44 In the course of his evidence, Mr Hogarth did say that it was not clear to him which of the ordinary tasks or functions operators intended to refrain from performing, in order to achieve the outcome specified in the notice. However, given that the focus of the hearing was on the validity of the first notice, the brevity of his evidence as to how the output of units might be adjusted was perfectly understandable.

45 In the course of explaining why she did not find that the notice was ambiguous, Commissioner Bissett said that EnergyAustralia was aware that "the bans limiting output will result in the operators not adjusting the generators to the target output required of management such that the generators will operate at 240MW".[11] Unfortunately, this conclusion was based on a misunderstanding of how generator capacity is ordinarily operated and altered. The Commissioner made no reference to the automatic generation control system, or the usual roles played by the market operator and the operators at the power station. She does not appear to have appreciated that output could not be reduced to 240 MW without the operators first taking various positive actions.

46 On the contrary, she apparently understood that the operators were "advised of the required output levels by management and, in the normal course, are expected to comply with the direction of management."[12] Given her understanding of the facts, it is not surprising that she expressed the opinion that the implementation of the ban would result in the operators not doing something as requested (namely, following management directions to alter the output of the units). She described that as an absolute prohibition,[13] which would fall within the concept of a ban.

47 I am not critical of the Commissioner for making these observations. She did so after a relatively brief,[14] urgent application, made late in the day, and on far more limited evidence than was before me. The observations were also made by way of obiter dicta, given that the application before her only concerned the validity of the first notice: whether or not it gave sufficient notice of the industrial action which the union proposed to implement.

48 Having had the benefit of more detailed evidence and submissions, specifically addressed to the question of whether the action actually taken by the operators falls within the concept of a "ban", I do not find Commissioner Bissett's observations persuasive. And, in the absence of reasons for the Full Bench's decision, I am not aware what views they might have expressed on this point.

49 I am satisfied that there is a serious question to be tried as to whether the CFMEU would be able to rely on the statutory immunity provision. In particular, there is a serious question as to whether the interference by the operators with the control of the units by the market operator constitutes a "ban" within the meaning of:

(a) The protected action ballot order, as approved by members; or

(b) The second or third notices to EnergyAustralia.

50 That conclusion is not affected by the fact that EnergyAustralia has, in several places, referred to the industrial action as "Partial Work Bans". The CFMEU says that this amounts to an acknowledgement by the employer that the industrial action falls within the meaning of a "ban". I do not accept that EnergyAustralia has made any such acknowledgement. In so far as EnergyAustralia has used that term in the affidavit of Dale Hogarth, which has been filed in this proceeding,[15] it is used in a context where it is clear that Mr Hogarth and EnergyAustralia do not accept that what the union is doing amounts to a "ban". And, in so far as that term was used in a letter sent by EnergyAustralia on 18 February 2013, it was used in a technical sense,[16] to explain why certain payments would not be made to employees during the industrial action.**

The alternative immunity under s 460

**51 Alternatively, the CFMEU says that s 460(1)(c)(i) of the Act is "fatal" to EnergyAustralia's case. Section 460(2) creates an immunity for persons who act in good faith on protected ballot results, in the following circumstances:

(a) the results of a protected action ballot ... purported to authorise particular industrial action; and

(b) an organisation or a person, acting in good faith on the declared ballot results, organised or engaged in that industrial action; and

(i) it later becomes clear that the industrial action was not authorised by the ballot; ...

52 The CFMEU says that if EnergyAustralia succeeds in establishing at trial that the industrial action was not in fact authorised by the ballot, then it will be able to rely on this provision to defend EnergyAustralia's tortious claim.

53 EnergyAustralia says this alternative immunity would not be available, because the results of the ballot only purported to authorise a "ban"; therefore, s 460(1)(a) would not be satisfied.

54 Alternatively, EnergyAustralia says that even if s 460(1)(a) were satisfied, the immunity could only be relied upon until the point when it became clear that what was being done did not fall within the terms of the ballot. That is to say, the section might provide some comfort in respect of past actions, but not future ones.

55 I am satisfied that there is a serious question to be tried as to whether the CFMEU may be able to rely on the s 460 immunity at trial.**

**56 EnergyAustralia must also establish that the balance of convenience favours the granting of an injunction. It is convenient to deal with this issue separately, as it relies on different evidence; however, I accept that the issue is interconnected with the "serious question to be tried" issue.

57 Mark Collette is the group executive responsible for managing EnergyAustralia's wholesale market exposures. His affidavit, dated 6 March 2013, goes into some detail about: how the national electricity market operates, via a pool or spot market in which the output from all electricity generators around Australia is aggregated and scheduled in five minute intervals, in order to meet demand; how the market is managed by the market operator; and how market participants often enter into financial hedge contracts, in order to manage the high degree of price volatility which occurs during the five minute trading periods.

58 Each time members of the CFMEU limit the output of the generators at the power station, it stops EnergyAustralia from earning the spot price for each megawatt hour that it would otherwise have generated during that period. For the purposes of the present application, there is no challenge to Mr Collette's calculation of the financial impact of the limitations between 1 and 5 March as being a loss of profits of $136,383.

59 As far as future losses are concerned, they have the potential to increase dramatically on days where the discharge price "spikes" (for example, due to the heavy demand generated by air conditioning on days where there is hot weather). Given that the third notice says that the bans are to continue for "an indefinite period", EnergyAustralia may continue to suffer losses of a similar magnitude indefinitely.

60 All of the industrial action directed by the CFMEU has taken place, or is scheduled to take place, during the daily peak periods, when demand for electricity is at its highest. Given that timing, the proposed industrial action may stop EnergyAustralia from generating sufficient electricity to cover the quantities in relation to which it has commitments under hedge contracts; this may cause it to suffer loss under those contracts, or at least to reduce its profit margins under them.

61 A further possible effect of the industrial action may be to discourage EnergyAustralia from entering into further hedge contracts, if it is not able to determine with sufficient certainty the amount of electricity it will be able to provide. The financial effect of this lost opportunity may be very difficult to calculate or prove at trial.

62 There is no suggestion that the CFMEU would suffer any financial loss or damage if an interlocutory injunction were granted. However, the CFMEU is currently engaged in enterprise bargaining negotiations with EnergyAustralia, and its negotiating position would undoubtedly be strengthened if the injunction was not granted. I have taken that into account in considering the balance of convenience.

63 I note that EnergyAustralia accepts that the CFMEU is free to take the other forms of protected industrial action specified in the third notice; that is to say, the union is not without other legitimate "bargaining chips". Nor does EnergyAustralia seek to prevent the CFMEU from implementing action which would actually constitute a ban.

64 I have also taken into account the following observation by Merkel J in ACI Operations Pty Ltd v Automotive Food Metals Engineering Printing and Kindred Industries Union:[17]

[B]y reason of some of the particular features of industrial disputes, the Court should take particular care to approach the question of interim injunctions in respect of such disputes, conscious of the industrial realities.[18]

65 In these circumstances, I am satisfied that the balance of convenience strongly favours the grant of an interlocutory injunction.**

**66 Even where an applicant establishes that there is a serious question to be tried, and the balance of convenience favours the grant of an injunction, relief may be refused on discretionary grounds.

67 The fact that EnergyAustralia did not object to the form of questions to be asked in the ballot is not a discretionary consideration against the grant of an injunction. In the context of a heated industrial dispute, it is not the employer's responsibility to ensure that the union frames its ballot questions unambiguously, or in a way which is likely to be most effective.

68 There is no doubt that EnergyAustralia could have applied to the Commission under s 418 for an order stopping the industrial action, on the ground that it is not covered by the notices or the ballot. It could have done so either as part of its challenge to the validity of the first notice, or by a separate application. Instead, it chose to commence this proceeding, seeking injunctive relief and tortious damages. The CFMEU argues that this court should not exercise its injunctive powers too readily, in circumstances where there is a specialist tribunal which has been set up to deal with industrial disputes.

69 The court acknowledges that the Commission has specialist industrial experience. But it does not have exclusive jurisdiction over all facets of the current industrial dispute. In particular, it does not have jurisdiction to deal with tortious claims. The issues which are the subject of this proceeding are within the jurisdiction, and within the expertise, of this court to determine.

70 The CFMEU also argues that it would be more appropriate for the current application to have been made to the Commission, because the Commission has already considered whether the proposed industrial action would fall within the meaning of a "ban", in the course of considering the validity of the first notice. The union does not suggest that any issue estoppel arises as a result of the Commission's decisions to date, but says that this is a matter which is relevant to the court's discretion.

71 However, as mentioned earlier in these reasons, the relevant observations by Commissioner Bissett were made by way of obiter dicta, and proceeded on a misunderstanding of the facts gleaned in the course of an urgent hearing. That EnergyAustralia would seek to have the current dispute determined afresh, by a court which has not formed any views as to the merits of the dispute, is perfectly understandable and in no way inappropriate.

72 I would not decline to grant the injunction on discretionary grounds.**

(a) There is a serious question to be tried as to whether the CFMEU is liable for the tort of inducing a breach of contract;

(b) The balance of convenience strongly favours the grant of an interlocutory injunction; and

(c) There are no discretionary considerations that would lead me to refuse to grant such an injunction.

74 An interlocutory injunction will be granted to stop the CFMEU from engaging in conduct similar to that which occurred in the first week of March. However, the form of order sought in the summons and the minute of proposed orders is too broad and needs further consideration. EnergyAustralia seeks an order restraining the CFMEU from inducing employees "to take any action, except as authorised by [EnergyAustralia] that would prevent or interfere with the control by the Australian Energy Market Operator of the rate at which electricity is generated."

75 As proposed, that might prohibit conduct which might legitimately fall within the concept of a ban. I will hear further from the parties as to an appropriate form of injunction, once they have read my reasons.**

[1] Section 414(6) of the Act requires that a notice given under s 414 "must specify the nature of the action and the day on which it will start."

[4] The Macquarie Dictionary (5th edition) defines "ban" as follows:

1. to prohibit; interdict: to ban a meeting; to ban a book.

4. informal denunciation or prohibition, as by public opinion.

[5] [2009] FCA 223.

[7] (2000) 104 IR 158.

[9] [1999] FCA 1108; [1999] 91 FCR 463.

[14] The total hearing time was about 90 minutes, excluding adjournments.

[15] Paragraphs [11], [15] and [89] of the Hogarth affidavit dated 6 March 2013.

[16] As defined in s 470(3) of the Act.

[17] [2000] FCA 393.