Construction, Forestry, Mining and Energy Union v Lend Lease Building Pty Ltd (formerly known as Lend Lease Project Management and Construction Australia Pty Ltd)

[2014] FWC 3547

[2014] FWC 3547

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Construction, Forestry, Mining and Energy Union
v
Lend Lease Building Pty Ltd (formerly known as Lend Lease Project Management and Construction Australia Pty Ltd)
(C2014/4292)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 28 MAY 2014

Alleged dispute about any matters arising under the enterprise agreement and the NES: s186(6).

[1] Some members of the CFMEU (the employees) employed by Lend Lease Building Pty Ltd (LLB) are members of the Defined Benefits Division (DBD) of the Lend Lease Superannuation Plan (LLSP).

[2] The DBD of the LLSP is to be closed on 31 May 2014 and the members’ benefits under the DBD are to be transferred to the member’s nominated accumulation fund. 1

[3] LLB is a wholly owned subsidiary of the Lend Lease Corporation (LLC). 2

[4] It is LLC which is the principal employer-sponsor of the LLSP. It pays the superannuation contributions and it is reimbursed for those costs by LLB. 3

[5] LLSP is a sub-plan of the Plum Superannuation Fund of which the trustee is PFS Nominees Pty Ltd (PFS).

[6] Under the Trust Deed, LLC has the right to terminate contributions to the DBD and the Trustee has the discretion to terminate the DBD.

[7] In February 2014, LLC announced its proposal to close the DBD to take effect on 30 June 2014.

[8] So much is not in dispute.

[9] The CFMEU contend that the decision to terminate the DBD is inconsistent with LLB’s obligations under the Lend Lease Project Management & Construction/CFMEU Joint Development Agreement Mark 8 2012-16 (the Agreement).

[10] In its notification to the Commission, the CFMEU sought orders that LLB “be prevented from taking any action in regard to the closure of the defined benefit plan that would be detrimental to the employees covered by the enterprise agreement.” It further sought orders that LLB “provide all relevant information related to changes to the superannuation fund(s) including but not limited to the actuarial advice and legal advice already requested and that the company be prevented from finalising any closure of the defined benefit plan until such information has been provided and an adequate time has elapsed for the information to be fully considered by the union and the employees affected.”

[11] At the hearing of the application the CFMEU sought an interim order:

“That until final order of the Fair Work Commission Lend Lease Building Pty Ltd, Lend Lease Corporation and PFS Nominees Pty Ltd, their officers, employees and agents refrain from taking any steps or doing anything to alter or close the Defined Benefits Division of the Lend Lease Superannuation Plan.”

[12] It did not press for any orders in relation to the provision of additional information.

[13] The CFMEU tendered documentary evidence to support its application. LLB tendered a witness statement of Mr Eric Hensley 4, the Australian Employee Relations Manager for LLC and Amanda Hughes,5 the Group Head of Compensation and Benefits for the Lend Lease group of companies. As the CFMEU was seeking interim orders the witnesses were not required for cross examination.

The issues to be determined

1. Was the dispute resolution procedure of the Agreement complied with?

2. Should an interim order be made?

3. Should the interim order be directed to LLC and PFS?

1. Was the dispute resolution procedure of the Agreement complied with?

[14] In its response to the CFMEU’s application, LLB did not concede that the dispute fell within the dispute resolution clause or that the Commission has the power to make the orders sought in the application. It was said that LLB was not aware of which employees covered by the Agreement the CFMEU purports to bring the Application on behalf of.

[15] Ms Hughes, who gave evidence on behalf of LLB, stated that prior to the lodgement of the application she was “not aware of the Union having sought a meeting to discuss a particular dispute that a JDA-8 member (or group of JDA-8 Members) had regarding the closure of the DB Division.” 6 It was her evidence that the correspondence from the CFMEU only sought information so that it might advise its members.

[16] She further stated that no individual employee, either by themselves or through the CFMEU, had “sought to resolve a claim that LLB (or LLC) was not permitted to close the DB Division.” She stated that individual employees had sought information in relation to administrative matters only. 7

[17] The CFMEU submitted that the dispute resolution procedure had been complied with and therefore the Commission had the jurisdiction to determine the application for interim relief.

[18] Clause 1 of the Agreement defines the parties as the Company, the employees and the signatory union, i.e. the CFMEU.

[19] The Agreement at clause 19 provides for conflict resolution.

[20] It provides as follows:

“19. Conflict Resolution

19.1 The Parties recognise that one of the aims of the Agreement is to eliminate lost time in the event of a dispute and to achieve prompt resolution. The most effective procedure is for the responsibility for resolution to remain as close to the source of the dispute as possible. To this end, the following processes are agreed:

(a) Disputes Procedure

In the event of a dispute occurring, the following procedure will be adopted:

(i) Discussion between those directly affected;

(ii) Discussion on the project between the site management and the Employee affected or a representative nominated by the Employee (including Union delegate);

(iii) Discussion between senior Company management and the Employee affected, or if nominated by the Employee their Representative or appropriate Union official;

(iv) The relevant Union official commits to make him/herself available to be involved at any stage of the procedure as required, or in respect of any potential dispute. The Company agrees to facilitating access to the project for the relevant Union official to represent Employees under this procedure subject to the Union official complying with all site rules and reasonable requests and reasonable directions of site management.

A dispute will not be referred to the next level of the above procedure until a genuine attempt to resolve the matter has been made at the appropriate level.

(b) Reference to the relevant State Board or Panel

If the dispute occurs in Victoria or Queensland, and still exists after the above disputes procedure either party may refer the dispute to a State Industry Dispute Panel or Board constituted under Australian Government or State law. This sub clause does not prevent any of the parties to the dispute from referring the dispute to Fair Work Australia (FWA) either before or after any decision or recommendation of the State Board or Panel. If the matter has been referred to a State Industry Dispute Panel or Board constituted under Australian Government or State law, once a decision has been handed down the matter may be referred by either party to FWA within 14 days.

(c) Reference to Fair Work Australia

A dispute may be referred to FWA for conciliation and if required, arbitration, in either of the following circumstances:

(i) If the dispute still exists after the above disputes procedure has been carried out, the dispute may be referred by any of the parties to the dispute to FWA; or

(ii) If any party to the dispute refuses or fails to follow any step of the above disputes procedure the non breaching party will not be obligated to continue through the remaining steps and may immediately refer the matter to FWA.

(d) Notice of Disputes

Should a dispute arise and it does not appear to be one which can be settled immediately, the party raising the matter will notify the other party or parties by telephone within 48 hours of the dispute arising and confirm it in writing.”

[21] The CFMEU submitted that there had been discussions between those directly affected as discussions had occurred both between the employees and the company and between the CFMEU and the company.

[22] Lend Lease notified employees of the proposed closure of the DBD on 24 February 2014 and advised that the proposed closure date was to be 30 June 2014. The CFMEU attended meetings of members of the DBD organised by Lend Lease on 28 February 2013. 8

[23] The CFMEU submitted that these discussion were “discussions between those directly affected” and included the employees and the CFMEU. 9

[24] The CFMEU submitted that these discussions continued at information sessions in March 2014. 10

[25] By letter on 14 March 2014, the CFMEU advised Lend Lease that its members “had expressed uncertainty and anxiety about the proposed closure.” 11 It did not advise that either the CFMEU or its members were opposed to the proposal. It sought further information from Lend Lease to enable it to “properly advise those members concerned.”12 On 19 March 2014, Mr Coleman of Lend Lease replied and provided some documentation and responded to the CFMEU’s members’ concerns.

[26] In a follow up letter of 2 April 2014, the CFMEU sought further information. Again it did not advise that it or its members were opposed to the proposal. It advised that it needed the information to “further advise members concerned.” 13

[27] On 11 April 2014, Mr Coleman announced that as a result of the consultation Lend Lease had decided to close the DBD.

[28] On 23 April 2014, the CFMEU having not received a response to its 2 April 2014 letter sought further information. Again the CFMEU did not advise that it or its members were opposed to the proposal. It advised that “the delay in providing [the] documents is impeding [their] members’ consideration of this matter.” 14 Mr Coleman replied on 29 April 2014. On 1 May 2014, the Trustee advised members that the DBD would close on 31 May 2014. On 2 May 2014, the CFMEU notified a dispute to the Commission.

[29] While LLB put the CFMEU on notice that the dispute resolution procedure had not been followed, it did not develop that submission in any detail at the hearing. It referred to clauses 19.1(a) and (c) and the evidence of Ms Hughes at [68]-[69] to support it submission that while there had been requests for information there has been no discussion between those directly affected. 15

[30] I, find for the purpose of the making of the interim order, that there have been discussions between the parties, as defined in the Agreement, about the subject matter of the dispute and those discussions had not resolved the dispute between the parties. I do not accept that because no individual member of the CFMEU had raised concerns with LLB that no dispute exists. The CFMEU is able to raise disputes in its own right under the dispute resolution procedure. However, I note it is not clear on the evidence that the discussions relied upon by the CFMEU were with LLB or with LLC.

2. Should an interim order be made?

[31] There was no dispute that the Commission has the power to make interim orders if the Commission is not in a position to make final orders. 16

[32] It is not contested the Commission has the power to protect and preserve its jurisdiction until a decision on the merits of the dispute can be made. These principles were set out in the majority decision of the High Court of Australia in Re Media, Entertainment and Arts Alliance and Others Ex Parte the Hoyts Corporation Pty Limited and Others  17(Hoyts).

[33] At paragraph 28, the majority stated that:

“The steps that may be taken and the orders that may be made in the course of arbitration are not necessarily coextensive with what may be done by way of a final award. So much is expressly recognized by s.111(1)(t) of the Act which, as has already been noted, confers a general power to ‘give all such directions, and do all such things, as are necessary or expedient for the speedy and just hearing and determination of (an) industrial dispute’. Although there might be questions as to the validity of a final award having effect of the kind that cl.31.1 has in relation to matters not dealt with in the Interim Award, an interim provision of that kind may well be necessary or expedient for the speedy and just hearing and determination of a dispute, particularly if, as was suggested in this case, there is a possibility that conditions will be altered so as to render the Commission's decision irrelevant or so as to defeat its jurisdiction. And that is so even if the provision operates in a wider area than that to be regulated by the final award, for it may be necessary or desirable to consider all aspects of existing employment practices and arrangements before determining the provision that should be made with respect to the matters in dispute.”

[34] Since the Hoyts decision, the Commission has followed this approach in dealing with applications for interim orders. 18 I will adopt this approach in this matter.

[35] In LHMU v Crown Casino 19 I set out the principles to be followed in determining whether an interim order should be granted.

[36] I shall first deal with the question of whether an interim order should be made binding LLB.

Serious issue to be tried?

[37] The CFMEU contend that clause 11.2 of the Agreement compels LLB to maintain a defined benefit fund for those employees who remain members of the fund.

[38] LLB contends that clause 11.2 of the Agreement does not require LLB to maintain a defined benefit fund. It contends that the continuance of the defined benefit fund is solely at the discretion of the Lend Lease Group.

[39] The predecessor agreements to the Agreement had contained the following provision:

“17.1 General

(a) The Company, as a wholly owned subsidiary of Lend Lease Corporation Limited, is currently able to provide a comprehensive benefits package in consideration for work performed.

(b) This package aims to provide meaningful income and security in the event of sickness, accident, cessation of employment, retirement, disablement or death for Employees and further links benefits for Employees to Company performance via profit share and ownership of Lend Lease shares.

(c) The Parties recognise and agree that Company obligations and Employees' rights in respect of these benefits are not granted or regulated by the terms of this Agreement, but by separate Trust Deeds, Rules and Agreements. It is recognised that terms of those benefits may be altered by the Lend Lease Group or the respective Trusts from time to time, without reference to this Agreement.”

[40] In the Agreement those words were changed as follows:

“11.1 General

(a) The Company, as a wholly owned subsidiary of Lend Lease Corporation Limited, is currently able to provide a comprehensive benefits package in consideration for work performed.

(b) This package aims to provide meaningful income and security in the event of sickness, accident, cessation of employment, retirement, disablement or death for Employees and further links benefits for Employees to Company performance via profit share and ownership of Lend Lease shares.

(c) The Parties recognise and agree that Company obligations and Employees' rights in respect of these benefits (except for superannuation) are not granted or regulated by the terms of this Agreement, but by separate Trust Deeds, Rules and Agreements. It is recognised that terms of those benefits may be altered by the Lend Lease Group or the respective Trusts from time to time, without reference to this Agreement.”

[41] The CFMEU submitted that the clause made it clear that superannuation benefits were now regulated by the Agreement.

[42] LLB submitted that the change of words in bold only reflect the fact that superannuation is regulated by law and was not intended to create an ongoing entitlement to a defined benefit fund via the Agreement. To support this contention it relied on the evidence of Mr Hensley who stated that “it was never suggested that employees should have an entitlement under JDA-8 to stay in the Defined Benefits Division. The JDAs have always stated that these benefits could be altered by Lend Lease Group or the respective trusts without reference to the JDAs (i.e. the second sentence of clause 11.1(c)) and it was not suggested that this should change.”

[43] The CFMEU submitted that the words in bold should be given their ordinary meaning and that the Agreement makes it clear that superannuation entitlements are not able to be altered by the Lend Lease Group without reference to the Agreement. Further it submitted the Mr Hensley’s evidence should be disregarded because it is evidence of LLB’s subjective intentions and was not admissible.

[44] It is clear that clause 11 does impose some obligations on LLB.

[45] Clause 11.2(a) obliges LLB to make contributions to a fund of the employees’ choice. 20 If the employee does not make a choice then the default fund is LLSP. The Agreement then sets out two options. Clause 11.2(c)(i) provides that if the employee joined LLB after 1 January 1999, LLB pays into the accumulation fund of LLSP. If the employees are in the DBD then clause 11.2(c)(iii) of the Agreement sets out how the company benefit is calculated.

[46] There is a serious issue to be determined about whether the Agreement commits LLB to ensure that employees who are in the DBD continue to receive that benefit.

[47] There is also a serious issue to be determined about whether clause 11.1(c) of the Agreement permits the Lend Lease Group or the respective trusts to alter the benefits without reference to the Agreement.

[48] The CFMEU also relied upon clause 6 of the Agreement which provides as follows:

6. No Extra Claims

The Parties acknowledge and agree that this Agreement covers the field, and is in full and final settlement of all matters, claims and demands however described whether or not any matter, claim or demand is specifically addressed within this Agreement.

The Parties to this Agreement undertake not to pursue any further claims as to wage increases/decreases, or improvements/reductions to conditions of employment, whether they are Award or over-award, during the life of this Agreement.

[49] The CFMEU submitted that the proposal would see a reduction in conditions and therefore LLB will contravene the Agreement.

[50] On the evidence currently before the Commission it is not clear that LLB has pursued any demands or claims. LLB is not the party that is proposing to end the DBD. LLB has taken no steps to close the DBD. Further it appears on the evidence before the Commission that LLB has no legal capacity to prevent the termination of the DBD. I am therefore not satisfied that there is an arguable case that LLB has made any claim or demand to reduce conditions of employment.

Balance of convenience

[51] The decision to close the fund will take effect on 31 May 2014. There is no doubt that unless restrained by an order of the Commission or a Court the DBD will be closed. Once that has occurred it will not be able to be undone.

[52] Evidence was tendered that there would be a detriment if DBD was not closed on 31 May 2014.

[53] It was said that:

● If DBD did not close by 31 May 2014, it would not able to be closed until 31 July 2014 or later. 21
● If all members remain in the DBD then the members may miss out on the uplift or bonus if their employment ends before the DBD is closed.
● Employees will be prejudiced because it is expected (based on reasonable assumptions) that the accumulation account will perform better than DBD for each member.
● There will be confusion and disruption to members as they will have made plans including establishing self managed funds.
● There would be additional costs to the trustees and the administrator which would ultimately disadvantage LLC as these costs would reduce the surplus in the LLSP.
● If only the Agreement employees remained in the fund there would be additional costs associated (though less than if all the members remained in the fund) with closing down the fund at a later time.

[54] There was no explanation of why the proposed date to close the fund was moved from 30 June 2014 to 31 May 2014. It is also not clear what detriment would flow to LLB if the interim orders were made.

[55] However, I am conscious that apart from members of the CFMEU who are represented in this matter other employee members of the DBD have had no notice of this application and therefore have not had an opportunity to be heard.

[56] However taking all this into account, I am satisfied that the balance of convenience is in favour of the making of an interim order against LLB at least to protect the position of those employees who are covered by the Agreement.

[57] However, given LLB has not taken any steps or done anything to alter or close the DBD of the LLSP, I am not prepared to make the orders sought by the CFMEU.

[58] I am prepared to order that LLB take all steps reasonably available to it to have LLC or PFS not alter or close the DBD of the LLSP so as to permit the members of the DBD covered by the Agreement to remain members of the DBD until further order of the Commission.

3. Should the interim order be directed to LLC and PFS Nominees Pty Ltd?

[59] The application and notice of listing were not served on LLC and PFS. The CFMEU wrote to LLC and PFS on 20 May 2014 seeking undertakings from LLC and PFS. On 21 May 2014, LLC replied and advised that LLC 22 will not provide the undertaking sought as did the PFS.23

[60] On the morning of the hearing the CFMEU wrote to LLC advising that at the hearing of this application the CFMEU would be seeking interim orders against LLC. 24

[61] At the hearing LLC did not appear and Counsel for LLB advised that he did not appear on behalf of LLC.

[62] Given my decision in respect of this, it is not necessary for me to determine if LLC at least had notice of the hearing. I do note however that correspondence from LLC makes it clear that it was aware of the proceedings before Senior Deputy President Drake and the witnesses for LLB were both from the Lend Lease group of companies and not LLB.

[63] I am not satisfied that I have the power to make orders against LLC and PFS.

[64] The High Court noted in relation to the private arbitration power:

“31. Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the content of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator’s powers depend on the agreement of the party, usually embodied in a contract, and the arbitrator’s award is not binding of its own force. Rather it perfect, if any, depends on the law which operates with respect to it.” 25

[65] Here the parties that consented to have the dispute resolved by private arbitration do not include either LLC or PFS.

[66] While I accept the submission of the CFMEU that an industrial dispute can exist with a party which is not an employer, and I accept that a party who is not an employer can be found to be involved with a contravention of a civil remedy provision under the Fair Work Act 2009, I am not convinced for the purpose of making an interim order that the dispute resolution powers of the Commission which derive from an enterprise agreement extend to making orders directed at third parties.

[67] I am therefore not prepared to make interim orders directed at either LLC or PFS. However given my interim order, I would expect that LLB would draw to the attention of both LLC and PFS my view that no steps should be taken to alter the position of employees covered by the Agreement who are members of the DBD by altering or closing the DBD.

DEPUTY PRESIDENT

Appearances:

B. Docking for the CFMEU

C. Ward and P. Young for Lend Lease Building Pty Ltd

Hearing details:

2014.

Sydney:

26 May.

 1   Exhibit R1 at [7]

 2   Ibid

 3   Ibid

 4   Exhibit R2

 5   Exhibit R1

 6   Exhibit R1 at [68]

 7   Ibid at [69]

 8   Exhibit R2 at [43]

 9   Transcript PN 175

 10   Ibid PN 177

 11   Exhibit A10 at attachment 8

 12   Ibid

 13   Exhibit A10 at attachment 10

 14   Ibid attachment 12

 15   Transcript PN 123-125

 16   Transcript PN 129

 17 178 CLR 379

 18   PR938271 and PR920954

 19   [2010] FWA 7379 at [12]

 20   Clause 11.2(a)

 21   Exhibit R1 at [105]

 22   Exhibit A8

 23   Exhibit A11

 24   Exhibit A12

 25 CFMEU v AIRC 203 CLR 645

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