Patrick Stevedores Operations No 2 Pty Ltd & Others v Maritime Union of Australia & Others

(1998) 195 CLR 1

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(Decision by: Gaudron J)

PATRICK STEVEDORES OPERATIONS NO 2 PTY LTD & OTHERS v MARITIME UNION OF AUSTRALIA & OTHERS

Court:

Judges: Brennan CJ, McHugh, Gummow, Kirby and Hayne

GaudronCallinan JJ

Subject References:
HIGH COURT AND FEDERAL JUDICIARY
Federal Court of Australia
Power under s 298U of the Workplace Relations Act 1996 (Cth) and s 23 of the Federal Court of Australia Act 1976 (Cth) to grant interlocutory injunctions to restrict purported termination of labour supply agreements, termination of employment of employees, obtaining stevedoring services, engaging in conduct having the effect of termination employment of employees, and engaging in conduct having the effect of the divestment of assets or dealing with assets otherwise than in the ordinary course of business.
EQUITY
Equitable Remedies
Mareva injunctions and other interlocutory injunctions
Whether within jurisdiction of the Federal Court of Australia to grant injunction with the effect of fettering discretion of administrators appointed under Pt 5.3A of the Corporations Law
Whether effect of such injunction requires company to trade while insolvent
Whether injunction necessary to prevent frustration of process
Whether confined to maintaining status quo at the time of making application
Whether available to protect the subject matter of litigation conferring greater rights than when application made
Whether serious question to be tried
Whether appropriate on balance of convenience
Effect on third parties
Exercise of supervisory jurisdiction.
CORPORATIONS
Companies
Management and Administration
Appointment of administrators under Pt 5.3A of the Corporations Law
Powers and duties in administration of company
Personal liability in administration of company
Jurisdiction of court fettering discretion of administrators
Jurisdiction of court to make orders compelling administrators to retain employees and to trade while insolvent contrary to responsibilities under the Corporations Law.
INDUSTRIAL LAW
Commonwealth
Stevedoring Industry
Whether restructuring of companies so as to remove assets from employer company with the effect of dismissing, injuring or altering the position of employees by reason of their membership of a union contravenes Pt XA of the Workplace Relations Act 1996 (Cth)
Nature of interlocutory injunctive relief available under s 298U of that Act.
TORT
Joint or Several Tortfeasors
Conspiracy
Whether interlocutory injunction an appropriate remedy
Whether interlocutory mandatory injunction an appropriate remedy.

Other References:
Corporations Law, Pt 5.3A, s 1321
Federal Court of Australia Act 1976 (Cth), ss 23, 32
Workplace Relations Act 1996 (Cth), Pt XA, ss 298K, 298L, 298T, 298U, 298V

Judgment date: 4 MAY 1998

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Decision by:
Gaudron J

[85] The Maritime Union of Australia ("the MUA") is an organisation of employees registered under the Workplace Relations Act 1996 (Cth) ("the Act"). Certain of its members are employed by Patrick Stevedores No 1 Pty Ltd, Patrick Stevedores No 2 Pty Ltd, Patrick Stevedores No 3 Pty Ltd and National Stevedores Tasmania Pty Ltd, respectively. It is convenient to refer to those companies collectively as "the Patrick Employers" and to the MUA members employed by them as "the MUA employees".

[86] The MUA employees are employed in accordance with the Stevedoring Industry Award 1991 ("the Award"). In some cases, their employment is also regulated by an agreement known as "the Patrick-Melbourne Enterprise Agreement 1996". However, they have been locked out of their employment since the night of Tuesday, 7 April 1998. On that day, Patrick Stevedores Operations Pty Ltd ("the Stevedoring Company"), which then had the benefit of labour supply agreements with the Patrick Employers ("the labour supply agreements"), terminated or purported to terminate those agreements.

[87] With the termination of the labour supply agreements, each of the Patrick Employers lost its entire business. Steps were then taken by the sole Director of those companies to appoint administrators. Administrators ("the Administrators") were, in fact, appointed that day. It is not in issue that, by reason of the termination of the labour supply agreements, the Administrators would have had little choice but to terminate the employment of the MUA employees had there not then been proceedings pending in the Federal Court of Australia in which the MUA was seeking interlocutory orders to prevent that course.

[88] Before turning to the Federal Court proceedings, it is convenient to note that there were events other than the termination or purported termination of the labour supply agreements which bore on the appointment of the Administrators on 7 April 1998. Those events go back to September 1997 when the Patrick Employers were carrying on profitable businesses as stevedores and their assets exceeded their liabilities. In September 1997, the Patrick Employers, other than National Stevedores Tasmania Pty Ltd, sold their assets to their parent company, Patrick Stevedores ESD Pty Ltd, now called Patrick Stevedores Operations No 2 Pty Ltd ("the Operating Company"). National Stevedores Tasmania Pty Ltd also sold its assets to the Operating Company, but that sale was not effected until March 1998. Nothing turns on the fact that that sale was not completed until then and, for simplicity, it will be convenient to proceed as if it occurred in September 1997.

[89] In September 1997, the Operating Company and the Patrick Employers entered into agreements by which the Patrick Employers agreed to supply labour to the Operating Company. As already noted, the benefit of those agreements was, on 7 April 1998, held by the Stevedoring Company. The agreements allowed the Operating Company and, later, the Stevedoring Company to obtain labour from other sources. And their terms were such that they could be terminated in the event that the Patrick Employers could not maintain the labour supply. As a result of industrial action, which the MUA claims was permitted by the Act, the Patrick Employers were, apparently, not able to maintain the supply of labour in the period leading up to April 7 1998. Hence, the labour supply agreements were terminated that day.

[90] The proceeds of the sale, in September 1997, of the assets of the Patrick Employers were used by those companies to extinguish debts owed to other companies in the Patrick Group of Companies ("the Patrick Group") and to effect share buybacks, the moneys again going to other companies in the Patrick Group. There then remained an amount - apparently $16 million - owing to the Patrick Employers from one or more of the other companies in the Patrick Group. It seems likely that that money was owed by the Stevedoring Company. The money has not yet been paid. However, it is not clear that it is presently payable. Nor is it clear whether it is subject to offsetting claims for moneys provided by the Stevedoring Company to the Patrick Employers to meet their operating costs.

[91] Whatever the amount owing to the Patrick Employers from the sale of their businesses, on 7 April 1998 it was effectively frozen in the hands of the company or companies which owed it. Although the Patrick Employers did not at any relevant stage after September 1997 owe any moneys other than wages and associated on-costs, their assets were, at some stage, charged to secure the indebtedness of other companies in the Patrick Group. On the evening of 7 April 1998, the security trustee of the creditors of those other companies gave notice under various floating charges crystallising those charges so that each became fixed on, but only on, the moneys owed to the Patrick Employers. With their right to receive payment of those moneys frozen and their labour supply agreements terminated, the view was formed that the Patrick Employers were insolvent. Hence, the appointment of the Administrators.

[92] On 7 April 1998, the same day that the right of the Patrick Employers to receive the moneys due to them was frozen, their labour supply agreements terminated, the MUA employees locked out of their employment and the Administrators appointed, the Stevedoring Company and the Operating Company entered into arrangements with PCS Resources Pty Ltd ("the PCS Company"), a company associated with the National Farmers Federation ("the NFF"), and with one or more other companies for the supply of their labour requirements. It is not in issue that, since 7 April 1998, the PCS Company has employed non-union labour to undertake work previously performed by the MUA employees.

[93] The actions which have been recounted took place, apparently, without the knowledge of the MUA or the MUA employees. However, other events had occurred which led the MUA to fear that the Patrick Employers intended to dismiss their employees. It is not necessary to recount those events. It is sufficient to note that, because of them, the MUA and three MUA employees who sued as representatives of all the MUA employees (collectively, "the MUA applicants") commenced proceedings in the Federal Court of Australia on 11 February 1998 ("the February proceedings").

[94] It seems that the February proceedings were brought against the Patrick Employers, the Stevedoring Company, the Operating Company, other companies in the Patrick Group and individuals associated with the Patrick Group (collectively, "the Patrick interests") and the NFF, the PCS Company and other companies and individuals associated with the NFF (collectively, "the NFF interests"). It appears that the MUA applicants alleged breaches of the Award and of the Patrick-Melbourne Enterprise Agreement 1996 as well as a wrongful plan to replace the MUA employees with a non-union workforce.

[95] On 6 April 1998, fearing the imminent dismissal of the MUA employees, the MUA applicants moved in the Federal Court for an interlocutory order restraining the Patrick Employers from pursuing that course. That motion was listed for hearing before North J on 8 April 1998. It is not contended by any of the Patrick interests that they did not know of that application when the events of 7 April 1998, which resulted in the MUA employees being locked out of their employment, occurred. And it was conceded by Counsel for the PCS Company that, by then, it also knew that an application had been made to the Federal Court for an order preventing the dismissal of the MUA employees. On 8 April 1998, North J granted an injunction to restrain the Patrick Employers under administration from dismissing their employees and adjourned the motion until 15 April 1998. By then, the MUA applicants had commenced fresh proceedings ("the second proceedings").

[96] The second proceedings were also brought against the Patrick interests and the NFF interests. Additionally, claims were made against the Commonwealth of Australia and The Hon Peter Keaston Reith MP, Minister for Workplace Relations and Small Business. In those proceedings, the MUA applicants allege a breach of the Award, breach of the Patrick-Melbourne Enterprise Agreement 1996, breach of the MUA employees' employment contracts, breach of s 298K(1) of the Act and contraventions of the Corporations Law. They also plead causes of action founded in conspiracy, including a conspiracy to breach s 298K(1), and claim damages against some of the Patrick interests (not including the Patrick Employers) and the NFF interests for the tort of inducing a breach of the MUA employees' employment contracts. And they plead that the transactions involving the sale of the businesses of the Patrick Employers in September 1997, and the share buybacks, are void or voidable for fraud. On 15 April, interlocutory orders were sought in those proceedings.

[97] On 21 April 1998, North J made various interlocutory orders as set out in Schedule I to these reasons. The orders included an order restraining the Stevedoring Company and the Operating Company from acting on the termination or purported termination of the labour supply agreements (Order 1) and another preventing them from acquiring stevedoring services previously acquired from the Patrick Employers from any other source (Order 4). There were also orders requiring the Stevedoring Company, the Operating Company and the Patrick Employers to treat the labour supply agreements as remaining on foot and to give effect to their terms (Order 2) as well as restraining them from terminating those agreements without first giving notice to the MUA (Order 3). Additionally, the Patrick Employers were restrained from entering into any agreement, taking any action or doing anything else that would result in the termination of the employment of their employees (Order 5). Further, various of the companies in the Patrick Group (but not including the Patrick Employers) were restrained from disposing of their assets other than in the ordinary course of business (Order 6). Leave was granted to the MUA applicants to proceed against the Patrick Employers for the purpose of obtaining interim relief (Order 7).

[98] Orders 1, 2 and 4 of the Orders of North J were stayed by the Full Court of the Federal Court pending the hearing of appeals to that Court. The appeals resulted in leave being given to the MUA to amend undertakings given before North J and an order under s 447A of the Corporations Law, to which it will later be necessary to refer. Otherwise, the appeals were dismissed. Orders 1, 2 and 4 of the orders made by North J were then stayed by order of this Court ^[F89] pending the outcome of this application for special leave to appeal by the Operating Company and other companies in the Patrick Group of Companies named in Schedule II to these reasons.

[99] There are three main strands to the argument advanced by the applicants in support of their application for the grant of special leave. First, they argue that, except for Order 7 and procedural orders which are not in issue in these proceedings, the Federal Court lacked power to make the Orders made by North J. They then contend that there was a failure to follow principle in the making of those Orders. Third, they claim that neither North J nor the Full Court gave proper consideration to the impact of those Orders upon those provisions of the Corporations Law that confer and regulate the powers of administrators to manage companies placed under administration.

[100] So far as concerns the argument that the Federal Court lacks power to make the Orders made by North J, it is necessary to note that, in the second proceedings, the MUA applicants clearly allege a breach of s 298K(1) of the Act. That sub-section relevantly provides:

"An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following:

(a)

dismiss an employee;

(b)

injure an employee in his or her employment;

(c)

alter the position of an employee to the employee's prejudice".

Section 298L(1) of the Act relevantly provides that "[c]onduct ... is for a prohibited reason if it is carried out because the employee ... :

"(a)

is ... [a] member of an industrial association; or

...

(h)

is entitled to the benefit of an industrial instrument or an order of an industrial body; or

...

(l)

... is a member of an industrial association that is seeking better industrial conditions ... [and] is dissatisfied with his or her conditions; or

...

(n)

as ... [a] member of an industrial association, has done ... an act or thing for the purpose of furthering or protecting the industrial interests of the industrial association, being an act or thing that is:

(i)

lawful; and

(ii)

within the limits of an authority expressly conferred on the employee ... by the industrial association under its rules."

[101] The pleaded allegations of breach of s 298K(1) of the Act include an allegation that, by the Patrick Employers' sale of their businesses to the Operating Company in September 1997, their entry into the labour supply agreements and the appointment of the Administrators, the MUA employees were injured in their employment and their position was altered to their prejudice for one or all of the prohibited reasons set out above or, else, for reasons that include one or all of those prohibited reasons ^[F90] .

[102] It has not been put by any of the parties to these proceedings that the actions which the MUA applicants contend injured the MUA employees in their employment or altered their position to their prejudice did not occur or did not have those consequences. Rather, it has been conceded by the Patrick interests that the actions complained of did occur and that they did have the results pleaded. But they assert that, in accordance with established principle, orders cannot be made to undo those actions. Moreover, they claim that the actions complained of by the MUA applicants were undertaken for legitimate commercial purposes, and not for a "prohibited reason" or for reasons including a "prohibited reason".

[103] To answer the question whether, by reason of the allegation of breach of s 298K(1) of the Act, the Federal Court had power to make the Orders made by North J, it is necessary to begin with s 298T of that Act. That section provides that "an application may be made to the [Federal] Court for orders under section 298U in respect of conduct in contravention of [Pt XA of the Act]", which Part includes s 298K. Section 298U is in these terms:

"In respect of conduct in contravention of this Part, the Court may, if the Court considers it appropriate in all the circumstances of the case, make one or more of the following orders:

(a)

an order imposing on a person or industrial association whose conduct contravened or is contravening the provision in question a penalty of not more than:

(i)

in the case of a body corporate - $10,000; or

(ii)

in any other case - $2,000;

(b)

an order requiring the person or industrial association to reinstate an employee, or to re-engage an independent contractor;

(c)

an order requiring the person or industrial association to pay to an employee or independent contractor, or to a prospective employee or independent contractor, compensation of such amount as the Court thinks appropriate;

(d)

an order requiring the person or industrial association not to carry out a threat made by the person or association, or not to make any further threat;

(e)

injunctions (including interim injunctions), and any other orders, that the Court thinks necessary to stop the conduct or remedy its effects;

(f)

any other consequential orders."

[104] The applicants for special leave to appeal contend that s 298U only authorises orders once the Court has found a contravention of Pt XA of the Act. In other words, it is argued that s 298U only authorises final orders. They also contend that s 298U only authorises such orders against persons who have contravened a provision of Pt XA and, thus, in this case, only against the Patrick Employers. The same view was taken of that aspect of s 298U by the Full Court ^[F91] . That Court held, however, that s 23 of the Federal Court of Australia Act 1976 ("the Federal Court Act") authorised the Orders made by North J to the extent that s 298U of the Act did not ^[F92] . The applicants for special leave contend that s 23 of the Federal Court Act is irrelevant because s 298U of the Act provides exclusively and exhaustively as to the relief that may be granted for a contravention of Pt XA of the Act.

[105] The argument in favour of confining orders under s 298U to final orders was made by reference to the opening words of that section, namely, "[i]n respect of conduct in contravention of this Part". It is said those words mean "in respect of conduct which has been found to be in contravention of [this] Part" and that they do not extend to conduct alleged to be in contravention of Pt XA.

[106] In my view, the powers conferred by s 298U cannot be confined to the making of final orders, save in the case of penalties imposed under s 298U(a). That paragraph, unlike the other paragraphs of s 298U, conditions the making of an order imposing a penalty on the existence of "a person or industrial association whose conduct contravened or is contravening [a] provision [of Pt XA]". Those words would be otiose if the opening words of the section were construed as limited to conduct found to be in contravention of Pt XA.

[107] Moreover, it is clear that the words "conduct in contravention of this Part" in s 298T, which, as previously noted, provides that "an application may be made to the Court for orders under section 298U in respect of conduct in contravention of this Part", extend to conduct alleged to be in contravention of Pt XA. It would be surprising if the words "in contravention of this Part" mean something different when used in s 298U. And the wording of s 298U(a) suggests they do not.

[108] In my opinion, the terms of ss 298T and 298U require that, apart from s 298U(a), s 298U be construed as including conduct alleged to be in contravention of Pt XA. That conclusion is supported by two other considerations. The first is the subject-matter of the Act: workplace relations. The principal object of the Act is "to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia". The means of achieving that object are set out in s 3 of the Act. "Cooperative workplace relations" often depend on there being an independent tribunal able to provide interim or interlocutory relief pending final determination of the matters in issue. And the availability of interim or interlocutory relief is conducive to ensuring that employers and employees abide by the provisions of Pt XA. The achievement of that legislative purpose would be much more difficult if s 298U is read as permitting a breach to continue pending final determination of the question whether it, in fact, occurred.

[109] One other aspect of s 298U should be noted. It is that s 298U provides as to the orders that may be made concerning the cessation of work by employees as proscribed by s 298N of the Act, industrial action proscribed by s 298P, and other proscribed coercive action by industrial associations against employees ^[F93] , members ^[F94] , and independent contractors ^[F95] . To construe s 298U as confined to authorising only final orders in restraint of that conduct would not, in my view, be conducive to harmonious workplace relations.

[110] The view that s 298U should be construed as applying to conduct alleged to contravene a provision of Pt XA is also borne out by s 298U(e), which allows for "injunctions (including interim injunctions)". Although the expression "interim injunction" is sometimes used in a technical sense to mean an injunction granted until the happening of some specific event (such as a named day or further order) ^[F96] and the expression "interlocutory injunction" is sometimes used to mean an injunction until the final hearing or further order ^[F97] , it is not uncommon for the expression "interim injunction" to be used more widely so as to include relief in the nature of an interlocutory injunction. "Interim injunction" is used in that sense in s 80(2) of the Trade Practices Act 1974 (Cth) ^[F98] , which provides that "the Court may grant an interim injunction pending determination of an application under subsection (1)". It would not be surprising if the words "interim injunction" were used in the same sense in s 298U(e) of the Act ^[F99] .

[111] The argument that s 298U is confined to orders against persons whose conduct is or is alleged to be in contravention of a provision of Pt XA of the Act is clearly correct in the case of orders made under pars (a), (b), (c), (d) and, also, (e), to the extent that par (e) is concerned with injunctions and orders "that the Court thinks necessary to stop the conduct". That limitation is clear from the terms of those paragraphs. Thus, par (a) is concerned with orders imposing penalties on those "whose conduct has contravened or is contravening the provision in question". And pars (b), (c) and (d) refer to orders "requiring the person or industrial association" to do or refrain from doing some act or thing. There, "the person or industrial association" clearly refers to the person or association found or alleged to be in contravention of Pt XA. However, there is no such limitation in that part of s 298U(e) which permits "injunctions (including interim injunctions), and any other orders, that the Court thinks necessary to ... remedy [the] effects [of the conduct in question]".

[112] It is well settled that provisions granting power to or conferring jurisdiction on a court should not be construed as subject to limitations not required by their terms ^[F100] . Thus, in Knight v. FP Special Assets Ltd ^[F101] , a general provision as to cost orders was construed as authorising an order against a person who was not party to the proceedings in which the order was made. For present purposes, it may be assumed that an order could not be made under s 298U(e) against persons who were not parties to proceedings under that section. However, that is not the question in this case. All the individuals or companies against whom North J made orders are parties to the proceedings. The question is simply whether an order can be made against persons who are parties but whose conduct is not or is not alleged to be in contravention of Pt XA of the Act. In my view, established principles of statutory construction require that s 298U(e) be read as authorising orders against such persons.

[113] Once it is accepted that interlocutory orders can be made under s 298U, and that orders under s 298U(e) can be made against persons other than those whose conduct is or is alleged to be in contravention of Pt XA, the only questions which then arise in the context of s 298U are:

(1)

whether, in terms of s 298U, it was open to North J to form the view that it was "appropriate in all the circumstances of the case" to make such orders as were "necessary to ... remedy [the] effects [of the conduct alleged to contravene s 298K]";

(2)

if so, whether, it was open to North J to form the view that the Orders which he made were necessary to remedy the effects of that conduct; and

(3)

if questions 1 and 2 are answered in the affirmative, whether, nonetheless, settled principles with respect to the grant of injunctions or the interaction of the Orders made by North J with the Corporations Law direct the conclusion that those Orders should not have been made.

The last question can, for the moment, be put to one side. It is convenient that questions (1) and (2) be considered together.

[114] It is to be remembered that, by the evening of 7 April 1998, none of the Patrick Employers had a business and they were unable to obtain money owing to them from the earlier sale of their assets. They had no other assets of any significance. They had no funds in hand or, at least, insufficient funds to pay wages and associated on-costs for which they were then liable. It follows that they were in no position to cover continuing wage costs. It also follows that they did not have sufficient funds in hand to cover liability for accrued leave and severance entitlements if the MUA employees were dismissed. Although the Patrick Employers were no doubt entitled, at some stage, to the moneys owing from the sale of assets in September 1997, it seems clear that that amount was not more than, or not significantly more than $16 million. And it is not disputed that if their employees were to be dismissed, either because there was no work for them or, else, no funds to pay them, that would result in a liability in respect of accrued leave entitlements and severance pay in the order of $125 million.

[115] It is not seriously in doubt that, if the events of 7 April 1998 were allowed to reach their almost certain conclusion, the Patrick Employers would have dismissed their employees and, being then irretrievably insolvent, gone into liquidation. The assets available to pay creditors, chiefly employees, would have been nowhere near sufficient to cover what was owed. And there would have been no prospect of the MUA employees obtaining the practical benefit of remedies available against the Patrick Employers under s 298U of the Act. In those circumstances, it was clearly open to North J to form the view that it was appropriate to make such orders as were necessary to remedy the effects of the conduct alleged to contravene s 298K of the Act.

[116] Further, it was clearly open to North J to conclude that, to remedy the effects of the conduct alleged to be in contravention of s 298K of the Act, it was necessary to make orders dealing with the transactions of September 1997. The events of 7 April 1998 had their genesis in those earlier transactions and, according to the MUA applicants, those transactions were, themselves, distinct contraventions of s 298K. Certainly, they resulted in prejudice to the MUA employees. Their consequence was that the MUA employees ceased to be employed by profitable companies carrying on business as stevedores with assets in excess of liabilities. Instead, they became employees of companies carrying on business with depleted capital, and not as stevedores, but as the non-exclusive suppliers of labour for the stevedoring operations of the Operating Company and, later, the Stevedoring Company. Because of the changes effected by the transactions of September 1997, it would have been impossible to provide an effective remedy for the consequences of the events of 7 April 1998 without also remedying the consequences of the earlier transactions. Specifically, it would have been impossible to effectively remedy what happened on 7 April 1998 if the labour supply agreements were not restored and conditions imposed restraining the Stevedoring and Operating Companies from obtaining labour from other sources.

[117] In the context just described, it was clearly open to North J to form the view that to remedy the effects of the conduct alleged to constitute contravention of s 298K of the Act, it was necessary to restrain the Stevedoring and Operating Companies from acting on the termination or purported termination of the labour supply agreements (Order 1), and, that it was also necessary to require those companies and the Patrick Employers to treat those agreements as remaining on foot and to give effect to their terms (Order 2). Additionally, it was clearly open to his Honour to form the view that it was necessary to restrain the Patrick Employers from terminating the employment of their employees (Order 5) and, to ensure the longer term efficacy of that Order, to restrain the Stevedoring and Operating Companies and the Patrick Employers from taking action to terminate those agreements without notice to the MUA (Order 3). As already indicated, it was also clearly open to his Honour to form the view that it was necessary to restrain the Stevedoring and Operating Companies from acquiring stevedoring services previously acquired from the Patrick Employers from any other source (Order 4). Whether Order 6 was necessary will be considered later in these reasons.

[118] Counsel for the applicants for special leave contended that Order 4 should not have been made because it conferred greater rights on the Patrick Employers than they had under the labour supply agreements and because it curtailed the right of the Stevedoring and Operating Companies to obtain labour from other sources. Counsel made the same argument with respect to Order 3. As already mentioned, that Order confers on the MUA a right which, it was contended, they did not previously have, namely, a right to be notified before termination of the labour supply agreements ^[F102] .

[119] As a general rule, interlocutory orders and injunctions are confined to orders maintaining the status quo at the time of the making of an application for those orders ^[F103] . However, that is not invariably so ^[F104] . Nor, as the applicants' argument assumes, is that a rule that applies in the same way to relief under s 298U(e) of the Act.

[120] Because the power to make an order under s 298U(e) is conditioned on the opinion that "it [is] appropriate in all the circumstances of the case, [to] make [the order]", it clearly permits of a refusal to make an order which confers greater rights than existed when the application was made. However, it is impossible to construe s 298U as requiring that an order be refused because it would have that effect. And in the circumstances of this case, it cannot be said that, because Orders 3 and 4 travel beyond the status quo existing when application was made for interlocutory relief, the decision of North J that it was appropriate to make orders under s 298U(e) was infected with error. And once the view was formed that it was appropriate to make orders under s 298U and, in terms of s 298U(e), those orders were "[thought] necessary", it cannot matter that they were of a kind that a Court might refuse to make if it were exercising equitable jurisdiction ^[F105] .

[121] It was also contended that, in making the Orders impugned in these proceedings, North J erred in holding there was a serious question to be tried concerning the alleged contravention of s 298K of the Act and, also, in not properly weighing the balance of convenience. In that last regard, it was put that "it was [not] appropriate to use interlocutory orders to frustrate achievement of objectives that might be lawful" ^[F106] and that "North J gave no real or no sufficient weight to hardship inherent ... in the operation of the regime established by the orders made" ^[F107] .

[122] For the reasons already given in relation to the arguments that the Orders of North J travel beyond the maintenance of the status quo, the question whether there was a serious question to be tried and questions of hardship and convenience are matters relevant to but not decisive of the question whether it was appropriate for North J to make the Orders in question. However, in this case, the proposition that there was not a serious case to be tried is so clearly untenable and the argument with respect to the balance of convenience so clearly without substance, that it is unnecessary to further consider their relevance to the exercise required by s 298U of the Act.

[123] As to the question whether there was a serious question to be tried, it is necessary to note again that it is not in issue that the conduct of which the MUA applicants complain occurred, or, that it had the consequences which they assert. The only issue is whether it was engaged in for a "prohibited reason" or for reasons including a "prohibited reason". Section 298V of the Act ^[F108] operates to create a presumption that it was. And it also operates to place the onus on those who contend otherwise to show that it was not. There is, thus, a very strong prima facie case of contravention, one which, if it proceeds to final hearing, must be determined in favour of the MUA applicants unless the Patrick Employers can prove otherwise.

[124] The fact that it is for the Patrick Employers to establish that there was no contravention of s 298K of the Act is also relevant to the claims of the applicants for special leave with respect to hardship and inconvenience. Once it is accepted that, but for Orders 1, 2, 3, 4 and 5 made by North J, the inevitable consequences of the conduct of which the MUA applicants complain would be that the Patrick Employers would have no business and the MUA employees would have no jobs and no real prospect of securing the benefit of remedies available under s 298U, the balance of convenience is overwhelmingly in favour of the making of those Orders. And that is so even if that conduct was engaged in for "objectives that might be lawful".

[125] It is convenient now to turn to Order 6 of the Orders made by North J. As already indicated, I am of the view that s 298U(e) of the Act authorises Orders 1, 2, 3, 4 and 5 of the Orders made by his Honour. Although his Honour might well have formed the view that Order 6 was desirable, it does not seem to me that it can be said that it was necessary to remedy the effects of the conduct alleged to constitute a contravention or contraventions of s 298K of the Act. However, in my view, Order 6 is authorised by s 23 of the Federal Court Act which provides:

"The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate."

[126] It is correct to say, as the applicants for special leave contend, that resort cannot be had to s 23 of the Federal Court Act to supplement a provision of another Act which provides exclusively and exhaustively as to the relief available, which provides as to conditions which must be satisfied before relief is granted or otherwise imposes limitations on the grant of relief ^[F109] . However, that does not direct the conclusion that the Federal Court lacked power to make Order 6.

[127] One clear purpose of s 23 of the Federal Court Act is to enable the Federal Court to make orders which might otherwise be made by a superior court in the exercise of inherent jurisdiction "to enable it to act effectively within [its] jurisdiction" ^[F110] . It is well settled that it authorises asset preservation orders of the kind made in Mareva Compania Naviera SA v. International Bulkcarriers SA ("The `Mareva'") ^[F111] to prevent a defendant from "deliberately disposing of his assets with the object of defeating or frustrating the ultimate judgment of the court" ^[F112] . But it is not confined to orders of that kind. As already pointed out, it extends to whatever orders are necessary to enable the Federal Court effectively to exercise its jurisdiction.

[128] Two approaches can be taken to determining whether it is appropriate to make what, for convenience, may be called a "jurisdiction protection order" under s 23 of the Federal Court Act. The first is to ask whether it is necessary to make an order of that kind and, then, to ask whether, having regard to the circumstances of the case, the order in question reasonably serves the purpose of ensuring the effective exercise of jurisdiction. The second is simply to ask whether it is necessary to make the order in question.

[129] In this case, it does not matter which approach is adopted to the grant of jurisdiction protection orders under s 23 of the Federal Court Act. It was clearly open to North J to conclude, in the light of the manoeuvres which culminated in the events of 7 April 1998, and, the attitude of the Patrick interests to the position of the MUA employees thereby revealed, that it was necessary to protect the effective exercise of jurisdiction with respect to the claims made against them ^[F113] by making an asset preservation order. And it cannot be said that, having regard to the circumstances of the case, Order 6 is not reasonably cast to achieve that purpose. Alternatively, it cannot be said that North J erred in principle in forming the view that it was necessary to make an order in terms of Order 6.

[130] Before leaving s 23 of the Federal Court Act, it is appropriate to note that, in my view, if s 298U of the Act did not permit Orders 1, 2, 3, 4 and 5 of the Orders as made by North J, those Orders could have been made under s 23 of the Federal Court Act to ensure the effective exercise of jurisdiction with respect to the claimed contravention of s 298K of the Act. It is, however, unnecessary to pursue that issue. So, too, it is unnecessary to pursue the question whether Orders 1, 2, 3, 4 and 5 can be supported by s 23 of the Federal Court Act as orders granted in accordance with equitable principles either to prevent the consummation of the conspiracy pleaded by the MUA applicants or to forestall its unworked consequences.

[131] What has been written thus far should be understood in the light of two propositions. The first is that, ordinarily, an interlocutory injunction will not issue if its effect would be to interfere with the rights of innocent third parties ^[F114] . The second is that neither s 298U(e) of the Act nor s 23 of the Federal Court Act can be construed as authorising orders requiring action in contravention of the law. Equally, however, neither can be construed as circumscribed by legislative provisions which simply confer powers and discretions to be exercised in accordance with the general law. It is in the light of the last two considerations that the argument that the Orders made by North J impermissibly interfere with the operation of Pt 5.3A of the Corporations Law should be considered. It is convenient to deal with that argument before considering the position of third parties.

[132] The object of Pt 5.3A of the Corporations Law ("the Law") is:

"... to provide for the business, property and affairs of an insolvent company to be administered in a way that:

(a)

maximises the chances of the company, or as much as possible of its business, continuing in existence; or

(b)

if it is not possible for the company or its business to continue in existence - results in a better return for the company's creditors and members than would result from an immediate winding up of the company." ^[F115]

[133] Various provisions of Pt 5.3A impose duties on a company administrator. Thus, he or she must convene a meeting of the company's creditors within five business days of the commencement of the administration to determine whether to appoint a committee of creditors and, if so, to determine its membership ^[F116] . The administrator must also investigate the "business, property, affairs and financial circumstances" of the company and form an opinion as to whether it is in the best interests of the creditors to execute a deed of company arrangement, or, for the administration to end, or, for the company to be wound up ^[F117] . And he or she must convene a further meeting of creditors to decide those matters within the time allowed by s 439A of the Law.

[134] As well as imposing duties upon an administrator, Pt 5.3A of the Law imposes both positive and negative duties on others, sometimes by providing that only an administrator may do certain things. Thus, for example, there are duties imposed on directors of a company under administration to deliver all books to the administrator of the company and to attend on the administrator as he or she reasonably requires ^[F118] . And because s 437D provides that, save in the case of a court order, only an administrator can deal with the company's property, others have a duty not to.

[135] Apart from imposing duties, Pt 5.3A confers important powers and discretions on administrators. The most significant of these are to be found in s 437A(1) which provides:

"While a company is under administration, the administrator:

(a)

has control of the company's business, property and affairs; and

(b)

may carry on that business and manage that property and those affairs; and

(c)

may terminate or dispose of all or part of that business, and may dispose of any of that property; and

(d)

may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration".

[136] It is not contended that the Orders made by North J interfere with the performance by the Administrators, or any other person, of any duty which Pt 5.3A of the Law imposes. Rather, it is put that those Orders impermissibly limit the powers and discretions conferred by s 437A and, therefore, should not have been made. It is also contended that the Orders made by North J require the Administrators to carry on businesses that are insolvent. Finally, it is argued that the Orders are contrary to the purposes of Pt 5.3A.

[137] The powers and discretions conferred on Administrators by s 437A of the Law are not entirely at large. They are subject to court orders made under the Law, including, as already indicated, orders as to transactions or dealings with respect to a company's property ^[F119] . Further, s 1321 of the Law confers a right on a "person aggrieved" by an act, omission or decision of an administrator to appeal to a court and provides that the court "may confirm, reverse or modify the act or decision, or remedy the omission, as the case may be, and make such orders and give such directions as it thinks fit".

[138] Most significantly, it is clear that the powers and discretions conferred on an administrator by s 437A of the Law are to be exercised subject to the general law ^[F120] , particularly those laws which operate directly upon a company's business, property or affairs. Obviously, for example, s 437A does not authorise an administrator to carry on business on land owned by a company contrary to town planning or environmental protection laws. Of direct relevance to this case, s 437A does not authorise an administrator to dismiss employees contrary to an award or legislative provisions. Nor does it authorise action contrary to a court order made before the administration commenced. And it does not authorise action contrary to an order made during the course of administration. That is necessarily implicit in s 440D of the Law ^[F121] .

[139] As already indicated, neither s 298U of the Act nor s 23 of the Federal Court Act is circumscribed by legislative provisions, such as s 437A of the Law, which confer powers or discretions to be exercised in accordance with the general law. Accordingly, the validity of the Orders made by North J is unaffected by s 437A. Nor, in my view, can it be said that any error of principle is disclosed by reason that the Orders curtail the powers and discretions of the Administrators conferred by s 437A. Before explaining why that is so, it is necessary to consider precisely how those Orders affect their powers and discretions.

[140] Order 5 of the Orders made by North J prevents the Administrators, pending hearing or further order, from doing anything that has "the effect that the employment of the employees engaged in [the Patrick Employers'] stevedoring business is or will be terminated". Orders 2 and 3 also bear on the Administrators' powers and discretions. Order 2 requires them, along with the Stevedoring Company and the Operating Company, to treat the labour supply agreements as remaining on foot and to give effect to their terms. And, so far as is presently relevant, Order 3 requires them to give fourteen days notice to the MUA before taking any step to terminate those agreements.

[141] The requirement in Order 2 that the various companies "give effect to the terms of [the labour supply] agreements" is, perhaps, ambiguous. It may mean that they are required to perform their obligations under those agreements. However, that would impliedly require the Administrators to re-commence and continue the businesses carried on by the Patrick Employers prior to 7 April 1998. The Orders cannot be read as requiring that course. And neither the MUA applicants nor the Administrators suggest that they should.

[142] Once it is accepted, as I think it must be, that the Orders made by North J do not oblige the Administrators to carry on business, it follows that they do not require the Administrators to carry on business in any particular way. That being so, Order 2 must be read as binding the Administrators only in the event, and to the extent that, they elect to carry on the businesses carried on by the Patrick Employers prior to 7 April 1998. So read, Order 2 does not curtail the powers or discretions of the Administrators. Instead, it gives them a choice to carry on business - a choice which, in practical terms, would be denied them if the events of 7 April 1998 were to go unremedied.

[143] Orders 3 and 5 are in a different position. They do fetter the Administrators' discretion by requiring them to maintain the employment of all employees, not just the MUA employees, and by requiring them to give notice to the MUA before terminating the labour supply agreements. However, those Orders have little practical impact. The powers of the Administrators to dismiss the MUA employees are, in any event, circumscribed by the Award, by the Patrick-Melbourne Enterprise Agreement 1996 and, perhaps, by the Act ^[F122] . Moreover, as already indicated, dismissal of employees will attract liability for accrued leave entitlements and, very likely, severance pay, thereby increasing the risk that the Patrick Employers will be wound up.

[144] Of greater significance than the limited practical effect of Orders 3 and 5 is the consideration that it would be inequitable to hold the MUA applicants to the undertakings they have given in these proceedings if the employment of the MUA employees is not protected by court order. More accurately, it was open to North J to form that view. The undertakings of the MUA applicants serve to protect the Administrators from personal liability, to the extent that they choose to carry on the businesses previously carried on by the Patrick Employers. They also serve to protect third parties against loss or damage. More precisely, they were intended to protect third parties in that way and the MUA applicants have indicated unambiguously that, if the Orders of North J stand, they are prepared to give further undertakings which have that effect.

[145] In the context of the undertakings given or intended to be given, it is impossible to conclude that North J erred in principle in effecting a limited curtailment of the Administrators' powers and discretions by obliging them to retain the services of their employees and requiring them to give notice before terminating the labour supply agreements, particularly as the curtailment is of little practical significance.

[146] I have already indicated that I do not read the Orders of North J as requiring the Administrators to carry on business. It follows that, contrary to the submissions of the applicants for special leave, the Orders do not require them to carry on insolvent businesses. The clear effect of the Orders made by North J is to permit of the possibility that the Patrick Employers might trade their way back to solvency. That possibility would not exist but for those Orders. For that reason, the argument that the Orders are contrary to the policy of Pt 5.3A of the Law must also be rejected.

[147] The only matter that remains to be considered is the impact of the Orders made by North J on third parties. As already indicated, the Patrick Employers are indebted to their employees for wages, and to others for labour on-costs. They also have contingent liabilities to their employees, not simply their MUA employees, with respect to accrued leave, severance and redundancy pay. It does not appear that they have any other significant debts or liabilities. Accordingly, the third parties most likely to suffer direct loss or damage in consequence of the Orders made by North J are the non-MUA employees and the Administrators, although the latter are not strictly third parties.

[148] The Administrators are at risk because, by s 443A of the Law, they are personally liable for various debts incurred by them in the performance of their powers and functions ^[F123] . Their position is, to some extent, protected by an undertaking by the MUA applicants that they will not hold the Administrators personally liable for wages and other benefits for which the Administrators would otherwise incur personal liability. That undertaking is, apparently, reinforced by Order 3 of the Orders made by the Full Court of the Federal Court.

[149] Order 3 of the Orders of the Full Court is in these terms:

"Part 5.3A of the Corporations Law operate[s] in relation to each of [the Patrick Employers] in such a way that s 443A(1) is not to operate in respect of services rendered to those companies by members of the [MUA]".

That Order was made pursuant to s 447A(1) of the Law which provides:

"The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company".

[150] It must, I think, be doubted whether, if construed according to its terms, s 447A is, in its application to the Federal Court, within constitutional power ^[F124] . That question can be put to one side. For if, as the Full Court appears to have thought, some feature of s 447A(1) had the consequence that the MUA applicants could not effectively give undertakings to relieve the Administrators from personal liability, it is difficult to see that it was appropriate for the Full Court to make its Order 3. However, nothing turns on these questions. The position of the Administrators is amply protected by the undertaking given by the MUA applicants as to damages. Thus, it does not matter whether Order 3 of the Orders of the Full Court stands or not. And the same is true of the undertaking by the MUA applicants not to hold the Administrators personally liable.

[151] The position of non-MUA employees is not protected by the undertaking as to damages given by the MUA applicants. That is an undertaking "to pay [compensation] to any party adversely affected by the [Orders of North J]". It is to be construed as limited to the parties to the second proceedings. Thus, it does not extend to non-MUA employees. As already indicated, however, a more expansive undertaking has been offered to protect their interests.

[152] There remains the question of the effect of the Orders on the interests of the PCS Company, other companies who entered into labour supply arrangements with the Stevedoring and Operating Companies on 7 April 1998, and the employees of those companies. It may be assumed for present purposes that they are all innocent third parties, in the sense that they were unaware of the possibility that they were part of a plan to circumvent s 298K of the Act. They will, doubtless, suffer considerable inconvenience if the Orders of North J are carried into effect. However, such rights as they have pursuant to their contracts and arrangements will be unaffected. In the circumstances of this case, it cannot be said that the fact that those parties will be inconvenienced reveals any error of principle in the approach taken by North J.

[153] It will be apparent from what has been written that I think the Orders of North J cannot be criticised, except in two very minor respects. First, it would be preferable if Order 2 were made subject to a qualification or proviso to make it clear that the Administrators are obliged to give effect to the terms of the labour supply agreements only if and to the extent that they elect to carry on the businesses previously carried on by the Patrick Employers. Second, it is desirable that the undertaking as to damages by the MUA applicants be extended to persons who are not parties to the proceedings. However, they are not matters which warrant the intervention of this Court. They can be dealt with, if the parties desire, by North J.

[154] No error of principle has been revealed in the approach of North J or of the Full Court. Accordingly, I would favour an order refusing special leave to appeal with costs. On the other hand, the majority would grant special leave and make orders disposing of the appeal. That being so, I would grant special leave to appeal but dismiss the appeal with costs.

SCHEDULE I

UPON THE APPLICANTS by their Counsel undertaking to pay to any party adversely affected by the interim injunctions granted by the Court on the motion, notice of which was filed by the Applicants on 14 April 1998, such compensation if any as the Court thinks just, in such manner as the Court directs -

AND UPON THE APPLICANTS by their Counsel further undertaking that until the hearing and determination of this proceeding, or until further order, they will not engage in any industrial action -

AND UPON THE APPLICANTS by their Counsel further undertaking that they will not hold the administrators appointed to the First, Second, Third and Fourth Respondents personally liable for their wages and other benefits arising from their employment with the First, Second, Third and Fourth Respondents for which the administrators would otherwise incur personal liability as administrators during the course of their administration -

In this undertaking "industrial action" does not include action by an employee if:

(a)

the action was based on a reasonable concern by the employee about an imminent risk to his or her health or safety; and

(b)

the employee did not unreasonably fail to comply with a direction of his or her employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform.

THE COURT ORDERS THAT:

1

Until the hearing and determination of this Application, or further order, the Fifth Respondent, Patrick Stevedores Operations No 2 Pty Ltd, and the Seventeenth Respondent, Patrick Stevedores Operations Pty Ltd, each by itself, its servants and agents, are restrained from acting upon or giving effect to:

(a)

its purported termination of the Labour Supply Agreement made on 23 September 1997 between it and the First Respondent, Patrick Stevedores No 1 Pty Ltd;

(b)

its purported termination of the Labour Supply Agreement made on 23 September 1997 between it and the Second Respondent, Patrick Stevedores No 2 Pty Ltd;

(c)

its purported termination of the Labour Supply Agreement made on 23 September 1997 between it and the Third Respondent, Patrick Stevedores No 3 Pty Ltd;

(d)

its purported termination of the Labour Supply Agreement made on 23 September 1997 between it and the Fourth Respondent, National Stevedores Tasmania Pty Ltd.

2

Until the hearing and determination of this Application, or further order, the First, Second, Third, Fourth, Fifth and Seventeenth Respondents shall subject to paragraph 4 of these orders:

(a)

continue to treat the Labour Hire Agreements referred to in paragraphs 1(a) to (d) as remaining on foot and binding upon the parties to those agreements;

(b)

give effect to the terms of those agreements.

3

Until the hearing and determination of this Application, or further order, the First, Second, Third, Fourth, Fifth and Seventeenth Respondents by themselves, their servants or agents, are restrained from terminating the Labour Hire Agreements referred to in paragraphs 1(a) to (d) for any reason without first giving to the First Applicant 14 days written notice of that intention and the reason for that proposed termination.

4

Until the hearing and determination of this proceeding, or further order, the Fifth Respondent and the Seventeenth Respondent, by themselves, their servants or agents, are restrained from acquiring the stevedoring services, which until 7 April 1998 they acquired from the First, Second, Third and Fourth Respondents, from any person other than the First, Second, Third or Fourth Respondents.

5

Until the hearing and determination of this proceeding, or further order, the First, Second, Third and Fourth Respondents by themselves, their servants or agents, are restrained from:

(a)

entering into any agreement, arrangement or other transaction; or

(b)

taking any action or doing anything;

having the effect that the employment of the employees engaged in their stevedoring business is or will be terminated.

6

Until the hearing and determination of this proceeding, or further order, the Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and Seventeenth Respondents, by themselves, their servants and agents, are restrained from:

(a)

entering into any agreement, arrangement or other transaction, or taking any action or doing any thing, having the effect of divesting itself of their assets or undertaking, otherwise than in the ordinary course of business;

(b)

dealing with or otherwise disposing of any of their assets or undertaking otherwise than in the ordinary course of business.

7

Leave is granted to the Applicants to proceed against the First, Second, Third and Fourth Respondents until further order, for the purpose only of further proceedings, if any, relating to the grant of interim relief.

8

The Respondents file and serve their Defences by 12 May 1998.

9

(a)

The Applicants and Respondents other than the First to Fourth Respondents are to make discovery to each other of the documents:

(i)

on which they rely in support of their contentions in the proceedings;

(ii)

of which they are aware and which, to a material extent, adversely affect their own case or support the other cases.

(b)

Discovery is to be made in four stages as follows:

(i)

Stage 1: 21 April 1998 to 5 May 1998;

(ii)

Stage 2: 6 May 1998 to 12 May 1998;

(iii)

Stage 3: 13 May 1998 to 19 May 1998;

(iv)

Stage 4: 20 May 1998 to 26 May 1998.

(c)

At the end of each of the first three stages, each of the said parties are to provide the other parties with an interim list of documents which it has been able to ascertain within that stage, and allow immediate inspection of such documents.

(d)

By the end of Stage 4:

(i)

the said parties are to file and serve a consolidated list of all documents necessary to be disclosed under paragraph 9(a), verified by affidavit;

(ii)

provide immediate inspection of the documents disclosed in Stage 4;

(iii)

file and serve any notice of motion and affidavit in support relating to discovery.

10

There be liberty to all parties to apply in relation to the foregoing orders upon 24 hours written notice to all other parties.

11

The directions hearing is adjourned to 10.15 am on 28 May 1998.

SCHEDULE II

Applicants for Special Leave