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           Shipping Stevedoring Port Services Hydrocarbons Diving  May-Jun 2008        |
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Judgement Day: Courts rule against Corrigan
'The cancellation of the labour supply contract and the appointment of administrators on April 7, 1998 were made possible by a complex inter-company transaction... 'It is arguable, on the evidence, that this was done because the employees were members of the union.... 'There is also evidence that Patrick owners and other companies in the Patrick group, together with others, agreed on these unlawful acts as part of an overall plan to replace the workforce with non-union labour...'
SWEET JUSTICEMay 4, 1998: The High Court The battle between Patrick, an employer hell bent on breaking the Maritime Union of Australia and the union has already generated many court actions and thousands of pages transcript in different courts. While much of the court proceedings seem complex on first reading, some simple truths and lots of agreement between judges emerge. Nine judges, including six High Court judges agree with Federal Court Judge North that Patrick has a serious case to answer for the breaching Workplace Relations Act 1996 and that Corrigan, the company, the Minister for Workplace Relations Peter Reith and others have a case to answer for conspiring to damage members of the MUA. (That makes 10 out of 11 judges all up.) If the matter went to trial and Patrick and the others lose these cases, they could faced massive damages. To the relief of workers all over Australia, 10 judges also agree that in a situation where there is evidence employers deliberately set out to sack or damage their workers because they are unionists ( an action which is prohibited under the Workplace Relations Act), the Federal Court has the power to impose orders to reinstate employees, even if it means discontinuing contracts with new, non union labour. The downside for the union was that the majority of the High Court of Australia judges said that such orders could not fetter the voluntary administrator of Patricks' labour hire companies. The practical effect of this was that no sooner had the company been finally been forced to accept Judge North's orders to reinstate the workers, the administrator started threatening to wind up the companies unless the union did not agree to the company sacking hundreds of workers and cutting the wages and conditions of the rest. Needless to say, at the time of publication, the union is back in the court. First, a brief statement of the facts as found by both Federal and High Court. Up until September 1997, four Patrick companies carried out stevedoring businesses in Australia and employed the services of employees (members of the MUA) for those purposes. They made substantial profits, one company earning $20 million in 1996. In September 1997, Patrick secretly arranged for these stevedoring companies to sell everything but their labour hire activities to another company in the group, Patrick No 2 (later renamed Patrick Stevedores Operations ) for $314 million. The labour hire agreements gave Patrick Operations the right to terminate their employment agreements without notice and permitted them to hire employees from elsewhere. From the point of view of the employees', the courts agree that the situation would not have been so serious if the shareholders had retained the $314 million from the sale. But instead much of this money was used to repay intercompany loans and about $60 million (Gyles QC who acted from Patrick was unsure during the hearing if it was $60 or $70 million) was used for share buy backs within the group. The shares bought back were cancelled immediately after the registration of their transfer so that this money was lost to the company and returned to shareholders. With their secret arrangements in place, Patrick transferred the right to use No 5 Webb Dock in Victoria to companies linked with the National Farmers 'Federation. The MUA saw this as a move to replace their labour with non union labour and took action in the Federal Court. On April 6, the MUA filed a notice of motion seeking to prevent the dismissal of the employees of the employer companies - a step which they believed Patrick intended to take over Easter. The action was listed for hearing on April 8. As it turned out, the union's worst fears were confirmed. On April 7, an event happened which further damaged the labour hire companies. The banks took steps which meant that money owed to the companies would not be paid. On the same day, Patrick Operations terminated the Labour Supply Agreements with its labour hire companies and entered into new agreements with KSK Contractors Pty Ltd and the NFF backed PCS Resources for the supply of labour. Patrick Holdings stopped any funds flowing to the employer companies. The union and employees filed a new statement of claim for damages for the sacking or damaging employees because they were members of a union ( s 298K of the Workplace Relations Act); and for the alleged fraud committed by those who dispensed with the employment companies' property and shares. The employees and the MUA also now alleged that the Chris Corrigan, Chief Executive of Lang Corporation (which owns Patrick), the director of the labour hire companies, PCS Resources, and its directors associated with the National Farmers' Federation and Mr Reith, the Minister of State for Workplace Relations and Small Business, conspired together by unlawful means to injure the employees. But if the action was to mean anything, the first step was to get court orders restoring the agreements and the jobs, in other words, a return to the status quo. On all the major relevant issues, Judge North found that the union had raised sufficient evidence to satisfy a finding that there were serious questions to be tried and indeed, by the time the action reached the High Court, this was no longer challenged by Gyles QC, representing Patrick. These issues include :
The judges also had to decide whether the Federal Court had the power to make orders reinstating the labour agreements and if it did have the power, whether the court should exercise its discretion to impose the orders in favour of the employees. Gyles QC for Patrick raised many points in trying to persuade the courts not to issue orders. He turned his client and their new non union employees (some of whom he said had even given up jobs to work for PCS) into victims - managers would resign, the newly trained employees would lose their jobs, business would be lost through disruption "mortally wounding the companies." He also argued that the conspiracy should be completed before the courts could intervene. In response to such arguments, Julian Burnside QC for the union argued before Judge North,"If the court has power to remedy at trial the things which have happened, then it is essential to preserve the position and prevent it from deteriorating further. The further the situation develops, the further the conspiracy is implemented, the more difficult it will be - both in practical terms and in terms of discretionary considerations -to grant effective relief to the applicants. It's no surprise to anyone that the applicants are trying to save their jobs. If their jobs are effectively taken by other people and if the four Patrick employers go out of existence because they cannot viably operate from today forward, then the applicants can forget about ever getting their jobs back with those employers, no matter what the court does. It's just virtually impossible." Of his opponents, he said there would be little inconvenience apart from two things: "first, maybe a sense of hurt pride because they have claimed victory a little early and, second, the inconvenience associated with putting on the back burner the contracts that they have entered in the last few days with the NFF companies, for example.... they have acted surreptitiously, dishonestly, in the utmost secrecy, with a view to stealing a march; and the court should not lend its aid to that sort of attempt. So that's what we say on the balance of convenience. " Similar arguments continued in the High Court where all the parties to the conspiracy were represented. Summing up the situation, Burnside said, "All of those ranged against us say the Court is powerless to do anything except to watch Patrick count the dead and bayonet the wounded. We say that is not so and the Court can step in and prevent further harm from occurring." During the High Court hearings, the judges raised the point of the size of the damages and the possibility that the company might not have the capacity to pay them, which lent strength to arguments in favour of early intervention. As the Chief Justice put it, if the allegations are later proved, the court "would have regard to all the mitigating circumstances in relation to lost earnings. Prospects of re-employment. Everything that would be relevant to the damage suffered by the series of individuals.... The only proposition that I think you have to deal with is that if those causes of action succeed at the end of the day, the damages must be enormous. " The union was successful before Justice North. Provided the MUA members agreed to not to take unreasonable industrial action and not to hold the administrator personally liable for debts, the companies were restrained from terminating the labour agreements, acquiring labour from any other source than through those labour agreements and disposing of their assets, other than through the normal course of business. It took Patrick on only a few hours to apply to the Federal Court for the orders to be set aside. The Full Court of Judges Wilcox, Souza and later said that they stayed the orders to avoid the "risk of chopping and changing. " They also took the opportunity to remind the community of the importance of the rule of law which is at the heart of system of judicial system, making the point that illegal actions to achieve desired goals is not condoned within our system of government. Five of the High Court judges agreed with the reasoning of the Federal Court to this point. They adopted the argument that a rider should be added to the orders that it could not prejudice the discretion of the administrator. One other judge Mary Gauldron, while acknowledging that nothing in the orders compelled the administrator to continue to operate the businesses, refused the leave to appeal altogether. She said that she would not have altered North's orders but would have left any change to the orders to the parties to argue back before North. The seventh, recent Howard Government appointee Justice Callinan upheld the appeal on the basis that orders too difficult to supervise and business should not be interfered with by the law in this way. So finally, the orders were implemented for a return to work, despite the fact that Reith was still publicly flouting the spirit of the judgement by saying that the administrator could still hire non MUA labour. Wendy Bacon The Federal Court Decision War on the Waterfront articles
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