Esso Australia Pty Ltd v Australian Workers’ Union; Australian Workers’ Union v Esso Australia Pty Ltd

The High Court has allowed an appeal and dismissed a second appeal against a decision of the Full Federal Court on protected industrial action and enterprise agreements. During negotiations over a new enterprise bargaining agreement between Esso and the AWU for employees of offshore gas platforms, onshore processing plants, and a marine terminal, AWU organised various forms of industrial action in support of its claims (at [13]ff). AWU claimed that each form of industrial action was protected under s 408(a) of the Fair Work Act (Cth), and Esso claimed some forms of purportedly protected action — relating to bans on equipment performance testing, air freeing and leak testing (which the AWU claimed was ‘de-isolation of equipment’) — were not protected. The Fair Work Commission granted Esso’s application for an order requiring the AWU to stop the organisation of bans on equipment testing, air freeing and leak testing, and in contravention of that order the AWU continued to organise that action. Section 413(5) provides that employees and bargaining representatives must not contravene any orders that apply to them and ‘relate to, or relate to industrial action relating to’ an agreement or a matter that arose during bargaining. Sections 343 and 348 prohibits the coercing others to exercise or not exercise workplace rights or engage in industrial action. Esso claimed the AWU had contravened s 413(5) in ignoring the order, and contravened ss 343 and 348 by organising action to coerce Esso to agree to the AWU’s terms. A majority of the FCAFC upheld the primary judge’s decision to not grant Esso’s s 413(5) declaration on the basis that s 413(5) must relate to an order that is current and operative at the time of protected industrial action. The majority also upheld the primary judge’s conclusion that the AWU had contravened ss 343 and 348, dismissing the AWU’s contention that it believed the action to be lawful and therefore could not be coercive.

A majority of High Court allowed Esso’s appeal (Kiefel CJ, Keane, Nettle and Edelman JJ, Gageler J dissenting) and the Court unanimously dismissed the AWU’s appeal. Dealing Esso’s appeal first, the majority first reviewed the lower court decisions (at [18]ff) and the parties’ contentions before the Court (at [23]ff), before turning to the construction of s 413. Because s 413(5) is ‘poorly drafted’, especially the ambiguity in its shifting tenses, it is necessary to look to the legislative history and context of the provision as indicators of its purpose (at [29]). That history suggested that the section was now aimed at applying to past contraventions of earlier orders (at [35], and see at [30]ff and at [41]). Similarly, the structure of the rest of s 413, and the tense changes throughout it, reinforce that s 413(5) is directed ‘to non-contravention of an order that was required to be complied with before the time of inquiry and mandates that there have been no past contraventions of any such order’ (at [36]). The majority concluded, at [41], that

Syntactically, a condition that there has not been a contravention of an order necessitates that there has not been non-compliance with an order with which it was necessary to comply. There is nothing in or about that which suggests that the order must be one that continues in operation at the time of the proposed protected industrial action, or with which it is still possible to comply at that time, or that it be an order that would apply to the proposed protected industrial action.

The majority then rejected AWU’s arguments that the extrinsic materials run contrary to this view (at [42]ff), that the conditions of protected action ballots run against this reading (at [44]ff), and that it would render s 413(7) otiose (at [46]ff). The majority also rejected the AWU’s contention that this interpretation would lead to capricious and unjust results: the Fair Work Commission holds broad powers to vary or revoke orders to correct obvious errors, and fix procedural or minor breaches of various orders (at [49]ff), and, in any case, the Court should not depart from the provisions, their plain meaning, and their context in order to avoid unintended consequences (at [52]). Finally, the majority rejected AWU’s argument that this interpretation would lead to double punishment by imposing a civil penalty and also denying immunity of what would otherwise be protected industrial action: ‘The denial of what the AWU calls the “right” to engage in protected industrial action is not a punishment’, but rather a privilege that is conditioned by the terms of s 413, especially the absence of past contraventions by organisers (at [53]).

Turning to the AWU’s appeal on the issue of coercion, the majority rejected the AWU’s contention that the coercion provisions required that the action taken or threatened needed to also be known to be unlawful, illegitimate or unconscionable. ‘[I]t is clear that a person taking coercive action need not have an accurate appreciation of the legal nature of the action’, and where a person was under a mistake of law in thinking industrial action is protected is ‘no more relevant’ than if that person ‘neither knew nor cared’ whether it was protected (at [61]). Finally, the Court rejected the AWU’s modified version of this argument that suggested that the person taking the action ‘must have a subjective understanding of the circumstances that, viewed objectively, would be perceived as rendering the action unlawful, illegitimate or unconscionable’: the evidence below did not go far enough to establish that the AWU truly believed that stopping testing procedures was part of ‘de-isolating equipment’ (at [62]–[63]).

The majority made the declaration that the AWU had contravened the original order, and that, due to the operation of s 413(5), industrial action that followed that contravention was not protected, dismissed the AWU’s appeal, and remitted the matter to the Federal Court for the hearing and determination of penalties and compensation (at [64]).

Gageler J agreed with the majority’s conclusions and reasoning on the AWU appeal, but would have also dismissed Esso’s appeal. For Gageler J, that appeal turned on alternative constructions of the phrase ‘must not have contravened’ in s 413(5) as either ‘did not contravene’ (Esso’s argument) or ‘is not in contravention of’ (the AWU’s argument) (at [66]). Neither of these constructions is ungrammatical or manifestly absurd or unjust (at [67]–[68]), and neither the general objects of the Fair Work Act, its legislative history, nor its extrinsic materials help in determining which construction should be preferred (at [69]–[70]). Instead, for Gageler J, ‘the constructional choice can and must be made in the application of workaday interpretative methodology’ (at [71]):

Nothing simpler or more sophisticated is involved than attempting sympathetically to determine which construction of the contested statutory text better fits the context of the statutory scheme of which that text forms part. Linguistic indications are important. More important is the ‘purpose and policy’ reasonably attributed to the provision within the statutory scheme.

The purpose of these provisions is to support good faith enterprise bargaining (at [73]ff) with the backing of bargaining and stop orders issued by the Fair Work Commission (at [76]ff). Gageler J emphasised that stop orders need not be complied with if the industrial action is or would be protected industrial action, and that it has no binding effect if, objectively, the order relates to protected action (at [89]), and noted that the circumstances in this matter illustrates how those questions of fact can be of a technical nature, and that any contravention might be short-lived (see at [90]).

Turning to s 413, Gageler J emphasised that what is ‘immediately apparent’ in the common requirements is that they ‘must be met at the time the industrial action is taken’ (at [92]). ‘Maintaining that present temporal standpoint and present temporal focus’, Gageler J notes the requirements of each sub-section before turning to s 413(5) which has the same temporal standpoint but lacks ‘the clarify of temporal focus’ of the others (at [96]). Section 413(5) has two ‘uncontroversial’ aspects of its operation; first, it encompasses bargaining orders and stop orders, and secondly it is objective and self-executing: ‘To the extent it attaches consequences to contravention of a bargaining order or a stop order, those consequences apply irrespective of the gravity of the contravention and independently of a court imposing a pecuniary penalty or issuing an injunction.’ (at [97]). On the AWU’s construction, that ‘must not have contravened’ means the absence of a present state of contravention, s 413(5) requires that the bargaining representative must not be in contravention of an existing order at the time of taking industrial action (at [102]). On Esso’s construction, the absence of a past event of contravention, the representative must not have contravened any order made at any time in the bargaining process (at [103]). Gageler J rejected this reading as a ‘harsh and rigid form of industrial discipline’ which encourages strict compliance with any FWC order and makes the representative into ‘an industrial cripple and an industrial outlaw’ (at [103]), and this ‘sweeping denial’ of capacity runs against the scheme’s purpose of creating an environment for bargaining that is ‘fair and flexible and efficient’ (at [104]). While this arbitrariness might be alleviated by a representative’s ability to seek a revocation or variation from the FWC, relying on that mechanism would undermine the taking of protected industrial action (at [105]). For Gageler J, the AWU’s construction is preferable to Esso’s and should be accepted (at [106]).

High Court Judgment [2017] HCA 54 6 December 2017
Result Esso’s appeal allowed; AWU’s appeal dismissed
High Court Documents AWU v Esso
Full Court Hearings [2017] HCATrans 151 10 August 2017
[2017] HCATrans 150 10 August 2017
Special Leave Hearing [2016] HCATrans 311  16 December 2016
Appeal from FCAFC [2016] FCAFC 72 25 May 2016
Trial Judgment, FCA [2015] FCA 758 24 July 2015
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About Martin Clark

Martin Clark is a PhD Candidate and Judge Dame Rosalyn Higgins Scholar at the London School of Economics and Political Science and Research Fellow at Melbourne Law School. He holds honours degrees in law, history and philosophy from the University of Melbourne, and an MPhil in Law from MLS. While at MLS, he worked as a researcher for several senior faculty members, was a 2012 Editor of the Melbourne Journal of International Law, tutor at MLS and various colleges, a Jessie Legatt Scholar, and attended the Center for Transnational Legal Studies Program.