Qantas Airways Limited v Australian Licensed Aircraft Engineers Association

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY FAIR WORK DIVISION NSD 381 of 2011

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

AND: AUSTRALIAN LICENSED AIRCRAFT ENGINEERS ASSOCIATION

JUDGES: GRAY, NORTH AND BESANKO JJ DATE: 4 MAY 2012 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 Before the Court is an appeal from two amended declarations made by the Federal Magistrates Court on 23 March 2011. One declaration, which will be referred to as the adverse action declaration, was that the first appellant, Qantas Airways Ltd, "subjected Mr Luke Murray to adverse action by suspending international postings in contravention of s.340(1) Fair Work Act 2009 (Cth)" (the Act). The other declaration, which will be referred to as the coercion declaration, was that the second appellant, Peter Cawthorne, "took action against Mr Luke Murray with intent to coerce him to not exercise a workplace right in contravention of s.343(1) of the Act.

THe facts 2 Mr Luke Murray is a Licensed Aircraft Maintenance Engineer (LAME) employed by the first appellant. He is based in Brisbane. He is a member of the Australian Licensed Aircraft Engineers Association, the respondent. 3 LAMEs based in Australia also travel to overseas ports for short periods to relieve LAMEs posted overseas. Mr Murray was posted to Narita in Japan from 4 December 2009 to 16 January 2010. 4 As a result of the hours he worked in that posting, Mr Murray made claims for additional payment from the first appellant, and for some additional time off on his return to Australia. There is some complexity, and indeed confusion about the basis of the claim. The detail is not relevant to this proceeding and was not addressed by counsel. It is sufficient to know that there was a claim made by Mr Murray which was not recognised initially by the first appellant. 5 In Brisbane, Mr Honsa was responsible for selecting LAMEs for overseas postings. He reported to Mr Thompson, the Manager, Line Maintenance Operations, also in Brisbane, who was responsible for approving or declining requests for overseas postings. 6 Mr Cawthorne was based in Sydney and was responsible for supporting LAMEs based in Australia who were posted overseas in Asia and the Pacific Islands. He reported to Mr Panagiotopoulos, the Manager, Line Maintenance Operations, who was also based in Sydney. 7 Mr Murray discussed his claims with Mr Cawthorne in late February 2010. Then, on 8 March 2010, Mr Murray and Mr Cawthorne exchanged emails on the issue. This exchange led to a heated telephone conversation. What was said in the telephone conversation was the basis of the coercion allegation. 8 On 25 March 2010, Mr Murray sent an email to Mr Cawthorne, which he copied to Mr Thompson and Mr Panagiotopoulos. In the email he said that Mr Cawthorne had no right to reject his claim, and that he was initiating the dispute resolution process available under the Enterprise Bargaining Agreement which governed his employment. 9 On the next day, 26 March 2010, Mr Thompson and Mr Panagiotopoulos decided to suspend all overseas postings for LAMEs out of Brisbane. 10 On 21 April 2010, the respondent filed an application in the Federal Magistrates Court alleging contraventions of s 340 and s 343 of the Act by the appellants. 11 On 27 April 2010, the first appellant lifted the suspension of overseas postings for Brisbane LAMEs.

The amended claim under the fair work act 12 So far as is relevant to this appeal, the adverse action allegations made by the respondent in the amended claim filed in the Federal Magistrates Court were as follows: 1. The Applicant claims that the First Respondent [Qantas Airways Ltd] and/or Second Respondent [Peter Cawthorne] took adverse action against Mr Murray ("the employee"), namely, injuring the employee in his employment, contrary to s340 of the Act. … (a) The Second Respondent verbally abused the employee for exercising the workplace rights described in 1A(i) [making complaints about shift penalties] above. Verbally abusing the employee injured him in his employment. (b) The First Respondent and/or Second Respondent denied the employee any future possible international postings on the basis that the employee exercised or proposed to exercise the workplace rights described in 1A(i) and/or 1A(ii) [initiating the dispute resolution process] above. Denying this benefit to the employee injured him in his employment and/or altered his position to his prejudice, and was adverse action taken against the employee. 13 So far as is relevant to this appeal the coercion allegations made by the respondent in the amended claim were as follows: 2. The Applicant claims that the First Respondent and/or Second Respondent has taken action with the intent of coercing the employee into not exercising his workplace rights, contrary to s343 of the Act. … (a) The Second Respondent verbally abused the employee for exercising the workplace rights described in 2(i) [making complaints about shift penalties] above. Abusing the employee was done with the intent of coercing the employee into not exercising his workplace rights. 14 The adverse action declaration reflects an acceptance by the federal magistrate of the allegation that the position of Mr Murray had been altered to his prejudice by the denial of future possible international postings as alleged in [1(b)] of the amended claim. 15 The federal magistrate did not accept the other adverse action allegation, namely, that Mr Murray was verbally abused and thereby injured in his employment as alleged in [1(a)] of the amended claim. 16 The coercion declaration reflects the acceptance by the federal magistrate of the allegation that Mr Murray had been threatened with denial of future international postings in order to coerce him into not exercising his workplace rights. 17 The challenge to each of the declarations will now be dealt with in turn.

The adverse action declaration 18 The allegation which resulted in the adverse action declaration was made under s 340(1) of the Act which relevantly provides: A person must not take adverse action against another person: (a) because the other person: (i) has a workplace right; or (ii) has, or has not, exercised a workplace right; or (iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or Section 342 relevantly defines adverse action as follows: (1) The following table sets out circumstances in which a person takes adverse action against another person. Meaning of adverse action Item Column 1 Column 2 Adverse action is taken by ... if ... 1 an employer against an employee the employer: (a) dismisses the employee; or (b) injures the employee in his or her employment; or (c) alters the position of the employee to the employee's prejudice; or (d) discriminates between the employee and other employees of the employer.

[emphasis added] 19 The first appellant raised three arguments on the appeal against the adverse action declaration. It contended that the federal magistrate erred by: a. concluding that the suspension of overseas postings was an alteration in Mr Murray's position to his prejudice. This argument will be referred to as the prejudicial alteration issue; b. failing to be satisfied that Mr Murray's claim for payment and his institution of the dispute resolution procedure played no part in the decision to suspend overseas postings. This argument will be referred to as the intention issue; c. making findings which departed from the respondent's pleaded case and the way in which the respondent framed its case. This argument will be referred to as the pleading issue. 20 Each of these arguments will now be addressed.

The federal magistrate's reasons 21 It is common ground that Mr Murray had exercised workplace rights within the meaning of s 340(1) of the Act by making the claims arising from the Narita posting and by initiating the dispute resolution process. 22 The federal magistrate addressed the prejudicial alteration issue at [42] as follows: Did the suspension injure Mr Murray in his employment or alter his position to his prejudice? The respondent argues that there was no way that Mr Murray was likely to be going on a secondment during the period in which the suspension was operative because he had just been away and had been put at the bottom of the list. I do not think that is a correct way to articulate the test. Mr Murray was a LAME in Brisbane whose employment provided him with a number of benefits one of which was the opportunity to volunteer for overseas postings. That benefit was removed by the decision to suspend postings to everyone. When the suspension was put in place, there was no temporal limit, whatever Mr Thompson's intentions may have been. Mr Murray may have been the person at the back of the list but it was not a very long list and other persons may well have had reasons why they did not wish to undertake such a posting at a particular time. Mr Murray had the benefit of being able to apply for an overseas posting on 24 March 2010 but not on 26 March. To my mind, his employment was adversely impacted by the decision and he was thereby injured or, at the very least, had his position altered to his prejudice which was the alternative way in which the action was pleaded.

The first appellant's submission 23 The first appellant contended that there was no impact at all on Mr Murray by its decision to suspend overseas postings. 24 The first appellant relied on the federal magistrate's finding that the suspension was temporary, that is to say, that it lasted only until 27 April 2010. It also relied on the federal magistrate's finding at [36] in the discussion concerning the first appellant's reasons for imposing the suspension as follows: Mr Thompson said he believed the problem could be resolved quickly and that he had no intention of permanently suspending postings from Brisbane and I fully accept both of those statements. Further, the first appellant relied on the respondent's further and better particulars of the future possible international postings which were allegedly denied to Mr Murray as follows: For the years 2004 to 2010 Mr Murray has received an international posting every year. He was next due to receive an international posting at the end of 2010 or early 2011. 25 Finally, it relied on the following exchange which occurred in cross examination of Mr Murray: And you certainly haven't suggested in your affidavit that during the suspension of postings, … you proposed to volunteer for overseas postings or expected to get overseas posting during that particular month? --- No. 26 On the basis of this material, the first appellant contended that because the suspension was lifted on 27 April 2010, and Mr Murray was not due to be posted overseas by that date, the suspension did not affect Mr Murray. 27 The first appellant contended that an action only alters an employee's position to their prejudice if the action affects the person and does so in a real and substantial way. An action which has an hypothetical or insubstantial effect is not an action which alters the position of an employee to their prejudice. In order that an employee's position is altered to their prejudice it is not necessary that the action has an immediate tangible effect, such as the effect of a demotion, but the action must target the employee. A particular employee must be included in the cadre that is the subject of the action. 28 The first appellant submitted that such an approach to the concept of prejudicial alteration was demonstrated in Community and Public Sector Union & Another v Telstra Corporation Limited 107 FCR 93; [2001] FCA 267 (Telstra). In that case some employees were employed under individual agreements and others were employed under awards and certified agreements. Telstra was in the process of reducing its workforce. There were established criteria for the provision of redundancies to employees. The employee relations manager sent an email to managers which conveyed to them that they should give more favourable treatment to employees employed on individual contracts in the event of redundancy. The instruction in the email had not been acted upon when proceedings were instituted by the Union. The Full Court held that the sending of the email altered the position of the employees employed on certified agreements and awards to their prejudice. 29 The first appellant submitted that even though the instruction in Telstra had not been acted upon, it targeted employees employed under certified agreements and awards and, hence, had an impact on them as a cadre of people to whom the action was directed. The first appellant submitted that the critical factor was that the employees employed on certified agreements and awards were all potential candidates for redundancy. The instruction was directed to the position of all of those employees. In contrast, so it was submitted, in the present case Mr Murray was not in the cadre of people to whom the suspension was directed because he was not due to be, nor did he intend to apply to be, posted overseas in the period of the suspension.

Consideration 30 In Telstra the Court explained the reach of the concept of prejudicial alteration at [17] - [18] as follows: 17 The question is whether, by sending the e-mail to its recipients, Telstra had altered the position of any of its employees to the employee's prejudice within the meaning of s 298K(1)(c). In Patrick Stevedores at 18 the majority of the High Court held that the subsection covers "not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question". The majority also observed (at 20) that the reorganisation of companies within the Patrick Group resulted in the security of the employer companies' businesses being "extremely tenuous" with the "security of the employees' employment [being] consequentially altered to their prejudice". The reorganisation did not directly affect or alter any legal rights or obligations of the employees but it left their future employment less secure. Although this issue was not in dispute, the majority appears to have had no difficulty in accepting reduced security of future employment as falling within s 298K(1)(c) because it brought about an adverse affection of, or a deterioration in, the advantages enjoyed by the employees before the reorganisation. 18 Where the alteration of position is alleged to be indirect or consequential, as in Patrick Stevedores and in the present case, a difficult question may arise as to whether a prejudicial alteration of position has in fact occurred. Answering that question may involve questions of degree. It is sufficient for present purposes to say that if the prejudicial alteration is real and substantial, rather than merely possible or hypothetical, it will answer the description in s 298K(1)(c). [emphasis added] 31 Australasian Meat Industry Employees Union v Belandra Pty Ltd 126 IR 165; [2003] FCA 910 is an example of a prejudicial alteration which occurred even though the employees in question suffered no loss or infringement of a legal right. The employees were meat workers whose employment was terminated when their employer's premises were destroyed by fire. The employer told them they would be re-employed when the operation resumed. However, the employer subsequently decided not to resume that operation and not to re-employ those employees. The employees had no legal right to re-employment. The statutory provision prohibiting prejudicial alteration applied to them and it was held that the disappointment of their expectation was an alteration of their position to their prejudice. 32 The authorities thus establish that a prejudicial alteration to the position of an employee may occur even though the employee suffers no loss or infringement of a legal right. It will occur if the alteration in the employee's position is real and substantial rather than merely possible or hypothetical. 33 By way of addition to or refinement of these principles, the first appellant argued that an employer's decision will only prejudicially alter the position of an employee if the employee falls within the cadre of people targeted by the decision. The addition or refinement is consistent with the purpose of the section, namely, to protect employees from disadvantageous actions of their employers. 34 The key question is whether the addition or refinement assists the first appellant in this case. In the end the answer depends on the time at which the facts are examined. The first appellant does not contest the finding of the federal magistrate that there was no temporal limit on the suspension when it was first put in place. It accepted that, at that time, the suspension was to operate without any end point. It is also common ground that Mr Murray expected an overseas posting towards the end of 2010 or early 2011. At the time the suspension was initiated this expectation could not be met because the suspension was not limited to a time before Mr Murray's next overseas posting was anticipated. Thus, if the facts are assessed at the time when the suspension was imposed and if, at that time, there was no temporal limit on the suspension, then Mr Murray fell within the cadre of persons affected by the suspension, and, even by applying the addition or refinement contended for by the first appellant, Mr Murray's position was prejudicially affected by the suspension of overseas postings. 35 The first appellant then argued that the finding that there was no temporal limit on the suspension must be read in the context of the finding that Mr Thompson believed the problem could be resolved quickly, and that he had no intention of permanently suspending postings from Brisbane. So understood, the evidence was that the suspension would be of short duration. It would not last until the end of 2010 or early 2011 and would not therefore impact on Mr Murray. 36 There are two difficulties with this approach. First, the duration of the suspension envisaged by Mr Thompson was not specific. Even if it is accepted that the suspension was not to be permanent and that it would be over quickly there is no clarity whether the suspension would still be in place when Mr Murray expected his next posting. There is insufficient precision in this description to support a finding that Mr Murray would not be impacted by the suspension. Second, the evidence only concerns Mr Thompson's belief as to the likely duration of the suspension and not the terms of the suspension conveyed to the employees. 37 Then it was said that the subject of the declaration was the suspension of overseas postings and that suspension actually occurred from 26 March 2010 to 27 April 2010. Mr Murray did not expect an overseas posting within the period of the actual suspension and was therefore not impacted by the decision. It follows that his position was not altered to his prejudice. 38 Again, this analysis takes the end of the period of the suspension as its vantage point. It assumes that the impugned action is that of imposing a suspension for a defined period ending before there was any impact on Mr Murray. But this was not the action about which a complaint was made, nor the action on which the declaration was based. The complaint was made over the imposition of a suspension for an unlimited period. The first appellant cannot recast the allegation into a form which, by its formulation, removes the prejudicial effect of the action. 39 Whilst the period of the suspension remained unlimited Mr Murray was prevented from obtaining overseas postings at the end of 2010 or early 2011 as he had previously expected to be able to do. The effect of this suspension in this period was therefore real and substantial and was not hypothetical or insubstantial. There was an adverse affection of and deterioration in the advantage enjoyed by Mr Murray before the suspension was imposed. Mr Murray was one of the employees to whom the suspension was directed. 40 It follows that the federal magistrate did not err in finding that the suspension of unlimited duration of overseas postings altered the position of Mr Murray to his prejudice. A declaration to reflect this finding was justified.

The Intention Issue 41 In [31] to [41] of his reasons for judgment the federal magistrate examined in detail the evidence as to the first appellant's reason or reasons for imposing the suspension of overseas postings. The evidence included oral evidence of the decision makers Mr Thompson and Mr Panagiotopoulos. The federal magistrate set out at [37] part of the cross examination of Mr Thompson as follows: And so part of the reason you made the decision was that Mr Murray had made some claims for his entitlements? Yes, yes. This evidence of Mr Thompson amounted to an admission of the necessary intention by Mr Thompson. Furthermore, Mr Panagiotopoulos described Mr Thompson as the driving force behind the proposal to suspend international postings. 42 In view of such evidence, the federal magistrate, not surprisingly, concluded at [41]: Looking at the evidence as a whole, I cannot be satisfied with the explanations put forward by the Qantas witnesses that the making of the claim by Mr Murray and the instigation of the grievance procedure was not at least part of the reason for suspending overseas postings, not only to Narita but also to Noumea from Brisbane. 43 The ground of appeal most relevant to this issue stated: 9 The Federal Magistrate erred in finding, contrary to the sworn evidence of the decision makers, that the First Respondent decided to temporarily suspend postings from Brisbane because Mr Murray exercised a workplace right (at [41]). 44 The outline of submissions of the appellants at [13] contended that the federal magistrate: … was in error in that his Honour found the motive of Qantas could be impugned notwithstanding that one of the two decision makers was found to have been actively attempting to reach a settlement of Mr Murray's grievances … There was no analysis by the Federal Magistrate of the difference between proximate cause and operative and immediate cause for the action taken … 45 At the hearing of the appeal, senior counsel for the appellants made an initial fleeting reference to the existence of the intention issue but did not return to it or develop any argument in relation to it. Senior counsel for the respondent observed that the intention issue was not developed orally. The issue was not taken up in reply. In these circumstances, although the point was not formally abandoned, it was, in effect, not pursued. 46 In any event, the argument faced a number of formidable obstacles. Section 360 and s 361 of the Act together provided a high bar for the first appellant to surmount in order to succeed. 47 Section 360 relevantly provided: For the purposes of this Part, a person takes action for a particular reason if the reasons for the action include that reason. 48 Section 361 relevantly provided: (1) If: (a) in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and (b) taking that action for that reason or with that intent would constitute a contravention of this Part; it is presumed, in proceedings arising from the application, that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise. 49 Thus, the first appellant had the onus of proving that it did not suspend the overseas posting for a reason which included the reason that Mr Murray had made the claims for payment or invoked the dispute resolution procedure. The reasons for the suspension were matters particularly within the knowledge of the first appellant. The federal magistrate had the advantage not available to this Court of seeing and hearing the evidence of the decision makers Mr Thompson and Mr Panagiotopoulos. The federal magistrate was not persuaded by these witnesses. Such findings would not be set aside on appeal unless there were incontrovertible facts or there was uncontested testimony which demonstrated that the federal magistrate's conclusions were erroneous, or that the decision of the federal magistrate was glaringly improbable or contrary to compelling inferences in the case: Fox v Percy (2003) 214 CLR 118 at 128; [2003] HCA 22 at [29]. No attempt was made by the appellants to demonstrate that the federal magistrate's conclusion was tainted by any of these features. In the result, this ground of appeal is not made out.

The Pleading Issue 50 The allegation made in [1(b)] of the amended claim filed in the Federal Magistrates Court stated: b) The First Respondent and/or Second Respondent denied the employee any future possible international postings on the basis that the employee exercised or proposed to exercise the workplace rights described in 1A(i) and/or 1A(ii) above. Denying this benefit to the employee injured him in his employment and/or altered his position to his prejudice, and was adverse action taken against the employee. [emphasis added] 51 Ground 7(a) of the notice of appeal stated: The Federal Magistrate erred in making findings that departed from the Applicant's pleadings and the manner in which the Applicant framed its case. In particular: (a) the Federal Magistrate erred in finding adverse action by the First Respondent. The Applicant's pleading claims that the First Respondent took adverse action against Mr Murray by denying "any future possible international postings". The Federal Magistrate accepted that the First Respondent did not deny any future postings, but rather temporarily suspended international postings from Brisbane (at [36]). Accordingly, there was no basis for finding adverse action as pleaded. [emphasis added] 52 Again, this ground of appeal was dealt with so slightly that it was effectively abandoned. There was no reference to the ground in the appellants' outline of submissions and only cursory reference to it at [13] - [14] of their outline of submissions in reply. It was mentioned at the hearing of the appeal without elaboration by senior counsel for the appellants. No attempt was made by the appellants to detail the way in which it was alleged that the finding made by the federal magistrate that the suspension was temporary departed from the way the respondent framed its case, other than by the reference to the comparative wording of the finding and the amended claim. 53 Even if the ground were not effectively abandoned it should not be upheld. The federal magistrate's finding that the suspension was without temporal limit when imposed falls within the terms of the amended claim which alleged that the appellants denied any future possible international postings. The allegation that Mr Murray was denied any future possible international postings allows for the case that the denial was for a limited period. Thus, the argument that the federal magistrate erred in making findings which departed from the case asserted in the amended claim should not be accepted.

the coercion declaration 54 The claim which resulted in the coercion declaration was made under s 343 of the Act which provides: (1) A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to: (a) exercise or not exercise, or propose to exercise or not exercise, a workplace right; or (b) exercise, or propose to exercise, a workplace right in a particular way.

The Claim 55 Paragraph 2 of the amended claim made by the respondent in the Federal Magistrates Court, which for convenience is set out again, stated: The Applicant claims that the First Respondent and/or Second Respondent has taken action with the intent of coercing the employee into not exercising his workplace rights, contrary to s343 of the Act. … a) The Second Respondent verbally abused the employee for exercising the workplace rights described in 2(i) above [making complaints about shift penalties]. Abusing the employee was done with the intent of coercing the employee into not exercising his workplace rights. 56 The appellants sought further particulars of the term verbally abusing as used in [2(a)] of the amended claim including the substance of what was said. On 21 June 2010, the respondent provided particulars which stated that the verbal abuse was in a phone conversation on 8 March 2010 between Mr Cawthorne and Mr Murray, and the particulars continued: (e) Mr Murray and Mr Cawthorne had a conversation for about 10 minutes. During this conversation Mr Cawthorne was shouting at Mr Murray. When Mr Cawthorne shouted at Mr Murray he shouted at him that he was not going to respond to an email request made by Mr Murray concerning overtime payments, that Mr Murray was the only person who complained, that employees that do not accept the conditions are not given future postings, that if he did not like the conditions then he shouldn't go. [emphasis added] 57 No particulars were sought in relation to the "intent of coercing" referred to in [2(a)] of the amended claim.

The Reasons of the Federal Magistrate 58 In his discussion of the s 343 allegations, the federal magistrate first reviewed the authorities including Finance Sector Union v Commonwealth Bank of Australia (2000) 106 FCR 16, Schanka v Employment National (Administration) Pty Ltd (2000) 170 ALR 42, National Tertiary Education Industry Union v Commonwealth of Australia [2002] FCA 441 and Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2001] FCA 456, and concluded that coercion was constituted by two elements. The first element required action aimed to negate choice, or the application of pressure amounting to compulsion of the will of the victim. The second element required that such action was unlawful, illegitimate, or unconscionable. 59 The federal magistrate concluded in relation to the first element at [52]: I have already noted that I am not convinced that the telephone conversation constituted verbal abuse. However, the conversation could be described as intimidating because of the manner in which Mr Cawthorne expressed himself (his raised voice) and the final threat which I have found to have been made: "The guys who go away and accept the conditions that they are given are the ones who get asked to go away next time." In regard to the first of the two elements of coercion, it seems to me that the final threat was one to "take away something Mr Murray then possessed", that being the untrammelled right to apply for future secondments if he continued his claim for additional benefits. 60 The federal magistrate then addressed the second element by asking whether Mr Cawthorne acted unlawfully in the course of the conversation with Mr Murray. He first considered whether the action of Mr Cawthorne discriminated against Mr Murray. The federal magistrate referred to a letter sent to the parties after the hearing which invited them to make submissions on whether discrimination was a possible basis for the element of unlawfulness. He also referred to some authorities which demonstrate that matters might be taken into account by a court even if those matters are not pleaded, providing they have been clearly identified in the proceedings and thoroughly litigated. He concluded at [54]: Having read the transcripts, I am satisfied that the issue of discrimination did not arise for discussion during the hearing. … I am not satisfied that the applicant pleaded or brought this issue within the confines of the case at trial and I would not be prepared to grant any amendment to plead it now. The case has been completed. 61 Then the federal magistrate considered whether the element of unlawfulness was satisfied by an alteration of the position of Mr Murray to his prejudice contrary to s 340 of the Act. The federal magistrate said: 55. In my discussion of the applicant's first claim under s.340, I indicated that Mr Cawthorne's treatment of Mr Murray and the veiled threat that, if he pursued his claim, he would not be selected for future postings might be considered action which altered the position of the employee to his prejudice. This, in turn, would provide sufficient grounds for concluding that Mr Cawthorne's actions were unlawful in the context of the FWA and that he had, therefore, exerted an illegitimate form of pressure on Mr Murray. Although this was not specifically pleaded by the applicant, either in relation to 1(a) or 2(a) of the Amended Application filed on 6 August 2010, I am satisfied that the relevant acts were clearly identified in the proceedings and thoroughly litigated. It is also relevant that the respondent did not ask for particulars of the coercion claim in their request for particulars date 7 June 2010 (exhibit C). 56. I think Mr Cawthorne's intemperate words to Mr Murray did alter his position to his prejudice in the sense explained by their Honours in Patrick Stevedores (supra). The fact that the conversation was witnessed by two of Mr Murray's colleagues meant that his status was comparatively reduced and the threat of adverse affection or deterioration in the advantages enjoyed by Mr Murray unless he chose not to exercise his workplace right was clearly adverse action (I note that the meaning of adverse action extends to the threat to take adverse action under s.342(2); see also Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2010] FCA 590). 57. I am satisfied that the threat to prevent Mr Murray going on future postings was an attempt to bring illegitimate pressure on Mr Murray to prevent him from further pursuing his claim. Mr Cawthorne's threat and the intimidatory manner in which it was delivered indicate an intention to coerce. I am satisfied that all of the elements of the civil remedy provision have been found to exist. I do not accept an argument that the coercion is nullified by the fact that Mr Murray was well down the list of persons likely to be chosen for a posting for the reasons explained at [41].

Arguments on appeal 62 In relation to the coercion declaration, the thrust of the appellants' case on appeal was that the federal magistrate erred by reformulating the respondent's claim and by failing to provide the appellants with an opportunity to address the claim as reformulated. As a result the appellants were denied procedural fairness. Although they were not clearly and separately articulated, the following arguments can be distilled from the appellants' written and oral submissions: a. the federal magistrate erred by finding that the threat contained in the conversation of 8 March 2010 satisfied the first element of coercion when it was never pleaded as a basis for the coercion claim. This argument will be referred to as a contention that the finding was outside the pleaded case; b. the federal magistrate erred by finding that the conversation of 8 March 2010 constituted verbal abuse for the purpose of the alleged contravention of s 343(1) when his Honour had already determined that it did not constitute verbal abuse for the purposes of s 340(1). This argument will be referred to as a contention that the finding of verbal abuse was not open; c. the federal magistrate erred by inviting the parties to make submissions on whether discrimination could satisfy the second element of coercion, then deciding the matter on another basis which was not the subject of such an invitation to make submissions. This argument will be referred to as the post-hearing letter issue; d. the federal magistrate erred in failing to find that the absence of any pleading that the threat was unlawful or unconscionable denied the appellants procedural fairness. This argument will be referred to as the issue of the absence of any pleading that the threat was unlawful; and e. the basis upon which the federal magistrate ultimately decided the second element of coercion, namely, the alteration of Mr Murray's position to his prejudice, was inconsistent with his Honour's judgment of 9 December 2010. This argument will be referred to as the alleged inconsistency issue. The alleged denial of procedural fairness appears to relate to both the first limb of coercion [a] and [b] above and the second limb [c], [d] and [e] above. 63 Each of these arguments will now be considered.

The finding was outside the pleaded case 64 Paragraph 2(a) of the amended claim alleged that the second appellant verbally abused Mr Murray and the verbal abuse was action taken with the intent to coerce Mr Murray into withdrawing his pay claims. The action therefore contravened s 343 of the Act. 65 The federal magistrate found that the threat made by the second appellant to prevent Mr Murray going on future postings delivered in an intimidatory manner satisfied the first element of coercion. 66 The appellants contended that the finding of a threat fell outside the allegation of verbal abuse and consequently was outside the pleaded case. 67 This narrow literalistic argument is answered by reference to the further particulars of the verbal abuse provided by the respondent. Those further particulars referred to the implicit threat to Mr Murray that he would not be given future postings. The particulars stated that Mr Murray was told: "employees that do not accept the conditions are not given future postings". In view of those particulars, the argument that the finding made by the federal magistrate was outside the pleaded case should not be accepted.

The finding of verbal abuse was not open 68 One of the alleged contraventions of s 340(1) of the Act was that the second appellant verbally abused Mr Murray in the conversation on 8 March 2010 ([1(a)] of the amended claim). In respect of that alleged contravention of s 340(1) the federal magistrate held that the conversation did not amount to verbal abuse. The same verbal abuse was alleged to constitute action taken with intent to coerce in contravention of s 343(1) of the Act ([2(a)] of the amended claim). The appellants argued that because the federal magistrate had found that the conversation of 8 March 2010 did not constitute verbal abuse for the purposes of s 340(1), it was not open to him to hold that the conversation constituted verbal abuse for the purpose of the alleged contravention of s 343(1). 69 In order to assess this argument it is necessary to examine the reasoning of the federal magistrate on the question of verbal abuse in relation to the alleged contravention of s 340(1). 70 The federal magistrate referred to a number of email exchanges concerning the complaints made by Mr Murray as a result of his Narita posting which led up to the phone conversation between Mr Cawthorne and Mr Murray on 8 March 2010. Then the federal magistrate at [18] set out the following part of an affidavit containing Mr Cawthorne's version of the phone conversation: 24. During this telephone discussion we then had an exchange in words to the effect of: Me: Your letter of posting said that you would be paid in accordance with your Brisbane roster and that is what you were paid. Apart from one recent issue no one else has raised a complaint about a posting to Narita or questioned their posting conditions in their letter of posting. LM: It hasn't been a problem in the past because the Brisbane roster has only recently changed and I was the first person to be posted after the new Brisbane roster started. Me: If you didn't like the conditions you didn't have to go. You knew the roster before you went. You could have declined to go and there are hundreds of other guys who would have gone in your place. LM: I didn't know the Narita roster before I left. I did not receive a copy of the roster until after I arrived in Japan. Me: No doubt before you went to Japan you would have spoken to the other travelling engineers in Brisbane who had recently been to Narita and you would have been well aware of the roster requirement. I am not going to respond to your email because this email train is not getting us anywhere and I don't want to continue with it. I have just returned from leave and I don't have time to deal with you or your complaint until you provide me with supporting evidence of the actual hours you worked in Narita. I need firm justification before I can approve any additional days off. I am not going to take your word for it because you have been economical with the truth concerning your contact with AHI. [Accident and Health International Underwriting Pty Ltd] LM: Is your position that the Company will not pay me for the roster I worked overseas but for a roster that was worth less? Me: At this stage, yes, until you can provide some supporting evidence of your claims. 71 The federal magistrate continued at [19]: Mr Murray has a different version of the conversation. He includes within it a remark by Mr Cawthorne that: "The guys who go away and accept the conditions that they are given, are the ones who get asked to go away next time. He also stated that he responded to Mr Cawthorne's suggestion that he could have declined to go to Narita with words to the effect that: "The two guys I know who rejected a posting were docked four hours pay and still have a letter on their personal files." Mr Cawthorne denies these assertions … [emphasis added] 72 The federal magistrate said at [22]: I am of the view in regard to the 8 March emails and telephone conversation that Mr Cawthorne was under pressure and reacted badly to Mr Murray's request for additional RDOs and additional shift loadings. His annoyance at Mr Murray was spurred on by what he considered to be Mr Murray being "economical with the truth" about the AHI complaint. But, if one looks carefully at the emails, the pattern coming from Mr Murray seems to me to be well-mannered and conciliatory whereas Mr Cawthorne's would appear to be less than that. The first paragraph of the first email that Mr Cawthorne sent seems to me to indicate an irritation that grew and culminated in the telephone conversation. I am satisfied that Mr Cawthorne did raise his voice to Mr Murray in that telephone conversation and possibly spoke in an aggressive tone as suggested by Mr Murray. 73 And at [24] he said: I think it would be difficult to describe the conversation between Mr Cawthorne and Mr Murray as abusive because I do not think it was insulting to or unkind of Mr Murray. As Mr Murray says in his own affidavit: "At the start of the conversation I would describe Mr Cawthorne's tone as aggressive. As the call progressed, it quickly changed to hostile as he was yelling at me." I would accept this evidence of the nature of the conversation because I would tend to prefer the evidence of Mr Murray to Mr Cawthorne, having seen both witnesses and having had regard to the manner in which Mr Cawthorne tended to express himself in his emails compared with the way in which Mr Murray did. I think Mr Cawthorne's temper could properly be described as somewhat shorter than Mr Murray's. However, even if the conversation did not constitute verbal abuse, it is necessary to consider whether it was of a nature that constituted an injury to Mr Murray in his employment such as to constitute adverse action under the Act. 74 After a consideration of the authorities on the question of the meaning of the concept of injury in employment, the federal magistrate concluded at [29]: I am satisfied that Mr Cawthorne's treatment of Mr Murray, though unfair, did not constitute an "injury" in his employment. 75 Thus, the federal magistrate did not accept that the conversation could be described accurately as verbal abuse. He defined verbal abuse as speaking insultingly or unkindly. He found that Mr Cawthorne did not speak insultingly or unkindly to Mr Murray in the conversation. However, he did find that Mr Cawthorne made a threat not to post Mr Murray overseas in the future. 76 The federal magistrate accepted Mr Murray's version of the substance of the conversation but not the description which the respondent had used for it. The rejection of the description did not prevent the federal magistrate relying on the substance of the conversation as the basis of the claim under s 343. Again, the appellants' argument should not be accepted.

The post hearing letter 77 Another argument advanced by the appellants relied on the course of events which occurred following the hearing. It is unclear whether this argument was a stand alone argument or whether its purpose was to provide a context for the more general argument that the appellants were, by reason of the approach adopted by the federal magistrate, denied the opportunity to respond to the case found against them. 78 On 20 December 2010, the federal magistrate wrote a letter to the parties (wrongly dated 20 December 2009) which in part stated as follows: In relation to the applicant's first claim under s.343 of the FWA, the Court accepts that there are two elements to the wrong of coercion, the second relating to the illegitimacy of the pressure exerted. The Court is of the view that if it accepts the evidence of Mr Murray in its entirety in relation to the telephone conversation, it could make a finding of adverse action by discriminating between the employee and other employees of the employer and this finding would satisfy the requirement for the unlawfulness of the means of coercion. This claim is not pleaded by the applicant and any finding would, therefore, not constitute a breach in respect of which a declaration could be made or a civil penalty imposed. 79 At the invitation of the federal magistrate the parties responded by written submissions. In those submissions the appellants contended that a claim based on discrimination had not been raised and should not therefore be permitted. 80 The appellants argued on this appeal that there was substantial unfairness arising from the course of the correspondence which occurred after the hearing. The federal magistrate identified that coercion would only be established if the alleged action was illegal, illegitimate or unconscionable. He raised for consideration whether the action taken against Mr Murray amounted to discrimination and whether that action was unlawful, illegitimate or unconscionable. In his reasons for judgment the federal magistrate rejected discrimination as the element of unlawfulness because it had not been part of the respondent's case at trial. The federal magistrate, however, determined that the threat of adverse action made by Mr Cawthorne in contravention of s 340 of the Act did satisfy the requirement of unlawfulness for the purposes of the s 343 claim. The appellants contended that it was unfair for the federal magistrate to raise discrimination in correspondence as a possible basis for satisfying the second element of the s 343 contravention, but not to raise the s 340 contravention as a possible basis for satisfying that element, when the latter was ultimately accepted. 81 The contention that the terms of the letter or the context in which it was sent created a situation of unfairness amounting to a denial of natural justice should not be accepted. The letter canvassed discrimination as one possible basis for the illegality required to establish the second element of coercion. It was neither expressed nor implied in the contents of the letter that this was the only basis being considered by the federal magistrate for the establishment of the second element of coercion. The appellants did not seek to lead further evidence on the appeal to persuade the Court that they had been misled by the letter from the federal magistrate to believe that discrimination was the only basis upon which he was considering that the second element had been established.

The absence of any pleading that the threat was unlawful or unconscionable 82 There was some debate about the terms of the amended claim. The appellants submitted that the second element necessary to establish an intention to coerce was not pleaded in the amended claim. The respondent argued that the pleading of an intent to coerce contained within it the necessary allegation that the action was unlawful or unconscionable. The respondent contended that the appellants were bound to contest that element in their grounds of opposition but did not do so. In the end, the state of the amended claim and the grounds of opposition do not assist either party on the issue. 83 Rather, what is significant is the way in which the case was conducted by the parties. The respondent submitted that the issue in contention during the hearing was whether Mr Cawthorne intended to force Mr Murray to withdraw his pay claims by the threat made in the conversation on 8 March 2010 that Mr Murray would not be posted overseas in the future if he did not withdraw his claims. None of the parties, the respondent suggested, regarded the second element as a live issue. 84 The respondent observed that it was not surprising that the second element was not in contention because if the federal magistrate found that Mr Cawthorne intended to force Mr Murray to withdraw his claim by threatening to withhold overseas postings there could be no justification for the threat. The threat would necessarily be illegitimate or unconscionable. This approach was the basis for the respondent's notice of contention which sought to uphold the finding of contravention of s 343 on the basis that, even if Mr Cawthorne's conduct was not unlawful, it amounted to pressure which was illegitimate or unconscionable. 85 The appellants had no response of substance to the argument that all parties conducted the case on the assumption that the contravention of s 343 would be made out if the respondent established that Mr Cawthorne intended to force Mr Murray to withdraw his claim by threatening to withhold future overseas postings. Thus, the parties approached the case on the basis that assumed the second element of coercion was made out if the first element was established. There was no denial of procedural fairness arising from the way the amended claim notified the appellants of the respondent's claim under s 343 of the Act.

The alleged inconsistency between the judgment of 9 December 2010 and the coercion finding 86 This argument relied on a judgment given by the federal magistrate on the last day of the hearing. In the course of the argument in reply at that hearing the respondent sought to amend the claim brought under s 340 of the Act. At the time, that claim alleged that the appellants injured Mr Murray in his employment by verbally abusing him. This was an allegation of adverse action in contravention of s 340(1) as defined in item 1(b) of the table set out in s 342(1) of the Act. By the amendment the respondent sought to allege that the appellants altered the position of Mr Murray in his employment by verbally abusing him. This amendment raised an allegation of a contravention of s 340(1) as defined in item 1(c) of the table in s 342(1). 87 The federal magistrate refused the application. He relied on Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 to conclude that such an application is not to be lightly granted. The federal magistrate said at [3]: To my mind, it is now too late to alter the basis of the claim to add an additional complaint as is sought, even if it was hinted at during the course of the proceedings. The difficulty is that the respondent would, at the very least, have to pore through the transcript to work out whether or not the matter had been properly dealt with in questioning and cross-examination. In respect of a case that has already taken some days, I do not think a party should be required to do that. It is for those reasons I decline to grant the amendment. 88 The appellants submitted that it was inconsistent of the federal magistrate to refuse the amendment of the s 340 claim in the 9 December 2010 judgment, but, in effect, allow such an amendment to the s 343 claim. On 9 December 2010, the federal magistrate refused the respondent's application to amend the claim by pleading the verbal abuse as an alteration to the position of Mr Murray to his prejudice. Nonetheless, so it was argued, the federal magistrate relied on the prejudicial alteration of the position of Mr Murray in contravention of s 340 as the element of unlawfulness required to establish coercion under s 343. 89 It may be accepted that the picture presented by the federal magistrate's refusal of the amendment, then his reliance on the adverse action as an element of unlawfulness is less than perfect. But the question is whether it amounts to a denial of procedural fairness which should be corrected on appeal. 90 As explained in [85] of these reasons the parties conducted the case before the federal magistrate on the basis that the element of unlawfulness or unconscionability was not a live issue in the case. Consequently, there was no unfairness to the appellants in the course taken by the federal magistrate. The factual foundation for the coercion finding overlapped the factual foundation for the finding of a contravention of s 340(1). Both depended on the respondent establishing that Mr Cawthorne threatened Mr Murray that his overseas postings would be denied unless he withdrew his claim. Hence, in explaining his reliance on the contravention of s 340(1) as satisfying the elements of unlawfulness, the federal magistrate said at [55]: Although this was not specifically pleaded by the applicant, either in relation to 1(a) or 2(a) of the Amended Application filed on 6 August 2010, I am satisfied that the relevant acts were clearly identified in the proceedings and thoroughly litigated. 91 Further, in the affidavit sworn on 15 September 2010 in support of the claims, Mr Murray explained the conversation with Mr Cawthorne in terms which related to the coercion claim as follows: 26. At the start of the conversation, I would describe Mr Cawthorne's tone as aggressive. As the call progressed; it quickly changed to hostile as he was yelling at me. 27. Although I was on my mobile phone, Mr Cawthorne's voice was very loud. I had to hold the phone away from my ear. I was quite upset and intimidated by the manner in which Mr Cawthorne spoke to me. I considered that he was trying to intimidate me into withdrawing the complaint I had lodged about underpayment. 28. The guys I was travelling in the vehicle with, including George Kirala, Nik Fatouros, and Michael O'Rance asked me who had been yelling at me. I was very upset as I felt I had been threatened and belittled, and intimidated into dropping what I believe is a legitimate claim for payment as per the EBA, and my letter of posting. [emphasis added] 92 But even if the second element was a live issue between the parties, the hearing was over when the amendment application was refused. By reason of that timing it cannot be said that the appellants' conduct of the case was influenced by the refusal of the amendment. 93 The appellants' submissions explained at [54] the course which they would have taken had they known of the amendment decision earlier in the case as follows: Had Mr Cawthorne been given the opportunity to address this new unpleaded ground of coercion against him, he could have made and would have made substantial submissions resisting such a course. At the very least, those submissions would be the same as the ones which convinced his Honour not to allow the Union to amend its pleadings on the close of its case to allege that the conversation altered Mr Murray's position to his prejudice. The cross-examination of Mr Murray would have plainly been different and covered different ground. The finding by the Court that the coercion was supported by the alteration of Mr Murray's position because his status was reduced in front of his colleagues could clearly have been tested by cross-examining the colleagues who offered evidence on behalf of Mr Murray in the proceedings. Those witnesses were not called for cross-examination because the legitimate forensic decision was taken on the basis of the state of the known case. The cross-examination referred to addresses only one of the alternative ways in which the federal magistrate found that Mr Murray's position had been altered to his prejudice. The other way was that there was "a threat of adverse affection or deterioration in the advantages enjoyed by Mr Murray". This issue was extensively canvassed in the hearing in relation to the alleged contravention of s 340. The real problem with the judgment of 9 December 2010 is not its inconsistency with the coercion finding, but its lack of any reasonable basis in view of the federal magistrate's finding in the judgment presently before the Court that all factual matters relating to the conversation of 8 March 2010 were clearly identified and thoroughly litigated. That being so there was no proper basis for refusing the amendment of the claim to include an alternative legal consequence for the facts which had been established. 94 In the result, there was no denial of procedural fairness arising from the federal magistrate's judgment of 9 December 2010.

conclusion 95 The appellants have not made out any of their grounds of appeal. 96 However, although the matter was not argued by the parties, the terms of the declarations fail to specify the contraventions in sufficient detail. The appeal will be allowed in part so that the declarations can be made in an appropriate form, but will otherwise be dismissed. I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Gray, North and Besanko.