Webb, J.M. v. Nationwide News Pty Ltd [1985] FCA 164

Federal Court of Australia|1985-04-29|Before: Wilcox J

John Martin Webb has laid an information against his former employer, Nationwide News Pty Limited -- the publisher of "The Australian" newspaper -- in which he alleges that he was dismissed from his employment with the company "by reason of one or more of the circumstances that he was then an officer, delegate and/or member of an organisation reaistered under the Conciliation and Arbitration Act, 1904 to wit the

Australian Journalists Association and/or was a member of the

said organisation which'was seeking better industrial conditions and was dissatisfied with his conditions and/or being an officer, delegate or member as aforesaid had done and/or was proposing to do a thing or things, which thing or things were lawful for the purpose of furthering or protecting the industrial interests of the said organisation or its members being a thing or things done or to be done within the 'Limits of authority expressly conferred on him by the said organisation in accordance with its Rules". The information alleges breaches of para (a), (d) and (f) of s.5(1) of the

Conciliation and Arbitration Act. Such an information is

triable summarily by a single judge of this Court: Conciliation and Arbitration Act ss. 104(2) (a), 118A.

"5. (1) An employer shall not dismiss an employee, or injure him in his employment, or alter his position to his prejudice, by reason of the circumstances that the employee

(a) is or has been, or proposes, or has at any time proposed, to become an officer, delegate or member of an organisation, or of an association that has applied to he registered as an organisation; or .

(d) being a member of an organization which is seeking better industrial conditions, is dissatisfied with his conditions; or

(f) being an officer, delegate or member of an organization, has done, or proposes to do, an act or thing which is lawful for the purpose of furthering or protecting the industrial interests of the organization or its members, being an act or thing done within the limits of authority expressly conferred on him by the organization in accordance with the rules of the organization.

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Penalty: $400. .. (3) A reference in this section to an organization

shall be read as including a reference to a branch of an organization.

this section, if all the relevant facts and circumstances, other than the reason or intent set out in the charge as being the reason or intent of an action alleged in the charge, are proved, it _lies upon the person charged to prove that that action was not actuated by that reason or taken with that intent.

(5) Where an employer has been convicted of an offence against this section the court by which the employer is convicted may order that the employee he reimbursed any wages lost by him and

May also direct that the employee be reinstated in his old position or in a similar position."

Mr Webb has established, it being either common ground between the parties or a matter of no active dispute, that he was dismissed from the employment of the defendant on 21 September 1982, that he was at that date a member of the Australian Journalists Association ("the AJA") and that the AJA was, at all material times, a registered organization

under the Conciliation and Arbitration Act. The other ingredients of the various offences provided by paras (a), (d)

and (f) of s.5(1) are in active dispute between the parties.

Particulars of the allegations made in the information were sought and supplied. The informant claims that, at the date of his dismissal by the defendant, he

occupied three positions with the AJA: vice president of the

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New South Wales branch, member of the branch committee, and member of the News Limited sub-committee -- generally referred to as the News Limited "house committee" -- and that any of these positions was enough to constitute him both an "officer" and a "delegate" of the organization; bearing in mind that subs (3) provides that a reference in the section to an organization includes a reference to a branch of the organization. The defendant contests the claim that the informant was an "officer" or a "delegate". Although each of the three relevant paragraphs refers to a "member" of an organization -- either solely or as an addition to "officer" and "delegate" -- and membership is proved, it is necessary to determine Mr Webb's status for the purpose of considering whether the various activities upon which he was engaged prior to and at the time of his dismissal and which, upon his casé, were the cause of his dismissal were activities within the limits of the authority conferred on him by the organization in accordance with its rules. I will deal with this matter

later when I summarize the evidence relating to Mr Webb's

employment with the defendant and his union involvement during

The primary issue in the case is the reason for the prosecutor's dismissal. Although the information relies, as one alternative, upon the mere fact of Mr Webb's membership of the AJA, under para (a) of s.5(1), it is clear that Mr Webb

was not dismissed simply because he was a member of the union.

As one would expect, the evidence indicates widespread membership of the AJA amongst the journalists employed by the defendant and its associated companies within the News Limited group. The real case put on behalf of the prosecutor is that Mr Webb not merely belonged to the union but that he took a very active role in its affairs, that he was a person who had been in the forefront of protests by the union against what he had seen as unfair, discriminatory and ill-informed actions by management against journalists employed by companies in the News group, and in particular by the defendant, and of efforts by the union to establish better communications with the management of those companies so as to avoid a repetition of such actions in the future. He contends that he fell into disfavour with the management of the News group because of these activities and that, as a result, the opportunity was taken -- in the context of the retrenchment of about one quarter of the journalistic staff of "The Australian" newspaper -~- to get rid of him. The defendant denies that Mr Webb's union activities were either as extensive or as irksome as Mr Webb suggests and it asserts that these activities, in any event, had nothing to do with his retrenchment. According to the defendant, the prosecutor was selected for ret. enchment because of his low productivity, his attitude to his work and his failure to co-operate with those in authority over him. The defendant also argues that, in any case, the activities claimed by the informant do not answer the description of

either para (d) or para (f), that the union could not be said

to be "seeking better industrial conditions" by the making of protests or the conduct of a campaign of the type referred to by the informant (para (d) ) and that the things done by Mr Webb were not done pursuant to the express authority of the

AJA, conferred on him by the rules of the union (para (f) ).

Section 5(4) of the Act, in its application to subs (1), provides that, in proceedings for an offence, if the other relevant matters are proved, the onus lies upon the employer to prove that the employee was not dismissed by reason of the circumstances alleged in the information. The employer is not obliged to show that the existence of the factor was totally disregarded in the decision making process but the evidence must establish, upon the balance of probabilities, that the prohibited factor was not "a substantial and operative factor" in the reasons for dismissal: see per Mason J, with whom Gibbs, Stephen and

Jacobs JJ agreed, in General Motors Holden Pty Limited v

Bowling (1976) 12 A.L.R. 605 at p 616. It is not enough merely to show that there also existed non-prohibited reasons. The prohibited reasons alleged in the information must be

negatived: Cuevas v Freeman Motors Limited (1975) 8 A.L.R.

321 at p 327, Heidt v Chrysler Australia Limited (1976) 26

F.L.R. 257 at p 268. In the case of a corporate employer, as here, the reasons of the individuals exercising the executive power of the corporation are to be taken as being the reasons of the employer: Wood v City of Melbourne (1979) 41 F.L.R. 1 at p 19.

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The oral evidence in this case occupied almost 15 hearing days. Evidence was led as to the history and terms of Mr Webb's employment, as to various claims for fringe benefits made by him, and as to the nature and extent of work done by him; with comparisons to the work done by others. The financial and industrial travails of "The Australian" were examined at length; ancient personal and industrial battles were re-fought.' This material was admitted on the basis that it indicated the circumstances surrounding -- and therefore bore upon the reasons for -- the dismissal by the defendant of Mr Webb. I think that part of the evidence does provide useful background material, which part I will discuss in context in due course. Much does not; and may be ignored, without unfairness to either party. I will refer to some, but not all, of the industrial and personal problems from which, on the evidence, "The Australian" suffered in the years 1981 and 1982. Many of these problems seem to have stemmed directly from poor fact resolution by, and poor communication between, some senior executives and some members of the journalistic staff; a surprising situation, given the fact that those concerned were trained fact gatherers and communicators. There were no doubt numerous factors contributing to that paradox. A major factor would appear to have been the rigidity of the rules or of the convention -- the precise position was never explained -- relating to the

work appropriate to be performed by AJA members and the

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consequent perceived necessity for a journalist to resign his union membership upon appointment as an editorial executive. The reason for the limitations never appeared but it seems that, on at least on one occasion, the AJA actively sought to discard them. It unsuccessfully urged Mr McCausland not to resign his union membership upon his promotion to news editor. As will appear, those limitations were responsible for the prosecutor's declining to accept a permanent appointment as chief of staff; an appointment for which he was well suited and which he may have found personally fulfilling. They appear also to have created, or contributed to, a division between people of like background -- trained journalists -- which created a "them" and "us" mentality amongst people who

had to work together as members of a team if the newspaper was

The submissions of the parties -- both those made orally and, at my invitation, in writing after the conclusion of the public hearing of the case -- were lengthy and detailed. I have read them carefully but I do not intend to deal in these reasons with all of the matters raised. I will restrict my comments to the contentions relating ts the

critical findings of fact and the major issues of law.

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Nationwide News is a member company of the News Limited group. News Limited is a public company whose chairman is Mr Rupert Murdoch. As at 21 September 1982, the date of the dismissal of Mr Webb, the managing director of News Limited was Mr Kenneth Cowley. Mr Cowley was also chairman of Nationwide News. Mr Cowley had served the group since 1964 and had held office as managing director since 1980. Immediately subordinate to Mr Cowley was Mr Brian Hogben, who had heid since 1976 the position of group general manager (editorial) of the News group -~- with particular responsibility for industrial matters -- and who was also a director of News Limited, and Mr Robert Muscat, who had been since 1980 the general manager of Mirror Australian Telegraph Publications, the business name under which News Limited carries out production of "The Daily Mirror", "The Australian" and the Sunday and daily "Telegraph". Mr Muscat's particular responsibility was in relation to production and financial control. Mr Warren Beeby was the editor of "The Australian" from November 1980 until 22 June 1982, wnen he was appointed to be editorial manager. Mr Beeby was replaced by Sir Larry Lamb, who had had extensive editorial experience, predominantly in England, and who had agreed to accept an appointment for about six months to take the newspaper, in his

words, "up market". Mr Colin Chapman was deputy editor from

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July 1981 until 31 August 1982 when he was appointed as editor -- Sir Larry becoming editor-in-chief -- but two days later he resigned from the service of the company. Mr David Armstrong was news editor from October 1981 until he was appointed as assistant editor shortly after 21 September 1982. Mr John McCausland was news editor from November 1981 until 23 September 1982, when he became night editor, and Mr John Hampshire was chief of staff from March 1982 until late in

Mr Webb, the prosecutor, is a person generally conceded, even by the witnesses critical of him, to have considerable talents as a journalist. He has had extensive journalistic experience, dating back to a cadetship with the "Daily Telegraph" which commenced in 1956. After 10 vears~ with that newspaper, during which he achieved at age 23 the grade of Al journalist - the highest grading in the profession

-- Mr Webb spent seven years working, predominantly, in the United Kingdom and then a further three years in the United States, culminating in the editorship of the National Inquirer, a magazine which he told the Court had then enjoyed the highest circulation of any weekly magazine in that country. Mr Webb returned to Australia for personal reasons in 1977. He then worked on freelance assignments and in radio journalism until, in March 1981, he was engaged by Mr Beeby on behalf of "The Australian". According to Mr Webb, the agreed

terms were for a salary equivalent to the award rate for an Al

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ll. journalist with a penalty for night shift -- whether worked or not -- together with meal allowances and telephone subsidy and.

two allowances totalling $80 per week for expenses and entertainment. In substance, Mr Beeby agreed in his evidence with this account of the arrangement. He confirmed the accuracy of a memo sent by him on 25 March 1981 to Mr Muscat which advised that Mr Webb "has joined The Australian as a journalist grade Al plus a $40 tax free travel and entertainment allowance." The memo went on:

left out the penalty payments", in relation to which he could

Mr Webb worked as a senior journalist for the newspaper -- satisfactorily to his superiors -- until August 1981 when he was asked by Mr Beeby to take an appointment to an executive position as chief of staff. It appears from the evidence that the position of chief of staff is an important one in the day to day operation of a newspaper. The chief of staff has the function of assigning reporting tasks to the journalists on the paper. It is his responsibility to ensure

that events likely to give rise to suitable copy are covered,

that interesting leads are followed up, that the time of reporters is efficiently used and that there becomes available each day to the editorial staff an adequate supply of good quality news stories. Mr Webb told Mr Beeby that he did not wish a permanent appointment as chief of staff because this was an "exempt job", that is one falling outside the provisions of the Journalists Award, so that he would be bound by the rules or conventions to which I have referred to leave the AJA. He did, however, agree to assist by taking the position on a temporary basis for about two months during which time, according to Mr Beeby, he did a "fine job". Both Mr Chapman and Mr McCausland also spoke in laudatory terms of Mr Webb's work as chief of staff and no witness said otherwise. During that period Mr Webb took the step of seeking out Mr Cowley on one or two occasions to discuss problems faced by the newspaper, an unusual initiative for

which Mr Cowley at the time expressed his appreciation.

At the end of October 1981 Mr Webb returned to general journalistic duties, writing both news and feature items. Shortly afterwards an industrial dispute occurred which, according to Mr Webb's case, considerably coloured the attitude towards him of senior management, and especially of Mr Cowley and Mr Hogben. The dispute involved the dismissal

from the staff of the "Sunday Telegraph" of a journalist named

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Sue Short. The AJA claimed, and management denied, that Ms Short had been dismissed not for the reasons given to her but in order to allow the editor of that newspaper to appoint to her position a personal friend. Journalists employed by the "Sunday Telegraph" stopped work. They were subsequently joined by other News group journalists, including those on "The Australian". During the course of negotiations an offer was made by management in relation to an alternative position for Ms Short but, according to the journalists, the company reneged on the offer. On 5 November 1981 a meeting of AJA members employed by the News group was held in the company's office car park. That meeting passed two resolutions relating to the dispute. The first resolution was to continue the stoppage until Ms Short was reinstated in her original position on the "Sunday Telegraph" or in a suitable equivalent position in the Women's Section of another News Limited publication. The second resolution, which was moved by Mr Webb, said, in part:

"THAT this meeting endorses the unanimous decision of

management, including Mr.Rupert Murdoch, our belief

that the outrageous dismissal of an AJA member is an

integral factor in the continuing saga of dismal relations at News Ltd.

THAT we ask Mr.Ken Cowley to meet with the House Committee as a matter of urgency to discuss ways to end the sacking, intimidation and harrassment of AJA members employed by News Ltd. ..."

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The second resolution itself became a matter of industrial dispute. According to Mr Hogben, it may have been the first motion of no confidence by AJA members against editorial executives of a News Limited publication; certainly he knew of none previous. Mr Hogben was "incensed". He declined to negotiate the original dispute whilst the second resolution was in existence. There were negotiations relating to the form of a substitute resolution, apparently between Mr Hogben on the one hand and Mr Brendon Giffney -- a News Limited journalist who was then a vice president of the New South Wales branch of the AJA -- and Mr Jim Nolan, the branch industrial officer, on the other. A form of words, omitting any reference to lack of confidence, was agreed, approved by Mr Cowley and, at a second meeting a few days later, a resolution in these terms was substituted for the earlier one. The original dispute was settled, Ms Short being appointed to a suitable position on the "Daily Mirror": but it left -scars on Mr Cowley. He said in evidence that he felt that he "lost" the dispute and he admitted in evidence that, ten months later during a further industrial dispute, the Van Oudtshoorn matter, he had said that he had had "to eat crow" in the Sue Short dispute and that his colleagues had not agreed with

Mr Cowley said in evidence that he had been aware that, in the Sue Short matter, Mr Webb was involved in keeping informed the journalists on "The Australian". At one of the negotiating

meetings he specifically asked: "Where 1s John Webb?" He agreed

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that, although he had previously indicated to Mr Webb a desire to continue their talks on the problems of the paper, he did not, after the dispute, do so. Mr Armstrong recalled that Mr Cowley "was somewhat cooler" to Mr Webb after this affair. There is little doubt that Mr Webb's involvement in the Sue Short matter

did adversely affect the attitude to him of Mr Cowley.

Mr Hogben denied knowledge of Mr Webb's role in the 'no confidence' motion. He was critical of Mr Webb's involvement in the dispute generally, describing it in evidence as "running around as usual like a busy body". However, he said that his anger in relation to the dispute was directed against others than Mr Webb. But, if this was so, the situation soon changed. Mr Hogben found himself in conflict with Mr Webb over industrial matters during the first half of 1982. Mr Webb was a member of union delegations on various matters early in the year; usually, according to Mr Hogben's colourful but denigrating phrase, in a "spear carrier" role. On other occasions, perhaps about the middle of the year, Mr Hogben was involved in more direct encounters with Mr Webb. There appear to have been two separate incidents in which Mr Webb and Mr Giffney saw Mr Hogben to complain about journalistic work being done by persons who were not members of the AJA. Various allegations were made. Their correctness does not matter; but some of them caused Mr Hogben,

on his own evidence, to become angry, to raise his voice, to

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swear at Mr Webb and Mr Giffney and to tell Mr Webb that he was "a bloody hypocrite". Mr Webb responded by telling Mr Hogben words to the effect that he was not moved by his (Mr Hogben's) petulance. Thereafter, Mr Hogben asked Mr Giffney not to bring Mr Webb to interviews on branch, as distinct from house, matters; Mr Webb not then holding any branch office, other than having

been since 23 March 1982 a member of the branch committee. There

ensued correspondence between Mr Gavin Cantlon, the branch secretary, and Mr Hogben in which Mr Cantlon referred to previous practice and, on 8 July 1982, suggested a meeting of four AJA officers with Mr Hogben and Mr Cowley to discuss "the role of the House Committee, rights of contributors and the work to be done by exempt non-AJA members". Mr Hogben replied that he had passed on the request to Mr Cowley for consideration but nothing further eventuated until, on 28 July, Mr Cantlon wrote again, stressing the urgency of a meeting on these and some additional, specified, matters. But, as Mr Hogben agreed in evidence, such was the strength of his feeling about Mr Webb's role at the meeting with

him and Mr Giffney that the meeting proposed by Mr Cantlon never

By a notice dated 27 May 1982 Mr Cantlon announced that Mr Webb was one of seven persons elected unopposed to the News

Limited House Committee. At the first meeting of that committee,

held shortly afterwards, Mr Giffney was elected as Chairman of

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provided for hy r.36A of the Constitution and Rules of the AJA

The financial and paid-up members within any office may elect a House Committee in consultation with the Branch Committee.

The House Committee shall advise and assist the Branch Committee on any Matters concerning the industrial and professional interests, welfare and conditions of employment of members.

The House Committee shall advise and assist the Branch Committee in representing all members in the office or organisation in which it operates on all matters affecting the industrial and professional interests, welfare and conditions of employment of members.

Each House Committee shall elect a President who shall be the convenor of the Committee and who shall exercise the powers of the Committee between meetings. The President shall report regularly to the Branch Secretary and shall immediately inform the Branch Secretary of any industrial dispute arising within the office. In the President's absence, an acting President shall be appointed hy the House Committee or Branch Committee.

Each House Committee may have issued for their observance by-laws by the Branch Committee which conform to the Rules of the Association, and shall operate within the policy of the Association.

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(h) Where no House Committee exists in any office, a Branch may arrange for members employed in the House to elect an association delegate or delegates who shall have the same duties as a

By a letter dated 15 July 1982 the Australian Electoral office, which was conducting elections for positions in the New South Wales branch of the AJA pursuant to s.170 of the > Conciliation and Arbitration Act, notified the branch secretary that certain candidates had been elected unopposed. One of those persons was Mr Webb, a candidate for one of the two positions of branch vice-president. It appears that, thereafter, Mr Webb was treated by his colleagues and by the News Limited management as having this office although the strict view would appear to be that -- if validly elected -- he took up his office only at the following Annual General Meeting, which happened to be held on the evening before his dismissal, 20 September 1982, when the results of the elections were formally declared. However, the defendant contends that, even after that meeting and therefore at the time of dismissal. Mr Webb was not a branch vice-president, and that his purported election was invalid because he was

ineligible for election. By r.43(a) a financial member was

(1) On June 30 of the preceding financial year owed no dues to the Association ...

(2) has been admitted or re-admitted to membership of the Association and has paid all his dues in accordance with Rule 39{(b)."

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rights and privileges and benefits of membership of the Association but shall not be eligible for

(ii) as President, Vice-President, or Treasurer of a Branch unless' he has been a financial member of the Association for the preceding three

The effect of r.43(b)(ii) was that, in order to be eligible for election as a vice-president for the year 1982-1983, Mr Webb needed to have been a financial member of the AJA as at 30 June in each of the years 1980, 1981 and 1982. There were admitted into evidence membership cards covering the years 1980-81, 1981-82 and 1982-83. The first of these cards was signed by the secretary of the South Australian branch of the association. It certified that Mr Webb was a financial member of the AJA for the year 1980-81 and that he cowed no dues to the association at June 30, 1980. The latter two cards were signed by Mr Cantlon, as secretary of the New South Wales branch, and certified in similar terms in respect of the two later financial years and that no dues were owed at June 30, 1981 and June 30, 1982. These documents,

if standing alone, would indicate the required eligibility.

However, there was also admitted into evidence the transfer of membership certificate dated 26 February 1981 whereby Mr Webb's membership was transferred from the South Australian branch of the AJA to the New South Wales branch. This document showed outstanding dues of $48.70 made up of 1979-1980 dues of $23.60 and 1980-81 dues of $25.10. The

certificate stated that Mr Webb "was a(n) unfinancial member at June 30 last."

I think that the explanation of the conflict between the two documents issued by the South Australian branch secretary is to be found in r.43A of the AJA Constitution dealing with 'paid up' members. That rule relevantly provided:

(a) A paid up member of the Association is a member who has paid all arrears to the Association, including his/her subscription for the current

financial year ending June 30th next. (b) A paid up member is entitled to all privileges,

benefits and responsibilities of financial membership as specified in Rule 43. ..."

Rule 47 requires that a member seeking a transfer of membership to another branch shall apply for a clearance and pay all dues owing to the branch he is leaving. If Mr Webb had done this in February 1981, and paid the dues owing for both 1979-1980 and 1980-81, he would have become a "paid up" member pursuant to vr.43A(a). He would be "paid up" in respect of both 1979-80 and

1980-81. Paragraph (b) of r.43A provides that a "paid up member"

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is entitled to all privileges, benefits and responsibilities of financial membership "as specified in Rule 43". The defendant points out that sub-paras (i), (ii), (ii1) and (iv) are framed in terms of a qualification upon the statement in r.43(b) that "a financial member is entitled to all rights privileges and benefits of membership of the Association" and argues that the privileges and benefits referred to in r.43A do not, therefore,

Linguistically, there is force in that submission but the difficulty is that, save for an entitlement to be issued with a membership card, r.43 specifies no "privileges, benefits and responsibilities of financial membership". Although the drafting is inelegant, I incline to the view that the reference in r.43A ko the "privileges" and "benefits" specified in r.43 was intended to be read as including the entitlement to stand for office after the relevant number of years' membership, equating "paid up"

membership with "financial" membership for this purpose.

Although there is no direct evidence of payment of dues, the membership cards strongly suggest that Mr Webb paid up his dues at about the time he transferred to the New South Wales branch, thus re-instating himself for the preceding year as well as making himself financial for the current year. If the view I have tentatively expressed is correct, his payment of fees during 1981-82, as to which no question has been raised, would then have

completed his eligibility for election. As will appear, having

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regard to my findings on other matters, it makes no difference whether or not Mr Webb's election as branch vice-president was or was not valid. I need not, therefore, express a concludsion upon this matter but I would not be prepared to say that the returning officer acted incorrectly in receiving his nomination for the

I have already referred to the terms of Mr Webb's employment with the defendant. Shortly after his appointment as editor Sir Larry Lamb became aware of the existence of a special

arrangement with Mr Webb. He investigated the position and

formed the view that the "oddities" in the way Mr Webb was remunerated should be removed. Sir Larry Lamb took particular exception to the "further $40 entertainment allowance" referred to in Mr Beeby's letter to Mr Muscat of 25 March 1981 and which, as Mr Beeby had apparently intended, was being paid to Mr Webb as of right and without the necessity for Mr Webb to produce vouchers of expenses. Sir Larry Lamb also disliked the arrangement that Mr Webb would be paid a 2 pm - 11 pm shift penalty allowance, whether or not he worked that shift. He decided to regularize the position and, with Mr Webb's concurrence, he caused Mr Beeby, as editorial manager, on 12 July 1982 to abolish the "entertainment allowance" and substitute an addition of $40 to the first $40 allowance -- the "tax free

travel and entertainment allowance" -- and, on 10 August 1982, to

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substitute for the guaranteed penalty payment the addition of 376 per week to Mr Webb's salary. The final result was, no doubt, more tidy but it is surprising that the investigation -- which involved not only Sir Larry and Mr Beeby but also, at least, Mr Hogben and Mr Chapman -- and "regularization" of Mr Webb's salary arrangements should have occupied significant senior executive time over a period of one month. tt was also, I think, unfortunate in terms of Mr Hogben's attitude to Mr Webb. Although Sir Larry accepted that the arrangements were as claimed by Mr Webb, and as had been paid since the commencement of his employment, Mr Hogben added to his opinion that Mr Webb was a

hypocrite the view that he was also "a chiseller and a poacher".

According to the evidence of Mr Cowley and Mr Muscat, the period during which the matter of Mr Webb's allowances was under attention coincided with one of financial crisis for the newspaper. To the best of Mr Muscat's knowledge -- and he has worked for the group since 1968 -- "The Australian" had never been profitable. During the period since he had become general manager of Mirror Australian Telegraph Fublications he had exercised rigorous economies in the running of the newspaper, including the introduction of a new printing system which enabled a reduction in production staff of about 40 people, but by mid 1982 he was aware of serious financial difficulties. Compared

with the same period in the previous calendar year, and stated in

24, money terms, advertising revenue was down by 3.3%, editorial wages were up by 13.1% and,production costs were up by 3%. The loss was running at a figure almost 50% higher than for the previous year. Moreover, in July and August the position worsened. According to Mr Cowley, the loss for the first five weeks of the financial year 1982-83 was running at an annual rate of about $7,000,000, about double the budgeted loss for the year. A report was prepared for a meeting of the Board of Directors of News Limited held on 25 August 1982. It 'showed that trading results for the first two weeks of the financial year were $1,062,000 compared to $2,100,000 for the same period last year; a loss for that period of s1,400,000. The board discussed the matter but no decisions were made. Mr Cowley explained in his evidence that "at that stage there was still the planning that we talked about, about the re-structuring of the paper". He referred also to a ""re-styled paper which Sir Larry was planning and already had started to put into effect. And it required better writing, better journalism, but a smaller paper and a smaller staff". It is not clear what changes Mr Cowley had in mind, or understood Sir Larry Lamb to have in mind, at 25 August; he said that he was never told more than the "broad outlines" by Sir Larry. Sir Larry said in his evidence that the only changes he ever contemplated were to take the paper up market, that 1s to reduce type sizes and use of pictures and "to introduce more serious and literary work into the newsaper", and "to streamline the editorial staff to a limited extent to make more use of the

wire services." (CIn fact "The Australian" did not increase its

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use of wire services until 1984.] However, I accept that, at 25 August, Mr Cowley was hoping that changes in editorial policy would improve the financial situation and that this was one reason why no decision was made to implement either of the major options which had been canvassed from time to time -- closure of the newspaper altogether or conversion to a weekly paper by

cessation of week-day publication -- or other remedial action.

Mr Cowley said in evidence that he had held the view since the beginning of 1982 that "The Australian" was wv oes over-staffed by journalists but he took no action to achieve a reduction in staff members, even by a process of natural wastage. In fact, over the period 30 June 1982 to 21 September 1982, the number of journalistic staff increased from 145 to 158.

According to his evidence, Mr Cowley was told by Sir Larry -- in July, after he had assessed the situation -- that "we could do with less people." Mr Cowley said that he was orally informed by Sir Larry that the journalistic staff should be reduced by 30 to 40: to about 120 people. He claimed that Mr Chapman was a party to this discussion and that by the beginning of September, when Mr Chapman commenced his two day period as editor, "planning was

well in hand for a major reduction" in the staff and that Sir Larry would have been aware of that. But, according to Sir Larry, he had never discussed with Mr Cowley any proposal for reduction of staff or specific numbers of staff to be retained and, before Mr Chapman left, "there had been no question of

numbers and nothing immediate was planned". Mr Chapman said

that, up to the time hé left, he knew nothing of a decision to reduce by 40. The matter had never been discussed with Mr Armstrong, who became the chief subordinate of Sir Larry when Mr Chapman left. Even more puzzlingly, Mr Cowley conceded in his evidence that, if Mr Chapman had told Mr Webb during his two day reign that there would be additional staff employed, "that would be consistent" with what had passed between himself and Mr Chapman. Sir Larry spoke to similar effect, according to Mr Armstrong, when he reported to him a rumour shortly after the resignation of Mr Chapman. Mr Webb came to him to seek comment upon a rumour that Mr Chapman had been dismissed because he would not agree to dismiss 30 journalists. Mr Armstrong said that was "bullshit", and that the paper was not getting rid of people but actively recruiting. According to Mr Armstrong, he reported the

rumour to Sir Larry, who responded to him in much the same terms

I have no doubt that Mr Cowley and other executives of News Limited were, during the period July -- early September 1982, concerned about the worsening financial position of "The Australian". It is likely that, from time to time, there was discussion in general terms relating tc a reduction in the number of journalists employed by the newspaper but I am satisfied that, until the commencement of the Van Oudtshoorn incident, neither Mr Cowley nor any other executive of the newspaper gave serious consideration to a substantial reduction in the journalistic workforce of "The Australian"; whether by retrenchments or

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On about 19 August 1982 Sir Larry Lamb decided to publish in "The Australian" an apology to readers. In evidence he explained his reason in this way:

"IT think we had lost an edition, the night's issue because of the industrial problems of the time and we had also been late and not got to all our customers and on several occasions there was a difficult situation. After we had lost a newspaper, I proposed to put an apology on page one explaining to the readers that we had

The industrial problems to which Sir Larry referred were stoppages affecting "The Australian" in common with other metropolitan dailies and which were related to award negotiations then in progress. The apology drafted by Sir Larry read:

Exception was taken to the wording of this apology by some of the sub-editors, who were AJA members. They refused to handle the copy. Sir Larry apparently reconsidered the matter and, on 20 August, there was published an apology in less contentious terms:

members of the Australian Journalists Association."

The Van Oudtshoorn dispute had its origin on Sunday 12 September 1982. Sir Larry Lamb overheard Mr Nick Van Oudtshoorn, one of the sub-editors of "The Australian", making a telephone call. It became obvious to him, he said in evidence, that Mr Van Oudtshoorn was reading a story froma copy of that day's "Sunday Telegraph". He deduced that the recipient of this material was the Manchester "Daily Star", a newspaper in competition with the London "Sun" -- a News group newspaper which Sir Larry had formerly edited. In Sir Larry's words: "I called him" (Mr Van Oudtshoorn) "into my office and admonished him and told him that this kind of behaviour would not be tolerated and that I would be confirming this warning in writing". He did so, the next day. His memo read:

time, to sell the company's material to a U.K. newspaper with which our U.K. colleages are in direct competition, as thoroughly reprehensible, disloyal and dishonest.

summary dismissal on the ground of outrageous misbehaviour."

Sir Larry said in evidence that he had no recollection of speaking to Mr Cowley about the memo but Mr Cowley remembered having seen and approved the memo before it was sent. He agreed

with the decision to send the memo even though, on his own

admissions, he thought the language "strong", the memo "a little unusual for Australian journalists", he had no information as to Mr Van Oudtshoorn's side of the matter and he "sensed" that it might give rise to an industrial dispute. Sir Larry evidently shared that opinion because he sent a copy of the memo to Mr Hogben. They were right. The memo did give rise to an industrial dispute, but not immediately. Upon receipt of the memo Mr Van Oudtshoorn sent a reply, with a copy to Mr Hogben. Omitting formal parts, it read:

"T refer to your letter of today which has just been delivered to me by hand.

Your letter contains a substantial number of grossly inaccurate and grossly insulting statements. It is obvious that you paid no attention at all to the explanations I gave you during our conversation yesterday after you eavesdropped on a private conversation. As a result, I am now on the advice of the Australian Journalists Association putting in writing the facts as to the events of yesterday afternoon.

I had permission from the acting chief sub editor, Mr Mike Toshack, to take 15 minutes of my meal break to make a telephone call. I have for the past 3 1/2 years been stringing for a group of South African newspapers and for about the same time for the Daily Star in Manchester. I was never informed that there was any objection to my stringing for any foreign newspapers and I have done so openly in the past. I have cable credit cards to file copy to both, which means that I have to make only a local call to OTC in Sydney.

Because there was some noise at my desk in the sub-editor's section, I mede a telephone call from the office of the Weekend Australian, in which area your office is located. I in no way tried to use the telephone secretly or to file copy in a secretive manner - if that had been my intention I would certainly not have used a telephone in the same general area as your office.

The story I was filing had already appeared in the Sunday Telegraph on Sunday morning. It was based on a paper delivered to a medical congress and I obtained permission from the source to use the quotes and material. There is thus no substance in your

allegation that I was using "company material", nor that I was using "company time".

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4, When you called me into your office after you had listened to the entire conversation without in any way making your presence known, I informed you of the facts

or as many as you would give me a chance to - and offered to pay for the telephone call, which you declined to accept.

I have discussed the matter with representatives of the AJA and am writing this letter on their advice. [I hereby demand an immediate and full withdrawal of all the allegations contained in your letter, and an

apology for the slur which you have cast upon my journalistic integrity and upon my character."

There was no response. On Tuesday 14 September Mr Cantlon and Mr Giffney visited Mr Hogben to demand a withdrawal and apology from Sir Larry. He refused. Later that day he hada further meeting with Mr Cantlon, Mr Giffney and, this time, Mr Webb at which he maintained his refusal. Late that afternoon the

On Thursday 16 September Mr Cantlon wrote to Mr Cowley about the matter. He expressed disappointment that Mr Cowley was "not able yesterday to meet the request of AJA members for an early conference to help solve the current situation of the Australian even though our members are still in dispute." Mr Cantlon went on to set out the AJA position:

"There appears to be no argument about the sequence of events on Sunday, September 12. What is at issue are two points: (1) The company's claim that there is a policy known to all covering the operation of "stringers"; (2) The excessive and inflammatory style of the memo sent to Mr. ... van Oudtshoorn.

We have presented the company with information of conversations at the time of Mr. van Oudtshoorn's appointment which we consider are vital to the first point. Briefly it is this --

When Mr. van Oudtshoorn was interviewed for his position it was done by a senior staff member, who was also an A.J.A. member, on the instructions of the Editor. During that interview Mr. van Oudtshoorn raised the question that he was a correspondent for some overseas newspapers and sought advice whether this would be a problem with his employment. No objections were raised at that time and the person who interviewed him also claims to have mentioned it in passing in discussions with the Editor, Mr. Beeby, about the appointment.

Since that interview last November, Mr. van Oudtshoorn has acted openly and with the knowledge, not only of his fellow workers but of persons exempted from the award, working on the back bench of the Australian. We believe it is also significant that some of these people, who are company executives, have no knowledge of any company policy on 'stringing'.

As I have pointed out to the Group General Manager (Editorial), Mr. Hogben, if the company has such a policy then it should be made known to staff so that our members and your employees are not unwittingly offending such a policy. I should also point out that it is a published fact that at least one senior staff member was a correspondent for an overseas paper that must be considered to be in opposition to a Murdoch publication.

Now to the second point. If the Editor-in-Chief believed that Mr. van Oudtshoorn's actions were detrimental to other company publications then it would have been within his rights for him to write a formal considered memo to that effect. To deliver a memo which is inaccurate and which contains highly damaging words, we believe, is totally wrong. As I have informed Mr. Hogben, we believe the original memo should be withdrawn and replaced with one more in line with company practice in its dealings with staff.

I would also like to draw your attention, and hope to have a chance to fully discuss with you, what I see to be a serious morale problem at the Australian. I am sure I do

not have to remind you of the resolutions carried in settlement of the Sue Short dispute in 1981 which sought to establish proper management/staff relations and to draw attention to management of any future likely causes of disharmony.

What has become clear to me in the past few days is that there is a serious staff/management relation problem at the Australian and I believe it is a matter of urgency for hoth the company and the union to consider this as soon as possible and avoid any future incidents of the kind we are currently facing. A.J.A. members employed on the Australian are intensely loyal to that paper and are vitally interested that it continues to publish uninterrupted to the highest possible standard; but they are also deeply concerned at the breakdown between staff and management. They want a better relationship -- they want better

communication -- they want to produce the best paper they can."

At some stage -- it 1s not clear whether as a result of Mr Van Oudtshoorn's letter or of Mr Cantlon's letter -- Mr Hogben checked with Mr Dargaville, who conducted Mr Van Oudtshoorn's employment interview, the claim that Mr Van Oudtshoorn had obtained at that interview permission to "string". In evidence

Mr Hogben said: "Dargaville tended to confirm that he had said

everything is okay". He also said that he had been "impressed »- by the statement that Mr Dargaville, although an AJA member, acting on the editor's instructions had okayed this business of stringing; that added a new element to the information then to hand". But nobody acted upon the "new element". Mr Hoghen's explanation in evidence -- one that he claimed to have given to

AJA representatives at the time -- was that 1t was expected

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convention that an employee approach his editor before accepting any stringing. Mr Hogben also told the AJA delegation that Mr Cantlon's letter did not express the sincere feeling of the staff, that the staff would not be happy "until it sees Lamb ridden out on a rail and management forced to abdicate its role" and, later that day, that "Mr Murdoch said quite clearly that he

There were apparently two meetings of journalists employed by "The Australian" on Thursday 16 September. At the first meeting, held at 2.30 pm, a resolution, in the following terms, and moved by Mr Webb, was adopted:

"This is to confirm our opinion of your lack of appreciation of your responsibilities as Editor or Editor-in-Chief of The Australian.

We regard your conduct, in bullying and adopting tactics of confrontation in your dealings with A.J.A. members as misguided.

Be advised that any repetition will result in our refusal to work with you, pending an assurance that you will cease this outrageous misbehaviour.

Be further advised that, in line with our continuing attempts to improve this company's abyssmal record in industrial relations, we again seek proper negotiations with Management to resolve this matter satisfactorily.

Pending those negotiations - which we assume no reasonable management would refuse - we resolve to discuss this matter at 4.30 pom today upon report from A.J.A. and House Committee representatives.

That this meeting demand a retraction and an apology by the Editor-in-Chief in accordance with this resolution."

There were no negotiations and, at 4.30 pm, the journalists resolved to meet again at 10 am on the following Monday and to stay on strike in the meantime. In the meantime Mr Cantlon attempted to settle the dispute through Mr W. O'Neill, chief industrial officer of News Limited. Mr Cowley agreed in evidence that he had not told the AJA representatives that he had seen Sir Larry's memo before it was sent and that, during the week, he had been urging a return to work upon the basis that Mr Van Oudtshoorn's complaint would then be discussed. However, Mr Cantlon obviously needed more than that. On 17 September he submitted a draft of a suggested substitute for Sir Larry's letter of 13 September; a draft which clearly stated the company policy and warned of the consequences of stringing without prior approval but which was expressed in courteous terms. There was apparently no response but a meeting was arranged between the federal secretary of the AJA, Mr Neal Swancott, Mr Cantlon and Mr Giffney -- and perhaps others; but not Mr Webb -- with Mr Cowley

Mr Cowley had in the meantime decided that there should be retrenchments of journalists. He said that his earlier general intention had "firmed up" during the strike; the strike had worsened the paper's financial position. On the Monday morning, according to Mr Hogben, Mr Cowley told Mr Hogben "that over the weekend and during the course of the previous few days

he determined that there had to be fairly extensive retrenchments

from 'The Australian' whether or not there was a return to work". At the meeting, according to Mr Hogben, Mr Cowley informed the AJA representatives that, unless there was a return to work by 11 am that day, the paper would be closed -- and he delivered a letter confirming this -- but that even if there was a resumption there were going to be substantial retrenchments, that "the paper needed firm management and an absence of the sort of disruption which had been taking place". Mr Cowley said that he spoke also of the paper's financial crisis and that he spoke of "major" retrenchments "at an early date". He did not mention either

The journalists did return to work by ll am. At 2 pm those who had met at 9 am met again, with the addition on this occasion of Mr Webb. There was-discussion about the proposed

retrenchments. Mr Cowley indicated that between 30 and 40 persons would be dismissed "by the end of the week". Mr Webb raised the possibility of the company accepting volunteers for retrenchment. It was agreed that there should be a further

meeting to discuss retrenchments on the following Wednesday.

In the meantime, however, Mr Cowley had set in hand retrenchment action. Before lunch on Monday 20 September Mr

Cowley instructed Mr Hogben that he was to do the administrative

At a glance

Court

Decision date

Before

Source

Judgment (429 paragraphs)