Victorian Supreme Court confirms tort of intimidation is part of Australian Law - Employee Rights/ Labour Relations

The decision of the Supreme Court of Victoria in Boral Resources (Vic) Pty Ltd v CFMEU [2014] VSC 429 (16 September 2014) (Boral) highlights an important response that is often available to employers when confronted with unruly unprotected industrial action by unions and/or employees.

THE CASE

In February 2013 a number of subsidiaries of Boral Limited initiated proceedings in the Supreme Court against the Construction, Forestry, Mining and Energy Union (CFMEU), in respect of bans imposed upon their products by the union. The bans were in response to Boral's involvement in the highly publicised dispute on the Grocon Myer Emporium site in the Melbourne CBD in 2012.

Initially, the CFMEU ignored the proceedings, and in May 2013 a default judgment was entered against it. Several months later the Boral companies, joined by the Attorney General for Victoria, initiated proceedings for contempt of court against the union. At that point, the CFMEU filed an appearance in the proceedings generally.¹

The union raised a substantial number of technical arguments in relation to various aspects of the judgment. These included an argument that the tort of intimidation, which was the centrepiece of the Boral companies' case, was not part of the law of Australia. All of the CFMEU's arguments were decisively rejected by the Supreme Court in Boral.

While the decision involved consideration of various procedural aspects of the proceedings, this In Brief focuses on the Court's treatment of the CFMEU's arguments concerning the tort of intimidation.

INTIMIDATION

Old English case law established that if a party (A) threatens to take unlawful action against another party (B) unless B does or does not do something they are entitled to do or not to do, with the intention of injuring a third party (C), then C can seek relief by way of injunction and/or damages against A for the tort of intimidation.

In the 1964 House of Lords decision in Rookes v Barnard,² it was held that liability for the tort of intimidation could arise where A threatened to do something which was unlawful, even if it did not involve violence or threat to property.

In that instance, the unlawful means were furnished by the threat by a number of employees of a predecessor of British Airways that they would breach their contracts of employment (by going on strike) if the airline did not terminate the employment of a fellow-worker who had resigned his union membership.

In the more recent case of OBG Limited v Allan,³ the House of Lords decided that a number of existing torts – including intimidation and unlawful means conspiracy - should be regarded as part of a broader tort of interference with business by unlawful means.

INTIMIDATION IN THE BORAL CASE

In Boral, the CFMEU raised two principal issues in relation to the tort of intimidation:

first, that the tort should now be regarded as a variant of the tort of interference with business by unlawful means, and that since that tort has not been recognised as part of the law of Australia, it follows that it was not open to the Boral companies to rely upon the variant constituted by the tort of intimidation; and
secondly, that even if intimidation is regarded as a tort in its own right, it has not authoritatively been determined to be part of the law of Australia.

The Victorian Supreme Court rejected both of these arguments.

In doing so it found that the tort of intimidation is not just a variant of the tort of interference with business by unlawful means, but rather that it is a free-standing head of liability in its own right. The Court further found that seen in these terms, the tort of intimidation is part of the law of Australia.

The Court acknowledged that there is no direct High Court authority which states that the tort of intimidation is part of the law of Australia. Nevertheless, there is clear authority to that effect in the form of the decision of the New South Wales Court of Appeal in Sid Ross Agency Pty Ltd v Actors and Announcers Equity Association of Australia⁴ (Sid Ross).

In Boral, the Victorian Supreme Court took the view that unless it was satisfied that the decision in Sid Ross was clearly wrong, it was obliged to follow that authority. The Court found that it was not so persuaded, and determined that the tort of intimidation should be regarded as part of the law of Australia.

The tort as recognised by the Supreme Court consists of three elements:

that the defendant (A) makes a demand coupled with a threat;
that the threat is a threat to commit an unlawful act; and
that the person threatened (B) complies with the demand, thereby causing loss to the plaintiff (C).

In the circumstances of Boral, the demand was that customers and potential customers of the Boral companies not do business with them. The relevant unlawful acts would include the CFMEU's procuring breaches of the contracts of employment of employees of the customers of the Boral companies; and/or contravention of the boycott provisions in section 45D of the Competition and Consumer Act 2010 (Cth) (CCA). Meanwhile, the loss to the plaintiff companies would consist of the losses incurred as a consequence of their customers' refusal to do business with them.

As an alternative to the claims in intimidation, the Boral companies alleged that the CFMEU and (un-named) union delegates engaged in an unlawful means conspiracy, with the requisite unlawful means being furnished by the tort of Intimidation.

The union objected to this pleading on a range of grounds. As with its arguments in relation to the tort of intimidation, all of these objections were rejected by the Supreme Court.

IMPLICATIONS FOR EMPLOYERS

The decision in Boral affirms what was already clear from Sid Ross: that the tort of intimidation is part of the law of Australia, and will remain so until the High Court of Australia says otherwise.

More generally, however, the decision serves as a useful reminder of the fact that employers confronted with unprotected industrial action by a union and/or its members have an extensive range of options available to them.

Options for Employers under the Common Law

At common law, these options do not yet include obtaining relief in respect of the emergent tort of interference with business by unlawful means. However, they do include seeking damages and/or injunctions against unions and employees in respect of the existing torts of:

unlawful means conspiracy;
intimidation;
interference with contractual relations; and
(exceptionally) conspiracy to injure – i.e. conspiracies where no unlawful means are employed and the conspirators are shown not to be motivated by their legitimate trade/industrial interests.

The taking of unprotected industrial action would also invariably involve breaches of their contracts of employment on the part of participating employees. This means that in many instances employers could treat those breaches as constituting repudiation of the employees' contracts of employment (thereby bringing employment to an end) and/or seek damages for breach of contract.

Options under Statute

Additionally, a range of options would be available to employers under the Fair Work Act 2009 (Cth) (FW Act). These would include:

obtaining an injunction under section 417 to restrain industrial action during the nominal life of an enterprise agreement;
obtaining and enforcing orders to restrain actual or apprehended unprotected action under section 418; or
obtaining an injunction to restrain pattern bargaining in reliance upon section 422.

Further, unprotected action which includes exerting pressure on target employers through their suppliers, clients or customers is very likely to be unlawful under section 45D (and cognate provisions) of the CCA. Those who engage in such activity may be subject to injunctions, awards of damages and monetary penalties.

Strategic Considerations

Clearly, employers who are confronted with unprotected industrial action are not lacking in legal protection.

However, some of these protections need to be treated with caution in practice: for example employers would not always perceive it to be in the interests of business stability and/or HR best-practice to seek damages (in contract or in tort) from current (or even former) employees, whilst in some instances recourse to legal processes can hinder rather than facilitate settlement of the dispute which gave rise to the proceedings in the first place.

Furthermore, even though the reach of the common law and statutory liabilities is extremely broad courts will be prepared to grant injunctions and/or to award damages only where the employer is able to lead credible evidence in support of its claims. The same is true for applications for orders under provisions such as section 418 of the FW Act.

This suggests that it is necessary carefully to weigh up the pros and cons of taking legal action in respect of unprotected industrial action - both in terms of the ease or difficulty of obtaining appropriate evidence, and of possible adverse responses on the part of employees and/or the wider public. Nevertheless, the remedies are there, and as Boral illustrates, there is no reason why they cannot be used in appropriate circumstances.

Footnotes

¹The proceedings under consideration related only to the default judgment. The contempt matter was dealt with separately – see Grocon v CFMEU [2014] VSC 134.

²[1964] AC 1129.

³[2008] 1 AC 1.

⁴[1971] 1 NSWLR 760.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.


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