In Search of the Magic Pudding

The Dollar Sweets Story

Peter Costello

    'I acknowledge receipt of your Telex of 24th July, and advise that the Department of Employment and Industrial Relations is maintaining contact with the ACTU in an attempt to satisfactorily (sic) resolve this dispute'.
    R.J.L Hawke, 26 July 1985.

    'The Secretary of the ACTU, Mr. Bill Kelty, yesterday intervened in the long-running Dollar Sweets Dispute and pledged the union movement's support for the reinstatement of sacked workers'.
    The Age

    'The owner of Dollar Sweets Confectionery might take Court action to gain union compensation for the dispute at his factory ... the ACTU Secretary, Mr. Bill Kelty, said yesterday any damages claim would make it much harder to settle the dispute.'

    'I hope they don't go ahead with it because it would simply make the whole thing harder to settle.'
    The Sun, 30 September 1985

    'If the defendants continue with their picketing, in the form in which they have chosen to conduct it, they may well succeed in forcing the plaintiff family company out of business. This indeed would seem to be their object, although I find it extremely difficult to rationalise such apparently stupid and nihilistic acts.'
    Mr. Justice Peter Murphy, (Dollar Sweets Pty. Ltd. v. Federated Confectioners' Association of Australia & Ors. [1986] V.R 383, 390)

History throws up unlikely heroes. The Dollar Sweets Company is now part of Australian industrial folklore. At the beginning of 1986, few Australians would have known the company existed, although its 'Hundreds and Thousands' had fed the sweet tooth and imagination of Australian children for a generation. No one would have anticipated that in 1985 it would become the subject of a vicious industrial campaign, and few would have predicted that events at Dollar Sweets would signal a turning-point in Australian industrial history.

In the words of the anti-hero of the H R Nicholls Society, Henry Bournes Higgins, the Dollar Sweets Company ushered in 'a new province for law and order' in Australian industrial relations. On one side was Fred Stauder, Manager of a small family company. On the other side was Carlo Frizziero, the Secretary of the small but militant Federated Confectioners' Association. Fred is easy-going, practical and down-to-earth. He is no ideologue. Over the years he had got on quite well with the union and all his employees on the factory floor were union members. Like thousands of small businessmen, all he wanted to do was to run a business and keep it profitable.

Carlo Frizziero was an ideologue. He had taken his union into close association with the small group of far-Left unions which used to congregate around Bill Hartley and the Food Preservers' Union. This group is sometimes called 'the tomato Left' of the Victorian ALP 34 not because they are in the business of food preserving, but because of the one-time use of rotten tomatoes thrown at Right-wing union leaders attempting to enter an ALP conference. Carlo has been a visitor to Gaddafi's Libya.

To fully understand the Dollar Sweets story, we need to remember the times. In March 1983, the first Hawke Government was elected and a National Economic Summit was convened to map out economic policies. An invited audience which included representatives of employer and union bodies found remarkable agreement on the direction future policies should take. In particular, there was unanimous agreement at the Summit on a return to centralised wage fixing.

The Arbitration Commission duly introduced centralised wage fixing in September 1983. For the following two years it automatically increased wages in line with prices. All a union had to do was give a commitment it would abide by the Arbitration Commission's principles and its members would receive an increase. The Federated Confectioners' Association was one of the few unions that refused that commitment.

By so refusing the FCA denied its members the automatic wage increases approved by the National Wage Bench. Dollar Sweets was not legally obliged to pay any such increases to its employees as a result. But the company and its employees came to an agreement in November 1985. If the employees agreed to abide by the principles (which the union would not), the company would pay them the increases denied by the union's intransigence. Fred Stauder's 27 employees, through factory representatives, were only too happy to agree to this proposal. All went well until the month of July 1985.

The relevant award for confectionery workers in July 1985 prescribed a 40-hour week (it still does). Dollar Sweets was paying employees full wages for a 38-hour week. This was not enough for the union. It demanded a reduction in hours (at full pay) from 38 to 36 hours. This was in breach of Arbitration Commission wage-fixing principles. This was in breach of the 1983 agreement Fred had reached with his employees. This was beyond the award.

In July 1985, strikes commenced in support of a 36-hour week. Dollar Sweets informed its employees that if they wished to work a 36-hour week, they would have to find an employer who could afford to pay it 34 Dollar Sweets could only afford to pay them for working a 38-hour week. Fred Stauder offered to open up the books of his company so union officials could examine them and ascertain for themselves that the company could not afford a 36-hour week. The union did not take up the offer.

An offer was therefore put to the 27 employees. If they wished to continue, as agreed, to receive over-award pay for a (below award) 38-hour week, they could do so. If they wanted to work a 36-hour week, they would have to find it elsewhere. Twelve of the company's 27 employees agreed to work on the existing conditions. The other 15 refused to work unless a 36-hour week was introduced. They continued to strike under the direction of the union. The company advertised for employees to fill their places. It was flooded with offers and 15 new employees commenced work on a 38-hour week almost immediately.

From 22 July 1985 the 15 'concomitants' and their union officials commenced a continuous picket of the Dollar Sweets factory in the Melbourne suburb of Malvern. Despite the fact that the picketers slept in vehicles parked outside the premises, the local council was unable to find any breach of health regulations. However, acting on an anonymous 'tip off', the council 'revealed' to the company that a back door was not fully fly-proofed and workers were wearing their overalls to and from work in breach of the Cleanliness (Food Drugs and Substances) Regulations 1984.

At first the picketers merely tried to stop employees entering and leaving the premises. Later, the focus turned to drivers. After a few weeks events at the factory became more serious. Fred Stauder received death threats. Bomb threats were made against the factory. The locks on the factory doors were destroyed and part of the premises was set alight in an attempted arson.

In mid-August, a driver making a delivery was assaulted and his truck was vandalised. Some of the picketers were subsequently convicted of criminal assault in relation to this incident.

The company appealed to the Premier and the Minister for Police to station a police guard at the premises. The Premier and Minister thought this was unnecessary. In any event, they advised, this was a matter for the Chief Commissioner of Police. The Chief Commissioner did not seem to think a permanent police presence was warranted.

The company's insurers were under no such doubt. They threatened to void the insurance policy because they considered the factory a bomb and arson threat, and insisted that the company pay for armed security guards to be stationed 24 hours a day at the premises as a condition of insurance. For the duration of the picket the company paid $70,000 for armed security guards.

In August 1985, all telephone and telex wires to the factory were deliberately severed. When Telecom was called to repair the line, its employees refused to cross the picket.

Eventually, Telecom management repaired the line late at night, apparently escaping the notice of the picketers.

It was not just the company, its management and its employees that were subjected to intimidation. Most of the major transport companies refused to make deliveries to Dollar Sweets because this would involve 'crossing a picket line'. Some of the large suppliers refused to supply Dollar Sweets at all lest they incurred the wrath of the union. One or two courageous individuals were prepared to take deliveries in and out of Dollar Sweets. For his trouble, one of them was assaulted and he suffered permanent damage to his eyes. In a military-style operation, union officials mounted a 'tail' on those drivers who braved the picket lines.

The irony was that the company was only doing what was required of it by the wage-fixing principles. The wage-fixing principles prohibited a reduction in the working week. In blatant defiance of the Commission's principles, the union sought it. Since it was scrupulously abiding by the Arbitration Commission's own principles, the company sought the assistance of the Arbitration Commission to relieve its plight.

The Arbitration Commission intervened. It gave a recommendation. It recommended that the picket be disbanded. It was ignored by the union.

Mr Hawke and Mr Willis promised to get their Departments to look into the matter. These Departments promised to get the ACTU to help. Mr Cain promised that his Department would look into it. The ACTU looked into it and decided to support the union. The company kept on bleeding. Its employees kept on being harassed. The employees were told that they would be sacked once the union had broken the company. One of the union's advocates later promised, in proceedings in the Arbitration Commission, that those employees would never work again anywhere in Australia.

In December 1985, after all its avenues had been exhausted, after it was clear that the Arbitration Commission was powerless to do anything, the company took the matter to the Victorian Supreme Court. It relied on general common law principles to seek an end to intimidation, nuisance and conspiracy to injure its business. Its claim was upheld. The Supreme Court gave orders to restrain the picket on 12 December 1985. The picket ended the next day, after 143 days.

In April 1988, by a settlement between the parties, the union paid the sum of $175,000 to Dollar Sweets as compensation for the losses it suffered as a result of the picket. It is, to my knowledge, the only time a union has paid common law damages to an employer for losses suffered through picketing in Australia.

I now wish to draw out some general observations and lessons from the Dollar Sweets story.

1. It is a very significant legal milestone

Before the December 1985 judgment in the Dollar Sweets case, there was considerable doubt about whether the State Supreme Courts would exercise common law jurisdiction to grant injunctive relief against unions involved in industrial disputes. It was argued that since the Commonwealth Parliament had set up a legislative scheme for dealing with industrial disputes (through compulsory arbitration), the Courts would not (and ought not) exercise general reserve common law jurisdiction. Indeed this was put on behalf of the unions in the case. The argument was rejected and the Court granted the orders sought.

The Dollar Sweets judgment confirmed not only that the State Courts will exercise common law jurisdiction in industrial disputes but that such powers can prove effective in bringing unlawful action to an end.

2. The case had very significant practical effects

As the Dollar Sweets case illustrated, unions had not, by 1985, achieved de jure immunity from the common law. What they had achieved was de facto immunity.

The number of occasions on which successful action had been taken against unions at common law was so negligible that, for all practical purposes, the law was extinct. Those practitioners who were aware of common law remedies (and there were very few of them) seldom advised parties of their common law rights, and if they did, almost universally recommended against such proceedings. The probabilities of common law actions being taken were so remote, they certainly had no deterrent or restraining effect on trade union behaviour.

The Dollar Sweets action shattered conventional thinking on this issue and, of course, it ended the long period of practical immunity from the common law which unions had enjoyed. One of the reasons common law actions were not taken was a fear of the possible reaction to the ending of the unions' privileged exemption from the law. There was no doubt the union movement would resent attempts to bring it back within the exercise of common law restraints but there was considerable anxiety about the form its resentment would take. It was feared that unions would seek to exert such industrial pressure as would force the Courts and the litigants to back down. It was certain that unions would make the exercise so expensive and the personal cost very high to ensure others would not be foolish enough to attempt it. For Dollar Sweets the exercise was expensive and the personal cost high. But it turned out to be less expensive and less costly than the nightmare of intimidation which the Court action ended.

The Dollar Sweets Company not only survived the bringing of a common law action but recovered compensation for its losses. Far from becoming an example of the folly of tackling unions in the Courts, it became an example of the reverse. Only in one sense was the company turned into an example of the personal cost of pursuing legal remedies. This was in the sense that it was labelled, probably irrevocably, with the modern hate words used by a significant sector of metropolitan press dailies 'New Right', with all the abuse which many journalists attach to those words. I will consider the role of the press later on.

3. The fate of the Industrial Relations Bill 1987

The Commonwealth Industrial Relations Bill 1987 was the product of the Hancock Report on Australian Relations Law and Systems 1985. The Bill was withdrawn on the eve of the 1987 Federal Election as a result of unanimous and unprecedented opposition from employers and, in particular, unanimous opposition to proposals to restrict and modify the application of common law and Trade Practices actions to trade unions.

One of the findings of the Hancock Report was that it was 'vain' to assume unions could be made to comply with arbitral decisions through enforcement procedures (see Volume 2 pp, 632-3). What the Dollar Sweets case illustrated was that it was not vain to hope that unions could be made to comply with judicial decisions.

This is why the proposals in the 1987 Bill provoked such an outcry. They were designed to restrict and modify proven enforceable sanctions against unions.

If the Bill had been introduced in 1985, there would have been no similar outcry. It would only have proposed taking away theoretical rights 34 rights which might have theoretically existed but which had not been proven in practice for a long time. What's more, in 1985 there was no evidence to show these rights, if taken, could prove effective or enforceable in the industrial context. In 1987, after the Dollar Sweets case had proven these rights, it was clear for all to see that the 1987 Bill proposed to remove substantive and valuable rights.

4. The judicial safeguard

Most of the overseas and Australian industrial disputes in which militant unionism has been defeated have involved a substantial use of state power through the police force: the Coalminers' and Wapping disputes in the United Kingdom, the SEQEB dispute in Queensland. State enforcement agencies played no role in assisting the Dollar Sweets Company against picketing. To a large degree it was forced to go to the Courts as a result. The Courts ordered the picketers to observe the law. The State enforcement agencies could have effectively done the same thing and made Court involvement unnecessary. They certainly could have prevented some of the worst aspects of the picketing from occurring in the first place.

The case illustrates the way in which a party can achieve private law enforcement in the absence of government co-operation.

5. The reaction of the media

When the Dollar Sweets Company successfully obtained Supreme Court injunctions, the overwhelming media reaction (with the exception of 'The Age' which was tepid even from the beginning) was supportive. The press which had followed 143 days of violence and intimidation congratulated the company on bringing an end to its troubles through the legal process and, in the course of doing so, blazing a new trail for ending destructive industrial action.

There was little support for the Confectioners' Union which was perceived to be a renegade even within the wider union movement.

Some time later, perhaps with the discovery of the 'clandestine' H R Nicholls Society, there was a shift in press opinion at least amongst reporters who write on industrial affairs. The Dollar Sweets action came to be frequently described as 'confrontationist' or 'New Right'. Presumably, it was 'confrontationist' to seek the assistance of the Courts in upholding the law. This was possibly based on the naive belief that everything can be settled by agreement with unions, and the involvement of the Courts amounts to wielding a big and unwarranted stick.

Part of this reaction was just sheer ignorance of what had occurred at Dollar Sweets. Part of it was caused by a very good publicity campaign by the union movement which whipped up hysteria (at least amongst journalists) over the so-called 'New Right'. Part of it was created by the aversion of certain journalists to some who grandstanded over the case.

The suggestion that the company was confrontationist is nonsense. The company sought to confront no one. The company and its employees had a very good working relationship and a free agreement on working conditions which substantially benefited the employees. After it was confronted with demands which were in flagrant breach of this agreement, it stood firm. Perhaps, like the victim of a rape, it was expected to roll over and co-operate. It did not do so. Because it refused to be ravaged, some silly and immature 'commentators' concluded it must have been confrontationist.

Although lt is rather mind-numbing to follow all the twists, turns and self contradictions of various journalists, one other press development in relation to the Dollar Sweets case must be mentioned. Ms Pamela Williams writes on industrial relation for the 'Financial Review'. She runs a pretty solid industrial relations club-type line, and is a very good indicator of the prevailing views amongst that group of journalists at any particular time. She signalled a new shift in the line on the Dollar Sweets after the action was settled in April 1988. Far from being confrontationist and beyond the pale, Pamela decided that the Dollar Sweets action was pretty standard fare. This was not an unusual situation at all, Pamela confidently informed her readers, major employer groups had been doing such things for a long time and, what is more, they did it quicker and faster.

One cannot entirely blame Ms Williams for writing this line. It was surprisingly similar to that being pushed by some employers at around the same time. She was used as a media outlet for those who wanted to denigrate the significance of the action. It was very hard to understand, however, why people who had been sent to Coventry for breaking the rules in taking such hard, 'confrontationist' and 'New Right' actions against a union should have suffered so much for doing what had always been done by those consistently being praised for being reasonable, moderate and consensual.

This was pointed out in a brilliant rejoinder by the President of the State Chamber of Commerce and Industry (Victoria), Michael Pointer (Financial Review 27 April 1988). In reality, Ms Williams's last and second-last shift in opinion was wrong. The action of the company was not usual or standard at all. It was highly unusual and quite irregular. This was why it had attracted so much press interest. But the company's actions were not confrontationist they were in self defence.

6. The long-term effects

In the first analysis, we should bear in mind the long-term effects on the Dollar Sweets Company. It not only won the dispute (preserving a 38-hour week), it recouped the losses it suffered through a bitter industrial dispute. In disputes which come before the Arbitration Commission, an employer, even if it is found to be right, never recoups the cost of industrial disputation. The Dollar Sweets Company is healthier than ever, and has recently moved to a new and larger property. Although one could never financially win from a dispute such as this, the company has not substantially lost.

In the second place, the case has illustrated that there are alternatives to being overrun by militant industrial action. On several occasions during the dispute, Fred Stauder was advised by others in the industry to give in to the union claims. He was told he could never win, and it was better to capitulate early rather than late.

Fred Stauder proved he could win, and did. He serves as an example to others that acceding to unwarranted demands is not inevitable. He should not be taken as an example of the inevitability of winning, however. What the Dollar Sweets story illustrates is that, in appropriate cases, the common law provides an effective remedy against unlawful action.

This is a point which has not been lost on unions. I would not for a moment recommend that every employer faced with industrial action sue every union. Legal action is expensive and time-consuming. The great thing about Dollar Sweets is that it acts as an example and a deterrent. It is in the interests of all parties to industrial relations to know the limits of acceptable behaviour. Unfortunately, in the past there have been no limits to acceptable behaviour from unions. As a result, everything has become permissible. The drawing of acceptable lines of behaviour circumscribes extreme and damaging action. Where a company like Dollar Sweets punishes such action, it not only reinforces the limits of acceptable behaviour but serves as a warning to anyone tempted to transgress them in the future.

The Meat Workers' Union in Victoria is a very militant union and, if not 'tomato Left', certainly close to it. In the latest issue of its journal ('The Meat Worker'), it refers to a dispute in which it was engaged at Oakleigh Abattoirs in Victoria. The union commenced a picket at the premises on 29 February 1988. On 2 March 1988, Solicitors for the Abattoirs wrote to the union secretary in these terms:

    'The actions of your union are causing serious loss and damage, and unless those actions cease immediately our clients will have no alternative but to obtain appropriate relief by way of injunction from either the Supreme Court or the Federal Court, together with an associated claim for damages. In this connection we would refer you to the judgment of Murphy J. in Dollar Sweets Pty. Ltd. v. The Federated Confectioners' Association of Australia (1985) V.R. 383.'

The remainder of the story is taken up by the above-mentioned journal (Autumn 1988):

    'The threat of legal action contained in the Solicitors' letters had great substance. The law did allow the companies to seek rapid relief by way of injunction. It did afford them an action for damages. The picket line was lifted.'

The Dollar Sweets company rewrote the manual on what are the acceptable limits of industrial action by unions. Its precedent prevented damaging and unlawful picketing at Oakleigh Abattoirs. The Dollar Sweets Story is the story of hundreds and thousands of other businesses around Australia who have and will be assisted by the Dollar Sweets precedent. And the Dollar Sweets Story is all about a new development in an old story; the story of how a small confectionery manufacturer made Australian industrial relations 'A New Province for Law and Order'.