Aldi Foods Pty Limited v Shop, Distributive & Allied Employees Association
[2017] HCATrans 149
[2017] HCATrans 149
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Melbourne No M33 of 2017
B e t w e e n -
ALDI FOODS PTY LIMITED AS GENERAL PARTNER OF ALDI STORES (A LIMITED PARTNERSHIP)
Appellant
and
SHOP, DISTRIBUTIVE & ALLIED EMPLOYEES ASSOCIATION AND FAIR WORK COMMISSION
First Respondent
FAIR WORK COMMISSION
Second Respondent
KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J
TRANSCRIPT OF PROCEEDINGS
AT BRISBANE ON WEDNESDAY, 9 AUGUST 2017, AT 10.18 AM
Copyright in the High Court of Australia
MR G.J. HATCHER, SC: May it please the Court, I appear with my learned friend, MS A.L. PERIGO, for the appellant. (instructed by Enterprise Law)
MR W.L. FRIEND, QC: If the Court pleases, I appear with my learned friends, MS A.M. DUFFY and MR C.J. TRAN, for the first respondent. (instructed by AJ Macken & Co)
KIEFEL CJ: Yes, Mr Hatcher.
MR HATCHER: The Court once more travels into the delightful area of industrial jurisprudence. In the particular area largely untrammelled by previous authority other than this particular case, the questions that arise are of substantial importance in that jurisdiction and a brief exposition of the facts leading to the case will explain why that might be so.
ALDI Food Stores, the appellant, operates grocery stores throughout the Commonwealth of Australia. Its principals are from Germany. They commenced in Australia over a decade ago. They commenced from a small base and have expanded rapidly. They have a particular mode of operation whereby they establish a business surrounding a distribution centre and that becomes a business of itself, as it were. So the distribution centres that services the group of stores are all an operational unit.
That is not a convenient way of operating consistent with the operations of the Fair Work Act. The Fair Work Act contemplates that the enterprise will have an agreement that will cover all its employees, but it does allow for exceptions where a part of the business is geographically, operationally or organisationally distinct. ALDI was able to satisfy the Fair Work Commission early in its operations that the way in which it operated involved such a separation. So each ALDI distribution centre, and the stores it services, has its own enterprise agreement.
As ALDI has expanded, that has led to the difficulties of transferring employees from one region to another region, operating under one agreement to go under a different agreement. Within six weeks of the Regency Park agreement being made, there had been such a situation in Queensland. There was only distribution centre, the Stapylton distribution centre. There was a new distribution centre established at Brendale. Some new employees were employed; some employees transferred from the Stapylton operations, whether they be in the warehouse, transport or some of the stores went to be serviced under the Brendale distribution centre.
A new agreement was made. That agreement was made prior to the distribution centre operating. So a very similar set of circumstances. Employees applied for transfer to the new operation or had accepted employment in the new operation, even though they were employed temporarily under the Stapylton agreement. An agreement was arrived at with all those employees who had agreed to take employment in the Brendale operations.
The first respondent was a bargaining representative in those negotiations. It embraced the materials that ALDI had filed in the commission for approval of the agreement, and the agreement was in due course made.
If the Full Court be right as to the South Australian operation, the Regency Park operation, then it must put at issue what occurred in the Brendale operation and, indeed, what had occurred in every expansion operation of ALDI’s prior to that. We acknowledge that in the Regency Park operation there was no SDA bargaining representative. That was a result of none of the employees asking to be represented by the SDA. It is not something ALDI influenced.
I should say that that factual background appears in the materials from appeal book 305 to 307. To the extent that one might see in the materials some suggestion that material was kept from the Deputy President, it is not suggested that there is any active misleading of the Deputy President, only that things that might have been disclosed were not disclosed. The materials were exactly the same as those filed in Brendale, and there was no reason for ALDI to think that the approach would be any different than it was in Brendale. ALDI was working on the concept that when an employee accepts employment under an enterprise agreement he is covered by that enterprise agreement, and that is a matter that we propose developing.
One other matter I should concede at the outset is that before the Full Bench of the Commission our learned friends had constructed an argument that because ALDI had not previously had operations in South Australia, in fact the South Australian operations were a greenfield operation, and they being a greenfield operation they should have been negotiated with the union. That is the way in which it was argued before the Full Bench of the Commission.
We pointed in those proceedings to the provisions of section 172(2)(b) of the legislation. It is dealt with in our written submissions and I do not need to take the Court to it at the moment. But that provision says if you have engaged any employees essential to the operation of a business you cannot have a greenfields agreement, even if it is a business you propose establishing, so a business that is not established but you have employees engaged. In this case there were plainly employees engaged. A number of employees had asked for transfers to the South Australian operations and 17 had been accepted.
When it came to the proceedings in the Full Court our learned friends ran the argument in a somewhat different way. They focused upon the terminology in the legislation, the alteration from the earlier sections will be covered to sections 186 and 187, which focus upon employees covered. Unfortunately, I will concede that I followed them on that merry chase.
We contend, and contended there, that the legislation was not intending to draw a distinction between employees actually working in the business and employees who were engaged to work in the business by the change in terminology from 172 through to 188. In retrospect, that is a distraction. The real question is: what does the word “covered” mean in the legislation?
When one focuses upon what the Full Court of the Federal Court said in John Holland – I am not turning to that immediately, but just to give the citation, Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (2015) 228 FCR 297. It is at tab 1 in the bundle of authorities. The Full Court in that case had considered some later subsections in section 186 of the Workplace Relations Act and found that, to make sense of “covered” in a statutory provision, one had to have regard to employees whose employment would come to be regulated by the agreement. The Court will have seen our submissions. We say that that same description can be applied in the 186 one, and that is in fact what the Full Bench had done. In retrospect, that is what we should have adhered to before the Full Federal Court.
Against that brief background can I then proceed to the outline of oral argument that we have provided. The proceedings below involved a jurisdictional challenge to the decision of a single member of the Fair Work Commission and the subsequent decision on appeal to the Full Bench. It is not and was not suggested that either the single member or the Full Bench did not have jurisdiction to embark upon the inquiries they embarked upon. It is not a question of a lack of power; rather, it is a question of the exercise of that power. The first respondent’s challenge was to the exercise by the Full Bench of its jurisdiction to entertain the appeal, not that it could not entertain the appeal but how it went about entertaining the appeal.
The Full Federal Court determined by a majority that the single member and the Full Bench of the Commission had fallen into error. Now, when we come to deal with coverage, it is appropriate to have regard to the legislation. It is reproduced at tab 5 of the bundle of authorities, and I might immediately turn to that. Section 51 provides:
(1)An enterprise agreement does not impose obligations on a person, and a person does not contravene a term of an enterprise agreement, unless the agreement applies to the person.
(2)An enterprise agreement does not give a person an entitlement unless ‑
it applies. Section 52, then deals with when it applies:
(1) An enterprise agreement applies to an employee –
relevantly, if:
(a) the agreement is in operation; and
(b) the agreement covers the employee . . .
(c)no other provision of this Act provides, or has the effect, that the agreement does not apply ‑
Then, section 53:
(1) An enterprise agreement covers an employee –
in subsection (1):
if the agreement is expressed to cover (however described) the employee or the employer.
Section 54, then:
(1)An enterprise agreement approved by the FWC operates from:
(a) 7 days after the agreement is approved; or
(b)if a later day is specified in the agreement – that later day.
Now, our friends have helpfully included in the book of authorities, an extract of the explanatory memorandum. Regrettably, it stops one paragraph too short. Can I hand up a copy of clause 205 of the explanatory memorandum? Clause 205 is in these terms:
Sub‑clauses 47(3), 48(3), 52(2) and 53(6) make it clear that a reference in the Bill to a modern award or enterprise agreement applying to, or covering, an employee is a reference to the award or agreement applying to, or covering, the employee in relation to particular employment. This means that, if a national system employee has more than one job, each job is treated separately in determining the effect of an award or agreement on the employee’s entitlements in relation to each job. For instance, the rule that only one enterprise agreement can operate in relation to a person at a particular time (see clause 58) does not mean that two agreements cannot cover, or apply to, an employee in relation to two different jobs.
What we would wish to develop is a proposition that when one looks at the question of coverage, one looks to the agreement or the contract of employment of the employee or the contracts of employment of the employee and ascertain whether that contract requires work within the application of a particular agreement or agreements. If they are required to work under more than one agreement under their contract, both agreements cover them.
Now, if I could then turn within the legislation to section 173:
(1)An employer that will be covered by a proposed enterprise agreement that is not a greenfields agreement must take all reasonable steps to give notice of the right to be represented by a bargaining representative to each employee who:
(a) will be covered by the agreement; and
(b) is employed at the notification time for the agreement.
There is no dispute between the parties that these employees fell into that category. Section 180, then, which deals with pre‑approval requirements:
(2) The employer must take all reasonable steps to ensure that:
(a)during the access period for the agreement, the employees . . . employed at the time who will be covered by the agreement are given a copy of ‑
certain materials. Section 181:
(1)An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.
Section 182:
(1)If the employees of the employer . . . that will be covered by a proposed single‑enterprise agreement that is not a greenfields agreement have been asked to approve the agreement . . . the agreement is made when a majority of those employees who cast a valid vote approve the agreement.
Then, 186:
(1)If an application for the approval of an enterprise agreement is made under subsection 182(4) or section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.
. . .
(2) The FWC must be satisfied that:
(a)if the agreement is not a greenfields agreement – the agreement has been genuinely agreed to by the employees covered by the agreement ‑
That is the change in tense that so occupied the Full Court. I should also draw attention to subsection (3):
(3)The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.
That, and subsection (3A), were the subject of the Full Court of the Federal Court judgment in John Holland. Then, section 188:
An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a)the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement –
and those provisions are set out. So, again, it talks of the employees covered by the agreement at that point.
If I could now ask the Court to turn to the appeal book and the reasons of Justice White who delivered the majority judgment? But I note that Justice Katzmann agrees in totality with Justice White’s reasons on the two matters the subject of these proceedings at appeal book page 380, paragraph 54 of the judgment. Justice White’s judgment at appeal book 409, paragraph 177, summarises his judgment in these terms:
For the reasons given above, I consider that the SDA has established jurisdictional error by the FWC in two respects. First, in the decision of Bull DP on 22 September 2015. The jurisdictional error lies in the failure of the Deputy President to address the question required by s 186(2)(a), namely, whether the ALDI Regency Park Agreement 2015 had been genuinely agreed to by employees “covered by” the agreement.
Could I ask the Court then to turn to the Deputy President’s decision which is found in the appeal book at page 44? At page 45, his Honour says at paragraph [12]:
I am satisfied that each of the requirements of ss. 186, 187 and 188 of the Act as are relevant to this application for approval have been met.
So, his Honour describes himself as having been satisfied that section 186 was met. It is true it is in fairly simple terms but it is a case that proceeded before his Honour on the papers. Could I ask the Court to turn to the papers that were before his Honour and, most particularly, the:
Form F17 – Employer’s statutory declaration in support of an application for approval of an enterprise agreement
That is reproduced at appeal book page 8. The Court will see that this is a prescribed form that is filled out. Then, at page 13, the material that was before his Honour the Deputy President to provide his satisfaction is set out. Section 2.10 is in these terms. The question is asked:
How many employees will be covered by the agreement?
Answer “17”:
How many employees cast a valid vote?
Answer “16”:
How many employees voted to approve the agreement?
Answer “15”. So, the expression “will be covered” has being picked up by the draftsman of the form. It is answered truthfully. Seventeen employees will be covered by the agreement. Clearly, at that point in time, no one was focusing on the difference in tense that became so important to the Full Court. And, it should be said that by operation of section 184, the agreement was made by the time this form was filled out because the agreement is made when the employees have voted on it.
Given that that is the prescribed form, if, as Justice White found, the Deputy President was not entitled on the basis of that form to be satisfied that the statutory requirements were met and, accordingly, there was jurisdictional error and, accordingly, the agreement is a nullity, then every agreement that has been before the Commission and dealt with on the papers, must fall into the same category because that is the prescribed form, that is what has been done, that is what the cases have been decided on.
At one point, not much may have turned on that because there was a privative provision in the legislation. As our friends point out in their submissions, quite properly, that privative provision appears to have disappeared after nearly 100 years – perhaps more than 100 years in retrospect – with the passage of the Fair Work Act. It might be observed that developments in administrative law perhaps made it otiose, in any event.
GAGELER J: Is it the position of both parties that the absence of a privative clause means that relief is available on the basis of error of law on the face of the record?
MR HATCHER: Your Honour, we will say that relief is not available on the basis of error of law on the face of the record but we will not do it on the basis of the absence of the privative provision.
GAGELER J: Has that question been addressed in the Full Court of the Federal Court at all? That is, the availability of certiorari?
MR HATCHER: It has, your Honour. In these proceedings, the Court did not deal directly with it but Justice Jessup, who was in the minority, conceded that if the appellant, or the applicant, in those proceedings could have pointed to an error of law, on the face of the record, certiorari would have been available. There are cases where it has been done. Though, I know of no cases – speaking on my feet at the moment – where it has been done in the absence of what might be characterised as jurisdictional error.
GAGELER J: Thank you.
MR HATCHER: If we turn then to the decision the Full Bench was exercising on appeal, the appeal was by way of a rehearing and jurisdiction only existed if error was ascertained. That probably was not contentious. If authority be needed, it is to be found in Coal & Allied Operations and, more particularly, in an earlier High Court case in the same year – I think even in the same report – Allesch v Maunz – and I undoubtedly have mispronounced that as I do to many things. Allesch is reproduced in the bundle at tab 11. It is reported in (2000) 203 CLR 172.
Our friends in their submissions appear to accept that the appeal was by way of rehearing and error was necessary. However, certainly, the Full Bench were alive to it and dealt with it directly in transcript. But, regrettably, the majority in the Full Court appear to have departed from that. In discerning error, it was necessary to distinguish between discretionary and non‑discretionary aspects of the appeal and the Full Bench was alive to that as well.
The majority in the Full Federal Court held that the Full Bench was required to determine the matter for itself because fresh evidence had been admitted. That appears in the appeal book at page 408 in paragraph 170 of his Honour Justice White’s reasons. It appears in fairly emphatic terms in the second sentence:
Once it had received the further evidence, the exercise of its appellate function was not constrained by the need to identify error by Bull DP. Instead, it was required to give its own decision on the evidence before it.
It is then said that:
By misunderstanding its task in this way, the Full Bench did not exercise its jurisdiction as required by law.
KIEFEL CJ: You are speaking now about the better off overall test.
MR HATCHER: No.
KIEFEL CJ: The evidence relating to that, are you not?
MR HATCHER: That was the evidence; yes, your Honour.
KIEFEL CJ: Yes.
MR HATCHER: It did relate to the better off overall test, yes. There was evidence on the question of coverage as well but that evidence was not in the least contentious. Our client was content to concede that the factual basis that was sought to be put on coverage, it is no secret that there were no employees actually working in South Australia at the time the agreement was made.
NETTLE J: Mr Hatcher, if the Deputy President and the Full Bench were wrong about the better overall test, such that it were requisite to look at the evidence rather than just the clause for making up, then the Full Bench would have been required to consider the matter themselves on the basis of the evidence, would they not?
MR HATCHER: Your Honour, they would have still been required to discern error but ‑ ‑ ‑
NETTLE J: But the error would be in ‑ ‑ ‑
MR HATCHER: ‑ ‑ ‑ the error may be disclosed by the new ‑ the fresh evidence.
NETTLE J: Well, by referring only to the catch‑up clause rather than to a requirement that, in truth, the employees would be better off overall, if that be the correct test.
MR HATCHER: Your Honour, that is a matter that I do wish to come to ‑ ‑ ‑
NETTLE J: I understand, but just assuming for the moment, without in any way portending what the result will be, if that were incorrect, then it would have been the function of the Full Court to reconsider the matter themselves on the evidence.
MR HATCHER: Yes.
NETTLE J: Yes, thank you.
MR HATCHER: Whether that is amenable to relief in the High Court or under 39(b) is another question ‑ ‑ ‑
NETTLE J: Yes.
MR HATCHER: ‑ ‑ ‑ that I wish to come to. The majority held that the Full Bench was required to determine the matter for itself, fresh evidence having been admitted. In this finding, the majority erred. So much is apparently conceded by the first respondent. The first respondent contends that the Full Bench was required to have regard to fresh evidence as admitted and we agree. However, it is unclear whether the relevant evidence in relation to the BOOT was admitted and we give references there for that proposition. The Full Bench was asked to rule a number of times on the admission of the evidence because there was a very real and vigorous question as to the weight that could be attached to the fresh evidence ‑ this is just as to the BOOT – and ‑ ‑ ‑
KIEFEL CJ: Well, the Full Court though considered it had been admitted.
MR HATCHER: They do, by reference to a paragraph where the Full Bench say that we have admitted fresh evidence but when one reads ‑ and these are the references that we have provided ‑ a little bit further, the fresh evidence they are referring to is the evidence as to coverage.
KIEFEL CJ: So, it is your contention the Full Court was wrong on this point.
MR HATCHER: Well, all three of the Full Court were content to accept that the evidence was in.
KIEFEL CJ: But is it not necessary to your argument that the Full Court was in error about that?
MR HATCHER: It is not necessary to our argument, your Honour. We say that the evidence that was produced was of so little weight that the Full Bench was entitled to disregard it, if it was admitted.
KIEFEL CJ: Let me put it another way. It is necessary for our consideration to know whether or not the Full Court was in error, is it not?
MR HATCHER: No, your Honour, because if the evidence was of so little weight that the Full Bench was entitled to disregard it, then it is not jurisdictional error for the Full Bench to have disregarded it and it was wrong for the Full Court to find such jurisdictional error.
KEANE J: Is there an indication that the Full Bench did regard it as of so little weight that it could be disregarded?
MR HATCHER: Your Honour, it is not a strong indication. It is referred to in our submissions. The Full Bench deal with one aspect of the written submissions by the then appellant and ignored the other aspects that relied on the evidence that had been objected to.
KEANE J: But did they not do that on the basis that clause 13 rendered the argument irrelevant, the argument supported by the fresh evidence relating to different rates?
MR HATCHER: Your Honour, there is no doubt that the Full Bench decisions are cryptic on this point but they do not just say clause 13 is a complete answer. They say, we are satisfied that there is no error in the Deputy President’s decision. Now, the Deputy President had before him an agreement that was in almost identical terms to one that had been approved with the support of the SDA six weeks earlier that was almost identical in terms to four others, or five others, that had been approved in almost identical terms with the support of the SDA.
The Full Bench had in front of it the form 18, which is the statutory declaration by the first respondent in the proceedings that had gone forward some six weeks earlier, in which it had said that the figures and the rosters and the basis upon which the BOOT test would be applied were provided by the employer in that Brendale agreement, we are all agreed to and appropriate, so far as the SDA was concerned, and they were now adducing material that was in direct conflict with that earlier statutory declaration that was in evidence. And so ‑ ‑ ‑
KEANE J: Well, what you just put might have been a basis on which the Full Bench might have said, well, the SDA is blowing hot and cold about this and, therefore, we treat what is being adduced here as being of little weight. I mean, they might have done but they did not, did they?
MR HATCHER: They did not, no. It is certainly cryptic.
KEANE J: Well, it might be said that on a fair reading of what they did say, that they regarded the matters raised by the fresh evidence as irrelevant because of clause 13.
MR HATCHER: Except, your Honour, that they see the need to say, we are not satisfied that there is any error in the Deputy President’s decision and they do know that the Deputy President exercised an independent review of the agreement because, notwithstanding the fact that there had been an agreement in almost identical terms ‑ I think in identical terms, approved some six weeks earlier ‑ his Honour obviously went through the agreement very closely because he insisted upon an additional undertaking in relation to cold work disability.
KEANE J: But the Deputy President did not have this material before him. I mean, of course in a sense he could not have been in error in failing to deal with it correctly because it just was not before him. I mean, you cannot get something wrong if it is not contended before you.
MR HATCHER: But again, if the Full Bench was of the view that this was of so little weight on the basis of the material before them, it would not satisfy them, that not having that material before him, had led him into error.
KEANE J: It just seems a bit unsatisfactory to be speculating about the possibility that that is what they did when they did not say it.
MR HATCHER: I accept that, your Honour. We would all love to have some hand in the writing of decisions that affect us. Regrettably, we do not have that luxury. We are faced with dealing with what we know was before them, what we know they did and that they certainly understood there was a strong objection to the evidence on the basis that it had no weight and they did not expressly rule one way or the other. They said they were reserving on that question when they had the totality of the material.
They then hand down a decision that says ‑ and it should be conceded, clause 13 did clearly weigh on their minds. They asked to be addressed in particular in relation to the effect of clause 13 but their decision does not just say clause 13 is an answer. It does go on to say, we are not satisfied that there is any error in the Deputy President’s conclusions and they do have the benefit, not only of the challenged material but also the circumstances in which the challenged material is put forward and the knowledge that the Deputy President had done an independent review, otherwise there would not have been the necessity for a further undertaking.
GAGELER J: Are we still dealing with coverage or have we moved on?
MR HATCHER: Well, I think we have moved a little way but I want to return to coverage if I might now, your Honour. Insofar as the majority held that the Full Bench needed to address but left unaddressed on appeal the question of whether the ALDI Regency Park agreement had been genuinely agreed to by the employees covered by the agreement, the process of reasoning appears inferential. If I could ask the Court to turn to appeal book page 396, at paragraph 122, Justice White says:
The Full Bench in the present case decided not to apply the construction adopted in Cimeco, taking the view that it had been supplanted by the reasoning of the Full Court of this Court in Construction, Forestry, Manufacturing and Energy Union v John Holland Pty Ltd [2015] FCAFC 16; (2015) 228 FCR 297.
His Honour then notes that John Holland involved some different considerations, and then at 126:
As the Full Bench recognised, it is usually appropriate to presume that terms appearing in more than one provision in an enactment are used with a consistent meaning . . . However, the presumption can be displaced by indications of a contrary intention.
Then 127, his Honour finds there are such indications but he considers the matter over the page at 398, line 40 or 39:
The use of the present tense and the fact that the FWC is to consider whether employees have genuinely agreed to the enterprise agreement indicates, the SDA submitted, a requirement that there be at least some employees actually (and not prospectively) covered by the enterprise agreement at this time it is made.
His Honour says:
a number of features of the FW Act support this construction.
He goes on to say:
a natural understanding of the language of s 186(2)(a) that it refers to the genuine agreement of the employees whom the enterprise agreement expresses itself to cover and who are in fact covered by it.
And paragraph 134:
Nevertheless, it is the genuineness of the agreement by particular persons which the FWC is to assess, these persons being the employees “covered by” the agreement. There is, accordingly, an inherent requirement in s 186(2)(a) and s 188 that there be such persons. That is to say, it is implicit in s 186(2)(a) that there be persons covered by the agreement whose genuineness in agreeing to it (on the basis identified in s 188) can be assessed by the FWC. Persons who will become covered by the agreement only at some time in the future do not answer that description, even if they did, by some means, vote to approve it.
The difficulty with that, as a matter of construction, is “covered” does not mean applied. The legislation is quite clear on that and his Honour recognised that. An agreement can cover an employee before the agreement applies – comes into operation. So the Fair Work Commission can approve an agreement that will operate from six months’ time. During that period the employees are not working under the agreement. They are in no different position to employees who will be covered by the agreement for the purposes of this analysis.
GORDON J: Is that not made clear by section 172(2)(a), that is, is that you are making the agreement before we even get to approval. You can have employees who are employed but who will be covered in the future?
MR HATCHER: Well, we say so, your Honour.
GORDON J: Is that where we need to start in the sense that there is power under the Act to make agreements of this nature and then, having satisfied that division, you then move to approving something which is within the earlier part – i.e. been made in accordance with the Act, approved in accordance with the Act, then giving rise to questions for the Fair Work Commission, having looked at the matters set out there?
MR HATCHER: Your Honour, I will be more than pleased to be informed that I was not distracted before the Full Federal Court by my learned friend’s wily argument that it all turned on tense.
GORDON J: It is not a tense, it is a question of looking to see is it – I mean, you can get carried away with tense but 172(2)(a) provides a provision which says that certain agreements can be made in respect of employees who are employed at the time but who will be covered. There is a mechanism for approval – a mechanism which provides for when that agreement is made that has been approved by those employees. Is it a question of tense?
MR HATCHER: Well, we say not, your Honour. We say that the tense was always a distraction. But whether one gets there by saying the tense is a distraction or you look at the notion of coverage you do not get there by the approach, in our respectful submission, by the approach adopted by his Honour Justice White of saying, well, what is the purpose of having people covered? The purpose is that they will know the work that they are doing, because they are doing the work. Well, the legislation does not contemplate them doing the work. So that is simply a false analysis.
KIEFEL CJ: What does it mean, in your submission, to say that an agreement covers an employee?
MR HATCHER: The employee is employed, contracted to do work to which that agreement will apply.
KIEFEL CJ: Do you mean that it falls within a classification that is within the scope of the agreement?
MR HATCHER: Yes, your Honour. And I might say that is consistent with the approach of the Full Court in Teys, which is in the bundle.
KIEFEL CJ: Well, unless I am mistaken I do not think you are at odds with the first respondent then about the meaning of “coverage”.
MR HATCHER: I think we are, your Honour.
GAGELER J: Do you say Teys is authority for the proposition that you have just put?
MR HATCHER: Yes, but not binding, for this reason, your Honour. In Teys (No.1) the Commission had said, on appeal, that the Full Bench were wrong when they excluded certain employees from the vote because those employees, albeit employed in positions that were within the incidence of the agreement, were not working in those positions. One was acting as a supervisor and another was off training.
GAGELER J: I am not at all interested in the facts.
MR HATCHER: I am sorry, your Honour.
GAGELER J: I am just asking for the construction. Where do we find, crystallised, your version of what the word “covered” or the concept of “coverage” involves? Is there some statement of that in some earlier case? That is what I am asking.
MR HATCHER: In this case, your Honour, in the Full Bench of the Commission – the Full Bench decision is to be found at appeal book page 317. And at page 327 ‑ ‑ ‑
BELL J: I am sorry, what page number was that?
MR HATCHER: Page 327, your Honour.
BELL J: Thank you.
MR HATCHER: At paragraph [40] the Full Bench say:
Ascertainment of the correct interpretation –
this is of “coverage”:
might be assisted by considering the following hypothetical example. Twenty employees from an existing operation are offered on‑going employment at a new location of the business. Twenty new employees are also engaged for that business and commence employment prior to the existing employees commencing employment in the new business. The twenty new employees are asked to vote to approve an enterprise agreement and by majority they do so. The existing employees are not given an opportunity to vote. It is unlikely in these circumstances that the Commission could be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement because half of the current employees covered by the agreement were not permitted to vote. It is not relevant that the agreement does not apply to them at the time of the vote.
[41] Hence for the purposes of giving logical and consistent meaning to common phrases in the Act we consider it appropriate to apply the approach adopted by the Federal Court in relation to the fairly chosen test. That approach, in over view, supplants the approach adopted in Cimeco. The Federal Court’s approach entails two elements. The first involves determining whether the persons are employees, while the second entails determining whether the employees will be covered by the agreement after it is made. Application of the agreement is not relevant.
[42] In the facts of this case we are of the view that the employees who accepted on‑going employment in the Regency Park region were employed by ALDI at the time the agreement was made. Further, as their employment comprehended work within the scope of the Regency Park Agreement they were covered by the Agreement. It was legitimate and necessary for them to be included in the group of employees asked to approve the agreement. The resultant agreement was made under s.182(1). It was a single enterprise agreement available to be made under s.172(2)(a). The Agreement has been genuinely agreed to by the employees covered by the Agreement. The first ground of appeal must therefore fail.
Now, the test they had to satisfy themselves of was whether the employees were covered by the agreement and genuinely approved the agreement. They expressed themselves as having dealt expressly with that.
KIEFEL CJ: So “coverage”, according to this, means that the agreement could apply to them?
MR HATCHER: No, your Honour. It requires a finding of fact that their employment is regulated by the agreement.
NETTLE J: In relation to that enterprise.
MR HATCHER: Yes. These employees, they are existing employees, each of them had executed a new contract to work in the Regency Park region. So their contract of employment was to work in the Regency Park region. They were told that, until the area in which they were employed in the Regency Park region commenced operations, they would continue to work in their present region under their present agreement, but they had a contract of employment to work in the Regency Park region.
KIEFEL CJ: I understand that, but I thought the Full Bench was saying that “coverage” means an employee is covered if their work is within the scope of the agreement.
MR HATCHER: Yes, your Honour.
KIEFEL CJ: My question then is: if the agreement is made and the agreement is approved and becomes operative, then the agreement actually applies legally to them in a legal sense. Is that how “coverage” and “apply” work?
MR HATCHER: Your Honour, that is the way it is expressed in the legislation.
KIEFEL CJ: That is what I am interested in.
GORDON J: That is what section 52 says, does it not?
MR HATCHER: Yes, but we have the explanatory memorandum, which says two agreements can apply at the same time.
GORDON J: That is not a distraction from the fundamental principle, is it?
MR HATCHER: Well, application has always meant that you have present entitlements as a result of working under the agreement. So you are actually performing the work rather than ‑ ‑ ‑
GORDON J: I do not know that is right. What 52 says is it applies to an employee “in relation to particular employment”. Is that not what the Full Bench is dealing with at 42?
MR HATCHER: Those are the terms of the legislation, your Honour, which means when they perform that work, that particular work ‑ ‑ ‑
GORDON J: No, in relation to particular employment. It may be in the future.
MR HATCHER: Yes.
GORDON J: It may be in relation to future employment. That is the whole concept of application – something applying to somebody. As I understood your earlier submission, that was, in a sense, what you were relying upon. You can have employment, but you can have an agreement which relates to future work they may not have even started. It is in relation to particular employment.
MR HATCHER: Yes.
GORDON J: I mean, one of the other reason why 42 is interesting is because it picks up the idea of having to have sufficient facts to give rise to a power to make the agreement under 172(2)(a) – i.e. I have someone who is employed, at the time the agreement is made and they will be covered by it.
MR HATCHER: Yes. And as I put to your Honour the evidence is clear and indeed it was an agreed fact that the employees had agreed ‑ had contracts to work in the Regency Park region. So their work was to be covered by the agreement. That was the whole purpose of the contracts.
KIEFEL CJ: I said before and you politely disagreed that the first respondent was not so far apart about the meaning of “coverage”. I have just found what I was referring to in the first respondent’s written submissions, at paragraph 30.
MR HATCHER: I am sorry, your Honour.
KIEFEL CJ: Paragraph 30 of the first respondent’s written submissions. It is speaking of section 207, the variation provision, but in the course of that it says at about line 12:
Secondly, they must actually be covered by the agreement, that is, they must be employed in a classification that falls within the scope of the agreement.
MR HATCHER: Well, I embrace your Honour’s understanding of ‑ ‑ ‑
KIEFEL CJ: Well, I read the submission.
MR HATCHER: I am not sure that my friend will quite so readily accept its effect. But, yes, that is the substance of our argument, your Honour. Once the employee is employed to do work under the agreement, the agreement covers them.
EDELMAN J: But the employee is not employed to do work unless, within the Act, the agreement has been made.
MR HATCHER: No, with respect, your Honour. The employee can do work. The work would fall to be regulated under a modern award or some other agreement in the absence of an agreement having been made to cover that work. The effect of the Full Court’s decision in quashing the agreement is to place all the employees under the modern award. And Justice Jessup deals with that in his consideration of the stay because of the complexities of vetting between different statutory instruments.
GAGELER J: You referred to an agreed fact about employment.
MR HATCHER: Yes, your Honour.
GAGELER J: Can you show us that, please?
MR HATCHER: The statement of agreed facts, your Honour, is at 352 of the appeal book. And your Honour sees:
4. In 2015, ALDI sought expressions of interest . . .
5.A number of employees submitted an expression of interest . . .
6.Those employees whose expression of interest was accepted by ALDI received a written offer to work . . .
7. The offer was accepted by 17 employees.
8.On 12 June 2015, ALDI provided to all employees who were transferring to the Regency Park Region a document titled “Schedule 2.1 Notice of employee representational rights” –
So the relevant document will be Annexure A, the written offer of employment. And I do not know that the annexure – the annexure is not reproduced there, but it does appear, your Honour, at page 138 of the appeal book. It is entitled “Offer of Employment”. The name is blanked out.
GAGELER J: So, under this agreement what actually triggers the doing of work?
MR HATCHER: I am sorry, your Honour?
GAGELER J: This is an agreement to be employed on certain terms from a date in the future. Is that right?
MR HATCHER: No, your Honour, it is an agreement which is executed on that date.
GAGELER J: Yes.
MR HATCHER: It is ongoing employment, but the employment is as an assistant store manager in the Regency Park region in South Australia. They are to go into that position when the new region opens, which is anticipated to occur in 2015, but may be earlier:
You will continue to be employed until that date in your current Region, and will be covered by that Region’s Enterprise Agreement.
NETTLE J: So it is when ALDI opens the new store he is employed under this agreement in relation to that store?
MR HATCHER: Yes. But his employment now is an employment that ‑ ‑ ‑
NETTLE J: No problem.
MR HATCHER: Yes, so it is a fresh contract of employment. Now, if I can just remind the Court, in paragraph 10 of our outline, the finding of the majority, Justice White, was the Full Bench left unaddressed on appeal the question:
whether the ALDI Regency Park Agreement 2015 had been genuinely agreed to by employees “covered” by the agreement.
In our respectful submission, it was not unaddressed. It was expressly addressed in paragraphs 40 to 42 of their judgment. It was not in accordance with the majority’s approach to the question of coverage, but it was addressed.
We acknowledge that Sir Frederick Jordan said many years ago that “there are mistakes and mistakes”, but it is an odd mistake that is only discerned inferentially, a mistake that says you express yourself as having dealt with the statutory task, but I find that you did not because I find that you were not attending upon the real question. Justice Jessup approached it differently, at appeal book page 371 in paragraph 23 where he said:
Here the Commission has considered whether the presently‑employed persons were covered by the agreement, which is exactly what the Commission must do under the statute.
Now, if I could ask the Court to turn to Teys (2015) 230 FCR 565 - and I will attempt not to tease with the facts of the case, but the facts are important to an understanding, with respect. That is reproduced in our bundle at tab 8.
BELL J: That I think is behind tab 9.
MR HATCHER: Your Honour, there are two Teys.
BELL J: Yes, and behind tab 8 is the one at 234 FCR.
MR HATCHER: Yes, I am sorry, your Honour. That is reported in (2015) 230 FCR 565. If I could I ask the Court to turn to 583. Justice Buchanan gives the court’s judgment. At 79:
In my view, Deputy President Asbury’s principal conclusion was that employees in the disputed roles were production workers, temporarily deployed to particular duties but not substantially engaged in non‑production roles, who continued to be covered by the proposed agreement and to whom the proposed agreement would apply unless they were in future substantively engaged in a different role, at which the 2013 Agreement would no longer apply to them.
Then at 82:
That analysis seems to me, with respect, to be one which led directly to the conclusion that the disputed employees were eligible to vote. I do not share the view of the Full Bench that the analysis was based on any apparent error of construction or other legal error. However, even on a correct application of the relevant provisions, evaluation and judgment about the particular work of Trainee Supervisors and other was was required. That was another area of challenge on the appeal. Apart from the textual criticisms which I have discussed, the Full Bench did not directly engage with that question; that appears to be amongst the matters put aside as unnecessary to decide.
If it was a matter for this Court to decide, I would not agree with the Full Bench that Deputy President Asbury’s reasons displayed any misunderstanding ‑ ‑ ‑
KIEFEL CJ: I am sorry, what is the relevance of this part that you are reading from?
MR HATCHER: Just, your Honour, that the approach of Justice Buchanan, giving the court’s view in this case, is consistent with the approach we urge to “coverage”, that is you look at the substantive employment of the employees. But, having found that there was error on the part of the Full Bench because they looked at the wrong question, his Honour says, “But it was matter for the Full Bench, not a matter for this court”.
KIEFEL CJ: I see.
MR HATCHER: So, even if we be wrong as to coverage, did the Full Bench exceed its jurisdiction in determining the question that was reposed in it?
EDELMAN J: Is it right then that your construction is effectively that a person is covered after the agreement is made, although before it applies, provided that their current employment falls within the terms of the agreement?
MR HATCHER: Yes, your Honour.
EDELMAN J: How would that then ever apply to a greenfields agreement? Could a person in a true greenfields agreement ever be covered by – because there is no – where the person has no current employment.
MR HATCHER: The true greenfields agreement for the purposes of legislation, your Honour, is the agreement where there are no employees employed who will be engaged in the business.
EDELMAN J: So there is no current employment?
MR HATCHER: So there are no current employees. But if you have employees – and I should say that that greenfields agreement is an agreement made between the employer and the union but your Honour will have seen from our written submissions, once an employee is employed, whether he is working in the business or not, he is entitled to be heard on the variation of the agreement.
But the provisions of the greenfields agreement, section 172(2)(b)(i), excludes any position where the employer has actually engaged an employee who will be working – and I am not using the statutory term here though – but will be working in the business it is proposed to establish. So, the section itself contemplates employment before work.
KEANE J: Well, it contemplates employment, perhaps in a different enterprise from the new enterprise.
MR HATCHER: Yes.
KEANE J: Why is that not determinative? I mean, insofar as the thrust of the other side’s case on this point is that you can only have – that an employee is really, for the purposes of 172, an employee in the new enterprise, that seems to be quite inconsistent with what 172(2)(b)(ii) is saying.
MR HATCHER: Well, that is our submission, your Honour, but to answer your Honour’s question, the Full Bench answered to that submission and I do not know that the Full Court ever addressed it, but the Full Bench’s answer to that was that may just mean that you cannot have an agreement if you have employees employed but not yet working in the new business. Now, ultimately the way in which they disposed of the matter meant that we could, but that was the way – that was the answer to your Honour’s question that the Full Bench ‑ ‑ ‑
KEANE J: It just looks though - when you look at 172, it looks like it is dividing single enterprise agreements into two classes: non‑greenfields agreements and greenfields agreements.
MR HATCHER: Yes.
KEANE J: Section 172(2)(b)(ii) would seem to be suggesting that there can be agreements made under (a) with employees who are currently employed by the employer but not in the new enterprise.
MR HATCHER: But will be covered by the new agreement.
KEANE J: But will be covered by it.
MR HATCHER: Yes.
GORDON J: Otherwise it is a collection of people who do not seem to have an ability to have an agreement.
MR HATCHER: Yes, your Honour, that was our submission before the Full Court.
GORDON J: Well, it might have been then. Is that your submission now?
MR HATCHER: Well, that is our submission now as well. We do not resile from the submissions that were put before the Full Court, but the question of will be – the tense question is a complete distraction, but whether one gets there by what the word “covered” means or by an analysis of the way in which the legislation works its way through and it is contemplating employees who are going to be employed in businesses that you are proposing to establish.
GORDON J: This is a rationale around the subsection (2) bit because it seeks to say, well, we want those employees to have a – if there are employees to be – that are employed in this new enterprise and they have not – and will be covered by the agreement, that they have a voice.
MR HATCHER: Yes. Well, as I earlier put, there are dramatic consequences flowing from the interpretation that the majority in the Full Court have placed upon it, because it means in that Brendale example when ALDI is going to open its second distribution centre in Adelaide and we know that a number of the stores are going to come within the operation of that new agreement and the employees will accept employment in those stores knowing that those stores are designed to go into the new region when the new region opens and that a different agreement will apply to them, and they will not be allowed to vote on it.
But the two or three in the first store that is covered by the agreement or in the distribution centre or the first truck driver employed – or the first two truck drivers; the legislation requires two – they will decide the terms and conditions of employment for all those employees already employed doing similar work who accepted employment knowing that they would move across. That is, without looking backwards, to the effect of the Full Court judgment on agreements that were regularly entered into with the consent of the union.
In any event, I think I have burdened the Court enough with our concerns as to coverage. Can I move then to the better off overall test? Can I commence by inviting the Court to return to what I am pleased to say is within the book of 200 most cited cases in Australian law now, at 153 and moving. That is Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 2 in the bundle.
This case concerned the Hunter Valley No 1 coal dispute which was fairly notorious at the time. All coal had stopped – had been shipped out of a very large mine in the Hunter Valley as a result of industrial action.
GAGELER J: I am sorry, you are getting back into the facts. We do not need to go to the facts of Coal & Allied.
MR HATCHER: The task of the Commission was to determine whether the bargaining period should be terminated under section 170MW of the then legislation. Justice Boulton at first instance had decided it should be terminated allowing the Commission to arbitrate. The Full Bench reversed that on appeal.
It was taken to the Full Federal Court for judicial review and the Full Federal Court found error both in the approach of the Court – the Full Bench to the nature of the appeal before it and that is why in Coal & Allied they concerned themselves with the nature of an appeal by way of rehearing and the fact that you must discern error. But also the Full Court of the Federal Court had found that the Full Bench did not understand properly the nature of an appeal from section 170MW in that it was a question of the satisfaction of the member who terminated the bargaining period and they reviewed that having regard to a number of circumstances which the Full Court said were inappropriate. At paragraph 27 of the judgment on page 207 of the report, the Court says:
For reasons that will be given shortly, it is not necessary to decide whether the Full Bench of the Commission was correct in ascribing error to Boulton J.
Then they proceed over the next little way to say that there was not any error in any event. But at paragraph 30 they say:
The Full Court concluded that the Full Bench of the Commission fell into jurisdictional error because it proceeded on the basis that the decision of Boulton J was attended by appealable error when it was not. And it did so, in the view of the Full Court, because of its “fundamental misconception . . . of the Commission’s role arising from the combined operation of s 170MW(1) and (3)”. To misconceive the role of the Commission under s 170MW (assuming that that is what the Full Bench did) does not constitute jurisdictional error on the part of the Full Bench.
They then cite the well‑known passage from Hebburn and in paragraph 32:
In his reasons for decision, Giudice J proceeded on the basis that the Full Bench could intervene only if there was error on the part of Boulton J. In this his Honour was correct. Giudice J held that there was error on the part of Boulton J. If he was wrong in that view (a matter upon which it is unnecessary to express an opinion), that was an error within jurisdiction not an error as to the nature of the jurisdiction which the Full Bench was required to exercise under s 45 of the Act. Accordingly, it was not an error in respect of which relief could be granted by way of prohibition or mandamus under s 75(v) of the Constitution.
Now, I know of no case in this Court revisiting that judgment but I should concede I know of many cases in the Federal Court where the Federal Court has gone behind an appeal to have a look at whether there was error in construing the Act and the nature of the task dealt with by the Commission which resulted in appeal.
GAGELER J: What are the sections that set up the jurisdiction of the Full Bench? Are they identical to the Coal & Allied provisions? Can you just cross‑reference them, please?
MR HATCHER: Different areas but the same substantive effect. I will just have my junior turn those up, your Honour.
BELL J: Was there a privative provision?
MR HATCHER: No, your Honour.
GAGELER J: There was at the time of Coal & Allied a privative provision.
BELL J: Yes, that is the question.
MR HATCHER: Yes. It does not alter, your Honour, if there was jurisdictional – if it was jurisdictional error it was amenable to relief under the Constitution but they say it is not jurisdictional.
BELL J: I understand. There may be a material distinction which has not been explored here in relation to the position under the Fair Work Act.
MR HATCHER: Certainly, there was a privative provision under the legislation at that time, your Honour. Can I then, if it please the Court, turn to section – I am sorry, your Honour, the appeal provision commences at section 604 of the present legislation.
GAGELER J: Can I just understand that last submission based on Coal & Allied? If the Commission at first instance had adopted a wrong understanding of the meaning of “coverage”, that would have been an error capable of being set aside by the Full Bench. Is that correct?
MR HATCHER: Yes, your Honour.
GAGELER J: Similarly, if the Full Bench had proceeded on a wrong understanding of “coverage”, that would have been a jurisdictional error capable of being remedied under section 39B.
MR HATCHER: Well, that does not seem ‑ ‑ ‑
GAGELER J: I am sorry, are you contradicting that proposition?
MR HATCHER: All I am saying, your Honour, is that does not appear to sit well with what the Court said in Coal & Allied. I understand why you ‑ ‑ ‑
GAGELER J: It is just a wrong legal test. I mean, it is a traditional form of jurisdictional error.
MR HATCHER: But the Court in Coal & Allied – the Full Court of the Federal Court had said that the Full Bench applied the wrong test to section 170MW, misconceived its task, classic form of jurisdictional error and the judgment says their task is to determine error. They might be right or wrong in the determination of error. They understood their task was to determine error and they did that. Now, I know of no further consideration of it in this Court. As I say, there are many cases in the Federal Court that have proceeded under 39B for jurisdictional error as this case was and no one has asked to overrule Coal & Allied. Can I turn then to section 193? That provision is in the following terms:
An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section of the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
Can I remind the Court of the decision of the Commission at first instance which again appears at appeal book 44. At 45 there is the reference to “stock replenishers” and the Commission not being satisfied as to their compliance with the better off overall test; a notation at [8] that an undertaking was provided and is attached; at [10] “The undertaking is not so substantial” as to require a fresh vote. At [11]:
Taking into account the substantially higher rates of pay under the Agreement in comparison to the Award, management employees and employees who would otherwise be covered by the Road Transport Award and Storage Award 2010 receive 5 weeks annual leave as opposed to 4 weeks under the Awards . . . I am satisfied that the Agreement results in employees being better off overall.
So, it is not just wages, there are other benefits that his Honour the Deputy President expressly noted. The Full Bench is then asked to revisit that firstly on the basis that the first respondent complained that the typical rosters provided by ALDI to the Commission for approval of the agreement did not represent actual rosters. That was not in issue. They do not because ALDI do not work on a rostering system in the same way as the major retailers do. Their hours of work contemplate that they will be worked out week by week between the employees and the employer to meet the convenience of employees and the needs of the employer.
So, you could not provide the rosters that were being actually worked. They moved about all over the shop. What was done in this case was to provide rosters that gave a typical spread of work. It was the same process that had been done with the concurrence of the SDA in all previous agreements. The rosters are almost identical to those that were provided in the Brendale agreement and the Brendale agreement, as I have probably repeated too many times, was supported by an F18 by the SDA.
The first respondent then complained that the evidence that the first respondent relied upon showed that 40 per cent of the employees would be worse off under the proposed agreement than under the award. That evidence excluded business review payments. Those business review payments are to be found in the agreement in question – I am sorry, that is to be found at page 67 of the appeal book towards the bottom of the page:
Business Review Payment
ALDI operates a Business Review Payment. It is designed to provide incentives to Employees that reflect the performance of the store. The amount of any payment will be determined and paid by ALDI on a fortnightly basis, based on the results of the previous Fortnight.
The method used by ALDI to calculate the Business Review Payment may vary at ALDI’s discretion, however for the purposes of the Better Off Overall Test, the Business Review Payment for Store Managers, upon takeover of a Store, will be a minimum of $459.00 per Fortnight based on Store Managers working a 45 hour week.
So, it alters with the number of hours the employee works and the 418 figure, in our submissions, related to an employee working a 40 hour week. But $419 a fortnight is a lot to exclude when you are conducting a better off overall test in evidence that you are presenting before the Commission to convince the Commission that the Deputy President did not have appropriate material before him.
Similarly, employees that the first respondent had in the Brendale agreement treated as shop assistants at grades 1, 3 or 4 were all classified as shop assistant grade 6 for the purposes of the comparison that was relied upon. All this was in front of the Full Bench. They had the comparison and they were not satisfied that the Deputy President fell into error. Shop assistant grade 1 which is the base level, first year shop assistant, and you, for the purposes of the BOOT, characterise him as a grade 6, a store manager, and say there is a 40 per cent underpayment.
Now, it is hardly surprising that the Full Bench might have been dismissive of evidence such as that especially in a circumstance where just six weeks earlier the same organisation had signed the statutory declaration saying we agree with the calculations, we agree with the figures, we agree they are better off overall. The only difference is this agreement, yes, they were not a party to. No one asked them to be a bargaining representative. So, may it please the Commission – may it please the Court, I am sorry, there is an old habit – may it please the Court, we say that the Full Bench was entitled to disregard that material.
We also say that the majority’s analysis at clause 13 is significantly flawed. What they fail to appreciate is section 193 does not require that an employee under an agreement will be better off overall, which is not the same as having higher wages than an employee under an award. It requires an assessment of all the conditions. There will be benefits and detriments but that employee must be better off overall at the test time.
Now, an agreement goes for four years and in theory an agreement that provided, for instance, that you will have all conditions in the award as at this date and salaries $2 higher than those appearing in the award must pass the better off overall test and yet in six months’ time there is an award increase, the employees fall behind, and they fall behind and they fall behind for the next four years until a new agreement is arrived at. That is the statutory scheme.
The clause that so influenced the Full Bench says “At any time during the currency of this agreement if you think you would receive more remuneration under the award, whether because the rates under the award have risen higher than the rates under the agreement”, and this agreement does contemplate rising rates, higher than the award, as it turns out – but it says, for instance, we think you are at the same level, the work you are doing is at the same level as a shop assistant grade 1, you think it is at the shop assistant grade 6, you can go before the Commission and said to the Commission, “These are the reasons why” and if the Commission says you are right, we will pay you at that higher rate.
To say that that is an illusory benefit, that it gives an employee no more than the award‑covered employee at test time is to do a great disservice. It is a clause that has a very real benefit for employees covered by agreements because it allows them to compare themselves throughout the period of the agreement to changes in the work they are doing, changes in the way in which they are being engaged and changes in the award that will not be reflected or are not necessarily reflected in the agreement because the agreement, once it passes, is the statutory instrument that regulates their employment.
KIEFEL CJ: Are you saying, though, that the effect of clause 13 is that it allows employees to keep up with the award?
MR HATCHER: We say it does more than that but it allows them to at least do that.
KIEFEL CJ: What is the law then?
MR HATCHER: Because they have the other benefits that are available under the agreement that do not reflect in remuneration - the extra week’s annual leave, the bonuses that some employees will receive, the flexibility in hours that is not to be found in the award.
GORDON J: But is that better off overall? What are we comparing?
MR HATCHER: We are comparing the agreement with what an employee would receive under an award at test time.
NETTLE J: If that is so, then the catch‑up clause is irrelevant because it only applies in the future.
MR HATCHER: Quite.
NETTLE J: One looks only at the position now at test time and says, well, these new terms are way better than the award.
MR HATCHER: One does that, but that is one of the terms. That is an operative provision in the agreement that gives employees a benefit over the award at that time that can be brought to account.
NETTLE J: Not really, because if you were under the award you would always be under the award and would always get what the award provides. That is why I think it was regarded as illusory.
MR HATCHER: Your Honour, can I approach it this way. At test time, the Commission is faced with the conditions under the agreement and the award. Assume all conditions are equal. If the wages under the agreement are $2 higher, then the test or the comparator, they are better off. Now, if we know that in a year’s time they are going to receive an additional $5 they have the additional benefit under the agreement as against the comparator of that additional $5. That is not a comparison with the award employee in a year’s time. The test is looking at that award employee at that time, at the test time.
If it please the Court, could I then invite the Court to turn to the judgment of his Honour Chief Justice French in Minister for Immigration v Li (2013) 249 CLR 332 at 349, which is in the bundle at tab 12. In paragraph 24, his Honour says:
Every discretion has to be exercised, as Kitto J put it . . . according to “the rules of reason”. His Honour, paraphrasing Sharp v Wakefield, said “a discretion allowed by statute to the holder of an office is intended to be exercised according to the rules of reason and justice, not according to private opinion; according to law, and not humour, and within those limits within which an honest man, competent to discharge the duties of his office, ought to confine himself”. Mason J . . . quoted Kitto J and linked his words to the general rule “that the extent of … discretionary power is to be
ascertained by reference to the scope and purpose of the statutory enactment”.
As Professor Galligan wrote in 1986 in Discretionary Powers: A Legal Study of Official Discretion, the requirement that officials exercising discretion comply with the canons of rationality means, inter alia, that their decisions must be reached by reasoning which is intelligible and reasonable and directed towards and related intelligibly to the purposes of the power. Those canons also attract requirements of impartiality and “a certain continuity and consistency in making decisions”. They were reflected in the powers of the English Court of Chancery to control public bodies “if they proceed to exercise their powers in an unreasonable manner; whether induced to do so from improper motives or from error of judgment. They were acknowledged in the earliest years of this Court.
There may be complaint about the Full Bench not sufficiently explaining why they did not have much regard to the statutory declaration or the evidence sought to be adduced by the SDA if it were admitted of different conditions but there cannot be any doubt that it was a rational decision to exclude it or to not have much regard to it and that it allowed for a continuity and consistency in the decisions, given that the SDA had supported the previous six agreements in like terms. May it please the Court, we invite the Court to uphold the appeal.
KIEFEL CJ: Mr Friend.
MR FRIEND: Thank you, your Honour. I start with this observation that both below and…..read with the submissions of the appellant one of the major issues in this appeal was when the relevant employees had to be covered by the agreement. Was it at the time the agreement was made or sometime after that? Would they fit within the description of employees who would be covered by the agreement? The manner in which the case was conducted below was on the basis that the employees were not covered by the agreement when it was made and I will take the Court to transcript of that in a little while.
KIEFEL CJ: When you say that it was conducted on that basis, you mean by both parties?
MR FRIEND: By both parties. Perhaps I will take you to the transcript now.
KIEFEL CJ: How does that affect this Court’s determination of the matter?
MR FRIEND: It means that we have changed the focus of the argument from what is in the submissions.
KIEFEL CJ: Well it might mean that the appellant ought not have been given special leave?
MR FRIEND: We would submit that, your Honour, because if you look at this transcript at page 80, going to line 30, Justice Katzmann says:
But if the union is right in its approach to the interpretation of “employed” and “will be covered” then it would follow, wouldn’t it, that the Full Bench had applied the wrong test?
MR HATCHER: Absolutely.
Now, our contention below was that the employees were not covered because you had to be covered at the time the agreement was made. So there would be jurisdictional error. Yes, if the true test is physically employed in the business at the time – these employees were not – then turning to page 87, which is the next extract ‑ ‑ ‑
KIEFEL CJ: I am sorry; could you speak up a little, Mr Friend.
MR FRIEND: I am sorry, your Honour, I will try to. At the bottom of the page at line 43:
JESSUP J: What’s your position about this particular agreement? Do you say that these 17 people were covered by the agreement upon it being made?
MR HATCHER: I can’t put that submission on the terms of their contracts of employment, your Honour. The terms of ‑ ‑ ‑
JESSUP J: So as to what constitutes being covered by this agreement, you agree with what Mr Friend said that it’s to be found in clauses 3 and 5.
MR HATCHER: As ‑ yes.
JESSUP J: And notwithstanding that they don’t say “cover”. They use the expression such as “will apply to” and things like that.
MR HATCHER: Yes.
JESSUP J: But that’s, in effect, a coverage provision.
MR HATCHER: Yes.
JESSUP J: All right. Well, if that’s common ground, then it means that they’re not covered by the agreement.
MR HATCHER: No, but they will be.
So the Full Court was called upon to consider the proposition that the fact that the employees would at some future stage be covered by the agreement was sufficient to bring them within the ambit of a group of employees with whom an agreement could be made under section 172(2)(a).
KEANE J: So their position, your opponent’s position below was that the agreement was within 172(2)(a) because he was saying that they will be covered.
MR FRIEND: At some stage in the future but not at the time the agreement was made.
KEANE J: But was he not saying that they are within 177(2)(a) and if that is right he wins?
MR FRIEND: He was saying that they were within it on the basis of, not that they were covered because of some broad expansive definition of “coverage”.
KEANE J: But that they will be covered.
MR FRIEND: But that they would be covered at some time in the future when they took up the employment.
KEANE J: But he is saying they will be covered for the purposes of 172(2)(a).
MR FRIEND: When they take up the employment.
KEANE J: Yes, okay, whatever, but I mean if the agreement is authorised, is within the scope of 172(2)(a), he wins.
MR FRIEND: If he is right about that, our position, which depended upon the close construction of the Act, was that you actually had to be covered at the time the agreement was made. When it was made you became covered by the agreement, understanding what the Act says, because of the change in tense and we point to a number of other indications in the legislation.
I do not understand the position now to be that it is necessary to engage in that debate because the case that seems now to be put against us is that they were covered when the agreement was made because their contracts of employment anticipated that they would take up this work in the future. So there was no real focus on that issue.
KEANE J: It is just that I do not think you can be too hard on the other side for the shifts in their argument when it seems both sides are grasping at straws that are floating around in the wind in terms of differences of tenses when there are strong, direct, textual indications in the provision that actually governs the matter that resolve it.
GAGELER J: Can I just ask you a question about the meaning of the word “covered” from your perspective?
MR FRIEND: Yes.
GAGELER J: I think for the first time in the proceedings, when I look at page 80 of the transcript that you have handed up, about line 42, for the first time, I think I understand that your position is that the true test is that an employee is only covered when physically employed. Is that the way you put it?
MR FRIEND: Yes, physically employed in the work, yes.
GAGELER J: So these employees, on your construction, will not be covered until they actually start work in the new region?
MR FRIEND: That is so.
GAGELER J: And the case that is put against you is, no, it is sufficient that there is an existing contract of employment by which they are contracted at some indeterminate time in the future to commence work in the new region. I think that is the whole difference between you.
MR FRIEND: Yes. Your Honour, with respect, that is how we now understand the difference. Perhaps I can go on to address that and ignore all of the submissions about tenses and what have you because we can deal with that issue, which really comes back to what her Honour Justice Gordon focused on at the beginning, which is section 53(6), which deals with what “coverage” means.
One has to consider that subsection in relation to the consequences of the various interpretations that arise from it. If the words “in relation to particular employment” mean any possible scope of employment under an employee’s contract, which is what in effect my learned friend’s position has to be, then extraordinary difficulties are created. You have to remember that an agreement is made with employees who will be covered. Each of those employees has to be identified. Each has to be sent a notice of representational rights. Each has to be engaged in a bargaining process, or at least have an opportunity to discuss the agreement, and each has to vote. or at least be given an opportunity to vote.
I can take the Court to the relevant sections but they are right through from section 182, I think, onwards. If it assists, I can take the Court to those sections now to establish those matters. But these are important considerations in relation to whom the employer has to deal with. It is the employer in the first instance who has to decide which employees it is going to engage with, which employees are the ones who will be covered by the agreement. Section 173(1) provides that the employer has to:
give notice of the right to be represented by a bargaining representative to each employee who:
(a)will be covered by the agreement; and
(b)is employed at the notification time for the agreement.
NETTLE J: In this case that was done.
MR FRIEND: It was done with the 17, your Honour.
NETTLE J: But that was all of the persons employed who would be covered by the agreement?
MR FRIEND: Well, maybe. We do not know anything further than the evidence in this case….arise in this way but posit this – and there will be many employment contracts like this where an employer has a right to transfer an employee to a different part of the business. So if that employee, because their employment contract contemplates that they might be working in a part of the business where the new agreement will operate, if that employee is one who will be covered, they must be given the notice as well.
NETTLE J: We are dealing with a case in which the 17 persons who were in the employ of ALDI entered into an agreement to be governed in relation to another enterprise by the terms of the agreement.
MR FRIEND: I fully understand that it is a different question, your Honour, but I am trying to address the question how one construes section 53(6), because if 53(6) is read so broadly when it says “in relation to particular employment” as to mean any employment, any employee who has, within the scope of their employment, the possibility of working under the agreement then you create those sorts of difficulties. You have to review your employment contracts, think about who might be covered, who could we perhaps transfer to this business and give them the notice.
We submit that one should adopt a narrower construction to section 53(6) which is employees “in relation to particular employment” means in relation to employment they are actually engaged in, work that they are doing at the time.
GORDON J: How does that sit, though, with 177(2)(b)(ii) which says I can have a greenfields arrangement and if I have one employee employed in that new site I cannot have a greenfields agreement?
MR FRIEND: I am sorry, did your Honour say 177 or did you mean ‑ ‑ ‑
GORDON J: Section 172(2)(b)(ii).
MR FRIEND: Section 172(2)(b)(ii). It fits ‑ ‑ ‑
GORDON J: Who looks after them?
MR FRIEND: Your Honour, if there is an employee working at the site ‑ ‑ ‑
GORDON J: One person employed, greenfields arrangement, it would seem to suggest on the provision as it is worded that they could not have a greenfields agreement.
MR FRIEND: Once you have employed someone in the work ‑ ‑ ‑
GORDON J: Not only work, you employed them in future. “I employ you to start work in four months time when I have got the thing up and running and I am in the process of” - you cannot have a greenfields agreement.
MR FRIEND: Yes, you can, your Honour, because on our analysis it is not someone who will be covered. On our analysis they are not engaged in the work so they do not answer to the description of an employee who will be covered.
NETTLE J: On your analysis, Mr Friend, would the 17 persons in this case, were they persons who would be covered within the meaning of paragraph 172(2)(a)?
MR FRIEND: Subsection (2)(a)?
NETTLE J: Yes. Employees who are employed as, indeed, they were, who will be covered by the agreement sub silentio if and when it is made.
MR FRIEND: No, because they are not employees who will be covered by the agreement, because they will not be covered by the agreement when it comes into operation. That goes to the second point, which is 186 in the change of tense. We all seem to be in agreement that when the agreement starts they have to be covered.
NETTLE J: Why will they not be covered when the agreement comes into ‑ ‑ ‑
MR FRIEND: Because 53(6) says “coverage” means:
in relation to particular employment.
NETTLE J: Well, the employment will be the employment with Gladstone Park, or whatever it is called, which is the enterprise.
MR FRIEND: Yes, but they are not employed – not doing the work at that stage – so then a greenfields agreement is available. If they are doing the work, you make the agreement with the employees. If they are not doing the work and they are just people who will, maybe or possibly could be doing the work at some stage in the future ‑ ‑ ‑
KIEFEL CJ: So “particular employment”, on your view, is not employment which falls within the scope of the agreement that is identified or classified, however?
MR FRIEND: No.
KIEFEL CJ: It is employment which is actually physically carried out.
MR FRIEND: Yes.
KIEFEL CJ: What is the use of the word “particular” employment then? Is it not meant to denote employment within the agreement?
MR FRIEND: It is in relation to particular employment, your Honour.
KEANE J: Does that not just mean a job? Does it not just mean in relation to a job?
MR FRIEND: Your Honour, we would submit no. These agreements are being made with people who are going to determine not only their own terms and conditions of employment for the next three years or four years but also everyone else who comes along. We are positing an example. This case may not be the best example but you can imagine cases where you will have people who have no experience of what the work is, what the conditions are. They have been offered a job: “Here is your job. You start in a month, and by the way, here is an enterprise agreement. Please sign.” If the employees are going to bind themselves and everyone you would expect that they should have some experience of what the work is like.
NETTLE J: But is not the protection a better overall test, that the Commission must be satisfied after the employees have approved it that those who are covered and those who will be covered will be better off overall?
GORDON J: And that it is has been genuinely agreed to by them – there has been some process.
MR FRIEND: Your Honours have seen the process in this case. They were given the agreement and they signed it. The better off overall test provides some protection but that is mostly concerned with money, your Honour. Agreements deal with conditions as well – make the breaks, shifts, how soon you can be put back on a shift ‑ all sorts of things which can be informed by experience of the work that is actually being done. We submit that one ought to read 53(6) as relating to work that is being done in respect of that coverage.
There is some support for this proposition in one of the cases we have relied on which is CFMEU v Australian Industrial Relations Commission (1999) 93 FCR 317 – it is one of many of that name, of course. It is found behind tab 17. It is a Full Court decision. The majority, plurality – the judgment of Justices Wilcox and Madgwick is the one I will take your Honours to. Could I start, to try and keep this as brief as possible, I do need to go into some of the facts from the headnote:
The second respondent (G) employed over 300 production and engineering staff at the mine -
and then retrenched them all. Then a potential purchaser for the mine was brought into the picture. If we go to page 333, at paragraph 43, there is the possibility of sale of the mine, involvement by Rio Tinto, which had formed a company called Mine Management. As you will see in 43(vi):
Mine Management Pty Ltd to put together a small team of people with the necessary technical and management expertise for an underground mine, who would be available to carry out the statutory functions, to keep the Gordonstone mine on a care and maintenance basis and do the feasibility work for the eventual mine re‑opening -
At the top of the next page:
The kind of work that the persons under the proposed agreement –
there was an enterprise agreement proposed to be engaged in for the mine operations and management. Can I ask the Court to turn next to page 351. There was an agreement made with the 20‑odd people at Mine Management and it was certified by Commissioner Harrison. You will see that there are various parts of the legislation set out which are not relevantly, we would say, the same as what we are dealing with here. At paragraph 104 on the next page:
Section 170LK(1) provides: “The employer may make the agreement with a valid majority of the persons employed at the time whose employment will be subject to the agreement.”
It does not use the “coverage” word. Then at 111 their Honours set out some of the relevant facts. Page 353, paragraph 113:
It may be recalled that, from 21 December 1998, Mine Management employed 22 employees. None of those employees was involved in the operation of the mine, which was still being managed by Gordonstone. Notwithstanding that fact, on that day Mine Management gave to its 22 employees what purported to be “notices of intention to make an agreement” -
and then it was approved in the ballot. They summarise some evidence that was given in relation to that. Over the next page there are a number of bullet points:
In those proceedings Mr McCrea gave oral evidence that:
·Mine Management had 26 employees, 23 of those being production, engineering and staff employees.
·At the time of giving evidence the “work” of the production and engineering employees consisted of induction, first aid courses, and training courses.
·Mine Management had also offered employment to 22 other persons whose employment would commence . . .
·After being appointed the manager of the mind, Mine Management would –
So it had not yet been appointed as manager of the mine:
implement a timetable for recruitment at the mine. The timetable involved appointing 20 employees per month for the first three months and then continuing to recruit every two months until the workforce reached 150.
So, you have an agreement made with a company that is proposing to employ people in a mine, does not operate it and if it gets the contract it will use that agreement to employ the whole production staff at the mine. At [124] and I will not read this but your Honours would mark it, their Honours did an example of how this type of scenario could lead to a manipulation of the system. At [126], they say:
S170LT(6) requires that a “valid majority of persons employed at the time whose employment would be subject to the agreement must have genuinely made the agreement”. This plainly betokens a concern with the authenticity and, as it were, the moral authority of the agreement. It is perfectly understandable – indeed, one might reasonably think, plainly necessary – this be so. The principal object of the Act as a whole, as set out in s3, is “to provide a framework for cooperative workplace relations” by, among other things ‑
and very similar objects to those that we deal with now. Then, the full paragraph at the end of [126]:
There can hardly be fair agreement‑making between employer and employees about wages and employment conditions in a workplace (a mine is a good example) before both sets of parties have actual experience of the work and its place of performance. Without that, cooperative workplace relations are unlikely to be achieved.
Now, if 53(6) is read in an expansive way, then the position will be that, firstly, agreements ‑ ‑ ‑
KIEFEL CJ: Was there a holding in the CFMEU Case that you want us to ‑ ‑ ‑
MR FRIEND: I beg your pardon, your Honour?
KIEFEL CJ: Was there some decision in the CFMEU Case, some part of the reasoning, in particular, that you say is applicable here or it is just observations?
MR FRIEND: The last part ‑ they are observations, your Honour, but they are observations that, we say, are pertinent to the issues before the Court here.
NETTLE J: Mr Friend, does not section 186(2)(a) afford that protection expressly under the current legislation?
MR FRIEND: Your Honour, there was the same usage generally under that legislation and the Court struck down the agreement, I think it is paragraph [128], your Honour, on the basis that ‑ ‑ ‑
NETTLE J: I follow that, but that is the protection, it is not construing down the ambit of the word “coverage” in section 53. The protection is that if the employer does not make a fair dinkum deal with people who are representative, he will not get the protection under 186(2).
MR FRIEND: Well, your Honour, 186(2) focuses on the genuine agreement of the employees who are the ones who will be subject to the Agreement. If those persons – they may have no idea whatsoever about what the work is or how it is going to work; they might, nonetheless, genuinely agree. We say that the Act should be read in a way that ensures that the people who are making the Agreement know what they are doing, have some idea.
KEANE J: Why is not that concern addressed by the provision for representational rights, that if the employees are being asked to buy a pig in a poke they can and they are entitled – they are to be entitled to be represented?
MR FRIEND: They are, your Honour, but at the same time you can have the situation where those employees may not be able to have any view or give any constructive view to any representative they might choose of how that would work…..how it works.
KEANE J: Well, that is possibly so but just staying in the real world for a moment, there is no question that in this case the SDA would have been in a position to provide advice and assistance.
MR FRIEND: I accept that, your Honour, and I will go further than that, your Honour, these employers were obviously, in this case, engaged in similar work to what they would have been engaged in under the new agreement. But the rule for this case may not fit all cases is my point.
GAGELER J: Now, you seem to be saying that the policy identified by the Full Court in the CFMEU Case in relation to the Workplace Relations Act 1996 follows through into the scheme of the Fair Work Act 2009.
MR FRIEND: Yes, your Honour, the provisions are very similar.
GAGELER J: They might be very similar but is there any extrinsic material that you can point to – anything since 1999 in any commentary?
MR FRIEND: No, your Honour.
GAGELER J: I will even take something from the Commission.
MR FRIEND: Not on my feet here, as I stand here, your Honour. We simply point to the text of the legislation and the fact that almost identical provisions were re‑enacted in the Fair Work Act.
EDELMAN J: How does your approach to section 53(6) fit with 52(1)(b) and 52(1)(a)?
MR FRIEND: Your Honour, it is clear – I beg your pardon. Rights and entitlements will only arise under an agreement if it applies to an employee. An agreement when it is made covers the employees it is expressed to cover. Once it is approved it comes into operation seven days thereafter and the employees – if the employees then undertake work under the Agreement, it applies to them and writes the rights for them. It is possible that an agreement may cover an employee but not apply to them because, for instance, there is an earlier unexpired agreement applying to their work. So, until that one expires the new one does not kick in. The system allows for the parties to have connecting agreements and ongoing coverage under different agreements over time. So, you can make a new agreement before the old one expires. It does not happen very often but it is possible. I am not sure if that has addressed your Honour’s question.
EDELMAN J: So, that circumstance and the delay between the agreement being approved by the Commission in the six days are the only circumstances in which there would be a difference between the agreement applying and the agreement covering the employee.
MR FRIEND: Yes, an agreement would still apply to an employee even though the employee – the rights of the agreement which accrue to the employee from the agreement and to the employer do not start until the seven days is up.
GAGELER J: Is the effect of your construction really to go back to the position that you advocated before the Full Bench and that is that this could only have been done as a greenfields agreement?
MR FRIEND: Yes, until an employee was employed, but it could have been done as a greenfields agreement, there is no lacuna, because on our construction of “will be covered” the 17 did not fit that category and, therefore, you could have a greenfields agreement. On the opposite construction of “will be covered”, for instance, ALDI wants to start a new region, a new business, where a greenfields will allow construction to be available but they have someone employed who is under an employment contract that says they could be transferred there then no greenfields agreement would be available because they would have employed someone who would be covered by the agreement.
So, all sorts of – by standing the conception of “will be covered” beyond what one would ordinarily have thought would be what was the focus of the legislation, the actual employees in the business, the ones who are working, by expanding it beyond that you create a whole raft of problems which do not seem to be anticipated in the legislation at all. What is the position, for instance, when one talks about amending an agreement – varying an agreement? This provision has been raised in section 207 ‑ and I may be overstating this, looking at the words in front of me right now, but 207(1) says that an employer and the employees employed who are covered by the agreement can apply to vary it. Employees who will be covered are included but only if a variation to the agreement would bring within its ambit.
So, it perhaps does not take the argument much further. I apologise because if the broad test is there well, then, all of the employees who are in other parts of the business would have to vote on the variation to the agreement. But that is an inconvenience that should not be underestimated and it gives rise to the possibility of invalidity in agreements if employees who should have been given notice of representational rights and should have been given a vote are not. It is easy to work out who is working in your business and give them the documents. It is a lot harder to review, especially a big organisation, all your contracts and work out who could be asked to work there under their contract. So, we say, there is a very strong reason why the narrower construction should be preferred.
GAGELER J: Well, can I just test that. On your construction, I think it would be sufficient that two employees had started work at Regency Park, that is all you need.
MR FRIEND: Yes, that is right, and then you could make the agreement with them. That is what happened in John Holland. Six employees made an agreement for the whole of Western Australia for three years. Any projects that John Holland had in Western Australia ‑ ‑ ‑
GAGELER J: There is nothing wrong with that.
MR FRIEND: People have different views about it ‑ ‑ ‑
GAGELER J: Let me put that another way. That can be done consistently with the scheme and policy of the Act.
MR FRIEND: Correct, your Honour. John Holland is a fairly closely reasoned judgment. Perhaps I should take the Court now to the Full Bench decision because our position is that on any view the Full Bench – I withdraw that, things have changed ‑ that is found at page 317. At para [35] the Full Bench deals with an earlier Full Bench decision called Cimeco. Now, in that case, some employees who were actually employed and working were given a vote and some who were going to be employed but had not yet been “mobilised” was the word used, were also given a vote. When the agreement commenced they were still and would not have been actually doing the work and the Full Bench in Cimeco said, well, they are not employees who will be covered. “Will be covered” means those falling within the coverage clause and who will be covered at the time the agreement is made:
[It] does not indicate future –
this is [51], quoting from Cimeco:
likelihood but rather expresses a determinate or necessary consequence.
Of course, that assumes the narrower meaning of coverage; I accept that. The Full Court in John Holland was dealing with section 186(3), and I will just ask the Court to turn to that very briefly. This is one of the criteria for satisfaction for approval of agreement by the Commission:
The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.
John Holland raised that issue fairly and squarely, as I indicated to Justice Gageler a little moment ago. The agreement was made with three employees – it might have been six – and it covered a whole range of classifications, many more than there were employees. But, in any event, the question arose as to whether the group of every employee in construction in John Holland in Western Australia was fairly chosen, when you only had three or six.
Justice Buchanan became concerned that the words “covered by the agreement” in 186(3) if read in the same way as those words – and they are used in 172 – will be covered by the agreement. If they meant the same thing, all sorts of difficulties would arise about determining who would be eligible to vote on the agreement and who you would have to deal with. And so in the passages that are quoted by the Full Bench – he came to the conclusion, and this was agreed in by Justice Besanko and Barker, that it had a different meaning. You could look at persons who might in the future be covered, not just those who were presently covered.
I can go to John Holland, but if it is quite convenient to the Court just to use the quotations within this case. At 36, which is also in 36 of the Full Bench decision:
The virtual impossibility of knowing with certainty the composition of the whole group within the potential coverage of the agreement, compared with the complete certainty about those to whom a vote is in fact offered, makes the choice of the first alternative construction an attractive one –
that is, the actual people:
unless such a construction is excluded by the terms of the statute.
That is not what has been accepted. The Commission and everyone has operated on the assumption that 186(3) meant that you looked at the expression of coverage in the agreement, including potential future employers or future persons who might work under the agreement, and his Honour then sets out some reasons for accepting that wider view. The members of the Full Bench have set those out and have set out Justice Besanko’s agreement.
I should indicate that Justice White dealt with this also in dealing with the Full Bench’s reasons. I beg your pardon, I will come back to that; I will find it in a minute. The Full Bench, following John Holland, said at 41 that they would adopt the position that the words will be covered in 172 and should have the same meaning as in 186(3) – in other words, the whole range of people who might come under the coverage. At 41, they said:
Hence, for the purposes of giving logical and consistent meaning to common phrases in the Act we consider it appropriate to apply the approach adopted by the Federal court in relation to the fairly chosen test. That approach, in over view, supplants the approach adopted in Cimeco. The Federal Court’s approach entails two elements. The first involves determining whether the persons are employees, while the second entails determining whether the employees will be covered by the agreement after it is made.
And, by that, they mean at any time after it is made. So you have to look at employees who might be covered at any time after the agreement is made to assess who your electorate is and who you are going to make your agreement with. That is the test that they adopted in deciding that these employees were employees who would be covered.
We say, on the basis of the construction we put on, really it comes down to 53(6), assuming that it has to be determined at the time the agreement is made, that the coverage only exists if the employees are actually engaged in the employment which is covered by the agreement, not some other employment. And if one looks at the facts in this case, at 138, the offer of employment provides, in the first paragraph, at about line 19:
You will continue to be employed until that date in your current Region, and will be covered by that Region’s Enterprise Agreement.
So insofar as the parties chose their relationships at that time, the employment was not employment in the Regency Park agreement.
BELL J: But we are talking here in the context of an agreement that the employee would, as a matter of fact, in the future be employed in the Regency Park store and would at that time be subject to the Regency Park agreement.
MR FRIEND: That is so, your Honour.
BELL J: Some of the submissions that you have been putting about the extreme and impractical consequences of the construction for which Mr Hatcher contends do not seem to me self‑evident. We are looking at people who, within the terms of section 172(2)(a), would seem to be covered. They are employees and they are persons, having regard to the contract that each has entered, who will be covered by the agreement.
When one looks at a construction other than that – than applying the ordinary meaning of the language in order to avoid difficulties that you have identified one comes back, as I understand it, to your acceptance that if ALDI had employed two store managers there would have been no question of them being able to enter a greenfields agreement and all they would need to have done was to negotiate with those two, which seems ‑ ‑ ‑
MR FRIEND: There might be questions about the choice of the group, but I ‑ ‑ ‑
GORDON J: That is where you answer is, though. That is where the protections kick in. That is what Justice Nettle put to you.
MR FRIEND: Your Honour, some of my submissions are more directed at the difficulties that might arise for employers.
GORDON J: It is funny, is it not, that you are putting those complaints ‑ ‑ ‑
MR FRIEND: Why not, your Honour? It is about construction of the legislation.
NETTLE J: Mr Friend, is this the first time in the 10 years or so existence of this Act that this provision has been so construed by an authoritative court like the Full Court?
MR FRIEND: Yes, the question has not arisen before that I am ‑ ‑ ‑
NETTLE J: Previously, it has been accepted that it operates in the way for which ALDI contends?
MR FRIEND: No, no, Cimeco. The Full Bench was the change from Cimeco. Cimeco was consistent – which was a Full Bench, headed by Justice Ross – with what we have been putting.
NETTLE J: When was that? Justice Ross, was it?
MR FRIEND: Yes. That was I think about 2009, your Honour. I will just see if I can find ‑ ‑ ‑
NETTLE J: But early after the Act’s inception?
MR FRIEND: Not at the Act’s inception. There are some other cases, but I cannot bring them to mind just at the moment.
EDELMAN J: 2012.
MR FRIEND: Thank you, your Honour. Now, in relation to what your Honour Justice Bell was putting to me before, can I say we accept that there is a high probability that those employees ‑ and no doubt probably all of them did – take up that employment. But the issues that I am dealing with are broader than that, because it may not always be the case that there is an agreement of that nature in place. And if the broader construction is adopted, then the difficulties that I have raised arise and I have said that those difficulties arise for employers but they might also arise for employees if agreements are struck down at some stage because of some failure to give someone a notice.
BELL J: It may be the theoretical possibility that a person employed by an employer in a capacity could conceivably change the character of their employment but that does not mean that the person would answer the description in 172(2)(a) of being a person who will be covered by the agreement. The facts with which we are concerned are a cohort of 17 persons who had entered into a contractual arrangement to take up the offer at Regency Park.
MR FRIEND: But, your Honour, that cannot be distinguished, in my submission, from the fact of someone who has a provision in their contract which says their employer can transfer to Regency Park. On that argument they would still be persons who will be covered because the possibility of transfer means coverage and that is the difficulty we see with the broad construction – or we submit that it exists with the broad construction.
KIEFEL CJ: Where are we in relation to your outline then, Mr Friend?
MR FRIEND: I am nearly finished the first appeal ground, your Honour. The second one would, I hope, be a good deal shorter. If there is an error in the Full Bench decision of the nature we identified – in other words, if they have determined that people who are not within the category of persons who will be covered by the employment because they are not doing the work, are in fact persons who will be covered by the agreement and are in fact covered by the agreement, then we submit they have applied the wrong statutory test and it is a jurisdictional error. They have misunderstood the statute and, in effect, they have approved an agreement that they had no authority to approve because it was an agreement with persons who did not fit the statutory description of persons with whom an agreement can be made.
KIEFEL CJ: If you are moving on to another topic that might be a convenient time.
MR FRIEND: Yes, thank you, your Honour.
KIEFEL CJ: The Court will adjourn until 2.15.
AT 12.43 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.14 PM:
KIEFEL CJ: Yes, Mr Friend.
MR FRIEND: Thank you, your Honour. If I can just very briefly, before moving on to the second ground, go back to where I started on the first ground, which is the change in the appellant’s case. Can I take the Court to page 401 of the appeal book? This is Justice White’s decision. At paragraph 143 he said:
The consequence –
of what he had set out before:
is that there were no employees actually “covered by” the Regency Park Agreement at the time it was made, at the time of the application to the FWC, or at the time the agreement was approved. Counsel for ALDI acknowledged that that was so.
When the appeal came before this Court and the appellants filed their submissions – I do not know if those written submissions are with the Court – but paragraph 3 where the issues are stated, the issue in this regard is:
Does “coverage” for the purposes of s. 186 of the Act mean “the whole class of employees to whom the agreement might in future apply”.
In inverted commas, it appears to be a quotation from John Holland which is dealing with that issue. Today, we have a different argument put and it is the first time it has been put in this way to us, which is that they were covered at the time the agreement was made and we have had to deal with that. But we do make our application that special leave should be revoked on the basis of the way the appellant has conducted the case below and here.
Can I move on to the second ground of appeal which deals with the better off overall test? I do not think the Court has been taken to the relevant legislative provisions yet, so can I do that very briefly? The first is section 186(2)(d). Subsection (2) sets out the matters that the Commission must be satisfied of before approving an agreement and one of those matters is in paragraph (d):
the agreement passes the better off overall test.
The better off overall test is set out in section 193:
An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time –
which is the time that the agreement was lodged:
that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
The first respondent put before the Full Bench of the Fair Work Commission substantial evidence, the effect of which, if accepted, would be that the employees were not better off under the agreement than under the relevant modern award. Now, if I can just direct the Court’s attention ‑ ‑ ‑
BELL J: I am sorry, whose acceptance was that?
MR FRIEND: It would be the acceptance of the Full Bench ‑ ‑ ‑
BELL J: The Full Bench you say accepted ‑ ‑ ‑
MR FRIEND: ‑ ‑ ‑ of the Fair Work Commission, if they did.
BELL J: I am sorry.
MR FRIEND: If they did, I am sorry, your Honour, I am trying to speak more loudly; I am told I was too soft. Now, the evidence is found in the appeal book at pages 143 to 160. This is a statement by Ms Rebecca Patena. Now, I do not take the Court to this in any attempt to argue the merits of whether this evidence shows that they are better off or not, only that it could, and the effect of it is that employees – for instance, if one turns to page 152, you have a comparison for one particular employee which shows at line 30 for a particular roster what Ms Patena’s evidence was, that she used the actual rosters that people were working in their current positions, and their offer of employment stated that they would continue with the same hours in Regency Park. So, at line 30, her calculations, the total payable under GRIA, the General Retail Industry award, is some $4,560, and then on her analysis the total payable under the ALDI Regency Park award is $4,073.
BELL J: Mr Hatcher has made submissions about the absence on this analysis of any reference to the bonus payments to which he referred us ‑ ‑ ‑
MR FRIEND: Yes.
BELL J: ‑ ‑ ‑ and to the circumstance that people were treated at a more favourable level as a ‑ ‑ ‑
MR FRIEND: Yes.
BELL J: Instead of an assistant class 1 they were assistant class 6 or what have you. Are those aspects accepted?
MR FRIEND: We do not accept that this evidence should have been rejected or could be dismissed out of hand. Our position was that it should have been considered and the Commission should have done its job and made a decision about whether or not the agreement was better than the award.
BELL J: The Commission accepted the view that the Deputy President had been relevantly satisfied that it passed this test.
MR FRIEND: That is so, your Honour.
BELL J: So the present complaint is that the Commission failed to explain how it could be satisfied that the Deputy President had done the task that was assigned to him?
MR FRIEND: Well, none of this material was before the Deputy President. This is the fresh evidence.
BELL J: Yes, all right.
MR FRIEND: So, there are three levels of complaint here.
BELL J: Yes.
KIEFEL CJ: When you say put before the Commission - it was filed, it was referred to in argument.
MR FRIEND: Not before the – I am sorry, I should have said the Deputy President. I am sorry, your Honour. It was before – it was filed, the evidence was given, there was cross‑examination and it was referred to in argument ‑ ‑ ‑
KIEFEL CJ: Before the Full Bench.
MR FRIEND: ‑ ‑ ‑ before the Full Bench, and there were submissions made ‑ ‑ ‑
KIEFEL CJ: But there was no suggestion that the evidence was rejected, given that cross‑examination took place upon it.
MR FRIEND: No.
KIEFEL CJ: It must have been accepted by the Full Bench.
MR FRIEND: Well, we say it was received into evidence. Justice White at 155, appeal book 403, made a finding that both parties I think sought and were granted leave to adduce further evidence.
KIEFEL CJ: And was granted?
MR FRIEND: Yes.
GAGELER J: Pursuant to what provision?
MR FRIEND: There is a provision. I will get that turned up, your Honour. But the Full Bench on appeal can receive further evidence and that is one of the reasons, for instance, in Coal & Allied that they determined it was a rehearing appeal, but we will get - section 607(2).
Now, there was a comparison table which was provided by way of submission which I can just direct the Court’s attention to. I do not want to spend a lot of time on it, but it starts at page 289 of the appeal book and goes to 296. Some of the figures are a little difficult to read because they were originally highlighted. On my copy of the appeal book, at least, they can be read. They are in the last column and they are the ones – the highlighted ones are the ones which it was submitted showed that the employees were not better off.
The sorts of differences which were pointed to, differences in enforceable entitlements to casual loadings, Sunday loadings, annual leave loadings, different minimum engagement for part‑timers, the agreement had no meal allowance, whereas the award did, the agreement had a much greater span of hours than the award, differences in breaks, the agreement did not provide an entitlement for consecutive days off, which the award did, there was no right under the agreement for Sundays or weekends off, which the award had.
But these are all issues – some of them are monetary and some of them are employment issues, which all come into the balance. We accept that it is for the Commission to weigh those up and make a decision, if the money is higher, if it is enough to compensate for them, or if it is not. But ouir submission is that in doing its job the Commission actually has to do those things.
KIEFEL CJ: You say that the error is that they failed to undertake the statutory task?
MR FRIEND: Yes, that is the first error, the first error which is simply failing to undertake the statutory task. Can I take the Court to the reasons of the Full Bench?
GORDON J: Is not the position that is set out in paragraphs 56 to 58 in its entirety on this BOOT test?
MR FRIEND: That is it. That is it, your Honour. So we have the SDA’s submission noted and the analysis of entitlements noted and then a reference to – ALDI’s reference to clause 13. Now, clause 13 is a misnomer really. This agreement has very large clauses. So if one turns to paragraph 54 of the appeal book, it sets out clause 13 and the fifth paragraph in clause 13 is the clause which Justice White called “the make‑good clause”.
KIEFEL CJ: Is it your submission that the Full Bench failed to have regard to the material because it thought this provision gave the answer to the question?
MR FRIEND: We submit that is the inescapable inference.
KIEFEL CJ: Is that because of what was said in the first sentence of paragraph 58?
MR FRIEND: That is part of it. The other part of it, your Honour, is that in the submissions to the Full Bench that is what was urged upon them by ALDI. Just bear with me one moment; I have lost my note of where that is – 310. So these are the written submissions filed by ALDI before the Full Bench of the Commission, at paragraph 64 of line 20 on page 310 of the appeal book. They say:
The Agreement, like all of the other ALDI agreements, contains a clause in the following terms -
and it sets out this clause:
This provision appears in clause 13 –
And then 66:
As such, the Agreement contains a mechanism for ensuring that it meets the Better Off Overall Test.
KEANE J: In these submissions is there any submission that the fresh evidence is of so little weight that it can be discarded?
MR FRIEND: Your Honour, I am not aware of any in these written submissions. There was certainly a submission made that the fresh evidence should not be accepted orally, that I can recall, but ‑ ‑ ‑
KEANE J: Accepted or admitted?
MR FRIEND: Not admitted. But I cannot, standing here now, recall. It was some time ago, your Honour.
KIEFEL CJ: But there was cross‑examination upon it.
MR FRIEND: There was cross‑examination and that is in the appeal book. So a number of things were put to Ms Patena about why she had not taken some things into account or other things and she gave her answers in relation to that.
KIEFEL CJ: The Full Bench made no suggestion of reserving its position with respect to admissibility, if that is possible.
MR FRIEND: My recollection, your Honour, is that when the evidence was started the Full Bench said, “We’ll reserve our decision on that and then any decision we get we’ve admitted into evidence.”
KIEFEL CJ: But in between that it allowed cross‑examination on the material?
MR FRIEND: Yes. It ran the ‑ ‑ ‑
GAGELER J: Can I go back to the nature of the appeal?
MR FRIEND: Yes, your Honour.
GAGELER J: At page 320 the Full Bench addresses that, at least in abstract terms addresses it, and says if it is a matter of discretion then you apply House v The King, at paragraph 15, and if it is not a matter of discretion then the question is whether the decision is correct. Which of those approaches is it applying when it gets to paragraph 58? Is it treating the question of satisfaction, section 186(2)(d), that the agreement passes the better off overall test as a question of discretion or as a question that is to be determined as a matter of correctness?
MR FRIEND: Your Honour, it is a very cryptic passage.
GAGELER J: Let us start with what you say is the correct approach. Is it a House v The King question?
MR FRIEND: In terms of the BOOT, that is a House v The King question because it is a discretionary decision of the Deputy President as to whether or not to approve because he has to be satisfied that it passes the BOOT.
GAGELER J: The word “satisfaction” or the word “satisfied” in 186(2) must, on your submission, make the entirety of the factors to be satisfied, of which the Fair Work Commission is to be satisfied, matters of discretion.
MR FRIEND: That is so.
GAGELER J: Is that the common understanding?
KEANE J: Given that whether or not people are better off overall would seem to be a question that lends itself to calculation.
MR FRIEND: It does in the money sense, your Honour, but sometimes you trade off something like the length of a rest break or whether you can always have a Sunday off, and that is why it is regarded as a balancing exercise.
KIEFEL CJ: Synthesis.
MR FRIEND: I am sorry, your Honour.
KIEFEL CJ: It is all right. I am saying that for the benefit of someone else. It is a balancing exercise, you say?
MR FRIEND: Yes, and that is the way it has been treated in the Commission and there have been some reasonably significant cases. The Court may be aware of a case about the Coles agreement, which has had a lot of coverage in the press, and that involved questions of whether or not employees were better off overall. Have I answered your Honour Justice Gageler’s question?
NETTLE J: On the former, Mr Friend, if it is a House v The King test and the original Deputy President did not have before him fresh evidence that was adduced before the Full Bench, how would the fresh evidence demonstrate that the Deputy President might have been in error in the sense of a missed exercise of his discretion?
MR FRIEND: This goes to the third element that we point to in relation to difficulty, this part of the BOOT. Allesch v Maunz says that when there is fresh evidence the appellate tribunal or court determines error on the basis of all the evidence, including the fresh evidence. Now under House v The King you could clearly say there is this thing that he did not have regard to or could not have had regard to; it demonstrates that the decision was wrong. So it is less of a focus on the actual discretionary process but it is a focus on the outcome based upon the material before the appellate decision‑maker.
NETTLE J: Being the Full Bench at that point.
MR FRIEND: Yes.
NETTLE J: So ultimately it is a question of what was the right decision to be made on the evidence put before the Full Bench.
MR FRIEND: Yes, and if the Full Bench says, “We think the right decision is this because we have all this new material”, that demonstrates error on the Allesch v Maunz principle, which we have referred to in our submissions. The case is (2000) 203 CLR 172. At 23, the Court said:
For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error.
GAGELER J: So in the case of fresh evidence, how does that work?
MR FRIEND: The appellate court has to include the fresh evidence in its consideration of whether or not the original decision was correct. Otherwise, a discretionary decision is insulated from any application of fresh evidence on appeal.
NETTLE J: Once fresh evidence - House v The King is off the table and we are down to an appeal by way of rehearing, I take it?
MR FRIEND: Yes, but the appellate tribunal would not interfere unless it thought there was error.
GAGELER J: In the conclusion?
MR FRIEND: Error disclosed by the fresh evidence.
NETTLE J: It cannot be disclosed by the evidence; it was not before the judge below.
MR FRIEND: No; “an erroneous decision”, I think, is perhaps how I should better have put it, your Honour.
GORDON J: So if we tie that back to the way in which you are putting this argument, as I understand there is the failure of the Full Bench to undertake its statutory task is your first ‑ ‑ ‑
MR FRIEND: That is the first step, yes, your Honour.
GORDON J: And the second error is wrong decision.
MR FRIEND: No, legally unreasonable decision – that is in relation to simply relying on this clause 13.
NETTLE J: It is not just unreasonable; it is wrong.
GORDON J: Wrong.
NETTLE J: The test is whether, having regard to all the evidence, the result reached by the judge below was correct, not whether he was acting within the ambit of discretion in coming to that conclusion.
MR FRIEND: Yes, but – I am sorry, your Honour, I may have gone too far. The second error that we point to is that reliance on clause 13 as a cure‑all for any failure of the BOOT cannot work because an employee cannot be better off under clause 13.
GORDON J: So the decision is wrong. On a rehearing, it is a wrong decision.
MR FRIEND: It is a wrong decision, yes.
BELL J: What do you say to Mr Hatcher’s submission, which, as I understand it, is one looks at the whole of the agreement so one takes into account the bonuses and the way employees are classified and the like and the work done by clause 13 is in the event in year 3 of this four‑year agreement the modern award had made provision in terms of hourly rate but is superior to that at the test time, then clause 13 is giving a right to the employee to seek an adjustment upwards but that all of the work of the test of the BOOT is not found in clause 13. It is, as it were, as I understood the submission, an indication of an advantage to the employee because it ensures in the future one does not slip behind.
MR FRIEND: There are several things in relation to that, your Honour. Firstly, the BOOT test is applied at the test time.
BELL J: Yes.
MR FRIEND: You do not look at the future; you look at what the employees are entitled to now under the agreement and the award.
BELL J: Appreciating that, as I understand the submission – and I may not have grasped it – but when one looks at, at the test time, the agreement one sees amongst other factors that it confers a right in three years’ time, if that be the case, to come back and have an adjustment if things have worked out in such a way that the modern award is in some respect more attractive than the provision under the agreement. So that, as I understood the submission, one might look at the agreement and see at the test time the employee is demonstrably better off, having regard to all the factors that might be weighed into that decision.
MR FRIEND: Yes.
BELL J: And a factor would be that clause 13 is providing an additional benefit.
MR FRIEND: Your Honour, I do not know that I would submit that that is correct simply because one compares the benefits as at the test time, not future benefits. An agreement, for instance, might have provisions that say the wages go up 2 per cent per year – commonly they do – but it is no part of the Commission’s role in assessing whether the employee is better off at the test time to say they are going to give a 2 per cent wage increase next year. It is at that time, in my submission.
I am not sure that it has much to do with this case though, your Honour, this issue, because the Commission, the Full Bench did not say, “Look, we’ve taken everything into account, we’ve looked at these balancing factors, we’ve set them out,” and I will hand up in a minute a decision of the Commission which does all this balancing exercise in a way we say it needs to be done. “We’ve set them out and we think the employees are better off and in particular the thing that tips it over the edge is this clause13.”
Maybe they can or maybe they cannot. I would probably submit they cannot and as I said that was because they had this right to get increases in the future equivalent to the award. I would say they cannot but it is not this case because in this case what they appear to have done is said do not worry about the differences between the agreement and the award. It is all fixed here by this clause and this clause does nothing more than give an employee an entitlement equal to the award after the employee goes to his or her employer. He makes a complaint, goes through a process and possibly goes to the Fair Work Commission to try and vindicate his or her rights.
BELL J: I understand that. I think the submission that is being put against you is that the agreement, so it is said, provided in essence for the employee to be better off overall and had the added bonus of clause 13. That I think is the way it is being put.
MR FRIEND: Certainly my learned friend says the agreement is better than the award, but we are not talking about that in this Court. We are not talking about finding out whether the agreement passes the better off overall test. We are talking about whether the Commission performed that function.
BELL J: I understand that, Mr Friend. I was simply seeking your submission in response to Mr Hatcher’s submission.
MR FRIEND: I am sorry, your Honour. Of course I knew your Honour was not putting that to me. It seems to me the way Mr Hatcher was putting the case, he was descending to the facts and saying have a look at all of this; the agreement is better than the award, and we say that is just not a permissible thing to do in this context. Look at what the Full Bench said and what does it tell us about what it has done.
BELL J: Just for my benefit, if one has an agreement that makes provision, for example, for annual 2 per cent increases in the hourly rate, it could happen, could it not, that under the modern award three years out the hourly rate is superior under the modern award.
MR FRIEND: Yes. The award can overtake the agreement. That is right.
BELL J: Yes, so clause 13 on one view does provide some protection against that.
MR FRIEND: On one view, some benefit perhaps in the future subject to various things if that is what happens, but not at the test time.
BELL J: Yes.
MR FRIEND: That is our submission.
EDELMAN J: Except it is at the test time because whatever future benefit that gives is a current right now. It might not be worth the full value of all of those benefits but it is a clause that might be worth something because it is included in the agreement.
MR FRIEND: It is a contingent right of the employee, yes, that he or she has been underpaid if one wants to try to give that value, perhaps. It is a debate, I repeat, your Honour, is not necessary to have in this context because we are looking at what the Full Bench did and no one can say that that was what was operating on their minds and if they did how could it outweigh detriments if they are there?
BELL J: Mr Friend, it is not a contingent right in the event the employee has been underpaid, is it? Because you have just accepted that under an agreement, the time may be reached where the award provides for higher pay. So, the contingent right protects against that circumstance.
MR FRIEND: Yes.
BELL J: But, it would not be right to describe the employee as underpaid. The employee would be receiving the entitlements in accordance with the award – with the agreement.
MR FRIEND: Of course, your Honour is right. I was using shorthand. Underpaid – paid less than the entitlements under the award ‑ ‑ ‑
BELL J: Yes.
MR FRIEND: ‑ ‑ ‑is what I should have said. I am sorry, your Honour. The third problem that we point to is the last two sentences of paragraph [58] on page 334, where the Full Bench said:
In our view the Deputy President properly considered the BOOT and reached a decision based on a sound analysis. It has not been demonstrated that there is any appealable error in the decision under appeal.
But, the focus should not have been just whether or not the Deputy President analysed the material before him properly but what all the material before the Full Bench disclosed. But, it is the passage that I read earlier from Allesch v Maunz, that if there is new evidence then you have to take that into account.
GORDON J: Is that not any more, though, than your – is that any more than a particular of your first ground, they just did not do what they were supposed to do? They failed to undertake their statutory tasks.
MR FRIEND: They did not undertake the statutory duty, perhaps, in two ways, your Honour. They did not actually do the task and they did not apply the right test. They said, we have got all this new evidence but we do not care, we will just have a look at what Deputy President Bull did and we think that is all right. But, your Honour, it does not matter, ultimately, I suppose.
Can I move very briefly, I hope, to the notice of contention? The notice of contention only arises if we are correct about one or other of the complaints that we make about the Full Bench decision, but my learned friend’s argument that the errors are not jurisdictional is correct. The errors would be, we submit, errors of law. The question, really, for consideration is whether or not they might appear on the record, the face of the record. Now, can I make it very clear that we are not here trying to expand or change or enlarge in any way what is the separate understanding at this stage about the face of the record? We are either right that we come within what is in probably mostly Craig’s Case or we are wrong.
GAGELER J: Was this argument put to the Full Court?
MR FRIEND: Yes.
GAGELER J: What bit of section 39B of the Judiciary Act allows for certiorari to issue on the basis of error of law on the face of the record?
MR FRIEND: Your Honour, it might arise on the accrued jurisdiction of the Court.
GAGELER J: What provision is that?
MR FRIEND: The Federal Court, accrued jurisdiction is in the 20s, your Honour. I am sorry, your Honour, I had not turned my mind to this issue.
GAGELER J: Well, it is your point.
MR FRIEND: I am sorry, your Honour?
GAGELER J: It is your point and it is a potentially very large point.
MR FRIEND: I understand, your Honour. I am simply apologising for not being ready to address it immediately. My juniors will try to find this, your Honour, if I might move on, and I will seek to address that as best I can.
Now, in this case, there is no record of the disposition of the matter before the Full Bench other than the decision which we have been dealing with today. We know from section 601, which should be in the bundle, that decisions of the Fair Work Commission must be in writing. That being the case, we start from the proposition that if one is to get back the record, the adjudication of the proceeding can only be contained in the decision. If we turn to Craig’s Case at tab 3, that is Craig v South Australia, (1995) 184 CLR 163 ‑ ‑ ‑
GAGELER J: Before you do that, what do you get from section 601?
MR FRIEND: That it requires the making of a record of the decision in writing.
GAGELER J: And draws a distinction between the decision and the reasons for the decision?
MR FRIEND: Just a moment, your Honour. It does, your Honour, and under section 598, the Commission can make an order as well.
GAGELER J: Do you say there is error here in the decision or in the reasons for the decision?
MR FRIEND: In the reasons, your Honour – in the document containing both the reasons and the decision. If you can split that document up, then I cannot succeed in this argument. If you can take a document which is a single document which establishes what the outcome of the case is and which is the only record of the case, and you can cut out sentences of it and say that that is the decision and the rest of its reasons, then I cannot succeed. My point has to be, your Honour, that once you have a document, even a document with pages like this one, if it is the only thing that comprises the decision and it also includes the reasons, then the reasons are part of the decision document and reviewable. Now, I was going to Craig’s Case. At 182, point 6 in Craig, the Court said:
The determination of the precise documents which constitute “the record” –
and note the focus on documents:
of the inferior court for the purposes of a particular application for certiorari is ultimately a matter for the court hearing the application. The effect of the foregoing is that “[o]rdinarily, in the absence of statutory prescription, the record will comprise no more than the documentation which initiates the proceedings and thereby grounds the jurisdiction of the tribunal, the pleadings (if any) and the adjudication”.
Our submission is that the adjudication is the decision.
GAGELER J: Not in the statutory section 601 sense but in the sense that it is a piece of paper headed “decision”.
MR FRIEND: Yes. It is the one thing where you can find what happened to this case in the Commission. When we filed the submissions, there was one – there are now two Federal Court cases, Full Federal Court cases ‑ against on this point. Can I take the Court to the first of them?
GAGELER J: Are they in your written submissions?
MR FRIEND: One of them is. The other one was only handed down on Monday. At least I think – yes, they are in our written submissions, yes. The first one is AFMEPKIU – I cannot remember all the names – v ALS Industrial Australia (2015) 235 FCR 305 which is found at tab 16. On page 343, at 94 and 95 is the relevant passage, the decision of Justices Dowsett, Tracey and Katzmann. Their Honours say:
The limitation of the availability of review to cases in which error appears on the face of the record is, at least in part, designed to limit the frequency of such reviews. Identification of the content of the record should not be guided by the desire to find error. Rather, the focus should be upon identification of the issues raised for determination and the outcome of the process. As we have observed, Craig establishes that the starting point is that the record comprises “no more than”: ‑
then the matters that I have referred to: the documentation, the pleadings ‑ the initiating of documentation, the pleadings and the adjudication:
The reasons and transcript will only be incorporated by reference into the formal order (and therefore the record) to the extent that the reference brings about its incorporation as an integral part of the order (and record).
We emphasise the word “integral”. But then the point that is against me, 95:
In this case, the whole of the Full Bench’s disposition of the appeal is headed “Decision”. However it does not follow that the whole of the document is part of the “formal order” or “adjudication”. The formal order is, in our view: –
And then their Honours excerpt part of a sentence:
… it is appropriate that we grant permission to appeal, allow the appeal, and substitute our answers to the questions posed by the parties upon the determination of the dispute.
Similarly, on Monday – last Thursday, sorry, I only saw it on Monday – another Full Court with Justices Tracey, Wigney and O’Callaghan, handed down a decision in Duggan vMetropolitan Fire and EmergencyServices Board (2017) FCAFC 112. The relevant passages are at 64 and 65 through to 68. Their Honours, in the end, decided to follow the ALS Case. Our submission is that I cannot look at parts of an integral document and excise a part of the sentence to say that is the decision, that is the adjudication.
If the Commission has chosen to publish a decision which includes the reasons, that brings the reasons within the face of the record. Otherwise, if you can do what the Full Court says you can do in ALS, the remedies, to all intents and purposes, have been abolished, the remedy of looking at the reasons when they are being exposed in a particular way. Now, the Full Bench could, as I said, have made an order and if they had made an order separately and published the reasons, we would not be making this submission.
But they have set out the outcome of the case in the document headed “Decision” which exposes their reasons and that, in our submission, exposes those reasons to review for error of law. The privative clause which was there for 100 years or more is gone. That had an effect and one of the effects, we submit, is that in these circumstances you can review for error of law on the face of the record.
KEANE J: What do you say about the suggestion that section 601(2) distinguishes reasons from the decision?
MR FRIEND: Well, it clearly does, your Honour, but in this case, they are all bundled up into the one document. It is just the one thing. Now, do you pull off the pages with the bits that are said to constitute the decision or do you cut and paste them out or do you as, we submit, take the document as a document? We are dealing with a remedy which deals with record constituted by documents. Now, if the courts are starting to pass the documents, not just which documents go in but how much of each document goes in, then, in my submission, you are changing what has been the accepted position on certiorari ‑ ‑ ‑
GAGELER J: What accepted position are you talking about?
MR FRIEND: Your Honour, can I take the Court to a case that is not in our list, Council of the City of Gold Coast v Canterbury Pipe Lines Limited (1968) 118 CLR 59. It is referred to by the other cases. This is a case about an arbitrator’s award and so to that extent it is different but, as we apprehend it, and all of the cases refer to it, the same principles apply in respect of error of law on the face of the record.
Now, in that case, the arbitrator had delivered a 15 page decision, the last page of which contained, in effect, his order and the debate was whether the order could be separated from the decision because there was no error on the face of the order. The error appeared on the page before where the arbitrator included a sum of money for interest. Justice Menzies was the leading judgment in the majority which comprised him, Justice Kitto and Justice Windeyer and he said at page 72, point 5:
to reject the first part of the arbitrator’s document as forming no part of his award would be to depart altogether from Kent v. Elstob, which has stood for nearly 170 years as the leading authority on this branch of the law –
and if the fact that that stands for the proposition that the documents are delivered together, then the reasons form part of the record. We would submit that the documents ‑ at least you can see that they are comprised in one coherent document, which deals with the different issues in different ways, different parts. The whole of the decision should be regarded as part of the record.
Now, if I can return to your Honour Justice Gageler’s question about jurisdiction of the Federal Court. Section 23 of the Federal Court of Australia Act, which I am sure the Court is familiar with:
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.
In the case of Baker v Patrick Projects Pty Ltd (2014) 226 FCR 302 at paragraph 29, Justice Katzmann held, with whom the other members of the court agreed, that section 23 conferred the power to issue certiorari for error on the face of the record to the Commission and she cited two Full Court authorities in further support of that proposition.
BELL J: Just for completeness, section 564 of the Fair Work Act for the avoidance of doubt notes that nothing in the Act limits the Federal Court’s powers under relevantly section 23.
MR FRIEND: Thank you, your Honour. Unless there is anything further I can assist the Court with ‑ ‑ ‑
KEANE J: Mr Friend, in that regard, in terms of the orders that the appellant seeks, they are at page 429 of the record, the “Order[s] sought” assume on both of the grounds, the coverage ground and the BOOT ground.
What do you say are the orders the Court should make if the appellant were to succeed on the coverage ground but fail on the BOOT ground?
MR FRIEND: Fail on the BOOT ground? An order upholding, setting aside the – so it is certiorari ‑ your Honour, the matter would need ‑ the decision of the Commission would still need to be set aside because of the BOOT ground but the matter would need to go back to the Commission because it would not have performed its statutory function.
KEANE J: To the Full Bench or to the Deputy President?
MR FRIEND: To the Full Bench ‑ or to the Commission, I think would be the appropriate order, your Honour. On other occasions ‑ the Full Court things have gone – been sent back to the Commission. The Full Bench could not be reconstituted as it was. We would not have a view but we would have thought the appropriate course would be to remit it to the Commission and the President could then constitute an appropriate ‑ or allocate the matter appropriately as he saw fit which may well be to the Deputy President or to a different Full Bench as one of the Members has now gone. If the Court pleases.
KIEFEL CJ: Yes, Mr Hatcher.
MR HATCHER: May it please the Court. In dealing with “coverage” my friend put a few propositions that were rather farther and wide than they were handsome. The first was that, if our propositions in relation to the meaning of “coverage” for the purposes of the legislation be accepted, it would extend to persons who might be transferred. In our respectful submission, that denies the effect of section 172(2)(b) as a starting point, which focuses attention on the employer having employed:
persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.
It denies the finding of fact to the Commission that it must make, that there are employees – that the employees who have voted will be covered by the agreement, and it has none of the practical concerns that my learned friend suggested. My learned friend also suggested that the process adopted here was that the employees were given the agreement and they signed it. That is not the process that was adopted. The process that was adopted was the process set out in the statutory declaration from appeal book, page 10.
And the Court will see that, while 17 employees were given the agreement, 15 voted to approve it, one voted to reject it, and one simply did not vote. So it is rather dismissive to say they were given the agreement and signed it. Though it is true to concede, as my friend did, that these employees well knew the nature of the work that they would be doing and the nature of the agreement they were being asked to agree. Their employment was regulated by relevantly similar agreements at the time.
Our learned friend placed some reliance on a decision under earlier legislation, which preceded the more recent Federal Court review of this legislation in John Holland, and is, in our respectful submission, somewhat inconsistent with that. But even in the case that our learned friend relied upon, Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission [1999] 93 FCR 317, the court said at paragraph 123 on page 356:
This conclusion is fortified by Pt VIB’s reference to a “single business”. The Part does not envisage certified agreements operating in an abstract way. For an agreement to be the subject of an application to the Commission, it must be an agreement pertaining to the relationship between the employer and “all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer”. Leaving aside the greenfields situation for which the Part makes special provision, it would be a strange result if the relevant agreement could be made with persons who were not yet employed, and might never be employed, in the relevant single business.
These are employees who are employed for the purposes of the ALDI Regency Park operations.
Finally, in relation to the question of “coverage”, our friend put that the Full Bench decision in Cimeco represents the approach of the Commission in relation to “coverage”. In our respectful submission, that is somewhat of an overstatement. The Full Benches of the Commission will still perform their statutory task of considering whether employees who will be covered by the agreement or are covered by the agreement are genuinely agreed with the agreement. And there is a recent decision referred to in our written submissions; can I hand up a copy of an extract? This is a Full Bench of the decision presided over by the Vice President Catanzariti and upon which Deputy President Bull sat with Commissioner Williams, McDermott Australia Pty Ltd v Australian Manufacturing Workers’ Union [2016] 255 IR 146. At paragraph [34] on page 155 or perhaps at [33]:
[33] Generally a casual employee is employed for the duration of each engagement; that is, their employment commences and finishes with the commencement and finish of each engagement. Employees engaged by McDermott for the Ichthys Project received an offer of on‑going casual employment on the Project. The employees who accepted the offer were placed on the employer’s payroll records and permitted to vote for the Agreement.
[34] The Commission was correct to test the application against the ratio in Swinburne, however in our view the Commissioner misdirected himself by narrowly focussing on the upcoming campaign involving one of the Project vessels – the Lay Vessel 108 (LV108) which was one of the vessels used by McDermott on its scope of work for the Project, rather than the Project itself. In doing so he concluded that at the time of voting the employees who voted were not employed as the campaign work for the LV108 had not commenced.
[35] The Commissioner was of the view that there was something wrong with the vote occurring while employees were not actually performing or being paid for performing work at the time of the vote. This in our view was incorrect; the status of the 36 casual employees at the time of the vote is a natural and expected phenomenon of being employed on a casual contract as per the Full Bench decision in Smiths Snackfood. In our view it would be inappropriate and counter intuitive to disenfranchise casual employees of a right to vote on an agreement that determines their wages and conditions on the basis that they were not rostered on to work on the day/s of the vote, or during the 7 day access period. There are obvious implications for voting manipulation adopting this approach. Swinburne is not authority for the proposition that a casual employee is only “employed at the time” they are rostered to work and are being paid. Swinburne eschewed the proposition that employed at the time included “usually employed”.
. . .
[36] It appears that the Commissioner accepted the Unions’ proposition that the Appellant’s work on the Ichthys Project, the subject of the Agreement did not begin until 10 January 2016. While the Agreement was not to operate retrospectively, the Appellant’s work on the Project, the subject of the coverage of the Agreement had already commenced . . . with a workforce of casual employees having . . . been employed ‑
Now, in our respectful submission, apart from anything else, that decision shows the wide range of circumstances that the Commission has to consider when it is considering the question of whether employees who will be covered genuinely agreed to the agreement. It is why, no doubt, Justice Jessup in dissenting in this case, said this is a very peculiarly idiosyncratic area of jurisprudence that is reserved to the specialist tribunal to form an appropriate judgment on. It is plainly within the jurisdiction of the Commission to determine whether the employees fall within the coverage of the relevant instrument.
As to my learned friend’s submissions in relation to the way in which the proceedings before the Full Court were conducted, I made the concession earlier that I was distracted by the “will be” and “were” dichotomy, but if one has regard to the transcript in the Federal Court it is plain that from the outset we said the court should attend upon 172(2):
employees . . . who will be covered by the agreement -
and that is what the statute sets out and that is what the statute’s focus is on. By the time they get to 186 and 188 they are no longer concerned with the peculiarities of tense; they are attending upon an agreement that has been made. It is just asking tense to do far too much.
I did concede, as we concede here, none of these employees were working in South Australia at the time the agreement was made or the application for approval was made. They simply were not. They had been employed. They were employed to work in South Australia.
As to the better off overall test, I am most reluctant to labour the point but my friend did put that there might be some controversy over the submissions I made in relation to the failure to represent or include the bonus in the calculations and the appropriate classification rate. If regard is had to appeal book page 147 – this is Ms Patena’s statement – page 4, the first statement, paragraph 11:
I made several assumptions in relation to the analysis undertaken by me. I set out those assumptions as follows:
a)Calculations for Store Manager, Assistant Store Manager, and Store Manager Trainee were all based on a comparison with the GRIA Retail Employee Level 6 rate.
That is the store manager. The Court will see, and we have given the reference in our written submissions to the Brendale agreement, where those other classifications are at grades 1, 3 or 4. In paragraph e) further down the page:
Sales Bonuses or Business Review payments potentially payable to employees under the ALDI Agreement were not included or allowed for in calculations of the payments due to employees working under the ALDI Agreement in the period analysed by me.
The evidence, such as it was, was severely deficient. If one has regard to the passages that my learned friend took the Court to, the highlighted bit, you will see each of those is either a store manager who would have had the benefit of the business review payment or a trainee or assistant store manager who was classified at the wrong rate.
My friend was asked a question about whether there was an objection to the table that he took the Court to. There was a most strident objection to the table, and it was not admitted into evidence because its authenticity was not – it had nothing that went with it that told us where it had come from or who had prepared it. As a result of those complaints that were in writing, Ms Patena’s statement was produced after the written submissions. Ms Patena’s evidence, as my friend has rightly conceded, was strenuously objected to.
The Full Bench said, and it is apparent in the transcript, “We will reserve your rights.” I asked for a voir dire on whether the evidence should be even accepted, and they said, “We are not going to give you that but your rights are fully reserved. You can argue that the evidence should not be admitted or no weight should be placed on it at the end of the case” and we argued and there was no ruling.
KIEFEL CJ: On what did the cross‑examination take place?
MR HATCHER: On the statement. The cross‑examination attends upon those points that I have highlighted. Now, the final point that we would make in reply is my friend’s exhortation to the Court in the circumstance that the Court finds favour with us that there was no jurisdictional error to grant relief for certiorari on the case of the record, and the record including the entire reasons for decision. Can I remind the Court that in Craig (1994) 184 CLR 163 the Court said this at page 181 about five lines in:
More importantly, the approach that the transcript of proceedings and the reasons for decision constitute part of “the record” would, if accepted, go a long way towards transforming certiorari into a discretionary general appeal for error of law upon which the transcript of proceedings and the reasons for decision could be scoured and analysed in a search for some internal error. It is far from clear that policy considerations favour such an increase in the availability of certiorari to correct non‑jurisdictional error of law. In particular, a situation in which any proceeding in an inferior court which involved a disputed question of law could be transformed into superior court proceedings notwithstanding immunity from ordinary appellate procedures would represent a significant increase in the financial hazards to which those involved in even minor litigation in this country are already exposed.
Can I invite the Court to consider the situation in relation to the question of coverage? We, in our written submissions, the Court will recall, put a number of reasons why we said the question of coverage fell within the jurisdiction of the Commission to determine. Looming large among those reasons was the fact that it is a statutory instrument and employers and employees are bound to comply with its provisions on pain of penalty unless and until it is set aside. The egg, as Justice Jessup so eloquently put it in the stay application, is very difficult to unscramble and scramble again.
If my friend be right that certiorari on the face of the record can go because there is no jurisdictional error on the question of coverage, the parties would be in this position. There cannot be any suggestion that there is any error of law on the face of the Deputy President’s record. So certiorari might go to the Full Bench. That would quash the appeal decision but leave the Deputy President’s decision on foot. Then there would need to be another appeal to consider whether that error of law ought be corrected by the appellate bench if leave to appeal were granted out of time.
In the meantime our client would be constrained to continue paying under the award, could not do anything but pay under the award – I am sorry, under the agreement. The practical implications of that when involving the revisiting sometime later of matters that simply cannot be put right.
My friend gave a very good example of one of the differences between agreements and awards and in this case a difference. The agreement provides for, on my recollection, a 15‑minute rest break but a 15‑minute paid rest break is given after a different time period than the 10‑minute unpaid rest break in the award. How does one put that back together again? It is obviously part of the mix in the better off overall test - this is a bit of a longer period, you have to work before you get a break but your break is paid as opposed to unpaid and it is a longer break.
That is typical of the sorts of things that employers and employees are expected to agree upon in these agreements and that the Commission is expected to form a view on in the better off overall test. How does one unscramble that and if it is jurisdictional error it is on the result of a Federal Circuit Court judge, nine or 10 years after the parties have reached the agreement, who in enforcement proceedings is told the agreement is a nullity because they did not consider the right parties at the time of approval and so we want to be paid under the award.
It cannot get a statutory intention, in our respectful submission, on Project Blue Sky on any commonsense approach to statutory interpretation. If it is not jurisdictional and it is not jurisdictional because of the consequences of making it – of regarding it as jurisdictional on the proper approach to statutory interpretation, why as a matter of discretion would you go there and create the same difficulty for an error of law?
KEANE J: Mr Hatcher, what do you say should be the orders looking at page 429 – the orders the Court should make if you were to be successful on ground 2 but fail on ground 3?
MR HATCHER: The appeal is upheld in part. The orders of the Federal Court ‑ I think the orders of the Federal Court would have to be quashed but the matter – the appeal from the decision of the Federal Court in relation to the BOOT would be dismissed and as my friend said, the matter would be remitted to the Fair Work Commission.
KEANE J: To the Commission.
MR HATCHER: Justice White made it clear that if it were just the BOOT the appropriate order of that court’s view or the majority’s view would be that the matter be remitted to the Fair Work Commission to determine according to law. May it please the Court.
KIEFEL CJ: The Court reserves its decision in this matter and adjourns until 10.15 tomorrow.
AT 3.28 PM THE MATTER WAS ADJOURNED
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