Burgess & Ors v Stevedoring Services Ltd (Bermuda) [2002] UKPC 39

Judicial Committee of the Privy Council

Case No Privy Council Appeal No. 37 of 2001

Venue FROM THE COURT OF APPEAL OF BERMUDA

Between

Burgess & OrsAppellant

Stevedoring Services Ltd (Bermuda)Respondent

Before

Lord Bingham of Cornhill

Lord Steyn

Lord Hoffmann

Lord Scott of Foscote

Lord Rodger of Earlsferry

Date 15 July 2002

[1]:- Lord Bingham of Cornhill Lord Steyn Lord Hoffmann Lord Scott of Foscote Lord Rodger of Earlsferry [Delivered by Lord Hoffmann ] Stevedoring Services Ltd (“SSL”) carries on business in the port of Hamilton. Its employees are represented by the Bermuda Industrial Union, a registered trade union. In September 1998 there was a dispute about overtime pay. Mediation by the Labour Relations Officer was unsuccessful. On 11 September Mr Furbert, vice-president of the union, notified Mr Lines, SSL’s operations manager, that overtime would be banned. SSL claimed that this action was unlawful. On 16 September it commenced proceedings against Mr Derrick Burgess, president of the union, Mr Furbert, Mr Sinclair Smith and Mr Orin Simmons “sued on their own behalf and on behalf of the members of the Portworkers’ Division of the Bermuda Industrial Union”. On the same day it applied ex parte to Bell J (Ag) for an injunction which was granted in the following terms:

“1. … restraining each of the defendants and each of the members of the Portworkers’ Division of the BIU from contravening the Labour Relations Act 1975 by means of irregular industrial action short of a strike, namely the banning of overtime at the docks of Hamilton. 2. … liberty to apply to discharge or vary this order on 48 hours’ notice …”

[2]Just over a week later the dispute was settled. A letter dated 25 September 1998, recording the terms of settlement, was signed on behalf of SSL and the Union and sent to the Minister of Labour. But no application was made to discharge the injunction.

[3]There were fresh disputes during 1999 and from time to time the union imposed an overtime ban. No reference appears to have been made to the injunction. But on 31 January 2000 the union wrote to SSL saying that overtime would be banned from 4 February on account of what were described as “unresolved issues” These were unrelated to the 1998 dispute.

[4]The reaction of SSL was to apply ex parte to Wade-Miller J. for an order which she granted in the following terms:

“1. That Messrs Derrick Burgess, Christopher Furbert and Sinclair Smith do attend before one of Her Majesty’s judges…to show cause as to why they ought not to be punished for their contempt of court in disobeying the order of this honourable court dated 16th September 1998. 2. That, in the interim, each and every employee of the plaintiff who is a member of the Portworkers’ Division of the Bermuda Industrial Union is to abide by the terms of the injunction granted by this court on 16th September 1998 and is not to contravene the provisions of the Labour Relations Act 1975 by engaging in irregular industrial action short of a strike [through] complying with the overtime ban put into effect by the Bermuda Industrial Union on 4th February 2000. 3. That any employee of the plaintiff who does engage in such irregular industrial action as aforesaid shall also attend before this court along with Messrs Burgess, Furbert and Smith on the date and at the time appointed in 1 above to similarly show cause as to why he ought not to be punished for his contempt of court.”

[5]The defendants responded with a summons to discharge the 1998 injunction which came before Meerabux J on 16 March 2000. Meanwhile, the notice of motion to commit for contempt was adjourned pending the decision on the injunction. On 6 April 2000 the judge dismissed the summons and affirmed the injunction. An appeal to the Court of Appeal (Astwood P, Cons and Clough JJA) was dismissed on 30 November 2000. The defendants appeal to Her Majesty in Council.

[6]The overtime ban was alleged to be “irregular industrial action short of a strike” within the meaning of the Labour Relations Act 1975. Their Lordships will for convenience call it “industrial action”. The Act defines it as:

“any concerted course of conduct (other than a strike) which, in contemplation or furtherance of a labour dispute - (a) is carried on by a group of workmen with the intention of preventing, reducing or otherwise interfering with the production of goods or the provision of services; and (b) in the case of some or all of them, is carried on in breach of their contracts of employment or otherwise in breach of their terms and conditions of service.”

[7]By section 9, industrial action in an “essential service” is unlawful except in circumstances which both sides accept do not apply. Essential services are specified in the First Schedule and include – “6. Port and dock services including pilotage, tug and line boat operation (not connected with cruise ships).”

[8]Before the judge and in the Court of Appeal it was conceded by the appellants that SSL were providing port and dock services. But Mr Newman QC, who appeared for the appellants before the Board, asked leave to withdraw that concession on the ground that “port and dock services” did not include loading and unloading. In support of this submission, he drew attention to the fact that certain kinds of loading or unloading are mentioned elsewhere in the Schedule:

“11. The loading and unloading of mail, medical supplies, foodstuffs, cattle and chicken feed and all supplies needed to maintain any essential service specified herein and the transport of such goods to their proper destination.”

[9]Mr Newman submitted that “port and dock services” must be construed ejusdem generis with pilotage, tug and line boat operations, which were all concerned with moving the vessel rather than its cargo. Loading and unloading fell under a different heading and were essential services only when they involved the goods mentioned in paragraph 11. He invited the Board to remit the matter to the Bermudian court for a finding as to the nature of the goods which required to be loaded or unloaded at the relevant time.

[10]Their Lordships do not accept this submission. Stevedoring services are the kind of services one would expect to be provided in a port and therefore fall within the desciption of "port and dock services". The fact that they are also said to "include" other things shows that the draftsman, for one reason or another, had some doubt about whether the expression would include pilotage, tugs and so on and wanted to make it clear that it did. But the inclusion of other things cannot narrow the ordinary meaning of "port and dock services". As for paragraph 11, it may well overlap with paragraph 6 but is in some respects wider (covering, for example, loading or unloading for the purpose of carriage of goods by road) and in some respects narrower (covering only loading and unloading and not other port activities.) Their Lordships see no reason to treat the paragraphs (or any of the paragraphs in the Schedule) as mutually exclusive.

[11]The question then is whether the overtime ban fell within the description of industrial action. It was concerted action in furtherance of a labour dispute and was undoubtedly done with the intention of preventing reducing or otherwise interfering with the provision of stevedoring services by SSL. Paragraph (a) of the definition was therefore satisfied. The question is whether it was in breach of the contracts of employment or terms and conditions of service of some or all of the participants.

[12]For this purpose it is necessary first to inquire into what the terms and conditions of service of the port workers were. According to the evidence, they had no written contracts of employment. But there was a collective agreement between SSL and the union, which dealt with such matters as wages and overtime. It is accepted that the workers were engaged upon the terms of the collective agreement so far as they were capable of application to individuals. To that extent, the terms of the collective agreement were impliedly incorporated as the terms and conditions of service of each employee. The collective agreement does not expressly identify which terms are to be regarded as incorporated. That must be inferred from their contents.

[13]The collective agreement deals with overtime in article 23.1 and paragraph 5 of the Schedule. Broadly speaking, article 23 is concerned with the union and paragraph 5 with the employees:

“ Article 23 CONDITIONS OF WORK 1.(a) When vessels are in port, they will be worked in accordance with the terms of this Agreement and as the Company is directed by the vessel's accredited Agent. (b) The Union shall be informed on the day prior to a vessel's arrival if overtime is required or not. Once that declaration has been made it can only be altered with the consent of the Union. (c) The Union undertakes to provide labour as necessary, to make up gangs or work units. (d) Should the Union not wish to work any specific overtime period they will give the Employer five working days notice, in writing, stating the reason that overtime is unavailable for that designated period. (e) In unforeseen circumstances and with mutual agreement overtime may be suspended without the stipulated notice period.” “ SCHEDULE 5. Overtime 1. Double time shall be between the hours of 1730 hours and 0800 hours, Monday through Friday, and 1730 hours Friday to 0800 Monday and on Public Holidays. 2. Work will cease at 1600 hours on Saturdays, unless the vessel is being worked through to finish for sailing that night or next day. 3. It is and has been the custom of the Port that work continue on a twenty-four hour basis when necessary to properly handle the vessels and cargoes. The physical facilities of the Ports and the schedules of the vessels frequently make it necessary to follow the practice of working the vessels until 2200 hours or after. When, by mutual agreement between the Union and the Employer, work has to be carried on after 2200 hours, it will be in accordance with the provisions of this Agreement. 4. With due regard to the collective undertaking of Article 23-1, for the Division to provide gangs for overtime work, any individual Employee assigned to a vessel who will not be available for stated overtime work, must notify his Superintendent or Foreman at least two hours prior to the end of the preceding work period. Failure to report for duty in an overtime period when assigned without having given notice of inability to work may result in disciplinary action. 5. It is further agreed that men may work any night of the week or on Saturdays, Sundays or legal holidays when required, except as otherwise provided in this Agreement.”

[14]For present purposes, the most important of these provisions are Article 23.1(c), which says that the Union is to provide labour to make up gangs or work units (including, as paragraph (d) makes clear, for overtime work) and paragraph 5.4 of the Schedule, which describes that obligation as a "collective undertaking" and goes on to say that individual employees assigned to a vessel for overtime work must not, on pain of disciplinary action, fail to report for duty without having given adequate prior notice. The arrangement is therefore tripartite: a collective obligation on the part of the Union to provide gangs for overtime work when requested and an individual obligation on the part of employees assigned by the Union to those gangs to report for duty. It seems to their Lordships clear from the reference to disciplinary action (which must in this context mean action by the employer) that every employee was obliged, as part of the terms and conditions of employment, to report for overtime duty when so assigned by the Union.

[15]At this point it is important to notice section 6 of the Trade Union Act 1965:

“Subject to this Act, the courts shall not have power to entertain any legal proceedings instituted with the object of directly enforcing or recovering damages for, the breach of … (e) any collective agreement between a trade union and an employer …”

[16]Thus the obligation of the union to provide gangs, being described in the agreement itself as a collective undertaking, was not directly enforceable. The obligation of the employees to report for duty, being incorporated into their individual contracts of employment, was enforceable. But that obligation was contingent upon the union performing its unenforceable obligation to assign them to a gang.

[17]The present proceedings are founded upon section 40(1) of the 1975 Act: “Notwithstanding any other provision in this Act or the Trade Union Act 1965 … any person having a sufficient interest in the relief sought shall be entitled, upon making application to the Supreme Court and upon satisfying the court that there are reasonable grounds for apprehending a contravention of this Act by any person or by any trade union, to an injunction restraining that person or union from so contravening this Act."

[18]This section applies only when there is a contravention of the 1975 Act. But the contravention relied upon, namely industrial action contrary to section 9, requires a breach of an individual contract of employment. It is insufficient that there should have been a breach of a collective agreement.

[19]The way in which the overtime ban was implemented was that the union, in breach of its collective obligations under Article 23, refused to make up overtime gangs or work units. But this was not in itself a breach of any individual contract of employment. No individual worker was able to make up a gang or work unit or had contracted to do so. It is accepted by SSL that this obligation was not incorporated into any contract of employment. The employee’s obligation, on the other hand, was to report for duty if, but only if, he had been assigned to an overtime gang. And the effect of the overtime ban was to prevent this from happening.

[20]Mr Strachan QC, who appeared for SSL, submitted that the decision of the union to call an overtime ban was an anticipatory repudiation on behalf of all its members of their contractual obligation to work overtime. It amounted to saying that they would in no circumstances comply with their obligations. That is how it was put by Astwood P. in the Court of Appeal (at p. 15 of the transcript):

“By their conduct the leaders of the Union, for themselves and on behalf of all their members, had clearly repudiated that part of their contracts that related to overtime.”

[21]Their Lordships do not think that the point can be dismissed in this robust manner. It amounts to collapsing the contractual structure under which the parties had agreed that only performance of an unenforcable obligation by the union could give rise to an enforceable obligation on the part of the employees. Mr Strachan did not contend for an implied term that if the union failed to assign employees to overtime gangs, SSL could do so instead. Their Lordships think that he was right not to do so, because that would contradict the express terms of the collective agreement. Instead, Mr Strachan said that the employees had evinced an intention not to perform their obligations even if properly assigned to an overtime gang. But there is simply no evidence to support such an inference. The decision of the union to ban overtime is quite consistent with a willingness on the part of employees to report for duty whenever called upon to do so.

[22]Their Lordships do not think that it is right to treat the union as if it were simply the sum of the employees. A trade union is not a corporation but it is an association of people bound by rules and its power to act on behalf of its members is limited by those rules. In the present case, the trade union, by the decisions of its officials and meetings prescribed by the rules, had power to decide not to comply with its collective obligations. But it had no power on behalf of its members to decide that they would not comply with their individual obligations. That was a matter for them. In the present case, however, the non-compliance by the union meant that no individual obligation arose and the employees never had to decide whether to comply or not.

[23]Mr Strachan objected that this analysis was artificial and legalistic. The leaders of the union claimed to be acting on behalf of the workers and it was wrong to draw fine distinctions between the obligations of the union and those of the workers. In some situations their Lordships accept that this might be a fair point. In the present case, however, the language of section 6 of the 1965 Act and section 9 of the 1975 Act makes it important to distinguish between the obligations of the union and those of the members. The former are unenforceable and industrial action in breach of the latter is, in essential services, unlawful. Their Lordships therefore think that it would be wrong to ignore the fact that the parties have chosen to include the primary obligation to provide overtime labour among the collective obligations of the union.

[24]Mr Strachan also placed reliance upon the decision of the Court of Appeal in Secretary of State for Employment v ASLEF (No. 2)

[1972] 2 QB 455

. That case also concerned the question of whether the conduct of the union amounted to industrial action in terms of a definition identical with that in the 1975 Act. Railway employees had been instructed by their unions to "work to rule" and more specifically to ban overtime, Sunday and rest day working. "Working to rule" meant giving an unreasonably literal construction to certain requirements of the railway rule book (such as satisfying oneself that the engine is in order) and ignoring others, such as the rule that one should make every effort to facilitate the working of the trains and prevent avoidable delay. And this course of conduct was pursued with the intention of bringing the system to a halt.

[25]The Court of Appeal agreed that the employees were not obliged to work on Sundays and rest days and that refusing to do so, even for the purpose of being obstructive, was not a breach of contract. On the other hand, there was a limited obligation upon individual employees to work 9 hour shifts instead of 8 when rostered to do so and the ban on this overtime was a breach of contract. In addition, the "work to rule" was in breach of a reasonable construction of the rules. So the instructions involved breaches of contract by the employees.

[26]But Lord Denning MR went further and said at p.492 that what made the action a breach of contract was the motive with which it was done: “If [the employee], with the others, takes steps wilfully to disrupt the undertaking, to produce chaos so that it will not run as it should, then each one who is a party to those steps is guilty of a breach of his contract. It is no answer for any one of them to say ‘I am only obeying the rule book,’ or ‘I am not bound to do more than a 40-hour week.’ That would be all very well if done in good faith without any wilful disruption of services; but what makes it wrong is the object with which it is done. There are many branches of our law when an act which would otherwise be lawful is rendered unlawful by the motive or object with which it is done. So here it is the wilful disruption which is the breach."

[27]Mr Strachan relies upon this passage in support of a submission that even if the employees were not under a contractual obligation to report for overtime duty, their failure to do overtime was a breach of contract because it was done wilfully to disrupt the business of their employer. But their Lordships do not think that Lord Denning MR intended to go so far. It seems clear from the examples which he gave that he had in mind that employees may legitimately perform their duties in a way which does not suit the employer (like keeping the train waiting while they check the engine) if they have a bona fide reason but not if their purpose is to be wilfully obstructive. But that does not mean that they are in breach for refusing to do things altogether outside their contractual obligations (like going to work on Sunday) merely because they do not have a bona fide reason for refusal. They do not have to have any reason at all.

[28]The other judges put the same point more narrowly. Thus Buckley LJ said at p.498 (in a passage quoted by Meerabux J and the Court of Appeal in this case) that the "work to rule" involved – “...breaches of an implied term to serve the employer faithfully within the requirements of the contract. It does not mean that the employer could require a man to do anything which lay outside his obligations under the contract, such as to work excess hours of work or to work an unsafe system of work or anything of that kind, but it does mean that within the terms of the contract the employee must serve the employer faithfully with a view to promoting those commercial interests for which he is employed" (emphasis supplied).

[29]Roskill LJ also concentrated upon the way in which admittedly contractual duties had been performed. He said at p. 509: “In legal theory, performance or non-performance of a contract does not depend upon goodwill or lack of goodwill; a contractual obligation can be properly performed albeit without goodwill, it can equally be broken notwithstanding honest if unavailing and well intentioned attempts at performance. But I venture to doubt whether the dichotomy between mere withdrawal of goodwill and the non-performance of a contract is in practice as complete as Mr Pain eloquently urged upon us. Purported performance accompanied by lack of goodwill may all too easily cross the borderline between lawful performance without breach and purported performance in breach either of some express or some implied term in the contract."

[30]It follows that in their Lordships' opinion the ASLEF case does not support the wide proposition for which Mr Strachan cited it. It is in any case difficult to see how the motives of the individual employees, as employees, can be relevant when their action is simply to stay at home because they have not been assigned any overtime work. If they had been assigned work and, as part of a concerted action, all claimed to be sick or have some other reason for declaring themselves not available (see paragraph 5.4 of the schedule) the ASLEF case might have some relevance. But that was not the position.

[31]For these reasons their Lordships consider that the appeal should succeed. There is however an additional matter which was raised before the Board (but not before Meerabux J or in the Court of Appeal) to which their Lordships must draw attention. That is the procedure which was adopted in this case.

[32]The application for an injunction was, as their Lordships have already noted, made ex parte. As a general rule, an ex parte injunction should be granted only if giving the defendant an opportunity to be heard appears likely to cause injustice to the applicant, by reason either of the delay involved or the action which it appears likely that the defendant or others would take before the order could be made and served. Mareva injunctions and Anton Piller orders are examples in this second category which immediately come to mind. The present case was not within this class and it seems to their Lordships questionable whether giving notice would have involved undue delay. The overtime ban was notified with immediate effect on Friday 11 September 1998. The application was made on 16 September after a letter before action, delivered by hand the previous day, which ended:

“Unless we hear from you by return, it is our instruction to proceed to obtain the necessary orders from the court without further reference to you”

. So the solicitors knew when they wrote the letter that they were intending to make an application on the following day. It is difficult in the circumstances to see why the defendants could not have been given notice. There may not have been time to give the full period of notice required by the rules, but that is no reason for giving no notice at all. A telephone call would have been better than nothing. The defendants would have had the opportunity to be represented but the judge could have waived the short notice and made the order if he thought the matter sufficiently urgent.

[33]In England, the matter is governed by section 221(1) of the Trade Union and Labour Relations (Consolidation) Act 1992:

“Where– (a) an application for an injunction…is made to a court in the absence of the party against whom it is sought or any representative of his, and (b) he claims, or in the opinion of the court would be likely to claim, that he acted in contemplation or furtherance of a trade dispute, the court shall not grant the injunction…unless satisfied that all steps which in the circumstances were reasonable have been taken with a view to securing that notice of the application and an opportunity of being heard with respect to the application have been given to him.”

[34]There is no similar provision in the law of Bermuda but their Lordships think that it reflects, in this sensitive area, no more than fairness requires.

[35]The next point to observe is that the ex parte order placed no time limit upon the injunction. In the past, the English practice has varied. In the Chancery Division the practice was to fix a return date so that the court would have the opportunity to decide whether it should be continued after an early hearing at which both sides could be represented. The practice in the Queen’s Bench Division and particularly the Commercial Court was to grant the injunction (as in this case) until trial or further order, leaving it to the defendant, if so minded, to apply to discharge at a time of his own choosing. The emphasis upon judicial case management in the new English Civil Procedure Rules has led to a general adoption of the Chancery practice: see Heathrow Airport Ltd v Gross (13 January 1999) unreported. Their Lordships do not think it would be appropriate for them to prescribe any fixed practice for the courts of Bermuda. There may be occasions when the defendant is clearly able to decide for himself whether to accept the injunction until trial or move for an earlier discharge. In such cases, it may be a waste of time and money to insist upon the parties reappearing in court at a fixed date. But the present case, concerned as it was with a specific flare-up in industrial relations, was one in which it would in retrospect have been wiser to grant the injunction over a fixed and relatively short period. It would then probably have been known on the return date that the dispute had been settled and the injunction could have been discharged.

[36]Instead, the injunction in general terms against the banning of overtime was left hanging over the heads of the defendants, to be invoked more than a year later in the course of an entirely different dispute. Their Lordships consider that its use by SSL in these circumstances was an abuse of process. The effect of the injunction was to ratchet up the consequences of any breach of the 1975 Act from being something liable to be enjoined under section 40 to something punishable by fine or imprisonment. Furthermore, the passage of time meant that the employees against whom the injunction was originally made were not necessarily all the same as those later summoned to show cause why they should not be punished for its breach.

[37]It is generally the duty of a plaintiff who has obtained an interlocutory injunction to proceed to trial and not simply to sit back and rely upon the injunction until such time as the defendant moves to discharge it: see Lloyds Bowmaker Ltd v Britannia Arrow Holdings Plc

[1988] 1 WLR 1337

. Their Lordships do not suggest that SSL were under a duty to proceed to trial in this case but that is only because the parties had agreed to settle the dispute and SSL had no need to rely upon the injunction. By the same token, however, it should have been obvious to both parties that not only was further litigation unnecessary, but that the injunction which had been granted in aid of SSL’s claim in that dispute was spent. SSL were not under a positive duty to apply to court to discharge the injunction they had obtained but their Lordships think it would have been good practice if they had notified the court that the dispute had been settled, so that ancillary orders obtained in connection with that dispute could be disposed of. Instead the parties simply left their forensic debris on the court record. It is however inconsistent with this view of the matter that the injunction should be resurrected as a weapon in a new dispute in 2000.

[38]For these reasons their Lordships consider that even if the overtime ban in February 2000 had been unlawful industrial action, they would have discharged the 1998 injunction and the supplementary injunction made in February 2000. They will humbly advise Her Majesty that the appeal should be allowed and the injunction discharged. SSL must pay the appellants’ costs before their Lordships’ Board and in the courts below.