Australian Meat Industry Employees Union v Mt Schank Meat Processing Pty Ltd

[1998] FCA 543

FEDERAL COURT OF AUSTRALIA

Industrial law - certified agreement - whether respondents bound by the certified agreement - whether each respondent is a successor, assignee or transmittee of the business or part of the business of a party to the certified agreement - whether evidence adduced by applicants made out a prima facie case - whether a transfer of part of the business established

Industrial Relations Act 1988 (Cth) s 149(2)
Workplace Relations Act 1996 (Cth) ss 178, 179

Woodhouse v Peter Brotherhood Limited [1972] 3 All ER 91
Shaw v United Felt Hats Pty Ltd (1927) 39 CLR 533 applied
Meat and Allied Trades Federation of Australia v Australasian Meat Industry Employees Union (1995) 58 IR 90 applied
Gapes v Commercial Bank of Australia (1979) 38 FLR 431 cited

Matter No. SG68 of 1997

AUSTRALIAN MEAT INDUSTRY EMPLOYEES UNION & OTHERS v MT SCHANK MEAT PROCESSING PTY LTD & ANOTHER

VON DOUSSA J
ADELAIDE
21 MAY 1998

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SG68  of   1997

BETWEEN:

AUSTRALIAN MEAT INDUSTRY EMPLOYEES UNION
FIRST APPLICANT

DARREN FRY
SECOND APPLICANT

MICHAEL DEAN MAYNARD
THIRD APPLICANT

GEOFFREY MARK BALNAVES
FOURTH APPLICANT

PAMELA LORRAINE DICKER
FIFTH APPLICANT

JENNIFER DOREEN FERGUSON
SIXTH APPLICANT

TROY KEPPLES
SEVENTH APPLICANT

AND:

MT SCHANK MEAT PROCESSING PTY LTD
RESPONDENT
FIRST RESPONDENT

QUALITY MEAT PACKING PTY LTD
SECOND RESPONDENT

JUDGE:

VON DOUSSA J

DATE OF ORDER:

21 MAY 1998

WHERE MADE:

ADELAIDE

THE COURT ORDERS THAT:

Declaration that the respondents are bound by the agreement entered into between the first applicant and Mount Gambier Meat Processing Pty Ltd and certified by the Australian Industrial Relations Commission on 3 February 1995.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SG68 of 1997

BETWEEN:

AUSTRALIAN MEAT INDUSTRY EMPLOYEES UNION
FIRST APPLICANT

DARREN FRY
SECOND APPLICANT

MICHAEL DEAN MAYNARD
THIRD APPLICANT

GEOFFREY MARK BALNAVES
FOURTH APPLICANT

PAMELA LORRAINE DICKER
FIFTH APPLICANT

JENNIFER DOREEN FERGUSON
SIXTH APPLICANT

TROY KEPPLES
SEVENTH APPLICANT

AND:

MT SCHANK MEAT PROCESSING PTY LTD
FIRST RESPONDENT

QUALITY MEAT PACKING PTY LTD
SECOND RESPONDENT

JUDGE:	VON DOUSSA J
DATE:	21 MAY 1998
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

This application by the Australasian Meat Industry Employees Union (“the Union”) and six of its members is brought under ss 178 and 179 of the Workplace Relations Act 1996. The application, as amended, alleges that in breach of a certified agreement the respondents underpaid the second to seventh applicants during the period from 1 July 1996 to 30 June 1997. The applicants seek the imposition of a penalty pursuant to s 178(1), and orders for the amounts of the alleged underpayments.

The substantial issue between the parties is whether the respondents are bound by the certified agreement.  The Court has been asked to determine that question ahead of the assessment of the alleged underpayment of wages.  If the respondents are correct in their contention that the certified agreement does not bind them, the application must be dismissed.

The certified agreement relied on by the applicants was entered into in November 1994.  The parties to the agreement were Mount Gambier Meat Processing Pty Ltd (“MGM”) and the Union.  The agreement was certified by the Australian Industrial Relations Commission on 3 February 1995.

In 1994 and 1995 MGM carried on an abattoir at Mount Schank in the South-East of South Australia (“the Mt Schank abattoir”).  Four of the applicants, Messrs Fry, Maynard, Kepples and Ms Dicker, were employed by MGM during the period from the certification of the agreement until the events which gave rise to the present dispute occurred in mid 1996.

It is common ground that the Mt Schank abattoir closed down in July 1996.  There is undisputed evidence from Messrs Maynard and Kepples that the Mt Schank abattoir closed at about this time each year, apparently when sheep prices became too high.  However, the closure which commenced in July 1996 was longer than usual, and at the time of the closure the employees working in the Mt Schank abattoir were informed that maintenance work was to be performed.

The Mt Schank abattoir commenced killing operations again in October 1996.  The four applicants who had previously been employed in the abattoir resumed work there, and Mr Balnaves and Ms Ferguson were employed for the first time.  Prior to the closure in July 1996 Messrs Fry and Maynard had been employed on the mutton chain.  When they returned, they found that a beef chain had been installed, and they worked on that for a short time before resuming work on the mutton chain.

When operations recommenced at the Mt Schank abattoir, those of the applicants who had previously been employed there found that the supervisors, the personnel managers, and the pay clerks were the same people.  Mr Kepples in affidavit evidence, said “Mr Rashad Aziz has always run the meatworks since I’ve been there.  I realised he was the owner because he would tell you off if you were doing something wrong”.  This evidence has not been challenged.

At a meeting of all employees including slaughterers and labourers at about the time that operations recommenced, the plant manager informed the workforce that they would be paid at a rate that was lower than the rate in the certified agreement.  They were informed that they would be paid at the “old rate”, being a reference to the rate that applied before enterprise bargaining led to the certified agreement.  The applicants were paid at a rate which they contend is lower than the rate specified in the certified agreement.  When the rate was challenged, the applicants ascertained that they were being paid by companies other than MGM.  Messrs Fry, Maynard, and Balnaves and Ms Dicker were being paid by the respondent Mt Schank Meat Processing Pty Ltd, and Ms Ferguson and Mr Kepples were being paid by the respondent Quality Meat Pty Ltd.

The present proceedings were then commenced. The applicants contend that the respondents are bound by the certified agreement for two reasons. First, by virtue of s 149(2) of the Industrial Relations Act 1988, which was in force in October 1996 and is applicable to these proceedings and secondly by the term of the certified agreement itself.

Sub-section 149(2) of the Industrial Relations Act 1988 relevantly provides:

“149(2)          An award that is constituted by a certified agreement, or that otherwise is made by consent of the parties to an industrial dispute, is binding on:

(a)      each of the parties to the agreement; and

(b)      all members of an organisation that is a party; and

(c)an employer who is a successor, assignee or transmittee (whether immediate or not) to or of the whole or part of the business of a party, including a corporation that has acquired or taken over the whole or part of the business of the party.”

The certified agreement provides in clause 1.2.4. that:

“Any reference to ‘the employer’ in this agreement shall include a reference to the successor, assignee or transmittee of such employer or part thereof within the meaning of s 149(d) of the Industrial Relations Act and shall include reference to such employer or part thereof notwithstanding any change in its name or status”.

As I conclude that the present matter is governed by s 149(2) of the former Industrial Relations Act it is not necessary to explore questions of interpretation that arise in relation to the terms of the certified agreement. It is sufficient to record that the applicants contend that the certified agreement has the same meaning and effect as s 149(2).

At an early directions hearing, and with the concurrence of the parties, a direction was given that the applicants file affidavits setting forth the facts and contentions relied on in support of their claims, and that the respondent (Mt Schank Meat Processing Pty Ltd was the only respondent at the time) file an answering affidavit or affidavits in a specified time.  Affidavits were filed by each of the applicants, and then by Mr Rodney Aziz who deposed that as General Manager of Mt Schank Meat Processing Pty Ltd he had authority to swear the affidavit on behalf of the respondent.  When the matter came on for trial on the preliminary issue, namely whether the certified agreement binds the respondents, the applicants tendered their affidavits in support.  Two of the deponents were cross-examined by the respondent.  The applicants then closed their case.  Counsel for the respondents then sought to advance a submission of no case to answer based on alleged inadequacies in the proof of facts necessary to support the applicants’ claim.  Counsel for the applicants objected, saying that the applicants’ case had been presented on the understanding that the affidavit of Mr Rodney Aziz would form part of the material before the Court.  To that end the applicants had given notice that they required Mr Aziz for cross-examination.

During directions’ hearings, discussion directed to identifying and deciding the real issue in dispute between the parties would have led the applicants and their counsel to the
understanding just mentioned.  I therefore gave leave to the applicants to reopen their case.  On doing so, the applicants tendered the affidavit of Rodney Aziz, and again closed their case.

Counsel for the respondents again contended that there was no case to answer, and in doing so accepted that the respondents should be required to elect to call no evidence.  The arguments advanced in support of the no case submission also constituted the submissions of the respondents in the event that the Court ruled that there was a case to answer.

The respondents contended that authority establishes that the transmission provisions of s 149(2) require that there be a transfer of the whole or part of the business of MGM to the respondents, and that it is not sufficient for the applicants merely to prove that there has been a transfer of assets and personnel: see Woodhouse v Peter Brotherhood Limited [1972] 3 All ER 91; Shaw v United Felt Hats Pty Ltd (1927) 39 CLR 533 and Meat and Allied Trades Federation of Australia v Australasian Meat Industry Employees Union (1995) 58 IR 90. Counsel for the respondents contended that the evidence failed to establish why there was a change in employer following the July 1996 closure. It was contended that the facts put forward by the applicants did not justify an inference, sufficient to discharge the civil burden of proof (as to which see Gapes v Commercial Bank of Australia (1979) 38 FLR 431) that there had been a transfer of anything more than the assets and personnel associated with the Mt Schank abattoir from one company to another company that commenced to operate a distinct and separate business.

The legal principles set out in the cases referred to are not in dispute.  The parties are in disagreement over the facts and the inferences which arise from them.

I reject the respondents’ submissions. In my opinion the evidence advanced by the applicants makes out a prima facie case that requires an answer. Moreover, I consider the evidence establishes that there was a transmission of parts of the business previously conducted by MGM to each of the respondents such that the respondents, in respect of those of the applicants who have been employed by them, are bound by the terms of the certified agreement pursuant to the provisions of s 149(2) of the Industrial Relations Act.

Evidence adduced through Mr Smith, an official with the Union, establishes that the registered proprietor of the land and fixtures comprising the Mt Schank abattoir has, since 17 November 1992, been Rashad Aziz Investments Pty Ltd.  Hitherto the registered proprietor was Mount Gambier Meatworks Pty Ltd (a different company to MGM).  Evidence tendered through Mr Smith also establishes that Rashad Aziz Investments Pty Ltd is a company incorporated on 6 October 1978.  It has an issued share capital of $30,000.  The shareholding is held equally between Rashad Aziz and Nahed Aziz.  MGM was incorporated on 24 February 1992 with an issued share capital of $2, the shares being held as to one each by Rashad Aziz and Nahed Aziz.

The respondent companies, together with another company, South-East Services Pty Ltd, were incorporated on 23 January 1996.  Each of those companies has a share capital of $1.  The single share in Mt Schank Meat Processing Pty Ltd is held by Rashad Aziz, the single share in Quality Meat Packing Pty Ltd is held by Nahed Aziz, and the single share in South-East Services Pty Ltd is held by Rodney Aziz.

The affidavit of Mr Rodney Aziz deposes, among other facts, to the following:

“3.      I am aware as a consequence of my oversight of the affairs of MGM:-

3.1that up until April 1996 MGM carried on an abattoir at Mt Schank in the South East of South Australia;

3.2the 2nd 3rd, 5th and 7th named Applicants [i.e. Messrs Fry, Maynard, Kepples and Ms Dicker] were engaged in the operations of the abattoir for varying periods up to July 1996;

3.3MGM closed down the processing operations of the abattoir in April 1996, principally because it was not up to the required and desirable export standard to access overseas markets.

3.4MGM was a party to the Mt Gambier Meat Processing Pty Ltd and Australasian Meat Industry Employees Union Enterprise Agreement 1994 (‘Enterprise Agreement’) from the date of its approval by the Australian Industrial Relations Commission.

4.Following the closure by MGM of the abattoir in April 1996, MGM applied to the Australian Securities Commission on the 16th of July 1996 for de-registration as a defunct company... .

5.        ...

6.        ...

7.The operators of the abattoir have an arrangement with Rashad Aziz Investments Pty Ltd to use the land, buildings, plant and equipment for the purposes of conducting the abattoir.

8.Following the closure by MGM of the abattoir and prior to the opening of it by the operators, significant repairs and maintenance and the construction of a new beef slaughtering chain were carried out to the infrastructure under the supervision of South East Services Pty Ltd, of which I am a Director.

9.Following the completion of construction repairs and maintenance to the abattoir infrastructure, the Respondent [i.e. Mt Schank Meat Processing Pty Ltd] opened the abattoir and commenced killing and processing operations in the new beef slaughtering chain in October 1996, and at a later date the mutton chain and boning room were commenced.

10.      ...

11.For commercial reasons the operations of the abattoir were conducted by different, but associated, entities:-

11.1the Respondent [Mt Schank Meat Processing Pty Ltd] conducted the slaughter floors.

11.2Quality Meat Packing Pty Ltd operated the boning room.

11.3South East Services Pty Ltd operated the freezer, load out and maintenance and cleaning;

11.4Select Meat Exports Pty Ltd provided administrative support services.

12-20...

21.There is not, and there has not been at any material time, any agreement or other arrangement between MGM and the Respondent in relation to the closure of the abattoir by MGM and the opening of the abattoir by the Respondent.”

Whilst Mr Aziz deposes to there being carried on at Mt Schank “an abattoir”, and “the operations of the abattoir”, for relevant purposes what was being carried on was the business of conducting the operations of the abattoir, and it is the transfer of that business, or part of that business, which must be central to a consideration of the application of the transmission provisions in s 149(2).

The affidavit of Mr Aziz, on analysis, does not depose to MGM being the owner of the abattoir business at any time, including during the period up to April 1996.  It is consistent with the facts deposed to that MGM was conducting the operations on behalf of another entity.  This is a possibility that is not far fetched having regard to the facts deposed to in paragraphs 7 and 11 of Mr Aziz’s affidavit, and to the further fact that in response to a request to discover any minutes or notes of resolutions of the companies, or any contract or sales documents concerning plant, buildings and equipment between 1 January 1996 and 1 October 1997, no documents referring to any transfer of assets or the business were discovered.  However, even if the abattoir business were relevantly owned and conducted by MGM prior to April 1996 I consider the evidence establishes that there was a transfer of that business or parts thereof to the respondents.

It will be noted that in paragraph 3.2 of his affidavit Mr Aziz deposes to the fact that Messrs Fry, Maynard, Kepples and Ms Dicker, the four applicants who worked in the abattoir prior to the closure in July 1996, were engaged in the operations of the abattoir “up to July 1996”.  That period of employment covers approximately three months from the time when “MGM closed down the processing operations of  the abattoir” (paragraph 3.3).

The evidence of Messrs Fry, Maynard, Kepples and Ms Dicker confirms that their employment in the abattoir continued until July 1996, and resumed in October 1996.  It is instructive to consider the group certificates which have been exhibited to the affidavits of a number of the applicants.  These group certificates disclose the identity of the employer company.  Messrs Fry and Maynard and Ms Dicker have exhibited group certificates given to them in respect of the year ended 30 June 1996.  Mr Kepples has not produced any group certificate for this period and Mr Balnaves and Ms Ferguson were only employed in October 1996.  For the year ended 30 June 1996 Mr Fry received two group certificates, one from MGM for $13,287, and one from Mt Schank Meat Processing Pty Ltd for $7,913 gross salary.  Mr Maynard also received two group certificates, one from MGM for $11,860 and one from Mt Schank meat Processing Pty Ltd for $6,969.  Ms Dicker received three group certificates, one from MGM for $4,206, one from Quality Meat Packing Pty Ltd for $101 and one from Mt Schank Meat Processing Pty Ltd for $4,685.

The group certificates in respect of the gross salary received by Mr Maynard and Ms Dicker from MGM were dated 22 April 1996.  The date of issue of the MGM group certificate to Mr Fry is not reproduced in the photostat exhibit.  The date of issue of these certificates tends to confirm that MGM ceased being the employer company in the operation of the abattoir in April 1996.

The group certificates for the year ended 30 June 1996 issued by Mt Schank Meat Processing Pty Ltd show the periods of employment of Messrs Fry and Maynard as commencing on 3 August 1995 - dates which coincide with the commencement periods also shown on the MGM group certificates.  As Mt Schank Meat Processing Pty Ltd was not registered until 21 January 1996 the commencement date shown on its group certificates must therefore be wrong.  The date for the commencement of employment of Ms Dicker shown on the group certificate for Quality Meat Packing Pty Ltd is 9 April 1996.

It is not suggested by the evidence of any of the applicants that they were at any stage prior to July 1996 informed that there had been a change in the identity of their employer.

The overwhelming inference arising from the evidence is that in April 1996 the role of MGM as an employer in the Mt Schank abattoir business came to an end, and that, as a matter of “commercial convenience” to the true owners of the business the conduct of parts of that business were taken over by Mt Schank Meat Processing Pty Ltd and by Quality Meat Packing Pty Ltd.  The evidence of the applicants as to their employers after October 1996 is consistent with paragraph 11 of Mr Aziz’s affidavit, namely that Mt Schank Meat Processing Pty Ltd conducted the slaughter floors and Quality Meat Packing Pty Ltd operated the boning room after the change occurred.

This inference arises from the evidence led as part of the applicants’ case.  It plainly calls for an answer, and the submission of no case fails.  No evidence having been led by the respondents in defence of the claim, the Court is entitled more readily to act on this inference: Jones v Dunkel (1959) 101 CLR 298.

Insofar as there has been, in relation to the Mt Schank abattoir business, a transfer of ownership, control, or operation from MGM to the respondents, that transfer occurred not at the time of the close down of the abattoir in July 1996, but in April 1996.  The transfer then occurred without notice to the employees, and in a way that did not indicate to any of the applicants who were then employed that there was any change at all in the identity of the business.  I do not consider there can be any doubt that following the changes which then occurred in the abattoir business, that the respondents, when they became employers of the workforce at the abattoir, were the successors, assignees or transmittees of the whole or part of the business of MGM.  In April 1996 the respondents therefore became bound by the provisions of the certified agreement.  The respondents remained bound by the certified agreement when the abattoir resumed operations in October 1996.

In my opinion the Court should now declare that the certified agreement binds the respondents in respect of the employment of the second to seventh applicants in respect of their employment from October 1996.

I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice von Doussa J

Associate:

Dated:             21 May 1998

Counsel for the Applicant:	Mr J Weatherill
Solicitor for the Applicant:	Lieschke & Weatherill
Counsel for the Respondents:	Mr R Manuel
Solicitor for the Respondents:	Manuel Fuller Merrigan
Date of Hearing:	21 April 1998
Date of Judgment:	21 May 1998