Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Shoalhaven Starches Pty Ltd T/A Manildra Group
[2024] FWCFB 315
•22 JULY 2024
| [2024] FWCFB 315 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.604—Appeal of decision
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
Shoalhaven Starches Pty Ltd T/A Manildra Group
(C2024/3143)
| DEPUTY PRESIDENT MILLHOUSE | MELBOURNE, 22 JULY 2024 |
Appeal against decision [2024] FWC 1282 of Deputy President Saunders at Sydney on 16 May 2024 in matter number B2024/530 – permission to appeal refused.
The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) has lodged an appeal under s 604 of the Fair Work Act 2009 (Cth) (Act), for which permission to appeal is required, against a decision[1] and order[2] of Deputy President Saunders issued on 16 May 2024.
In the decision, the Deputy President determined to make an order pursuant to ss 426 and 427 of the Act suspending protected industrial action by members of the CEPU employed by Endeavour Energy Network Management Pty Ltd (Endeavour). The order was made on application by a third party, Shoalhaven Starches Pty Ltd, which contended that the protected industrial action was threatening to cause it significant harm. Being satisfied that this was the case, the Deputy President issued an order that had the effect of suspending protected industrial action for a three-day period between 17 May and 19 May 2024.
The matter was listed for permission to appeal only. For the reasons that follow, permission to appeal is refused.
Context
The respondent is part of the Manildra Group and operates a plant in New South Wales (the Site). The Site, amongst other things, mills flour and produces gluten and starches for food production and other industrial applications. Products made at the Site generate 80 to 85 percent of Manildra Group’s revenue (or about $1.9 billion in 2023). It is not in dispute that Manildra Group is a large agribusiness with revenue in the year ending June 2023 of $2.3 billion and profit after tax of $203 million.
The respondent recently installed two gas turbines at the Site, at a cost of approximately $250 million. At the time of the first instance proceedings, the turbines were only able to provide approximately two thirds of the Site’s energy requirements, pending the performance of certain switching work at the Site. Such switching work could only be performed by employees of Endeavour Energy. Once the switching work was carried out, the turbines would provide almost all of the Site’s electricity requirements.
The switching work scheduled for April 2024 did not take place as the Endeavour Energy employees were taking protected industrial action. The switching work was rescheduled to 15, 16 or 17 May 2024. However, further protected industrial action, including bans on the carrying out of the switching work, and the use of physical locking systems, had been notified for those days.
While the respondent was waiting for the switching work to be carried out, it purchased additional electricity at a cost of approximately $1.176 million over a period of around a month. Additionally, because the respondent was not able to use its turbines to their full capacity, the respondent was also foregoing possible revenue of $8,220 per day in carbon credits.
The respondent’s application under s 426 of the Act for orders suspending the protected industrial action being taken by the Endeavour Energy employees was made on 10 May 2024. It proceeded to a hearing before the Deputy President on 15 May 2024. The decision and order were issued on 16 May 2024.
The decision
There was no dispute before the Deputy President that the requirement in s 426(2)(a) of the Act was made out, because the protected industrial action was adversely affecting Endeavour Energy.[3] However, the CEPU contended that:
(a)the FWC could not be satisfied as to the requirement in s 426(3), that the protected industrial action was threatening to cause significant harm to a person other than a bargaining representative or an employee who would be covered by the agreement; and
(b)the FWC could not be satisfied as to the requirement in s 426(5) that the suspension was appropriate taking into account the public interest and the objects of the Act.
The Deputy President determined that the requirement in s 426(3) was satisfied:
[31] I am satisfied that the protected industrial action which is likely to be taken in the future in this case threatens, and is very likely, to cause economic loss to Manildra
(s 426(4)(d) of the Act). The economic loss will take the form of higher costs for Manildra to purchase electricity from the spot market than it would have incurred if it had been able to run its turbines `to their capacity and use the turbines to power the Site. Those ongoing costs are likely to be in the vicinity of about $190,000 per week ($19,000 per day plus a loss of approximately $8,220 per day due to not obtaining Carbon Credit Units), together with higher daily costs if the spot prices on the market spike, as they did to a significant extent on 7 and 8 May 2024. On any view of it, and even having regard to the size and profitability of Manildra’s business, the fact that Manildra is likely to incur ongoing additional costs of at least about $190,000 per week as a result of protected industrial action being taken by members of the ETU is significant. Over three months this equates to at least $2,470,000. Over six months it equates to at least $4,940,000.(citations omitted)
The Deputy President also expressed satisfaction as to the requirement in s 426(5):
[34] Having regard to all the circumstances, I am satisfied that the proposed suspension of the protected industrial action for 3 days is appropriate, is not contrary to the public interest, and is not inconsistent with the objects of the Act. The protected industrial action has caused, and is very likely to continue to cause, significant economic harm to Manildra. This harm is significantly beyond the harm which might ordinarily be expected to be caused by protected industrial action. Further, the fact that only a very short period of suspension (3 days) will resolve Manildra’s problem is relevant to my assessment of the appropriateness of ordering a suspension. Such a suspension will be to the detriment of the ETU and its members who are employed by Endeavour Energy because their planned protected industrial action will not have as much impact as it would if the suspension were not ordered and Manildra continued to suffer significant harm, which it would no doubt put pressure on Endeavour Energy to resolve. However, a short suspension of three days is unlikely, in my assessment, to cause significant disadvantage to the ETU and its members employed by Endeavour Energy in their bargaining for a new enterprise agreement because they will be able to resume their protected industrial action after three days and broaden the action if they wish to continue to put pressure on Endeavour Energy during the balance of the negotiations. This may be contrasted to cases such as Woodside where the protected industrial action was suspended at first instance for a period of three months in circumstances where a suspension of that duration almost certainly had the practical effect of terminating the protected industrial action rather than merely providing a temporary respite from the effects of that action.
(citations omitted)
Being satisfied that the various requirements in s 426 had been met, the Deputy President issued an order suspending the protected industrial action for a period of three days commencing at 6:00am on 17 May 2024 and ending at 6:00 pm on 19 May 2024.
The CEPU filed its Notice of Appeal on 16 May 2024 and, at an urgently convened stay hearing before the Commission on 17 May 2024, advised the Commission that the switching work had been completed.[4] The CEPU otherwise informed the Commission that it pressed its appeal.
Appeal ground and submissions
While the Notice of Appeal contained three grounds of appeal, grounds 2 and 3 were not pressed at the hearing. By its single ground of appeal, the CEPU alleges as follows:
The Deputy President erred in concluding that the protected industrial action was threatening to cause Shoalhaven Starches Pty Ltd “significant harm” within the meaning of s 426(3), in circumstances where the protected industrial action being taken by the appellant was:
(a) not threatening the viability of the respondent’s enterprise;
(b) not disrupting the supply of goods or services to the respondent’s enterprise;
(c) not reducing the respondent’s capacity to fulfil any contractual obligation;
(d) preventing the respondent from taking steps to avoid incurring costs in its business.
The CEPU contends that permission to appeal ought to be granted – notwithstanding that the immediate force of the decision and order is spent – because the potential ramifications of the decision enliven the public interest.[5] The CEPU relies upon the witness statement of Ms Tara Koot to demonstrate the significance of the decision as it applies in the electricity industry. We admitted that statement pursuant to s 607(2) of the Act, without objection, being satisfied that there was an appropriate basis to do so.[6]
Acknowledging it was made in circumstances of extreme urgency the CEPU contends, in summary, that the decision is attended by sufficient doubt such as to warrant the grant of permission. The CEPU says that the Deputy President erred by concluding that the protected industrial action was threatening to cause the respondent significant harm within the meaning of s 426(3) of the Act. It contends that the Deputy President failed to correctly apply the principles articulated in Woodside Burrup,[7] and considered the issue simply as a question of quantum and not by reference to the use of that term in the context of the Act.
The CEPU submits that in considering 426(4)(d) of the Act, the Deputy President focussed upon the respondent’s lost opportunity cost, being a loss occasioned by its inability to implement a system to avoid incurring some of its existing costs. The CEPU says that the costs that the respondent had been unable to avoid at the time of the first instance hearing (being just over $1 million) were approximately 0.5% of its most recent annual profit. It submits that even on the Deputy President’s worst case scenario where the bargaining continues for a period of six months, the costs to the respondent would have been approximately $4.9 million, being 2% of the respondent’s annual profit. The CEPU submits that the size of the figures diminishes when considered in their context and were not sufficient to justify a finding of significant harm.
Principles – permission to appeal
An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker.[8] There is no right to appeal, and an appeal may only be made with the permission of the Commission. Permission to appeal must be granted, pursuant to s 604(2), where the Commission is satisfied that it is in the public interest to do so. Permission may be granted by the Commission otherwise.
The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.[9] The public interest may be attracted including where a matter raises issues of importance and general application, or where the decision at first instance manifests an injustice, or the result is counter intuitive.[10]
It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of an appealable error.[11] However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.[12]
An application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal.[13] However it is necessary to engage with those grounds to consider whether they raise an arguable case of appealable error.[14]
Consideration
For the reasons that follow, we are not satisfied that the grant of permission to appeal would be in the public interest, nor do we consider that there are discretionary grounds justifying the grant of permission.
First, there is no arguable basis to consider that the decision was attended by appealable error in the manner contended by the CEPU’s appeal ground. This is an appeal from a discretionary decision to which the principles in House v The King[15] apply. The correctness of the decision can only be challenged through the demonstration of error in the decision-making process.[16] The CEPU contends that the Deputy President failed to correctly apply the principles in Woodside Burrup and rather, erroneously applied a principle that a large sum of economic loss equals significant harm. The CEPU contends that this is a matter necessitating correction on appeal.
While the CEPU contends that the Deputy President set the bar for significant harm too low, it acknowledged in the proceedings before us that one cannot necessarily attribute a figure to the concept of significant harm, in the context a discretionary decision.
Against this context, we note that paragraph [26] of the decision contains the Deputy President’s recitation of the evidence upon which he relied. At [31] of the decision, the Deputy President conducted an evaluation that we consider to be in conformity with the discretionary nature of the decision. It appears sufficiently clear from this analysis that the Deputy President reached a state of satisfaction, as he was required to do, as to whether there was a threat of significant harm to the respondent. The Deputy President was expressly permitted by s 426(4)(d) of the Act to take into account the issue of economic loss caused to the respondent, and having regard to the CEPU’s oral submissions, we do not understand it to contend otherwise. In the exercise of his discretionary judgment, the Deputy President placed weight on the view he took of the threatened economic loss of at least $190,000 per week; at least $2,470,000 if the bargaining continued for a period of three months; and at least $4,940,000 if the bargaining continued for a period of six months.
Nor do we consider it to be arguable that there has been a misapplication of principle. In the decision, the Deputy President extracted passages of the decision in Woodside Burrup, emphasising passages that he regarded to be of particular relevance. One such passage is the anticipation that the Commission would suspend industrial action in only “very rare cases.”[17]
It appears to be sufficiently clear that the Deputy President proceeded to apply the reasoning from Woodside Burrup in his analysis. This is demonstrated at [32] of the decision wherein the Deputy President recorded his subjective evaluation that:
[32] …this is one of the very rare cases where the impact on a third party (Manildra) or protected industrial action is above and beyond the sort of loss, inconvenience or delay that is commonly a consequence of industrial action.
We are not persuaded that an arguable error of the House v The King kind arises in these circumstances.
Second, we are not persuaded that there is any practical utility in granting permission to appeal. The period for which the order operated has passed. The order has been discharged and has no residual legal effect. The switching work is complete. Even if permission were granted, we accept the respondent’s contention that the outcome of the appeal could not have any effect on matters between the parties. It would not impact the respondent’s capacity to seek to invoke
s 426 in the future or on the CEPU’s ability to oppose any such application. We accept that a lack of practical utility does not compel the refusal of permission to appeal, but it is a well-established basis for its refusal, even if appealable error is demonstrated.[18] This principle has been applied in appeals from decisions concerned with the circumstances of protected industrial action.[19]
It follows that we are not persuaded by the CEPU’s contention that the asserted precedent value of the decision, including in the context of the bargaining negotiations within the electricity industry,[20] enlivens the public interest. The decision is inherently fact specific, involved a measure of subjectivity or value judgment,[21] and is not binding on another Member of the Commission.
Conclusion and disposition
Having regard to the above matters and the conclusions reached, we do not consider that the public interest is enlivened such as to grant permission to appeal. Nor do we consider that there are discretionary grounds justifying the grant of permission.
Accordingly, permission to appeal is refused.
DEPUTY PRESIDENT
Appearances:
W Friend KC of counsel and L Doust of counsel for the appellant.
S Meehan KC of counsel and G Fredericks of counsel for the respondent.
Hearing details:
2024.
Melbourne (by video):
July 10.
[1] [2024] FWC 1282
[2] PR775068
[3] Appeal Book (AB)18 at [20]
[4] [2024] FWC 1308 at [3]; AB111
[5] AB119-120 at [3.1]
[6] Exhibit 1; Akins v National Australia Bank (1994) 34 NSWLR 155
[7] Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd [2010] FWAFB 6021; 198 IR 350
[8] This is so because on appeal the Commission has power to receive further evidence, pursuant to s 607(2); see Coal and Allied v Australian Industrial Relations Commission (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ
[9] O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44]-[46]
[10] GlaxoSmithKline Australia Pty Ltd v Makin[2010] FWAFB 5343, 197 IR 266 at [27]
[11] Wan v AIRC [2001] FCA 1803; 116 FCR 481 at [30]
[12] GlaxoSmithKline Australia Pty Ltd v Makin[2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth[2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663] at [28]
[13] Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]
[14] Wan v AIRC (2001) 116 FCR 481 at [30]
[15] (1936) 55 CLR 499 at pp 504-505
[16] Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [21] per Gleeson CJ, Gaudron and Hayne JJ
[17] AB15 at [40]
[18] See Ferrymen Pty Ltd v Maritime Union of Australia[2013] FWCFB 8025; 238 IR 258 at [48]; Australian Rail, Tram and Bus Industry Union v Queensland Rail Limited[2013] FWCFB 2165 at [5]; Australian Licenced Aircraft Engineers Association v Qantas Airways Ltd[2012] FWAFB 7791 at [8]
[19] Linfox Australia Pty Ltd v Australian Federated Union of Locomotive Employees; Australian Rail, Tram and Bus Industry Union[2019] FWCFB 5861 at [10] and the case cited therein
[20] Exhibit 1
[21] See Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [28] per Gleeson CJ, Gaudron and Hayne JJ
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