Wednesday, 12 September 2012

Unfinished Business: The Hold Cleaning Case - Part 3 - The Judgment

Part 3: The Judgment

ACCC v Maritime Union of Australia[1]

As stated in the earlier post, the ACCC had commenced legal proceedings against the MUA and a number of MUA officials, namely:

  • Mr Derrick Newlyn, the South Australian Branch Secretary of the MUA;
  • Mr Michael O’Leary, National Organiser of the MUA;
  • Mr James Boyle, Branch Secretary of the Northern New South Wales Branch of the MUA
We had commenced legal proceedings against these three individuals because they were involved in a number of the incidents we had pleaded. However, they were also the MUA officials with regular and long running involvement in hold cleaning demands. Mr Newlyn was involved in hold cleaning demands in South Australia, while Mr Boyle was heavily involved in such conduct in Newcastle. Mr O’Leary was also involved in most hold cleaning demands as the person who spoke for MUA head office in support to the local hold cleaning demands.

The ACCC had alleged a number of contraventions of section 45DB of the TPA in relation to “Star Sea Bird and the “Anangel Eagle”. The ACCC also alleged that the MUA had engaged in contraventions of section 60 in relation to the “Star Sea Bird” and the “Jian Qiang”.

Prior to the trial, the MUA agreed to settle parts of the ACCC’s case. The MUA admitted that it had it had engaged in contraventions of section 45DB by engaging in conduct for the purpose, and having the effect, of substantially hindering the operators the Star Sea Bird and the Anangel Eagle vessels from engaging in trade or commerce involving the movement of goods between Australia and places outside Australia

Newlyn and Boyle also admitted that they had been knowingly concerned with the section 45DB contraventions involving the Star Sea Bird and Anangel Eagle respectively.

The MUA agreed to pay a penalty of $75,000 for each of the two s45DB contraventions - a total pecuniary penalty of $150,000.

The MUA however did not agree to settle the ACCC’s section 60 allegations. Therefore, this issue had to be decided by Justice Hill.

Justice Hill’s judgment

The following extracts from Hill J’s judgment provide a good description of MUA’s approach to hold cleaning demands:

Star Sea Bird
24 On 6 March 1999, some 45 minutes before the "Star Sea Bird" was due to leave the port, a picket line was formed at the main gate to the access road leading to the berth where the vessel was moored. The picket line was manned by persons who were members of the MUA including Mr McNeela and a Mr Ridgeway. The mooring gang rostered on that day to release the lines of the vessel arrived at the berth by launch. I would infer that they did so to avoid having to go through the picket line. The Division Manager of port operations, Captain Shipp, requested the mooring gang to release the lines to the vessel. The request was refused. A member of the mooring gang said that the vessel would be released if the agent gave a letter of undertaking to the union that shore labour would be engaged at the next port to clean the holds. No such undertaking was given. Captain Shipp again requested the gang members to release the lines. They again refused. A member of the gang (a Mr Crompton) said that there might be problems if the gang crossed the picket line. They could be in for a hiding and have their cars damaged. I should say that in allowing the words of the gang member to this effect to be given in evidence I did so not as evidence that gang members might in fact be in for a hiding or have their cars damaged, but rather as evidence of their state of mind, one of fear.

25 A meeting was then held between Mr Ridgeway and Mr McNeela…and representatives of the ship's charterer and of Ports Corp (SA), the port authority, to discuss a resolution of the dispute. While this meeting was taking place, Mr Crompton rang Mr Newlyn and was told that he should await "instructions" from Mr Ridgeway, who attended the meeting because he was to act in the position of Assistant Branch official of the South Australian Branch of the MUA from 8 March 1999.

26 Shortly after Mr Ridgeway asked Mr Travis whether it was his intention to engage shore-based labour and Mr Travis said that it was not, either in Adelaide or any other Australian port. Mr Ridgeway then said that the picket would remain in force.

27 A short time later arrangements were made with the port authority to have a mooring gang available the following morning to release the "Star Sea Bird". It departed Adelaide at approximately 7.30 am. As a result, Star Shipping incurred a loss of $17,610.62 made up of lost time, pilotage and tug cancellation fees and legal fees.
Jian Qiang
35 Approximately 35 minutes before the vessel was to depart a picket line formed at the main gate to the access road leading to the berth where the vessel was then moored. It was manned by members of the MUA, including Mr Newlyn. Members of the mooring gang employed by Ports Corp (SA) on that day to release the lines to the vessel were each members of the MUA. When requested to release the lines all but one refused. Two of the gang said that if they crossed the picket line they would be harassed. Another member said that if they did so they would have a problem. Again evidence of what was said by these gang members was admitted not as evidence of the fact that this would happen, but as evidence of their state of mind, ie as evidence of the fear they had of crossing the picket line. One gang member said that he would if instructed by his employer. For this he was called by Mr Newlyn "a dog, slime and a scab".
36 Later that evening Mr Travis contacted Mr O'Leary and told him that Western Bulk Carriers had put the vessel off-hire that evening. He referred to there being a dispute as to which charter party would be responsible for any hold cleaning. There was then a discussion as to what would be a reasonable cost to clean the vessel. Mr O'Leary suggested a contractor, Mathews Bros Pty Ltd, and later, when telephoned by Mr Travis again, advised that the cost would be $20,000. Later a representative of Lauritzen, Mr Kjaer-Petersen, had a conversation with Mr Travis. Mr Travis told Mr Petersen that it was no longer possible for the vessel to leave port and to have its holds cleaned at sea. He said that he had spoken to Mr O'Leary and that it was agreed that the cleaning could be carried out at a cost of $20,000, a figure substantially below the historical cost of hold cleaning in Adelaide. Mr Travis was then authorised by Mr Petersen to make the necessary arrangements with Mathews Bros for the cleaning of the holds by shore-based labour, notwithstanding that Mr Petersen expressed the view that he was not happy that Lauritzen was being forced to pay the cleaning costs. In the result, the vessel was re-delivered on 2 May 1998 with holds uncleaned to Lauritzen and then moved to Berth 27 where it was cleaned by shore-based labour prior to being loaded with barley.
Anangle Eagle.
42 A picket was then formed comprised of members of the MUA some 15 minutes before the vessel was due to leave the port. Soon afterwards, a representative of Adsteam approached one of the members of the picket line and asked him who he was representing or who sent him. He asked whether the picketer intended to prevent the ship from sailing and to advise the names of the picketers. The man replied that the questioner should speak to Mr Boyle for information.
43 The mooring gang (employed by Lovett McCracken & Bray) arrived some time later as the port programme was running late. The gang were also members of the MUA. Shortly thereafter the members of the mooring gang refused to release the lines because members of the MUA who were part of the picket line were seated on, or standing in, the vicinity of the bollards. The members of the mooring gang, the tugs and the pilots all left the wharf soon after.
44 Later that afternoon Adsteam arranged with Lovett McCracken & Bray to provide mooring personnel to release the lines so as to permit the departure of the vessel the following morning, that is, the morning of 9 August 1997. A picket line was again formed manned by members of the MUA. When the new mooring gang arrived they too were members of the MUA. They refused to release the lines because members of the MUA who were part of the picket line were seated on, or standing near, the bollards. The mooring gang, the tugs and pilots left the wharf around five minutes later. Mr Walker then spoke to one of the men who had been sitting on the bollard. The picketer asked at what time Adsteam was going to try again to sail the vessel. Mr Walker said that he was awaiting instructions from the ship's operator. He was told: "Whatever time, day or night, we'll be back."
45 Star Shipping instructed Adsteam to engage a firm to undertake minimal hold cleaning at a cost of $7,000. The vessel sailed for Burnie approximately three hours after the cleaning was completed. It is agreed that on each occasion the picket line was formed to incite and encourage, and did incite and encourage, the mooring gang to refuse to attend and release the lines unless hold cleaning using shore-based labour was undertaken. It was a result of this conduct that the vessel was delayed in leaving the port and that loss, damage and inconvenience was caused to Star Shipping and/or Aberfoyle. The loss incurred by Star Shipping was in the order of $22,000 comprised of the ship's time, cleaning costs, deferment of pilotage, site occupancy, overtime payments and legal advice.
As is apparent from these three descriptions, the MUA followed a similar pattern when making their hold cleaning demands. If the ship owner did not agree to using the MUA to do the hold cleaning, MUA employees would appear at the time the vessel was due to sail and prevent the vessel sailing by either threatening the linesmen, forming a picket line or obstructing the linesmen by sitting on the bollards. They would do this until the vessel missed its window for sailing from the port.

As a result, the ship-owner would not only have to book another time slot for the vessel to sail, but they would have to pay for all the services which had been booked for the departure, such as linesman, tug boats, pilot charges, which could not be provided due to the picket line or obstruction. The ship owners would also lose money because that the vessel had to be berthed for another 24 hours due to the delay, as well as charter party costs to the period of the delay.

The MUA would keep turning up every time the vessel was due to sail and prevent it from sailing until the ship owner finally capitulated.

Justice Hill’s first task was to determine the meaning of the words “harassment” and ‘coercion” in section 60. In this regard, he stated:

62 The word "harassment" in my view connotes conduct which can be less serious than conduct which amounts to coercion. The word "harassment" means in the present context persistent disturbance or torment. In the case of a person employed to recover money owing to others, as was the first Respondent in McCaskey, it can extend to cases where there are frequent unwelcome approaches requesting payment of a debt. However, such unwelcome approaches would not constitute undue harassment, at least where the demands made are legitimate and reasonably made. On the other hand where the frequency, nature or content of such communications is such that they are calculated to intimidate or demoralise, tire out or exhaust a debtor, rather than merely to convey the demand for recovery, the conduct will constitute undue harassment (see per French J in McCaskey at [48]). Generally it can be said that a person will be harassed by another when the former is troubled repeatedly by the latter. The reasonableness of the conduct will be relevant to whether what is harassment constitutes undue harassment…

63 "Coercion" on the other hand carries with it the connotation of force or compulsion or threats of force or compulsion negating choice or freedom to act.. A person may be coerced by another to do something or refrain from doing something, that is to say the former is constrained or restrained from doing something or made to do something by force or threat of force or other compulsion. Whether or not repetition is involved in the concept of harassment, and it usually will be, it is not in the concept of coercion.
In other words, harassment under section 60 is less threatening than coercion. However, harassment will involve a person repeatedly “troubling” or interfering with another person. If the demand is being made in relation to a legitimate matter, such as a valid debt, the conduct can still be “harassment” if the frequency of contact is unreasonable. On the other hand, if the demand is illegitimate the conduct will become undue harassment.

Coercion involves a greater degree of compulsion or force than harassment. The main distinction is that coercion does not require repetition of the conduct – ie: a one off act by a party may constitute coercion within the meaning of section 60.

Justice Hill concluded that the formation of a picket line, as had occurred in the present case, undoubtedly constituted “both coercion and undue coercion” within the meaning of section 60:

65. …The formation of a picket line to prevent access to a vessel for the purpose of allowing that vessel to depart, and in circumstances where the picket line is capable of engendering fear in the mind of those in the mooring gang employed to release the vessel for departure and thus prevent the departure from occurring, will constitute both coercion and undue coercion, at least where it is directed at compelling those responsible for the vessel the departure of which is affected to depart from their decision to have the holds cleaned at sea and instead to have the holds cleaned by shore-based labour.

This was a very significant finding as it indicated that section 60 could be used in relation to picket lines where the conduct of the parties on the picket line was aimed at coercing other individuals into engaging or refraining from engaging in particular conduct.

The only remaining issue to be determined by Hill J was whether section 60 applied to the MUA's conduct. This turned on whether section 6(2)(b)(1) could be used to extend the operation of section 60 to the MUA’s conduct in making the hold cleaning demands.

Counsel for the MUA, Julian Burnside QC, had argued that section 6(2)(b)(1) could only apply if these was a real and direct relationship between the conduct and international trade. Burnside QC argued that in the particular section 60 cases pleaded by the ACCC, the relationship was too remote.

Justice Hill rejected these submissions. He concluded that the relationship to international trade did not have to be direct for section 6(2)9b)(1) to apply. Accordingly, the fact that the vessels had been sailing to another Australia port before sailing overseas did not take them outside the scope of section 60, by virtue of the extended operation of the TPA.

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