Schanka v Employment National

Introduction 1 This is a representative proceeding brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("FCA Act") by Peter Schanka, Erica Aldridge, Richard Walden and James Burns ("the applicants"). On 18 May 2001, I decided that Employment National (Administration) Pty Ltd ("ENA") contravened s 170WG(1) of the Workplace Relations Act 1996 (Cth) ("WR Act") by applying duress to Schanka, Walden, Burns and one group member, Valinda Brushe, but not Aldridge, in connection with an Australian Workplace Agreement ("AWA"): [2001] FCA 579. However the evidence led by the applicants did not establish that duress was applied to the other group members. The matter was adjourned to enable the parties to make submissions on the appropriate orders. That led to lengthy submissions about how the matter should be concluded. 2 The following issues remain to be resolved. First, what orders should be made about the further conduct of the representative proceeding in relation to the other group members. Secondly, what orders should be made concerning the AWAs entered into by Schanka, Walden and Brushe. And thirdly, whether a penalty should be imposed on ENA for contravention of s 170WG(1) and, if so, in what amount and to whom should that penalty be paid.

The further conduct of the representative proceeding in relation to the other group members 3 In the reasons published on 18 May 2001, I explained, at [116] to [119], why the evidence did not establish that ENA had applied duress to the other group members: "Several of the matters that point to the application of duress to Brushe, Walden, Schanka and Burns are not directly addressed in the evidence as they may have arisen in relation to the other members of the group presently under discussion. That is, the evidence does not directly address what the individual position was in relation to all other employees who took up employment with ENA (or, indeed, were simply offered employment with ENA). For example, it is not apparent whether all other members of the group were being offered the same or substantially the same position they held prior to 1 May 1998 as a member of the APS. While it may be that all the employees in the APS wanting to take up employment with ENA, or at least very many of them, were being offered, in substance, the positions they held in the CES immediately before 1 May 1998. However I cannot infer, as I was invited by the applicants to do, that as a matter of fact this was so of each and every member of the group on whose behalf these proceedings are brought. These are proceedings for a penalty and it is thus appropriate to apply the Briginshaw standard of proof […] and the evidence in this matter falls short of establishing, to that standard, that each and every member of the group was being offered the position they held before 1 May 1998. […] Nor does the evidence address directly whether any other employee who had not signed an AWA by 20 April 1998 had made known to ENA that he or she did not want to be employed under the terms and conditions embodied in the proposed AWA, did not want the prescription of those terms by an AWA or both. While an inference might be drawn from the evidence as a whole that there were employees in addition to Brushe, Walden, Schanka and Burns whose position was the same, their identities and precise number is unknown. This is an important matter as these are representative proceedings in which the applicants seek the imposition of penalties on the footing that ENA applied duress to each member of the group. Moreover the applicants ultimately sought a declaratory order that ENA had applied duress to each and every member of the group. In my opinion, the question of whether duress was applied as alleged turns fundamentally on the question of whether ENA, in conducting itself in the way it did, was requiring each member of the group to sign an AWA when it knew that the individual wanted to negotiate or bargain about the terms and conditions contained in the standard AWA or about whether the terms and conditions of his or her employment should be prescribed by an AWA. Or, at the least, it was known to ENA this was the likely position. In the absence of evidence that would support a finding that any particular individual wanted to negotiate or bargain about these matters, (or it was likely the individual wanted to), it cannot be said, in my opinion, that the conduct of ENA did, or probably would, deny or tend to deny the individual the opportunity to negotiate or bargain freely. One is left not knowing whether the conduct of ENA involved the application of duress nor knowing whether the pressure was being applied to an individual who wanted to negotiate or bargain. This can be illustrated by the position of Ashfield about which there is some evidence. He is a member of the group on whose behalf these proceedings are brought. He gave evidence that he willingly signed an AWA. It is plain he did not wish to negotiate or bargain with ENA about the terms and conditions of employment in the AWA nor to negotiate or bargain with ENA about whether an AWA should be the means of prescribing those terms and conditions. In the absence of evidence of an expressed desire to negotiate or bargain on one or both of these matters (or even an unstated desire to be inferred from the circumstances) or evidence that this was likely to be the position, it cannot be said, in my opinion, that ENA applied duress to him. No question of negotiation or bargaining, whether free or illusory, arose. I do not accept that the imposition of the April 1998 condition, viewed in isolation and without regard to the circumstances of each of the individuals on whom the imposition of the condition might operate, was conduct intended to be proscribed by s 170WG having regard to what I view as the purpose of the section discussed earlier. For these reasons, the evidence only establishes that in the period after 20 April 1998 ENA applied duress to Brushe, Walden, Schanka and Burns and not other members of the group. The absence of evidence about the circumstances of any particular individual for the period prior to 20 April 1998 would lead to a similar conclusion. That is, the evidence does not establish that in this earlier period duress was applied to any person in the group." 4 Following the publication of these reasons, the applicants initially foreshadowed an application for orders under s 33N (that the proceeding no longer continue as a representative proceeding) or s 33Q (that the issue of whether duress was applied to other group members be determined separately) of the FCA Act. Ultimately, however, the applicants sought only an order that a notice be sent to group members under s 33X(5) of the FCA Act. The applicants proposed that the notice inform the other group members of the reasons for judgment of 18 May 2001 and invite them to make submissions about the further conduct of the representative proceeding before orders were made relating to the named applicants. The applicants also proposed that the notice inform the group members that an application might be made under s 33N of the FCA Act for an order that this proceeding no longer continue as a representative proceeding. In a final written submission following the hearing on this issue, the applicants appeared to make such an application as an alternative to the issuing of a notice. 5 ENA submitted that orders should be made concerning the named applicants and Brushe, and an order made otherwise dismissing the proceeding. 6 The applicants' submissions in support of the issuing of a notice were, in summary, as follows. This proceeding was properly commenced as a representative proceeding under Pt IVA on behalf of a group which numbered several hundred employees. It would have been impractical and contrary to the purpose of Pt IVA to present evidence, at the outset, of the individual circumstances of every group member. It only became apparent from the reasons of 18 May 2001 that such evidence was necessary to establish a contravention of s 170WG in the circumstances of this case. It is important to consider the impact of the judgment on the group members whose substantive rights will be bound by it: Jenkins v NZI Securities Limited (1994) 52 FCR 572 at 577. If the Court were to make orders now concerning only the named applicants, they would bind all group members other than those who have opted out: s 33ZB of the FCA Act. If other group members sought to pursue separately claims based on their individual circumstances, they may be subject to res judicata or issue estoppel. So as not to prejudice such claims, the Court should now allow the other group members an opportunity to be heard, in accordance with the principle articulated by French J in Zhang v Minister for Immigration, Local Government & Ethnic Affairs (1993) 45 FCR 384 at 405: "In a case in which the group members have not raised individual claims but have been defined into the group on their related circumstances and the common issue, it is necessary that care be taken to ensure that claims based on individual circumstances of which the Court knows nothing are not prejudiced." 7 The submissions of ENA against the issuing of a notice were, in summary, as follows. The applicants elected to run their case on the basis that a contravention of s 170WG(1) could be established by focusing on the conduct of ENA, though they did lead some evidence of the individual circumstances of the named applicants and one group member, Brushe. The applicants made this election in full knowledge that ENA submitted it was necessary to look at individual circumstances, and that was an issue to be determined in the proceeding. Having conducted their case on that basis, the applicants were only successful in relation to those individuals about whom specific evidence had been led. The present application to issue a notice (to be followed perhaps with an application for an order under s 33N or s 33Q) is, in substance, an application to re-open the case. Such an application ought be determined in accordance with the principles stated by the High Court in such cases as State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29, Wentworth v Woollahra Municipal Council (1982) 149 CLR 672, Smith v New South Wales Bar Association (1992) 176 CLR 256 and Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300. On these authorities, it was said, no basis existed for allowing the applicants to re-open their case. Moreover, the weight of discretionary considerations was against the course proposed by the applicants. 8 I have concluded that it is inappropriate to order that a notice be issued, and that the appropriate order is that the proceeding be otherwise dismissed. 9 Having regard to the history of the proceeding, it cannot be said that before the publication of my reasons on 18 May 2001 it would not have been apparent to the applicants that evidence of individual circumstances might be necessary. The following (referred to by counsel for ENA) illustrate that this general issue was raised on several occasions. 10 Earlier in the proceeding an application was made by ENA under s 33N for an order that the proceeding cease to be a representative proceeding. I refused to make such an order and said ((1998) 86 IR 283 at 294): "…[It] can be assumed that in considering whether there has been contravention of s 170WG it will at least be necessary to consider the possible or probable impact of the conduct of ENA on individuals who signed AWAs and, arguably, those who were invited to sign them. It may also involve a consideration of the individual circumstances of each employee and, arguably, a consideration of the subjective reaction to the conduct of ENA on a given individual and the contribution, if any, it made to the signing of the AWA if they signed them. I put it this way because it may ultimately be necessary for the circumstances of individuals to be considered separately. However, the scheme in Pt IVA of the FC Act provides a mechanism where, by order of the Court, the proceedings cease to be representative proceedings and become proceedings in which the circumstances of individual applicants are considered in separate proceedings. … In my view it is appropriate for the present proceeding to continue for the time being as a representative proceeding. That is, at least until a point is reached where it is apparent that it will be necessary to examine the subjective reaction of any person who signed an AWA and their circumstances in order to ascertain whether there has been a contravention of s 170WG." 11 On the first day of the hearing of this matter (27 November 2000), senior counsel for ENA raised, as a procedural question, the scope of the issues to be determined in the hearing (at p 33): "[SENIOR COUNSEL FOR ENA]: … One of the procedural things that has to be sorted out is, what's the trial about at the moment? This is a representative proceeding, so is this about common questions of fact or law? So that's got to be sorted out. [THE COURT]: Well I must say, I didn't apprehend from anything I've been told before five seconds ago, that there was any residual issues about the nature of the proceedings, they're representative proceedings, I rather thought that there wasn't any controversy attending the prosecution. [SENIOR COUNSEL FOR ENA]: There have been no directions made or sought about how they're to be conducted, because clearly, many of the affidavits, particularly the individual deponents, don't go to common issues of fact or law, they go to individual circumstances. So at some stage, the common questions of fact or law have got to be severed from the individual complaints, and that will need to be sorted out. [THE COURT]: That may or may not be correct, Mr Trew, but I would have thought, indeed expected, that those sort of issues would have been raised some time ago, if there was a concern on anyone's part, your side or the applicant's side, that the course the proceedings was taking needed to be further refined, in regard to their representative character. [SENIOR COUNSEL FOR ENA]: Well nobody has told us your Honour, just exactly how the applicants, if it's got the carriage of the case, how it proposes to deal with those matters, and they need to be sorted out, and there's an obligation on the court to determine, irrespective of the position of the parties, at what particular time, or circumstances, that's the end of the common questions of fact or law …" 12 At directions hearing on 30 November 2000, I raised with junior counsel for ENA the matter raised by senior counsel on 27 November 2000 about the scope of the hearing (at p 3): "[JUNIOR COUNSEL FOR ENA]: … our friends brought the case on the basis that: you merely look at our conduct and you don't have regard to any individual circumstances, we are at issue on that and if it becomes necessary to look at individual circumstances after making findings of common fact and law, then, it may be necessary to make orders under s 33N. [THE COURT]: But this is where I think with respect there may be confusion. If I am dealing with a question of liability, that is: has there, or has there not been a contravention of section 170WG, is it? [JUNIOR COUNSEL FOR ENA]: Yes, it is. [THE COURT]: And there is evidence before me that relates to the circumstances of a limited number of people, and I find it is necessary to pay regard to the circumstances of individuals in relation to such matters. [JUNIOR COUNSEL FOR ENA]: Yes. [THE COURT]: It may be that the ultimate outcome would be, if I were to find that the circumstances in relation to the individuals demonstrated a breach, but there was no evidence in relation to the remainder of the members of the group, then, there wouldn't be a finding of contravention in relation to the remainder of the members of the group. If on the other hand I don't accept that you need to prove individual circumstances well, presumably, in theory there could be a finding of contravention in relation to both the applicants and all the members of the group. [JUNIOR COUNSEL FOR ENA]: Yes. [THE COURT]: So in a sense the applicants are taking the risk. In fact, this fairly represents the evidence and I have not absorbed it all, that it is not necessary to prove the circumstances of individuals, because they haven't sought to do so. If it is, well, perhaps they will run into the sort of problems I have just discussed but, at the end of the day, what I will be deciding at the conclusion of the hearing commencing on 29 January, as I understand this to be common ground: has the respondent contravened the section in relation to both the applicants and the members of the group, is that right? [JUNIOR COUNSEL FOR ENA]: That is the question that your Honour will be asked to decide. Your Honour, may as you have indicated, so that you can find in respect of the applicants because their circumstances have come before you and you are unable to find it in respect of the remainder of the group, that may be one result, yes. [THE COURT]: But then what I would be doing would be moving on to consider the question of penalty in relation to those in respect of whom I have found there is a contravention. I mean, it is not as though I would then go on - I am sure it is not in your client's interest for me to then go on and consider the circumstances of other members of the group if they haven't been put before me at this stage. [JUNIOR COUNSEL FOR ENA]: Yes. I would have thought not, your Honour. [THE COURT]: No, so I think I understand what I am doing, as long as you agree with me I am content to proceed on that basis. [JUNIOR COUNSEL FOR ENA]: I think we do too. Yes, thank you. [SENIOR COUNSEL FOR THE APPLICANTS]: We agree, your Honour." 13 Finally, at the hearing on 2 February 2001, during an exchange with senior counsel for ENA on the question of whether there might be one or a number of contraventions, the following was said: "[THE COURT]: But I rather think the applicants have taken the position with the attendant risks that flow from it that it's only necessary to look at the conduct of the company and if they fail in that fundamental proposition … [SENIOR COUNSEL FOR ENA]: That's right your Honour and that raises the question, if you only look at the conduct of the company there is only one offence. [THE COURT]: That may be right but all I am saying that I can't, can I, dictate to the applicant how they conduct their case if they've elected to follow a particular course and they are inviting me to make declarations of what I might describe as general application in relation to all members of the group on a particular basis their application fails or succeeds." 14 It was submitted by senior counsel for the applicants that in interlocutory decisions in this proceeding it was made clear that a contravention of s 170WG(1) can be established without analysing the actual effect of ENA's conduct on group members (though its likely effect is relevant). Particular reliance is placed on two passages. In a judgment on 24 September 1999, I said ((1999) 166 ALR 663 at [42]-[43]): "In my opinion s 170WG(1), properly construed, applies to the conduct of a person applying duress irrespective of whether that conduct actually results in the making of an AWA and irrespective of whether, as a matter of fact, the party subjected to that conduct did not freely make the AWA if one was made. That is not to say that, in ascertaining whether conduct contravened s 170WG(1), the potential effect of the conduct on the exercise of free will by the person to whom it is applied is irrelevant. It plainly is in this way. The conduct of the contravening party must involve illegitimate pressure. […] [It] must be pressure that is likely to have the effect of denying the exercise of free will if an AWA was made …" In an appeal from that judgment, the Full Court said ((2000) 97 FCR 186 at 193): "… the legislature's concentration on the quality of the conduct and intention of the person against whom duress is alleged is also borne out by the fact that the proscription in s 170WG(1) is cast in the form "a person must not apply duress"." The judgments were given to determine preliminary questions. While one question was initially formulated as "on the proper interpretation of s 170WG(1) … is duress in that section limited to the conduct of the alleged perpetrator?" it was subsequently reformulated. The questions became: "Can a person, by their conduct, contravene s 170WG(1): (i) before an AWA is made by the person to whom the conduct was directed; (ii) irrespective of whether an AWA is made by a person to whom the conduct was directed; (iii) if an AWA is not made by a person to whom the conduct was directed." 15 The comments in the passages set out above formed a link in the chain of reasoning that led to affirmative answers to each of these questions. They did not establish a principle of law that evidence of individual circumstances is irrelevant in ascertaining whether conduct amounts to duress under s 170WG(1). 16 I am conscious that one of the purposes of Pt IVA is to enable the pursuit and efficient resolution of a claim on behalf of a group, where it may not be economically viable for group members to pursue the claim individually: see Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at [20]. Accordingly, it is important not to take an overly legalistic approach to Pt IVA: Johnson Tiles Pty Ltd v Esso Australia Limited [1999] FCA 56 at [49]. However, it was for the applicants to decide how claims were to be divided into common and individual issues and pursued in the Court. In the event, they elected to treat the entire question of duress as a common issue and to resist any submission that in order to determine the issue of duress it was necessary to present evidence of all group members' individual circumstances. In addition, I do not accept, as I discuss later, that I have power to make an order avoiding an AWA. That would be the principal remedy which would or might be of personal benefit to other members of the group. If I had concluded the Court had that power, then that would have been a consideration pointing towards the resolution of this matter in a way that preserved the rights of individual group members to seek to have their AWAs set aside, if that was a course they wished to follow. In the absence of such a power, the only purpose served by not dismissing the application is to leave open the possibility of the applicants or individuals seeking penalties against ENA for contravening s 170WG. This, in my opinion, having regard to the history of the matter, provides an insufficient basis for not following the course proposed by ENA for the reasons it advanced. 17 Accordingly, it is inappropriate that a notice be sent to group members under s 33X(5) or an order be made under s 33N. The applicants made no application to re-open their case. It is unnecessary to consider whether the applicants should be allowed to do so. The appropriate order, in my opinion, concerning the group members in relation to whom a contravention of s 170WG(1) has not been established is that the proceeding be otherwise dismissed.