Sunday, 8 July 2012

The Untold Story: The ACCC's Role in the Waterfront Dispute - Part 18 – The Settlement – Final

Part 18 – The Settlement – Final


In this post, I will be discussing the terms of the ACCC’s settlement with the MUA and Patrick in more detail. Despite the significance of this settlement, it received very little attention in the media at the time or subsequently in various accounts about the Waterfront Dispute.

Trust Fund

As stated earlier, the first aspect of the settlement was that Patrick would pay up to $7.5 million into a trust fund to compensate small businesses that had suffered loss or damage due to the MUA’s illegal conduct during the Waterfront Dispute.

We decided to call the trust the Stevedoring Industry Reform Small Business Compensation Fund. In hindsight, this was a very long name, but we wanted to make it clear that the fund was part of the broader waterfront reforms, as well as being aimed at providing compensation to small businesses.

The ACCC did not want to be in direct control of a fund of up to $7.5 million. We did not have the skills or the systems to manage such a large amount of money. We also did not want to get involved in the time consuming process of assessing compensation claims and making distributions from the fund. Accordingly, we decided to structure the transaction in such a way that we could appoint the Official Receiver of New South Wales to be the trustee of the Fund.

We set up a trust which required Patrick Stevedores to pay all the money directly to the trustee. The trustee would then be required, under a trust deed, to assess various claims and make distributions.

We designed a detailed Claim for Compensation form for applicants.

The introduction to the Claim Form explained that the ACCC has established a discretionary trust to compensate parties who had suffered any loss of profit or consequential losses which were:

…directly attributable to the activities of the Maritime Union of Australia during the period 7 April 1998 and 2 September 1998 in preventing the introduction of non-union labour in stevedoring operations at ports of Australia.
Claimants had to lodge their applications for compensation by 31 March 1999.

Section 2 of the Claim Form defined who was eligible to receive compensation. We excluded particular categories of claimants for example, all federal, state and local governments, government business enterprises, and any companies associated with Patrick or the MUA. The last thing we wanted to see was the government, Patrick or the MUA making a claim for compensation on the Fund!

The Trust gave priority to individuals and businesses with an annual sales turnover of less than $100 million per year. Initially claims were to be limited to $200 000 per claimant.

We also made it clear in the Claim Form that parties would not be able to make a claim if they had insurance which covered their losses.

However, there was also provision for larger business to claim on the Trust Fund once all small businesses have recovered their damages. We did not want to give any money back to Patrick if we could possibly avoid it.

The main challenge we saw was to make sure Patrick actually paid the agreed money into the trust fund. The way we did this was to enter into a section 87B undertaking with Patrick which created an obligation that Patrick enter into a Deed with the ACCC.[1] It was the Deed which created the legal obligation that Patrick pay the money into a trust fund at the ACCC’s direction.

Clause 2 of the Deed stated that:

Patrick agrees to make the following payments (on the dates specified) into a trust to be established by the ACCC for the purpose of compensating persons for losses arising in connection with the events referred to in the statement of claim relating to the proceedings referred to recitals A and B…
Patrick was required to pay $1 million into the trust fund on the following dates:
  • 1 September 1998;
  • 31 December 1998;
  •  21 March 1999;
  • 30 June 1999; and
  • 30 September 1999.
The final $2.5 million was payable within 30 days of lodgment of Patrick’s final year results in 2000 if certain conditions were met.

Once everything had been set up, it was my job to write to Patrick one month before each of the payments were due to remind them of their obligation to make the $1 million payment to the Official Receiver of New South Wales by the due date. We were concerned that Patrick may forget to make one of the payments by the due date!

Despite my very clear instructions to Patrick as to where to send the $1 million cheque, on almost every occasion Patrick would hand deliver the $1 million cheque to me personally.

It became apparent to me after the third occasion that the senior manager at Patrick responsible for making the payments had not in fact misunderstood my simple instructions. Rather, he formed the view that he could use the occasion of delivering the cheque as an opportunity of criticizing the ACCC for the way it had resolved its waterfront litigation – namely, by getting Patrick to pay the MUA’s damages.

After a while, it became a standing joke in the ACCC about how I would be receiving my $1 million cheque from Patrick every six months. On receiving the cheque, I would patiently listen to the abuse from the senior Patrick’s manager about the ACCC, give him a receipt and then say words to the effect of “See you in six months for the next $1 million installment.” I would then hand-deliver the $1 million cheque to the Officer Receiver of New South Wales for depositing into the Trust.

The Fund ended up paying out $5 million to 85 claimants:

$5 Million paid from Waterfront Trust Fund[2]

More than $5 million has been paid from the Stevedoring Industry Reform Small Business Compensation Fund, established by the Australian Competition and Consumer Commission, to 85 businesses affected by the waterfront dispute in 1998.

"The compensation has been paid to the businesses which suffered loss and damage as a result of the waterfront dispute", ACCC Chairman, Professor Allan Fels, said today.

"The ACCC intervened in the waterfront dispute and established the Compensation Fund to compensate businesses whose cargoes were held up by boycott conduct at a number of Australian and overseas ports.

"Eighty-five businesses have so far received compensation from the fund for the economic loss they incurred during the dispute. This includes numerous small businesses, as well as a number of exporters who had cargo on the Columbus Canada, which was stranded off the Los Angeles coast for a number of weeks during the dispute due to boycott activity in the US.

"Compensation of $5 million to these businesses is a very positive outcome because they would otherwise have suffered significant financial harm due to factors totally outside their control. Many of those affected were small businesses which would have been unable to take their own private legal action".

MUA Undertakings

The orders and undertakings which we ultimately agreed with the MUA were a significant compromise because the MUA did not want to agree to anything meaningful. It is fair to say that the MUA are probably the toughest “negotiators” that I have every dealt with – indeed, their idea of a negotiation is to just say “no”. In that context, getting any undertakings out of the MUA was a significant achievement.

The first part of the orders had a recital section where the court noted the role of the MUA in protecting and advancing the interests of its members as well as its self-appointed role in protecting international seafarers through their flags of convenience campaign.

I thought that the court may question this recital, given that it was totally irrelevant to the case at hand. However, the Court asked no questions at all.

The MUA also consented to a range of undertakings not to contravene the secondary boycott provisions of the TPA for a period of two years. In other words, the MUA provided an undertaking not to break the law!

However, the MUA also demanded a further carve out in relation to its flags of convenience campaign. This was quite an odd carve out given that the MUA’s conduct in relation to flags of convenience vessels was likely to constitute a clear breach of sections 45D and 45DB of the TPA.

Paragraph 2 of the undertakings created an obligation on the ACCC to notify the National Secretary of the MUA of any alleged breach of the TPA. The MUA then had to meet with the ACCC’s Chairperson within 48 hours to try to resolve the breach. In other words, the ACCC now had an obligation to formally advise the MUA that they were breaching the TPA and then to give them an opportunity to resolve the breach by calling a one-on-one meeting with the ACCC’s Chairperson.

Paragraph 3, provided that in the event that the meeting between the MUA’s National Secretary and the ACCC’s Chairperson was unsuccessful in resolving the ACCC’s concerns, then the ACCC and the MUA would jointly apply to the Federal Court within 72 hours to request the appointment of a mediator.

Under paragraph 4, the ACCC was prevented from taking any action in relation to a breach of the TPA until the steps set out in paragraphs two and three had been completed.

The orders also noted the establishment of the Stevedoring Industry Reform Small Business Compensation Fund. 

I was not very happy with the terms of the orders. In my view, the orders gave the MUA special treatment in relation to future contraventions of the secondary boycott provisions of the TPA.

I had no doubt that the MUA would have been bragging to its membership that the orders effectively gave the MUA much greater scope for engaging in illegal boycott activity in the future.

Reaction to settlement

The reaction to the ACCC and MUA settlement was generally very positive. Business groups seemed to be of the view that the ACCC had done the right thing in holding out for compensation for small businesses.

The ACTU was also very happy with the result, pointing out precisely what I feared about the effect of the orders – namely that the MUA now had much greater scope to engage in illegal boycott activity in the future. As stated by Greg Combet:

It (the ACCC settlement) hasn't required the MUA to pay one single cent. The undertakings given we believe are fair in the circumstances and are very confined in scope and indeed are an advancement on the position we have had previously, in that there is now a recognised disputes procedure before any action is taken by the ACCC.

We had always denied liability in this ACCC matter, there is copious amounts of evidence now on the public record that this dispute was an injustice done to the union and it was a conspiracy by Patrick and the Government.
The Federal Government also appeared to be quite relieved that the matter had finally been resolved. This was probably due to the fact that the matter was finalised one month before the Federal election which was to be held on 3 October 1998.

I suspect that the only group which was not happy about the settlement occurring at this time was the Federal Labor opposition. This was because they were getting a great deal of political mileage out of the dispute in the lead up to the federal election and wanted to keep the dispute on the front pages of the newspapers for as long as possible.

Royal Commission?

I recall receiving a telephone call just before the October 1998 Federal election from a senior public servant from another Federal Government department. This senior public servant had been working in one of the Federal Government departments which had been heavily involved in the waterfront strategy.

After exchanging some pleasantries, this public servant asked me whether I had “reviewed” the ACCC’s files in relation to the Waterfront Dispute. 
I responded by saying that I did not really understand what he meant by suggesting that I should “review” the ACCC’s files. He again suggested to me that it may be sensible for me to “review” the files anyway. I said that I still did not really understand what he meant but that I did not think that the ACCC needed to review its waterfront files.

At that stage, the senior public servant became very exasperated with me. He asked me, in a quite acerbic manner, whether I was aware of the fact that there was going to be a Federal Election and that if the Labor Party was elected in that upcoming Federal election then they may decide to establish a Royal Commission to look at the role of the former government in the Waterfront Dispute.

I thanked him for explaining these facts to me but advised him that the ACCC would not be “reviewing” its files, as it had no need to do so. I said to him that the ACCC had assessed all the information it had received during the Waterfront Dispute in the normal way and had done everything by the book. Therefore, I said that the ACCC had nothing to fear from any external inquiry, including from any potential Royal Commission.

The senior public servant appeared to be quite unhappy with my response given how he hung up on me by slamming his phone down with what seemed to be considerable force.

The Howard government was re-elected in 1998 and unfortunately there was never a Royal Commission into the role of all of the major players during the Waterfront Dispute.

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