Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Corke Instrument Engineering (Australia) Pty Ltd [2005] FCA 799 (6 June 2005)

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Corke Instrument Engineering (Australia) Pty Ltd [2005] FCA 799

INDUSTRIAL RELATIONS – certified agreement – construction of – industrial action – interference with contractual relations – interlocutory injunction

Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 cited
American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396 applied
Davids Distribution Pty Ltd v National Union of Workers [1999] FCA 1108; (1999) 91 IR 198 applied
D C Thomson & Co Ltd v Deakin [1952] Ch 646 cited
Herbert Morris, Limited v Saxelby [1916] 1 AC 688 cited
Lumley v Gye (1853) 2 El & Bl 216 applied
Mackay v Dick (1881) 6 App Cas 251 applied
Mason v Provident Clothing and Supply Co [1913] AC 724 cited
May & Butcher v The Queen [1934] 2 KB 17 referred to
News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; (2003) 215 CLR 563 applied
Nordenfelt v Maxim Nordenfelt Gun & Ammunition Co [1894] AC 535 applied
Posluns v Toronto Stock Exchange and Gardiner [1964] 2 OR 547 cited
Quinn v Leathem [1901] 1 AC 495 cited
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 applied
Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 applied
South Wales Miners’ Federation v Glamorgan Coal Co Ltd [1905] AC 239 referred to
Zhu v Treasurer of the State of New South Wales [2004] HCA 56; (2004) 211 ALR 159 applied

COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA v CORKE INSTRUMENT ENGINEERING (AUSTRALIA) PTY LTD and SIEMENS LIMITED

VID 519 of 2005

FINKELSTEIN J
6 JUNE 2005
MELBOURNE

BETWEEN:	COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA Applicant
AND:	CORKE INSTRUMENT ENGINEERING (AUSTRALIA) PTY LTD and SIEMENS LIMITED Respondents
AND BETWEEN:	SIEMENS LIMITED Cross-Claimant
AND:	COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA, CORKE INSTRUMENT ENGINEERING (AUSTRALIA) PTY LTD and DEAN MIGHELL Cross-Respondents
JUDGE:	FINKELSTEIN J
DATE OF ORDER:	6 JUNE 2005
WHERE MADE:	MELBOURNE

AND UPON THE CROSS-CLAIMANT FURTHER UNDERTAKING to inform the first cross-respondent in writing if the cross-claimant awards a further contract to the second cross-respondent to perform work for or provide services to the cross-claimant at its construction site located at 147 Cherry Lane, Laverton North, in the State of Victoria,

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN:	COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA Applicant
AND:	CORKE INSTRUMENT ENGINEERING (AUSTRALIA) PTY LTD and SIEMENS LIMITED Respondents
AND BETWEEN:	SIEMENS LIMITED Cross-Claimant
AND:	COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA, CORKE INSTRUMENT ENGINEERING (AUSTRALIA) PTY LTD and DEAN MIGHELL Cross-Respondents

1 At the centre of the dispute between the applicant union, which is usually referred to by the acronym CEPU, and the respondent, Siemens Limited, is the electrical engineering firm, Corke Instrument Engineering (Australia) Pty Ltd, also a respondent. The dispute has arisen because Corke Instrument has entered into what seem to be two inconsistent engagements. (I say that they seem to be inconsistent because that issue is itself an aspect of the dispute.) To this point, Corke Instrument has had nothing to say in this dispute though its interests are affected by the outcome. I suspect that Corke Instrument has, at least for the time being, decided to sit things out in hope that its problem will be solved without its intervention. It cannot be criticised for that approach, but in the long run it may not be so easy to be rid of the difficulty in which it finds itself.

2 The dispute arises in the following way. There is a certified agreement between CEPU and Corke Instrument which came into effect on 15 December 2003 and has a nominal expiry date of 31 October 2005. The certified agreement contemplates that there will be further agreements between CEPU and Corke Instrument to cover the conditions of workers employed at specific sites where Corke Instrument may be engaged to provide its services. In this regard, cl 3.2 (which I will later set out in full) requires CEPU and Corke Instrument to agree upon a site agreement before Corke Instrument is permitted to work at the site. This clause, and others found in the certified agreement, were reproduced in substantially the same terms in a deed the terms of which were negotiated before 23 February 2005 but which had not been delivered (and therefore was not effective) until 5 May 2005. The deed was made because, as the recitals explain, following the decision of the High Court in Electrolux Home Products Pty Ltd v Australian Workers’ Union [2004] HCA 40; (2004) 78 ALJR 1231 the parties were concerned that certain clauses in the certified agreement might not be enforceable and they wished to have those clauses set out in a deed so they could be enforced.

3 Siemens has a contract to engineer, procure and construct a gas turbine power station. The power station is located at an industrial estate in Laverton North. In March 2005 Siemens awarded to Corke Instrument the contract to carry out the electrical work for the power station. Pursuant to the contract Corke Instrument was obliged to begin work in May 2005. But it has been prevented (to use a neutral term) from doing so by CEPU for the reason that there is no site agreement for the project and cl 3.2 requires there to be such an agreement before work is to begin.

4 CEPU says that until a site agreement is in place it is justified in taking steps to prevent Corke Instrument from breaching its obligation under cl 3.2. For its part, Siemens contends that by taking steps to prevent Corke Instrument from carrying out its contractual obligations (that is, the obligations owed to Siemens), CEPU and Mr Mighell (a divisional State Secretary within CEPU) are in breach of ss 45E and 45EA of the Trade Practices Act 1974 (Cth) and s 170MN of the Workplace Relations Act 1996 (Cth). It also argues that they are engaging in tortious conduct, identifying as the relevant torts the so-called "economic torts" of conspiracy, intimidation and interference with contractual relations.

5 In addition, Siemens seeks leave (which leave should be granted) to bring a cross-claim against CEPU and Mr Mighell and moves for interlocutory injunctions to restrain CEPU and Mr Mighell from continuing with their allegedly unlawful (breach of statute) and tortious conduct.

6 As cl 3.2 is the provision around which almost every relevant aspect of this application will turn, I will set it out in full and then make several comments about its effect and operation. Clause 3.2 reads:

7 The first thing to notice about the clause is the indefinite nature of the site agreement which the parties have agreed should be entered into before work is to begin at an Engineering Construction Project. Important aspects are left unresolved. For example, must the site agreement deal with each topic that is covered by the certified agreement? If not, what topics must be covered? Unless one knows the answer to these questions it may be impossible to tell whether an agreement that purports to be a site agreement is in fact an agreement answering that description. Moreover, if it be impossible to state with reasonable precision what is required of the site agreement, the clause may have no legal effect. In some cases, and I do not suggest this is one of them, this kind of uncertainty or incompleteness can bring down a contract. May & Butcher v The Queen [1934] 2 KB 17 is one of the better known cases where this problem was encountered. Whether the principles from such cases can apply to a certified agreement -- which is given effect by statute -- is by no means clear and I have no view on the matter.

8 The second observation to make about cl 3.2 is that its subject matter, the making of a site agreement requires a degree of co-operation by both parties. This brings into operation the principle discussed in such cases as Mackay v Dick (1881) 6 App Cas 251. There Lord Blackburn said (at 263):

Another approach is to say that what is necessary to be done on each side is to conduct negotiations for a site agreement. In that regard it may be necessary to impose an alternative obligation, again by the implication of a term, that the parties must conduct their negotiations in good faith. See Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, 268.

9 The third point about cl 3.2 is this. The certified agreement is what it is described to be: an agreement certified under s 170LT of the Workplace Relations Act. This gives rise to the following question: Is the site agreement required by cl 3.2 also to be an agreement which must be certified under s 170LT? Clause 3.2 is silent on this point. There is some indication in other parts of the certified agreement that the draftsperson has drawn a distinction between, on the one hand, agreements and, on the other hand, certified agreements. This suggests that if in a particular provision a certified agreement is not referred to then certification is not required. That approach to construction of an industrial agreement is so far removed from the realities of the making of such agreements that I place little reliance on it. What persuades me that it is likely that the parties had in mind a site agreement to be certified under s 170LT is that absent such certification there is real doubt, a doubt known to the parties, whether the site agreement could create binding obligations. As to this problem, see Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235, 272.

10 There is another important point to note about cl 3.2. The obligation to agree a site agreement is removed if CEPU and Corke Instrument, or Corke Instrument’s client (in this case Siemens), are parties to an existing agreement specific to the site where Corke Instrument is to perform work, provided the terms and conditions of such specific agreement are no less than those contained in the certified agreement. Now at this early stage, the evidence suggests that CEPU and Siemens had at least reached agreement on the terms of an agreement specific to the Laverton North site in relation to the works to be performed there. On the other hand, while the terms of an agreement may have been reached -- indeed those terms were reduced to writing -- the agreement was not signed by CEPU and, in any event, has never been certified. So, if cl 3.2 restricts Corke Instrument in any way that restriction appears not to have been removed by a new agreement between Corke Instrument and Siemens.

11 The final point is this. The draftsperson of cl 3.2 (the point is likely not applicable to the certified agreement) may have overlooked the effect of the doctrine of restraint of trade. The clause has all the hallmarks of a restraint on the ability of Corke Instrument to carry on its trading activities. Initially, such restraints were void under the common law. Nowadays a restraint on trade will be void unless it can be shown that the restraint is reasonable: Nordenfelt v Maxim Nordenfelt Gun & Ammunition Co [1894] AC 535, 565. The question of reasonableness is to be determined at the date of the deed. There are two aspects to reasonableness: the restraint must be reasonable in the interests of both contracting parties and it must also be reasonable in the interests of the public. See Mason v Provident Clothing and Supply Co [1913] AC 724, 733; Herbert Morris, Limited v Saxelby [1916] 1 AC 688, 699-700, 707.

12 Returning to the implied terms, I note that Siemens did not argue for their existence. Nor did it contend that if the implied terms did exist then CEPU is in breach of the obligations which they would impose. This notwithstanding, the evidence tendered to date, incomplete though it may be, suggests that CEPU has not made a sufficiently serious attempt to arrive at an agreement with Corke Instrument as regards the Laverton North site to meet its duty to cooperate or negotiate in good faith. On one view CEPU may be dragging out the process. For reasons that will soon become clear, I do not propose to venture into this topic at length save to indicate that, as things presently stand, I intend to act on the basis that CEPU is in breach of each implied term and for that reason may not be able to rely on cl 3.2 as a basis for preventing Corke Instrument from honouring its contractual obligations to Siemens. On that approach, at least for present purposes, I am also required to act on the basis that any threat CEPU is making to hold Corke Instrument to cl 3.2 is an unjustified threat.

13 Having set out the background I can now turn to Siemens’ claim for interlocutory relief. I will consider first whether CEPU is in breach of s 45E of the Trade Practices Act. As the heading to that section indicates, the section is concerned to proscribe arrangements that interfere with the supply of goods or services. Relevantly, s 45E strikes at a contract, arrangement or an understanding which contains a provision included for the purpose of preventing or hindering one person (called the first person) from supplying goods or services to another person (called the second person). The prohibition only arises "in a supply situation". "Supply situation" is defined as a situation in which "a person (the ‘first person’) has been accustomed, or is under an obligation, to supply goods or services to another person (the ‘second person’)".

14 Mostly by chance the deed which contains a version of cl 3.2 was made after the agreement between Siemens and Corke Instrument and so was made "in a supply situation". Thus it is necessary to determine the purpose of the contracting parties when agreeing to include cl 3.2 in the deed. As the cases in this area show (see in particular News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; (2003) 215 CLR 563) it is only the subjective purpose for the inclusion of the provision to which regard may be had. Once this is recognised then although the deed was made "in a supply situation" the allegation that s 45E has been breached is, to say the least even at this interlocutory stage, nigh on hopeless. The purpose for the inclusion of cl 3.2 in the deed is, so it seems to me, no different from the purpose for its inclusion in the certified agreement in 2003. It simply cannot be said that at that time the purpose was to interfere with the supply of services from Corke Instrument to Siemens. Indeed it is inherently unlikely that Siemens was even in the contemplation of CEPU or Corke Instrument when the certified agreement was negotiated.

15 Siemens pointed to a recent arrangement between CEPU and Corke Instrument under which CEPU allowed Corke Instrument to send four electrical workers to the Laverton North site to "perform site establishment and unpacking work" but no construction work. This arrangement, of which there is a written record, contains a provision that: "No construction work will be done on the Project by Corke before a site agreement is reached with CEPU." Siemens contends that even if what preceded did not fall foul of s 45E this particular arrangement is caught by the section. Without wishing to express any concluded view on this argument, I think it probably goes too far. I rather think that the arrangement does no more than allow Corke Instrument to depart from the constraint imposed by cl 3.2, albeit in a limited way. That the arrangement records that apart from the performance of site establishment and unpacking work "[n]o construction work will be done [at the site]" is likely intended to do no more than reaffirm the obligation imposed by cl 3.2.

16 The claim that CEPU has contravened s 170MN of the Workplace Relations Act is not sufficiently strong to justify the grant of interlocutory relief even though it is no longer necessary in order to obtain an interlocutory injunction to show a prima facie case (which Siemens is a long way from doing). It is enough to show a serious question that warrants investigation at a trial: American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396.

17 The case for a breach of s 170MN is that CEPU has engaged in "industrial action" before the nominal expiry date of the certified agreement. Industrial action is widely defined in s 4(1). The only limb of the definition relied upon by Siemens is that CEPU has imposed a "ban" on work at the Laverton North site. The word "ban" is susceptible to a variety of meanings. In the context of industrial disputation it entails something in the nature of stopping or prohibiting work from being performed: Davids Distribution Pty Ltd v National Union of Workers [1999] FCA 1108; (1999) 91 IR 198, 229. There is no evidence that CEPU has imposed a ban in this way.

18 This brings me to the economic torts. Here Siemens is on firmer ground. Putting to one side the specific torts of conspiracy and intimidation, the evidence justifies me proceeding on the basis that CEPU is procuring, or is likely to procure, a breach of the contract between Corke Instrument and Siemens or that it is unlawfully interfering with Siemens’ business.

19 The first mentioned tort was given life by Lumley v Gye (1853) 2 El & Bl 216. See also Quinn v Leathem [1901] 1 AC 495. The gist of the cause of action, at least where the interference is direct, is the knowing interference with (or procuring a breach of) contractual relations, when there is no sufficient justification for the interference or procuration. Proof of malice in the sense of spite or ill-will is unnecessary: South Wales Miners’ Federation v Glamorgan Coal Co Ltd [1905] AC 239, 246, 250. It is, however, necessary to show that the breach of the contract has been "procured" or "induced". Sometimes the cases have noticed a distinction between "procuring" or "inducing" which is said to be unlawful, and "advice" which is said not to be unlawful. The prevailing view is that to induce a breach of contract means to create a reason for breaking it; to advise a breach of contract is to point out the reasons that already exist. The former is actionable while the latter is not. See generally South Wales Miners’ Federation v Glamorgan Coal Co Ltd [1905] AC 239; D C Thomson & Co Ltd v Deakin [1952] Ch 646, 686. By insisting upon performance of obligations under cl 3.2, CEPU has created an inducement for Corke Instrument to breach its contractual obligations to Siemens.

20 As to the other tort (interference with the business of another) the following cases are relevant: Ex parte Island Records Ltd [1978] Ch 122, 136; Hadmor Productions Ltd v Hamilton [1983] 1 AC 191, 201-203, 228-229; Brekkes Ltd v Cattel [1972] Ch 105; Merkur Island Shipping Corporation v Laughton [1983] 2 AC 570, 609-610. These cases establish that there is a tort of interfering with the trade or business of another by doing unlawful acts. The cases also indicate that "an unlawful act" includes the procurement of another person to break an existing contract or the interference with the performance of a subsisting contract.

21 There is sufficient evidence to show that CEPU has procured Corke Instrument not to fulfil its obligations under its contract with Siemens to perform work at the Laverton North site. Indeed, as things presently stand, there is no other evident cause for its failure to commence work. And, in view of what was said by the High Court in Zhu v Treasurer of the State of New South Wales [2004] HCA 56; (2004) 211 ALR 159, cl 3.2 cannot found a plea of justification for this interference based on CEPU’s contractual rights in its agreement with Corke. See also Posluns v Toronto Stock Exchange and Gardiner [1964] 2 OR 547.

22 In the result, I propose to grant an injunction pending trial to restrain the continuance by CEPU of its acts of interference with the subsisting contract between Siemens and Corke Instrument and with Siemens’ business. In my view, what is usually referred to as the "balance of convenience" requires that course.

23 It follows that CEPU will only be able to take curial steps to enforce cl 3.2, if that clause is capable of enforcement. Here I have in mind the possibility that CEPU may seek to enjoin Corke Instrument from acting in breach of cl 3.2. If such an application is to be made it is best, I think, that it be returnable before me. If necessary I will give directions to enable that to be done.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Counsel for the Applicant & First Cross-Respondent:	Mr H Borenstein SC Mr D Guidolin

Solicitor for the Applicant & First Cross-Respondent:	Maurice Blackburn Cashman

Counsel for the 2^nd Respondent & Cross-Claimant:	Dr C N Jessup QC Mr R P Dalton

Solicitor for the 2^nd Respondent & Cross-Claimant:	Freehills

Date of Hearing:	3 June 2005

Date of Judgment:	6 June 2005

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 519 of 2005

JUDGE:	FINKELSTEIN J
DATE:	6 JUNE 2005
PLACE:	MELBOURNE

Federal Court of Australia

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Corke Instrument Engineering (Australia) Pty Ltd [2005] FCA 799 (6 June 2005)