Amcor v CFMEU & Ors; Minister for Employment and Workplace Relations v CFMEU & Ors

[2004] HCATrans 256

[2004] HCATrans 256

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M311 of 2003

B e t w e e n -

AMCOR LIMITED

Appellant

and

CONSTRUCTION FORESTRY, MINING AND ENERGY UNION

First Respondent

NEVILLE GEORGE ANDERSON

Second Respondent

MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS

Third Respondent

Office of the Registry
  Melbourne  No M312 of 2003

B e t w e e n -

MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS

Appellant

and

CONSTRUCTION FORESTRY, MINING AND ENERGY UNION

First Respondent

NEVILLE GEORGE ANDERSON

Second Respondent

AMCOR LIMITED

Third Respondent

GLEESON CJ
McHUGH J
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 4 AUGUST 2004, AT 10.18 AM

Copyright in the High Court of Australia

MR A.C. ARCHIBALD, QC:   May it please the Court, I appear with my learned friends, MR R.J. BUCHANAN, QC and MR M.F. WHEELAHAN, for Amcor Limited in both matters.  (instructed by Allens Arthur Robinson)

MR R.R.S. TRACEY, QC:   If the Court pleases, I appear with my learned friend, MR J.L. BOURKE, for the Minister for Employment and Workplace Relations in both matters.  (instructed by Phillips Fox)

MR S.C. ROTHMAN, SC:   If the Court pleases, I appear with my learned friend, MR S.J. HOWELLS, for the first and second respondents, being the Union and Mr Anderson, in each appeal.  (instructed by Ryan Carlisle Thomas)

GLEESON CJ:   Mr Archibald, I mentioned at the special leave application and the parties are aware that I own shares in Amcor and PaperlinX.

CALLINAN J:   I should mention also that I have a legal interest, but not a beneficial interest, in some Amcor shares.  I do not know whether that causes any problem.

MR ARCHIBALD:   Thank you, your Honour.  For our part, we do not see that that would give rise to any difficulty in this matter.

GLEESON CJ:   Yes, Mr Archibald.

MR ARCHIBALD:   If the Court pleases, the subject matter and structure of the certified agreement can be appreciated by reference to some of the initial clauses in that agreement.  The agreement commences in volume 1 of the appeal book at page 195.  The clauses to which we wish to take the Court are clauses 3, 4 and 7.  Clause 3 at page 201 identifies the parties bound by the agreement and paragraphs (a) and (b) break up the bindingness of the agreement on the employer party by reference to two sets of mills.

The set of mills in paragraph (a) relate to what can be called the paper business.  The set of mills set out in paragraph (b) relate to what can be called the packaging business and so that dichotomy is made reflecting the two main Amcor businesses.  Clause 4, likewise, shows the area and incidence of the agreement by reference to the mills and the mill sites so that the third, sixth, seventh and eighth mills in that list are the mills of the paper business.

Clause 7 at page 203 shows in clause 7.1 that there are what can be called general conditions and then cites specific conditions within the certified agreement.  Clause 7.1 shows that parts 1 to 9, which are clauses 1 to 60, provide minimum terms that apply at each of the sites specified in clause 4 and clause 7.2 shows that the remaining parts of the agreement, 10 to 18, provide the particular provisions referable to each mill or mill site to achieve the objectives of the agreement.

KIRBY J:   Now, you passed over in clause 3 the naming of the Union, the present respondent, and there is another union named there.  None of their members are affected by this case, are they?

MR ARCHIBALD:   No, your Honour, it seems that the second union had some members at two of the paper mill sites, but none of their members are involved in these proceedings.

KIRBY J:   A point is made repeatedly in the respondent’s submission that the steps that your clients took were taken without any consultation or discussion even with the union named in clause 3(b), presumably making the point that that, therefore, is relevant to the relationship between that union and its members and the new companies.

MR ARCHIBALD:   Presumably, but that point does not, in our submission, bear upon the engagement and operation of clause 55 to which we will come.

KIRBY J:   But the fact that no consultation is not a disputed fact?

MR ARCHIBALD:   It is put that there was no consultation or no notification before 21 February when the termination and offer of engagement letters went out.  We have put in our reply that there was some contact on 17 February with the Union officers, but we do not see that that bears upon the issues which fall for consideration by this Court.

KIRBY J:   I suppose the point being made is that if you do not consult, negotiate and agree, you cannot complain at being kept to a technical construction of the former agreement; I suppose that is the underlying thesis.

MR ARCHIBALD:   Well, it may be ‑ ‑ ‑

KIRBY J:   Anyway, we will come to that further down the track.

MR ARCHIBALD:   Yes, if the Court pleases.  So the sites’ specific arrangements between the parties are in those subsequent parts, one of which we will seek to take the Court to later by way of illustration, but they canvass issues pertinent to the specific mill sites.  Shortly after the agreement was certified on 9 June 1998, in fact, the business of the four paper mills was transferred by Amcor to a wholly owned subsidiary company, Paper Australia Limited.  Two of the four mills were sold, two of them were leased and later sold.  We deal with those facts in paragraph 8 of our written submissions. 

The consequence of that step was that the paper mill businesses were from 1998 in fact operated by Paper Australia, and the jobs and positions of the employees were in the businesses at the mill sites.  It is also pertinent to observe that as of 1 July 1998, Paper Australia discharged all the obligations of employer in relation to the workforce at the paper mills, and it did so pursuant to an agreement entered into between Paper Australia and Amcor, which is in volume 5 of the appeal book at page 948.

KIRBY J:   Again, the Union was not a party to that agreement.

MR ARCHIBALD:   No, it was not and really there was no occasion for it to be for the burden of the agreement ‑ ‑ ‑

KIRBY J:   Except that you are changing an agreement.  The original agreement included the Union.

MR ARCHIBALD:   Yes, but this is not changing the certified agreement.  It is not altering the relationship between employer, employee and employees’ union.  By this agreement what occurred was that Paper Australia took it upon itself to discharge all of Amcor’s obligations to the employees.

KIRBY J:   Except, it is argued, the redundancy obligations, which is the issue.

MR ARCHIBALD:   May be the issue.  The ultimate reach of this agreement is of no present moment.  One sees at page 950 recital B, the recitation that:

Amcor employs a number of persons (Employees) for the purpose of working in the business of PAPL (PAPL Business) -

which, by this point, had the paper business and recital C:

In consideration of Amcor continuing to provide the services of the Employees to PAPL to work in the PAPL Business, PAPL agrees to discharge all obligations in respect of the Employees.

And the substantive embodiment of recital C was contained in clauses 2 and 3 of that agreement at page 951.

McHUGH J:   Are those recitals in that clause accurate?  They seem to indicate that Amcor will continue to employ the employees and will continue to provide their services.  That is not the fact, is it?

MR ARCHIBALD:   Well, it is the formal or legal shell fact, if one likes, but the substantive burdens attending the provision of employment in that fashion were assumed by Paper Australia.

McHUGH J:   I understand that, but insofar as the recital and clause 2 indicate that Amcor would continue to provide the services to work in the PAPL business, that is not correct, is it, as a matter of fact?  You would not have a problem if it was true. 

MR ARCHIBALD:   Well, I am not sure about that.  The phraseology may not be exact, but what we do say flows from this agreement was that Paper Australia became, if one likes, the de facto employer, whereas Amcor was and remained the de jure employer.  That, I think, generally, is what we say flows from this agreement, but we do not contend that Amcor ceased relevantly to be the legal employer of the employees by reason of this agreement.  Now, early in the year, the calendar year 2000, it was decided formally to de‑merge the paper business from the packaging business, and that was effectuated in familiar fashion through a scheme of arrangement and accompanying reduction of capital.  We deal with that in paragraph 10 of our written submissions.  The consequence was that the paper business would continue unchanged, but under the auspices of what became a discrete corporate group. 

In the announcements of the demerger, it was indicated that business would continue as normal.  For example, the reference in volume 5 at page 969 was to that precise effect.  That was contained in a letter dated 17 February 2000 to employees from the paper group.

KIRBY J:   That is a nice democratic touch, is it not?  He begins “Dear Fellow Employee”.  This is the managing director writing to the underlings.

MR ARCHIBALD:   Yes.  There is certainly a congeniality about it.

KIRBY J:   Yes.  It is nice to see, Mr Archibald. 

MR ARCHIBALD:   At 969, within that letter, line 14, the managing director conveyed that the business would continue as normal and the business would continue to trade under the names that had previously obtained.  So, in connection with the demerger, Amcor was then to shed the vestigial status of employer that it had retained in light of the 1998 agreement.  That was effectuated and conveyed to employees by the two letters of 21 February to which reference is made in the judgment of the Full Court and in our submissions.

McHUGH J:   Could I ask you a question which does not seem to have attracted any attention in the courts below, but could be of significance.  Between the agreement of 1998 and the demerger agreement, who was the paymaster of the employees?  Who paid them? 

MR ARCHIBALD:   The actual payments, as we understand it, were made by Paper Australia.  I do not think the evidence shows this, but the legal or formal status, such as a group certificate ‑ ‑ ‑

McHUGH J:   Issued in the name of Amcor.

MR ARCHIBALD:   Via Amcor, yes, which is the de jure/de facto distinction I made before.

GLEESON CJ:   Does the evidence show who got the tax deduction for the payment of wages?

MR ARCHIBALD:   No, it does not.  One can see from the terms of the agreement that it is an agreement by Paper Australia to discharge the obligations, not to reimburse Amcor for having discharged the obligations.  It is an assumption of a primary obligation, at least in terms of financial burden, not only to the employees, but to third parties claiming through employees or third parties claiming by reason of activities of employees.  One sees that in clause 3 of the 1998 agreement.

GLEESON CJ:   I assumed, perhaps wrongly, that it was expressed that way in order to secure the tax deduction for the payment of wages to the person who derived the assessable income.

MR ARCHIBALD:   Probably.  There may have been a variety of reasons for it.  That would seem to be one feature that would be achieved by it, but the evidence does not descend to identify that as a particular consequence.  For practical purposes ‑ ‑ ‑

McHUGH J:   Although it talks about Amcor, that is the first agreement talking about them providing their services, for the purpose of various legal doctrines it may well be that Paper was an employer of these employees even before the year 2000.

MR ARCHIBALD:   Yes, indeed.  In a number of contexts that would likely be so, and one can think of a number.

McHUGH J:   For purposes of vicarious liability.

MR ARCHIBALD:   Yes, exactly.  That is what I had in mind, for the activities occurred within Paper Australia’s organisation.

McHUGH J:   Exactly.  They had control.  They satisfied the control test.

MR ARCHIBALD:   Yes.  Relevantly, in our submission, for the purposes of this case, the jobs, the work specifications, the duties and responsibilities of the employees were within Paper Australia’s business and those duties continued without change, without interruption, at the point at which the merger occurred and at the point at which the identity of the legal employer changed.

McHUGH J:   However, there seems to be a plain admission in the letter that is set out at page 857 that Amcor was the employer.

MR ARCHIBALD:   Yes, that there was a need, rightly or wrongly, to terminate something called employment with the employee and, correspondingly, in the companion Paper Australia letter, that there was need or occasion for a fresh contract of employment to be entered into between the workforce within the paper business and Paper Australia, hence at page 858, volume 4, line 26, the same managing director offered:

employment with the operating company of your business . . . on the same terms and conditions as you currently enjoy.  All benefits will be preserved -

and providing that -

acceptance of this offer will be confirmed by you reporting for duty at your usual workplace on your first normal working day on or after 1^st April –

the termination letter having stated at line 45 on page 857 that the termination would be effective on the previous day.

KIRBY J:   So that was terminating the employment agreement between the employer and the employees that was referred to in the certified agreement?

MR ARCHIBALD:   The case has been conducted on that footing.  What was being terminated was employment and it has been assumed in the conduct of this case that clause 55 was capable of being engaged by reason of that termination.

KIRBY J:   So the issue is what is the preferable construction of the clause in the circumstances that have occurred?

MR ARCHIBALD:   Yes, what is the proper true construction of clause 55, as applied to those circumstances.

McHUGH J:   You do not seem to throw any weight on the fact that the agreement does not appear to bind Amcor Limited as such but Australian Paper Limited as agent.

MR ARCHIBALD:   Not as such.  The way in which we rely upon that feature is to show that there is a focus upon the particular business, the workplace, the site and the mill, and not upon the identity of the employer.  The evidence does not elucidate the role or function of Australian Paper Limited as agent.

McHUGH J:   I understand that, but interestingly clause 3 differentiates between Australian Paper Limited as agent in respect of the paper business and Amcor which is directly bound in respect of the packaging business.

MR ARCHIBALD:   Yes, and one might deduce that Australian Paper, which is not Paper Australia – it is a different corporate entity – Australian Paper Limited is not Paper Australia Pty Limited under a different name.  One might deduce that Paper Australia Limited had some role or function or control of the operations of the paper business rather than Amcor Limited directly operating or managing that business and hence the notion for the purposes of the certified agreement of some agency role.

McHUGH J:   Well, apart from identifying something about Australian Paper Limited, do the words “as agent for Amcor Limited” have any effect in this case?

MR ARCHIBALD:   No.  What it suggests is that Amcor was rather remote from a direct interface with the employees in the paper business even before the transactions with Paper Australia later in 1998, but it has not been relied upon in any other way as an aid to understanding the construction and operation of clause 55.

McHUGH J:   It occurs to me whether there would be a case against you if the words “as agent for Amcor Limited” were not in there.  Would clause 55 apply then?

MR ARCHIBALD:   No, in our submission.  One would reach the same outcome as that for which we now contend whether there was or was not a true agency.  The distinctions between (a) and (b) are in relation to business and the nomenclature that is used really seems to be use of the business names or the trading names of the two businesses.  One sees that in the definition of “Company”, the expression “Company”, at clause 9, page 204 where “Company” is defined to mean “Australian Paper or Amcor Paper Australia”.

Now, Australian Paper seems to be the prime business name for the paper business and Amcor Paper Australia the prime business name for the packaging business.  That is elucidated a little bit in clause 1 at page 197 under the heading “TITLE” where it is explained that:

Due to organisational changes which have occurred within the Company since “in principle” agreement was reached on this Agreement, any reference in this document to Amcor Paper Australia shall be taken to mean Amcor Fibre Packaging in respect of the –

packaging business sites.  So although “Company” is defined as Amcor Paper Australia, it seems that by the time of certification the business name of the packaging business had become Amcor Fibre Packaging, so it is reflecting the emphasis on business, and commensurately the reference to Australian Paper is emphasising the business aspect or the workplace aspect of the paper business rather than the identity of the particular employer.  That bears, in our submission, upon an understanding of what is denoted by the concept of position for purposes of clause 55.

GLEESON CJ:   What is denoted by the concept of “business”?

MR ARCHIBALD:   That organisational activity which is associated with the functions of the workforce to which this agreement relevantly applies.  So it is looking at what one might call the “paper business” ‑ ‑ ‑

McHUGH J:   That is a clever forensic device and you have sought to use it effectively, but is it not meaningless without identifying who conducts the business?  After all, a business is repetitive activities carried on by or on behalf of some person, corporate or human. 

MR ARCHIBALD:   Yes.  I mean, one cannot understand what I have sought to put in an abstract without there being some orchestration of that activity, and the orchestration of the activity would essentially be the entity, if one likes, the entity or entities who organise that business.  But here that entity is Paper Australia, rather than the entity that in terms of the 1998 agreement provided the employees to that enterprise.  So, however one comes at it, one ends up with a business concept and an organiser of that business which is not the employer. 

McHUGH J:   True, but it is a matter of some importance when one comes to the question of position, is it not?  Has the term “position” any meaning without identifying what the position is or with whom?

MR ARCHIBALD:   Yes, because the concept of “position” is concerned with the job or the work, the tasks, the collocation of responsibilities and functions which are discharged by the employee, and those concepts focus essentially upon what happens within the organisation of which the position is a part.  That is the concept and that is a concept that does not require identification or naming of a employer.  It is a concept which admits of continuity of position, irrespective of change in the identity of employer.

McHUGH J:   But is not the context of clause 55 against you on that point?  Does not the context of 55 indicate that the capacity to retrench and the capacity to make the position redundant reside in one and the same person?  Your argument requires the two clauses to be divorced.  So you say a position can become redundant for the purposes of the clause, although it is a position with another employer, and the retrenchment can occur through the actions of somebody other than the employer of the position.

MR ARCHIBALD:   No, in our contention, because the adoption of that approach to clause 55 would wrongly equate the concept of “position” with the concept of the particular contract of employment.  In those circumstances, one would and could not differentiate between the termination of the contract of employment, on the one hand, and the redundancy of position, on the other hand.

McHUGH J:   Yes, you could.  I notice you have put that in your written submissions but there is a short answer to it, is there not, and that is to say that these payments do not depend, merely because you are retrenched or dismissed or whatever you like to call it, but because your position becomes redundant, so the clause does not apply if you are dismissed for dishonesty, for example.  So both limbs serve a purpose.

MR ARCHIBALD:   Both limbs serve a purpose, but the second limb is a limb that is distinct from and performs different work from the first limb and the construction of the Full Court eliminates any useful role for the first limb to perform.

McHUGH J:   But why?

MR ARCHIBALD:   Because the Full Court equated the concept of position with the existence of a contract of employment.

McHUGH J:   Let us analyse it.  Let us read it the way the Full Court read it.  Should a position of employer become redundant and an employee subsequently retrenched, both clauses on that hypothesis have work to do.  The employer has to make the position redundant and has to retrench the employee.  The second limb does not become superfluous.

MR ARCHIBALD:   The second limb, in our submission, must follow upon and is dependent upon satisfaction of the first limb, but the agreement makes clear and the general concept of redundancy as discussed in the cases makes clear that, of course, there can be redundancy without retrenchment.  That is what clause 55.2 is addressing, for example.

McHUGH J:   Let me ask you a question which I do not think your submissions deal with.  What happened to the employees who did not accept the offer of employment?  Were they retrenched?

MR ARCHIBALD:   There were no such employees.

McHUGH J:   I thought there were but ‑ ‑ ‑

MR ARCHIBALD:   There is a bit of a distraction about that.

McHUGH J:   Let it be assumed that there was one employee whose employment was terminated.  Was that person’s position retrenched?

MR ARCHIBALD:   No.

McHUGH J:   Notwithstanding that Amcor closed down its business and he was not prepared to take up employment with the transferee, you say he was not retrenched.

MR ARCHIBALD:   Amcor did not close down its business.  The paper business continued ‑ ‑ ‑

McHUGH J:   It closed down its employment.

MR ARCHIBALD:   Amcor determined to cease to provide the employment services to the business.  It did so not because positions had become redundant.  The set of tasks of the putative employee who did not accept the offer continued and that is exactly what the Full Court found.  All the members of the Full Court expressly found and held that the positions continued unchanged.  Justice Moore, at page 1602, lines 12 to 15, held that “the same position at the same location doing the same work” persisted.

HAYNE J:   What paragraph?

MR ARCHIBALD:   It is 1602.  I will get the paragraph number.

HEYDON J:   Is it 6?

HAYNE J:   Do not delay, Mr Archibald, I will find it.

MR ARCHIBALD:   Yes, I think the reason I did not have it there, I think a hole punch has obscured the paragraph number.  I think it is paragraph 6 and the commensurate finding in the joint reasons of Justices Merkel and Marshall are in their paragraph 25, page 1609, line 40 to 1610, line 2.

McHUGH J:   Can I put this for your consideration.  Is it possible that hitherto people have not looked at this case properly and that it is an error to look at this case in terms of what was being done at PaperlinX.  The position that these employees had was that they were employed by Amcor and in the position of being lent to another entity to work, so the position from which they were retrenched was the position in which their services were lent. 

MR ARCHIBALD:   An analysis of that kind would not meet the concept of position as understood and applied in this area of the law because the set of tasks, or the set of responsibilities, the functions that are discharged, were functions in the business.  It is not part of the concept ‑ ‑ ‑

HAYNE J:   Whose business?

MR ARCHIBALD:   Paper Australia, the paper business at the mill site.

HAYNE J:   Not the business of a labour hire company, which, in effect, Amcor by then had become?

MR ARCHIBALD:   No, in our submission.  The tasks or responsibilities were and had always been to perform the functions of – we will take the Court to some of the examples – site operator or senior operator of a machine at a mill site.  It is not the function to deploy one’s services as part of a labour-hire organisation to provide whatever services may, from time to time, be sought by the operator of the paper business.

McHUGH J:   But if Rent a Worker hires out personnel to various firms to work in various positions, if it is for the purpose of retrenchment, you look at it from the point of view of Rent a Worker.  You do not look at it from the point of view of what they did for a particular employee.  I mean, take Brambles, for instance.  Once upon a time, BHP in Newcastle did not have its own lorries.  Brambles’ trucks worked exclusively in BHP’s steel works.  Now, surely, they were not employed in the steel works, their position was in the steel works to carry – that is, the Brambles drivers were not working in the steel works carrying steel from one mill to another; they were employed as truck drivers by Brambles.  Why is that not the case here?

MR ARCHIBALD:   Because in the instance your Honour poses, what is being performed by those employees is a function, a set of tasks or responsibilities, in which they are answerable to their employer Brambles, Brambles providing logistic services to the steel mill, and that is radically different from what one can see was the case here.

McHUGH J:   But why is it, Mr Archibald?  Amcor had to pay their wages, Amcor had superannuation obligations, bonds service, annual leave obligations.  If an employee was injured because of some event that happened in the paper business, that employee would sue Amcor as his employer.

MR ARCHIBALD:   And the entire burden of all those obligations was to be discharged on a primary basis by Paper Australia.

McHUGH J:   Well, that may be, but that is an arrangement as between Amcor and Paper Australia.  It does not affect the relationship between Amcor and the employee.

MR ARCHIBALD:   One can conceive of a case – take a business that provides temporary secretarial services and they have five such persons that they can make available to enterprises that seek to utilise the services of somebody in that position.  In that case, each of the five would be part of the organisation supplying the temporary secretarial services to client enterprises.  It may be that the attraction of temporary secretarial services wanes and that enterprise says, “We can’t keep five on anymore, two have to go”.  Now, their positions would be positions in that enterprise because they come and go.

McHUGH J:   Anyway, I understand the way you put your case and the way it is being conducted, but I just want to make it clear that at the moment I am not persuaded that the way the case has been analysed hitherto is the right way of looking at the case.

MR ARCHIBALD:   Could we make this submission.  We do not, before this Court, seek to urge that the precise factual position of effective continuity of employment after the demerger or after 1 April is critical to our case.  What we say is vital is to identify at the time at which notice of termination was given as to whether a position had become redundant.  We say because of what was occurring at that point, the position had not become redundant and whether a particular employee chose to accept or not to accept the offer of employment does not alter the characterisation of the events that have occurred and would not alter the conclusion as to whether notice of termination had been given in the circumstances of clause 55.1.

HAYNE J:   If that is the point at which you place chief weight, can I just understand what you mean by position.  Do you mean position in a business of an employer?

MR ARCHIBALD:   We mean position in a business in which it is no part of an essential understanding of the concept of position as to the identity of the employer of that employee.

HAYNE J:   Is that a proposition that either depends upon or engages consideration of succession provisions?

MR ARCHIBALD:   No.  It will in each case be a question of fact as to whether there is or is not redundancy of position.  Succession may impact upon the conclusion one reaches.  Transmission will impact upon it, just as circumstances within a business which is not transmitted will impact upon it.

HAYNE J:   Absent succession or transmission, could you arrive at a conclusion that the position had not become redundant if the employer ceased to employ the particular person in the conduct of the particular activities previously the subject of work?

MR ARCHIBALD:   Yes.  One needs to understand why it is that that employee ceases to be engaged.  If it is because the job has disappeared, if it is because there has been an abolition of the set of responsibilities discharged by that employee, then the position has gone and there will be redundancy of position quite independently of succession or transmission.  In each case the question is:  has the job disappeared?  That is what the TCR Case identifies as the vital criterion.

GUMMOW J:   That case is before Division 6 of Part VIB, is it not?

MR ARCHIBALD:   Yes.

GUMMOW J:   Clause 8 of this agreement at page 203 made certification a condition precedent to its commencement.

MR ARCHIBALD:   Yes.

GUMMOW J:   Does that not then draw in for consideration the provisions of Division 6 of Part VIB in construing the agreement?

MR ARCHIBALD:   Certainly Part VIB is the context and we say that supports the contentions which we advance because the focus of Part VIB is not upon the identity of employer but upon businesses or single business, as is defined ‑ ‑ ‑

GUMMOW J:   I am not sure about that.

HAYNE J:   Is that right?

GUMMOW J:   Section 170MB, as Justice Hayne reminds us, talks about successor employers.

MR ARCHIBALD:   Yes, because they are transmittee of the business, not a transmittee, so to speak, of the contract of employment.  They become employers because they are transmittees of the business.  The concept of Part VIB and the concept of section 3 of the Act is that one addresses the workplace or the site.  That is the focus in the criterion.  This agreement was made, as we have submitted, against that context.

KIRBY J:   I think you had better take us to the statutory context because really it seems that that is the starting point to see what this certified agreement meant.  I am not familiar with this area of the law.  This came in long after I left any familiarity with this Act or its predecessor, so do not assume I know anything about this.

MR ARCHIBALD:   We have attached to our written amended submissions extracts from the Act.

KIRBY J:   Should we be using Reprint 5.  I have been handed that reprint.  Is that the one that is relevant to the circumstances of this case?

MR ARCHIBALD:   Reprint 3 is the one that was relevant at the time, but I do not think there are – there are some changes.

KIRBY J:   We had better check this.

MR ARCHIBALD:   Yes.  We have identified - perhaps anticipating this we ‑ ‑ ‑

McHUGH J:   Reprint 3 is 1997, I think.

MR ARCHIBALD:   Yes.  So, in schedule A we have set out some of the sections and in schedule B, your Honour Justice Kirby, we have sought to identify the amendments since Reprint 3 and 170MB, for example, was amended.  The points we would seek to make are that in section 3 one has the articulation of the principle objects of the Act and section 3(b) ‑ ‑ ‑

KIRBY J:   What is the one that you focus on there that is ‑ ‑ ‑

MR ARCHIBALD:   Section 3(b):

primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level ‑ ‑ ‑

KIRBY J:   That runs into the problem that in the new arrangements there was not really a renegotiation between employers and employees at the workplace or enterprise level.  It was just decided unilaterally by the employer.

MR ARCHIBALD:   But our submission is that the 1998 agreement between Amcor and Paper Australia does not alter the operation of the certified agreement and, indeed, could not alter the operation of the certified agreement in any way.

KIRBY J:   Except in the name and identity of the employer, a not insignificant matter.

MR ARCHIBALD:   Not altering the name or the identity of the employer, simply, corporation B agreeing to discharge those obligations which corporation A, the employer, had in respect of the employees.  We are not altering the relationship or the responsibilities or the incidence of those responsibilities as between the unions and the employer or the employees and the employer.

KIRBY J:   I understand the way you say look at the substance, but if you look at this section 3(b) to which you have taken us, it seems to posit a relationship that is one of consensus and, indeed, that is the whole idea of workplace agreements.

MR ARCHIBALD:   Yes, and that is exactly what parts 10 to18 of the certified agreement do at the workplace level, at the site level, the mills, the particular arrangements between the employer and the employees were articulated and delineated and, in our submission, quite importantly, one sees clearly from those workplace specific arrangements that the concept of position is the set of tasks and functions performed within the mill business.

KIRBY J:   Does that come out of this part of the Act?

MR ARCHIBALD:   No, it does not.  I am looking for a convenient moment to go to the agreement, but it is consistent with and can be seen to be in effectuation of the provision I have just taken the Court to, section 3(b).

KIRBY J:   I do understand the emphasis you put upon business and upon position, they are really the anchors of your case, I think.  But it is very helpful to see how these workplace agreements work in the structure of the Act.

MR ARCHIBALD:   Yes.  Then, within Part VIB, one sees the concept of certified agreements.  We have extracted part of Division 1 of Part VIB, which is dealing with certified agreements.  Section 160L provides a division specific object, stipulating that: 

The object of this Part is to facilitate the making, and certifying by the Commission, of certain agreements, particularly at the level of a single business or part of a single business. 

KIRBY J:   That is 170L.  I think you said 160L.

MR ARCHIBALD:   I am sorry.  Thank you for the correction, your Honour.  The concept of “single business”, which I need not labour, is set out in section 170LB(1).  The functions of the Commission as to certification are set out in section 170LA.  So we have the single business concept.  Then 170MB, as it was at the time of certification, is set out at page 180 of Reprint No 3. 

GLEESON CJ:   Just before you pass from section 170LB(1)(a):

a business, project or undertaking that is carried on by an employer –

Does that mean carried on by a particular employer?  Or carried on by some employer?  Or any employer?

MR ARCHIBALD:   Some employer, in our submission.

HAYNE J:   How does that fit then with subsection (2)?

MR ARCHIBALD:   Because that subsection, which is blending, if you like, the concept of “business” for the purpose of the defined concept in subsection (1), is taking the circumstance of a plurality of employers carrying on that business project or undertaking – these provisions being calculated ultimately to cater for the different scenarios and the different contexts in which certification of agreements may be sought and required. 

GLEESON CJ:   Do the concepts of succession, transmission and assignment of a business or part of a business, which are referred to, for example, in 170MB, assume that a business is something distinct from the person or entity carrying on the business?

MR ARCHIBALD:   Yes, because it would cater for what I will call a “trade sale” as distinct from the sale of, for example, the share capital in the corporation that is, in lay terms, the owner of the business. 

GLEESON CJ:   If the identity of a particular employer is an integral aspect of the concept of a business, how can you have a transmission of a business?

MR ARCHIBALD:   Well, one could not, and that is part of the analysis upon which we rely.  This Part VIB plainly contemplates transmission of business without what I will call transmission of employer.  One is looking at the practical commercial concept of a business which can be the subject of acquisition and disposition.

McHUGH J:   We dealt with this sort of problem in the Bank Employees Case up on the Gold Coast, where part of the business was taken over by a pharmacy or something and they were receiving the deposits ‑ ‑ ‑

MR ARCHIBALD:   Yes, there can be a variety of contexts, but certainly 170MB in the framework of Part VIB is contemplating – again, I am using perhaps colloquial terms – that the employer remains in place or remains static and yet the business or part of a business moves away from the employer by way of transmission or assignment. 

KIRBY J:   I think that is quite an important point.  I mean, this Court has said “business” is a chameleon‑like word and therefore you look at what it means in this context.  This context is certified agreements and if you look at 170LB it does seem to be using “business” as a sort of metaphor of enterprise or activity. 

MR ARCHIBALD:   Yes, and perhaps importantly – perhaps naturally but importantly – 170MB contemplates that what may be assigned or transmitted is what is called part of a business.

McHUGH J:   Well, we dealt with – I think it was the Finance Sector Union Case.

MR ARCHIBALD:   Yes.

HAYNE J:   And it is presently reserved after argument of Gribbles, issues that touch upon the operation of section 149 of the Act.

MR ARCHIBALD:   Yes.  Our submission is that all of those notions are consonant with the argument for which we contend and are in harmony with the setting in which one finds clause 55 of this certified agreement. 

McHUGH J:   Is not the TCR Case against you, because the model redundancy clause in the TCR Case had a deeming provision?  It deemed the continuity of the employee not to have been broken where the business was transmitted.  Now, whoever drafted this certified agreement failed to include a comparable provision.  That is part of your problem, is it not?

MR ARCHIBALD:   No, your Honour, for two reasons.  One, our argument does not depend upon continuity of employment, for reasons I explained earlier, and, secondly, the concept of the TCR Case at page 75.10 is that the Commission did not envisage that severance payments would be made in cases of succession, assignment or transmission of a business.  That is to say ‑ ‑ ‑

McHUGH J:   I understand that, but they did not want it.  They thought it would be unfair, which it probably is, to require an employer to pay in those circumstances, but they realised that they had to do something to overcome the natural consequences of the transmission of the business.  Therefore they insisted on the model clause which deemed the employment to continue, and therefore there was no termination of the employment.

MR ARCHIBALD:   In our submission, that is not consonant with the analysis ‑ ‑ ‑

McHUGH J:   If you had the TCR model clause in, you would not have a problem, would you?

MR ARCHIBALD:   We would not have a problem, but for a different reason ‑ ‑ ‑

McHUGH J:   I know. 

MR ARCHIBALD:    ‑ ‑ ‑ because of continuity of employment, which is not the criterion of clause 55.  The analysis at page 56 of the TCR Case shows what it was that was in the mind of and was the understanding of the Commission in connection with redundancy, and that analysis makes plain that it is not to be equated with a concept that is corresponding to and to be equated with the termination of the contract of employment.  The point is made emphatically, in our submission, in the TCR Case, in paragraph (a) at line 4 of page 56, that the concept of redundancy:

refers to a job becoming redundant and not to a worker becoming redundant ‑ ‑ ‑

HEYDON J:   That is an argument that is recorded there.  Was it adopted by the Commission - the previous page.

MR ARCHIBALD:   Yes.  It is the contention of the Union, or the ACTU, that it is the commonly accepted meaning.  True it is, the Commission does not go on to say, “and we accept it” but it is treated, in our submission, in the reasons of the Commission as being so and in the subsequent decisions appears to be accepted as being embraced and endorsed by the Commission.

KIRBY J:   We have three things floating in the air here.  One of them is the meaning of redundancy - the first is the Act, the second is the meaning and analysis of the clause, and the third relevant to the second is the meaning of redundancy which has a bit of law around it.  I am not clear whether you have finished your analysis of the Act because ‑ ‑ ‑

MR ARCHIBALD:   Yes, I have, for present purposes.

KIRBY J:   There is no other provision in Part VIB that helps in any way in understanding how you approach a certified agreement?

MR ARCHIBALD:   Not in our contention.

KIRBY J:   Very well, we have that out of the way.  Now the next step is the analysis of the clause.  We have not yet been taken to the clause, have we? 

MR ARCHIBALD:   No.

KIRBY J:   You have not had a chance.

MR ARCHIBALD:   Might we do that and might I then get back to page 56?  The clause is in the appeal books, volume 2 at page 243.  In the joint reasons of Justices Merkel and Marshall in the Full Court it is in volume 7, set out in paragraph 18 at page 1605.  Clause 55.1.1 has, as we have identified in our written submissions, two separate elements, the first being a requirement that a position shall have become redundant - should a position become redundant, and that entails that the job or work has ceased or in terms of the TCR Case, has disappeared or, as it is sometimes put, been abolished, or, to pick up the verbage of Justice Bright in the Adelaide Milk Case at page ‑ ‑ ‑

KIRBY J:   I do not know.  Chief Justice Bray had something to say on this, did he not?

MR ARCHIBALD:   Yes, I will go to it.

KIRBY J:   We had better have a look at that because Chief Justice Bray was a great judge.

MR ARCHIBALD:   For present purposes, what Justice Bright said at page 26 was is the job of “continued utility”, so I am just rehearsing the kinds of expressions that one finds to elucidate the concept of the position becoming redundant.  The job or work ceases, is abolished, disappears, the duties disappear, the job is not of continuing utility.

KIRBY J:   Can I just ask you, is the point of difference between you that the Union reads it as, “Should a position [in the employment with the employer named in this certified agreement] become redundant”?  Is that what the point ‑ ‑ ‑

MR ARCHIBALD:   Yes, the Full Court added what we say is the impermissible gloss of adding in or reading in to clause 55.1.1 a position with the particular employer.

KIRBY J:   All right, well that is equivalent to what I was putting in square brackets.  Why would one not read the agreement, being an agreement, therefore between parties as being confined to the position in the employment of the parties to the agreement?

MR ARCHIBALD:   Because that is to equate the concept of the set of tasks and responsibilities with the particular contract of employment and would leave no useful work to be done by the first part of the first element of clause 55.1.1 and would depend and operate exclusively on the second limb which is concerned with the contract of employment and its termination.

GLEESON CJ:   But how would that relate to section 170MB and transmission?  Leave aside any arguments about whether there has been a transmission.  Suppose you had a clear case of a transmission of a business and section 170MB then provides that the certified agreement continues to apply.  If 55.1.1 means should a position with a particular employer become redundant, then 55.1.1 would always operate in the case of a transmission, would it not?

MR ARCHIBALD:   Yes.  One of the consequences of the Full Court’s construction is that there is inexorable redundancy in the case of every transmission, and we say that is not consistent with the concepts of the TCR Case, the concepts of industrial relations and practical reality, and it would again emasculate the first element and provide exclusive focus on the second element in this clause. 

One could never transmit a business without there being redundancy, that is to say, redundancy is no more than termination of a contract of employment where, without fault on the part of the employee, the employer seeks and chooses to terminate that contract.

McHUGH J:   Yes, but the clause was intended to operate generally, not only in respect of transmissions of business, which would probably be a minority of the cases where it would apply, and because transmission did create special problems that the Commission drafted a model clause which deemed the employment to continue, so that on a transmission you could not obtain severance payments, but this agreement has failed to do it. 

MR ARCHIBALD:   Deeming employment to continue would not obviate the operation of clause 55 and the incidence of redundancy in the case of transmission.  It would still occur, even though one had continuity of employment and the transmittee employer being bound by the certified agreement would not deal with this problem.

McHUGH J:   I am not sure about that.  It says the continuity of the employment shall be deemed not to have been broken by reason of such transmission.  So the fact that your employment is terminated is for the purposes of the redundancy clause, the model clause, deemed not to be a termination and therefore not a retrenchment.

MR ARCHIBALD:   But there would still be redundancy.  Even if no termination, a position would still have become redundant, so that, for example, clause 55.7 would operate and we would have to send off notices under the provisions of that division to the Commonwealth Employment Service telling the Commonwealth Employment Service that there had been terminations on account of redundancy.

McHUGH J:   I am not sure about that because the model clause says that the employment shall be deemed not to have been broken.

MR ARCHIBALD:   Yes, but there would still be redundancy.  Limb one would have been triggered even if limb two would not have been.  That serves to emphasise, in our submission, against the context of the Act that limb one avowedly and discernibly adopts the concepts of the TCR Case where the redundancy of position is not to be equated with redundancy of the worker. 

KIRBY J:   Where is that obligation to shoot off the notice to the Commonwealth?  If you could just give us the reference to that at some time.

MR ARCHIBALD:  Yes.  Under the Act ‑ ‑ ‑

KIRBY J:   Just whilst that is being searched for, what is the great burden of doing that?

MR ARCHIBALD:   Well, it is futile because ex hypothesi in the circumstances that have been canvassed ‑ ‑ ‑

KIRBY J:   The employees are not out of work and therefore there is no real point to engage the Commonwealth.

MR ARCHIBALD:   Yes.  It is section 170CL.

McHUGH J:   But 55.7.1 only operates if you have terminated the employment.

MR ARCHIBALD:   But Amcor will have; Amcor has.

McHUGH J:   No, what the redundancy clause required the continuity of employment to be deemed not to have been broken by reason of your transmission.

MR ARCHIBALD:   But it is on account of the redundancy.

McHUGH J:   Yes, I know but it has to have a termination.

MR ARCHIBALD:   So there would be odd consequences.  Of course, similarly one would have 55.2.  Redundancy without termination would attract clause 55.2 and the obligations in relation to transfers to other jobs with the associated issues as to the retention of entitlements for hourly rates related to the redundant position.

McHUGH J:   The worrying aspect of this case is that no matter what result you reach, you get some fairly unsatisfactory results.  It seems to me, prima facie, to be terribly unfair to your client that they have to pay three weeks pay for each full year of service, notwithstanding the employee is still there doing the same job.  On the other hand, it would seem unfair if Amcor could transmit its business to some ragtag outfit who offered the same conditions of employment and the employee who refused to go and work for the new company could not obtain any severance payments.

MR ARCHIBALD:   They might have remedies though.  Under 170CE, for example, the termination may in those circumstances be seen to be harsh, unjust or unreasonable or there may be a claim under section 170FA to invoke the ILO Convention provisions about severance.  There may be a variety of remedies.

GLEESON CJ:   Is there a possible intermediate position - it does not seem to have attracted anybody so far – under which whether or not a position has become redundant might depend, amongst other things, on the response of the employee to what was done by Amcor?  If you look at 55.1.1(b), as I understand it, the effect of Part VIB perhaps, and certainly the effect of the agreement between the PaperlinX subsidiary and the employee, was that those accumulated annual leave credits remained standing to the credit of the individual employee after the events that occurred.  So that if a particular employee had accumulated to his or her credit six weeks annual leave before this transmission of business, after the transmission of business that employee still had six weeks credit accumulated to his or her benefit.  But, on the argument against you, under 55.1.1 the same employee was entitled to be paid an amount equal to the value of those, so the employee gets both.

MR ARCHIBALD:   It has been called a windfall but ‑ ‑ ‑

GLEESON CJ:   The accumulated credits remain accumulated.  Is that the effect of Part VIB of the Act?  It is certainly the effect of the new contract between the employee and the PaperlinX subsidiary.

MR ARCHIBALD:   It is the effect of Part VIB but not in a context which explicitly countenances a doubling up.

GLEESON CJ:   I am not suggesting that.  I am just looking at the consequences of transmission.

MR ARCHIBALD:   Yes, it does preserve ‑ ‑ ‑

GLEESON CJ:   What occurred was a transmission, was it not?

MR ARCHIBALD:   Yes.  It was accepted.  That was non‑controversial between the parties.

GLEESON CJ:   Yes.  Well, now, it is put against you that the contractual situation that arose between the employee and the PaperlinX subsidiary is irrelevant, and that may or may not be correct.  Let us put that to one side for the moment.  I am more interested in understanding at the moment the statutory position that resulted from the transmission in relation to, for example, accumulated annual leave credits and how that relates to clause 55.1.1, which has, presumably, to be read consistently with the statute.

MR ARCHIBALD:   Yes, which is the position for which we contend.  The preservation of those accumulated entitlements flows, in our contention, from the operation of section 170MB(1)(c) in relation to the whole of the business of which the transmittee has become the transmittee.

GLEESON CJ:   But is it possible that if a particular employee said, “Look, I’m not interested in working for PaperlinX.  I was happy to remain working for Amcor.  I don’t want to work for PaperlinX or whoever the transmittee might be.  I am not going to continue doing the same job”, then in the case of that employee you could have within 55.1.1 a position having become redundant, but a different consequence in relation to an employee who says, “I’m going to continue doing my job for PaperlinX”?

MR ARCHIBALD:   Our primary argument is no, because the position has not become redundant.  One can look at the business after 1 April and see that position, that set of tasks, is still there; it is continuing to be performed.

KIRBY J:   But the position with that employer has become redundant.

MR ARCHIBALD:   No, the position is not tied, in our contention, to the particular contract of employment.  The position survives the departure of the employee.  That is why one has “Positions Vacant” columns, because the employee is gone but the position is there.

GLEESON CJ:   We know that is your primary argument, but is there a possible intermediate position?

MR ARCHIBALD:   Well, what your Honour the Chief Justice puts to me could be a fall‑back position.

GLEESON CJ:   It does not seem to have attracted any interest.

MR ARCHIBALD:   No, because in this case all the employees took the positions.

McHUGH J:   Yes, but we have to test it.  If you have a fall‑back argument, I would like to see how you support it, because I was thinking about it last night and I could not think of a way.  It seemed to me it was ‑ ‑ ‑

MR ARCHIBALD:   It can be no more than ‑ ‑ ‑

McHUGH J:    ‑ ‑ ‑ one or other.

MR ARCHIBALD:    ‑ ‑ ‑ a failure of the primary argument as to the concept of redundancy of position.  The secondary argument is, as the learned Chief Justice puts to us, that one can see that the position is related to the continued tenure of the particular employee, and if, voluntarily, although the opportunity is there, the employee determines not to avail himself or herself of the opportunity, then it is taken to be a redundant position and then clause 55.1 would be engaged to allow the employee to take the advantage of it and not, so to speak, take the advantage that section 170MB would afford the employee if he or she had accepted the offer of employment.

McHUGH J:   Yes.  I tried to analyse it in terms of causation and own acts and all sorts of things.  I could not come up with a theory.  It just seemed to me that there were two positions and one or other had to be ‑ ‑ ‑

KIRBY J:   That may be because it is a little difficult to conceive of a position in abstracto.  It is difficult to conceive of a position as existing, in the employment sphere, without its link to the employer.  It is the employer who makes the position and makes it available.

MR ARCHIBALD:   Not necessarily ‑ ‑ ‑

KIRBY J:   It does not exist in the divorce from industrial realities.

MR ARCHIBALD:   But it can exist divorced from the employer.  Take the case of what might be called semi-permanent secondment, the person is the employee of employer A but as between employer A and enterprise B it is convenient for enterprise B to have one of its positions occupied by a person supplied by corporation A; and so one has the position divorced from the employer and corporation B may determine that that position becomes redundant.  The contract of employment with A may continue, but the position has become redundant because of the decision of corporation B.

McHUGH J:   Yes, but that is why I put to you earlier that the relevant position is a position with employer A and not B.

MR ARCHIBALD:   Well, it must depend upon what the facts are.  My example of the temporary secretarial services, one would accept or we would accept that there the position is with employer A, but I put the case of the permanent or semi-permanent secondment where the position would be with enterprise or corporation B.  So we look ‑ ‑ ‑

KIRBY J:   No constitutional problem hovering in the background here, is there, such as was argued in the earlier case?

MR ARCHIBALD:   Not that we have seen.

KIRBY J:   You have lost your link with the original agreement.  Is the agreement founded on the conciliation power under section 51(xxxv)?  Is that the constitutional foundation for it?

MR ARCHIBALD:   I am not sure ‑ ‑ ‑

KIRBY J:   Yes. I know neither party wants to raise it as it was raised in the earlier case, but we ought to keep an eye on the Constitution.

MR ARCHIBALD:   Yes, we do not think that even the extremities of our argument raise issues of that kind.

HAYNE J:   It was an agreement, was it, that was certified under Division 3?

MR ARCHIBALD:   Yes.

HAYNE J:   And Division 3 is concerned with agreements about disputes and situations.

MR ARCHIBALD:   Yes, it seems to be.

HAYNE J:   Presumably it finds its foundation there rather than the constitutional corporation provisions of Division 2.

MR ARCHIBALD:   Yes, but the presence of clause 55 in it does not cause any part of that agreement to extend beyond the permissible reach of that function of the Commission.

KIRBY J:   One just gets a little cautious about the embrace of new ideas in this Court that had not been thought of and argued below.  If you do intend to accept this fall‑back position, I think you will have to get your notice of appeal into some form of order because it is not covered by your present grounds.

MR ARCHIBALD:   Yes, I think it would not be.  I accept that.

McHUGH J:   You might have to deal with the problem that the employer can refuse employment immediately, take the benefits and then at some later stage then apply to the transmittee.  What happens then?

MR ARCHIBALD:   Well, there could be a variety of scenarios.  If the whole enterprise collapsed hard on the heels of transmission, it may be that it was all pre-ordained and there was some scheme if one likes.  In those circumstances, one would readily see that the positions had become redundant.  It seems that they were just running out a short period of time and one would understand that.  If there is a collapse of the new business but it is referable to some supervening event, some natural disaster or these days we speak of terrorist attacks and so on, if the collapse occurred by reason of the subsequent event then the position would not be altered and the ground of giving notice of termination would not have been referable to a position becoming redundant even though very shortly after the position in fact did.

Our contention is that within clause 55.1, as we were submitting, first one must see that the position shall have become redundant.  One has the requirement that should the position be redundant, and I have articulated what is entailed by that, and then subsequently the employee is retrenched and that entails the termination of the contract of employment and by reason of the relationship between the first element and the second element of the clause the reason for termination must be the fact of redundancy of the position.

KIRBY J:   So there is no definition of “redundant” or “retrenched” in the certified agreement?

MR ARCHIBALD:   No, there is not.  That is why ‑ ‑ ‑

KIRBY J:   So we are back to the general meaning in the English language, and there are cases on it?

MR ARCHIBALD:   Perhaps not so much the English language, because some of the cases observe that the dictionaries do not necessarily pick up the industrial meaning, so one is taking the context of the industrial relations sphere of discourse.

GLEESON CJ:   Mr Archibald, what is the “Government compensation” referred to in 55.7.2?

MR ARCHIBALD:   Presumably unemployment benefits ‑ ‑ ‑

McHUGH J:   No, it is probably – it has a political flavour has it not?  I mean, a lot of companies in recent times have had to retrench employees and the Federal Government has been asked to provide financial assistance, and on a couple of famous occasions has.

MR ARCHIBALD:   Yes, the reason I answered the question the way I did was I am not sure whether all of that was necessarily in place in 1997.  There may be a timing issue, but it is something in that sphere whereby the contemplation of these parties was that an employee might be able to call upon the government to assist the position of the employee.

KIRBY J:   That rather helps you.  If there is a statutory scheme that is engaged for government compensation, then that would not, on the face of things, be appropriate for a case such as the present.  Now, where do we find that scheme?  It must have been in somebody’s mind when they drafted 55.7.2. 

MR ARCHIBALD:   I am not sure that the evidence has identified it.  We will perhaps search a bit further.

HAYNE J:   But that is a separate realm of discourse.

MR ROTHMAN:   Indeed, your Honour, and one then gets into issues such as proof of those issues which frankly is an area that, in our respectful submission, this agreement seeks to avoid.

CALLINAN J:   I suppose the employees in a sense are always at risk though, Mr Rothman, that an employer may become insolvent.

MR ROTHMAN:   Yes, your Honour.

CALLINAN J:   There is probably no perfect solution.

MR ROTHMAN:   No, your Honour, there is no perfect solution, but if there is a dissipation of assets, that is much easier to trace than a transfer and much easier to stop, or at least have a recourse to persons behind the corporate entity, than would be the case in the situation of a transfer.  Certainly, if one takes, in this very case, the 1998 arrangements, one could imagine that in an extreme circumstance where all of the assets of the company were devolved to other entities and all that was left was the employment – the same situation has occurred, perhaps, since it was not finally decided, in Patrick’s, what was alleged in Patrick’s. 

CALLINAN J:   I was thinking of that, yes, and some of the remedies that the decision suggests would be available.

MR ROTHMAN:   Yes, your Honour, but it is one thing to obtain interlocutory relief.  That case never proceeded to finality and I will not posit what the effect would have been if they had tried.  In our respectful submission, for those reasons, the issues and the reasons of the judgment below ought be confirmed and the appeal dismissed. 

GLEESON CJ:   Was Mr Anderson a shareholder of Amcor?

MR ROTHMAN:   Yes, your Honour, he was.

GLEESON CJ:   He was a party to the scheme of arrangement between Amcor and its shareholders? 

MR ROTHMAN:   Yes, your Honour, I think that follows. 

HAYNE J:   He would have therefore had the inestimable benefit of about 150 pages of impenetrable expert’s report, which no doubt he would have read, learned and inwardly digested to his inestimable benefit.

MR ROTHMAN:   But he would not have had it, your Honour, before he was terminated, and he would not have had it before the offer of employment with PaperlinX occurred, because that scheme to its shareholders did not arrive until April 2000 and the other matters occurred in February 2000. 

McHUGH J:   He would have been concerned, if he had read the documents, to find that the funds employed in the business were going to be reduced by 770 million and that it was expected that the return on funds invested would be about 12 per cent and on that basis he was entitled to a gainshare payment of 4 per cent of his wages.

MR ROTHMAN:   And a lower amount, yes, your Honour.  There are very briefly two other matters to which I need to go, your Honour.

McHUGH J:   I did not notice anything in those documents about reference to employees, the effect on employees.  There is reference – expert reports spoke about reference to the creditors and that they would be - I did not notice anything but it is possible.

GLEESON CJ:   It is there.  It is at ‑ ‑ ‑

MR ROTHMAN:   I have to say, your Honour, I did not look at it for the purposes of these proceedings.  I did look at it below ‑ ‑ ‑

HAYNE J:   At 1347 and 1328 are the only references I think to creditors.

MR ROTHMAN:   There is a passing reference only, that is my recollection.

GLEESON CJ:   There is a reference to employees that I noted at 1154:

All creditors associated with the Paper Operations will be transferred to PaperlinX pursuant to the internal restructuring.  This will include the obligations to lenders, trader creditors and employees of the Paper Operations.  These liabilities will continue to be funded from the operating cash flows of the business.

That is why I was puzzled about what, if anything, went on in the Supreme Court of Victoria at the time of the approval of this scheme of arrangement and reduction of capital about attention to the interests of employees.

HAYNE J:   The position of creditors was dealt with in the expert report of Barings at 1327 to 1348 where there is no specific reference to employees, only specific reference to ‑ ‑ ‑

MR ROTHMAN:   Other creditors.

HAYNE J:   Debt providers, convertible note-holders and other unsecureds.

MR ROTHMAN:   Yes, your Honour.  My recollection below – I did not look at it for the purposes of these proceedings, but, having read it below, my recollection was that the reference to employees was at best a passing reference. 

Your Honour, I have put all that I really need to put in relation to the proposed amendment.  We say that what does occur in relation to the amendment is that it goes to the issue of what, if any, issues arose between the employees and Amcor and/or PaperlinX between the offer of employment, or a termination, and its acceptance by turning up to work.  That was not the subject of evidence simply because it was not a matter pleaded and was not an issue between the parties below.

KIRBY J:   But what could have been done?  You have a letter and you have the apparent acceptance of the offer made in the letter by the employees turning up.  How could evidence bear on how you interpret that?

MR ROTHMAN:   Your Honour, in our respectful submission, what agitated the employees to accept the employment by turning up must be relevant to the issue of whether the employees accepted the offer of employment.  If in fact the subjective – and it seems to be subjective – issue of the acceptance of the alternate employment impacts back upon the issue of whether or not redundancy occurs, then it is that subjective element which needs to be examined and what it was that – I hesitate to use the word “forced” – required or motivated the employees so to do.  More importantly, from a general proposition, in our respectful submission, the post‑termination conduct of the employee cannot affect the benefits that applied at the date of termination, and there can be no doubt that redundancy had to be measured at the date of termination.

For example, as complicated as an example as it might be, let us assume that an employee has an accident going to work on their next day of employment.  By whom are they employed?  And one has to deal with that, not by looking at the particular individual circumstances, but rather by looking at how the agreement would operate, and that is the point of his Honour Justice Moore’s statement in paragraph 6 of his Honour Justice Moore’s ‑ ‑ ‑

KIRBY J:   But is this not against your objection that you need evidence, or could call evidence on this matter because the matter is determined ‑ ‑ ‑

MR ROTHMAN:   Your Honour, our primary submission is that one cannot look at post-termination conduct to determine what the effect was of the termination and the operation of the agreement.  Our subsidiary or secondary point is that, if one is to look at post-employment conduct, then it is not the acceptance of employment simpliciter that one would then look at.  It is the circumstances that gave rise to the acceptance as well, and whether, for example, that was in any way affected by the attitude of either Amcor or PaperlinX.

The last matter, I apologise for the time, but the last matter, your Honours, is the question of costs.  This Court has differentiated prerogative relief proceedings, and I refer to the decision in McJannet and again in the Private Arbitration Case in which the Court said it arose under the Constitution and the Judiciary Act from provisions that are from appeal from the Federal Court exercising jurisdiction under the Workplace Relations Act as it now is. 

There is agreement as between the employer and ourselves that 347 governs that in any event we do not seek costs against the employer.  That is not the case in relation to the Commonwealth.  Section 471(4) I think, makes clear that when the Commonwealth does intervene and does appeal, section 347, which is the limitation on the awarding of costs, is a limitation which does not exist, and we would therefore, to the extent that we are successful, seek costs against the Commonwealth.

KIRBY J:   You submit to an order for costs against you in favour of the Minister if the Minister succeeds?

MR ROTHMAN:   No, your Honour, section 471 does not operate that way.  Section 471 operates only to the extent that costs can be awarded against the Commonwealth.  In other words, it does not allow the Commonwealth to obtain costs from another party.  If your Honour pleases.

GLEESON CJ:   Thank you.  Yes, Mr Archibald.

MR ARCHIBALD:   If the Court pleases.  My friend said that nobody had suggested that section 170MD(6) was not available in the circumstances of this case.  We did, and we set it out in our written submissions, between paragraphs 35 and 37, upon which we rely. 

In relation to the effect of the scheme of arrangement on employees, there is a section called Part G, at 1218 to 1219 in volume 6, dealing with PaperlinX employees, but it is concerned largely with the share plan and does not address their position as creditors.  In relation to the post‑demerger position of the PaperlinX group, there was in the expert report a balance sheet, at page 1325 of volume 6, showing net assets of $940 million against which creditors could draw, if necessary.  The reduction of capital, of course, was the reduction of Amcor’s capital, not PaperlinX’s capital.

GLEESON CJ:   Mr Archibald, I may have forgotten or confused something about the facts, but over the period of two years before 2000, when the letter giving notice of termination was written, the relevant businesses were being carried on by Paper Australia, is that right?

MR ARCHIBALD:   That is so, from a time shortly after the certification of the agreement in June 1998, but clearly it seems before December 1998 when the agreement was made that Paper Australia would bear the obligations of employer. 

GLEESON CJ:   Perhaps I should not have said the relevant businesses, I should have said the paper mill businesses.

MR ARCHIBALD:   Yes.

GLEESON CJ:   It follows, does it not, that there was no transmission of the paper mill businesses in the year 2000.

MR ARCHIBALD:   Probably, although the case has been conducted upon the footing that that is when the transmission occurred.

GLEESON CJ:   That is what is puzzling me.

MR ARCHIBALD:   Yes.

GLEESON CJ:   I do not see a transmission at the moment.  The businesses must have been disposed of by Amcor two years before that.

MR ARCHIBALD:   There may have been stages at which that occurred but certainly by the end of calendar year 1998 it seems that that movement had occurred.

GLEESON CJ:   Well, in 2000, at the time these notices of termination were given, what business did Amcor have but a business – what relevant business did Amcor have but a business of supplying the services of employees to others?

MR ARCHIBALD:   It had its other businesses.  We say it had no relevant business as such in relation to the paper businesses, but whatever activity it had the positions of the employees were positions in the paper business.  Appendix A speaks in those terms.  At the time at which Appendix A was prepared that movement across from Amcor to Paper Australia had not occurred, but the movement occurred in 1998 and as at the time of the demerger all that happened, in our contention, as we urged in‑chief was that there was a transformation in Paper Australia from de facto to de jure employer. 

GLEESON CJ:   This demerger was what is sometimes called a spin-off, was it not?

MR ARCHIBALD   Yes, but as the scheme booklet showed there had been the internal positioning of the paper business within discrete subsidiary companies antecedently to the point of time to which the scheme was announced.  They were positioned and ready for the demerger.  My friend made the submission that subparagraphs (a), (b), (c) and (d) of clause 55.1 were inconsistent with the TCR concepts.  Our submission is that they were quantitatively different but not qualitatively different.

In relation to clause 55.7 of the certified agreement, we do submit that the circumstances of this case plainly do not involve any question of alternative employment being achieved with Paper Australia.  The work which was done by employees after the demerger was not outside the company because the company was defined in terms which we have referred to in our submissions in‑chief in clause 9 which was apposite to the businesses or the names under which the businesses were conducted, rather than to the legal entities which constituted the employers.

In relation to your Honour Justice Callinan’s questions in relation to the gainshare arrangements under clause 26 of the certified agreement, those provisions, in fact, in our contention support the argument we have urged rather than tell against them, for again, the concept of profitability measure by return on investment is tied to the concept of the company.  The company by reason of the definition to which we just referred is referable to the business entity, either the paper business on the one hand or the packaging business on the other and, therefore, the return on investment to which clause 26.3 refers is the return on investment of that business.

CALLINAN J:   Remind me of the definition of “a business”, where I find that.

MR ARCHIBALD:   There is no definition of “business”, your Honour, but the definition of “Company” in clause 9 at page 204 defines “Company” to mean “Australian Paper or Amcor Paper Australia” and the first was the paper business and the second was the packaging business.

CALLINAN J:   Clause 9.

MR ARCHIBALD:   Clause 9, the definition of “Company”, which is the fourth definition.  One can test it by seeing what would have happened in this case had there been a sale to a arms length third party, to XYZ Corporation.  Clause 26 would operate after that trade sale occurred, XYZ Corporation would be bound under section 170MV, would be bound by the certified agreement, and the way in which the gainshare payment provisions would operate after that transaction had occurred would be that the return on investment to be calculated by reference to the operation of clause 26.3 would be referable to XYZ Corporation’s funds employed in that business.  So, again, these provisions, clause 26, emphasise that the nexus, the criterion is effectively the business activity, not the particular employer.

HAYNE J:   Connected with that and connected with the matter the Chief Justice put to you earlier, does the series of events that occurred here perhaps reveal more than a single transmission of more than one part of what, at the date of certification of the agreement, could be seen as perhaps one or more businesses of an employer.

MR ARCHIBALD:   No, your Honour.  If there were a transmission in 1998, one sees that from the various sales agreements, which include sales of assets including goodwill, no transaction or no feature of what happened in the year 2000 has any of those elements or ingredients in it.  Indeed, it was no part of the scheme that there be such a passing across of anything from Amcor to Paper Australia.  All that occurred, relevantly, was that on 21 February Amcor gave notice to its employees, and separately, without transmission of any subject matter, Paper Australia indicated that it offered to engage those employees.  So there was nothing of that character occurring at that point of time.

GLEESON CJ:   Yes.  The question I was going to ask you was, when did the transmission occur that activated section 170MB?

MR ARCHIBALD:   Likely in 1998.  It may be that the operation of section 263 shows that, although couched in language which itself has as its primary contemplation the position of the then existing employers, it needed to operate in an environment which Part VIB would impose upon it and therefore would need to cater for the incidence of different entities that might, during the life of the certified agreement, in fact be the employers and outside any concept of an Amcor company being involved.

In relation to the Government Cleaners Case, the passage at page 203.7 shows that although the entities which took the privatised activities of the government cleaning service provided employment to the employees, the work changed; hence the positions changed.  That circumstance largely explains the attitude adopted in that case in dealing with the issues that had been raised.

In relation to the amendment, we do submit that the issue is exclusively one of construction and the different criterion that would trigger redundancy is insusceptible of being dealt with by evidence.  One way in which that contingent alternative may emerge could be through the operation of clause 55.7.2, for in the postulated circumstances where the employee did not accept the offer of employment with the new entity, that employee would need to seek alternative employment.  By reading clause 55.1 in conjunction with clause 55.7, it may be possible to construe redundancy of position as being a circumstance that is called into existence where the employee does not avail himself or herself of the alternative offered, needing therefore alternative employment, but it is not a construction which we urge as our primary proposition.  If the Court pleases.

GLEESON CJ:   Thank you.  Do you want to say something, Mr Tracey?

MR TRACEY:   Only something very briefly on costs if I could.  The Minister submits that in the event that the appeal is unsuccessful that an award of costs should not be made against the Minister as sought by our friends on the basis that the Minister’s participation in this proceeding has not elongated it, nor has it incurred additional costs.

KIRBY J:   It is 4.25, so you have elongated it by 10 minutes.

GLEESON CJ:   We will reserve our decision in this matter and we will adjourn until 10.15 tomorrow morning.

AT 4.28 PM THE MATTERS WERE ADJOURNED