Georgina Pastoral Company Pty Ltd
[2010] FWA 3138
•16 APRIL 2010
[2010] FWA 3138 |
|
DECISION |
Workplace Relations Act 1996
cl.2A(1)(b) Sch. 7 - Application for an order to vary pre-reform certified agreement
Georgina Pastoral Company Pty Ltd
(AG2009/20288)
Northern Territory | |
COMMISSIONER ASBURY | BRISBANE, 16 APRIL 2010 |
Application to vary and extend the Colonial Agricultural Company Ltd Certified Agreement 2005.
Overview
[1] This is an application by the Georgina Pastoral Company Pty Ltd (the Applicant) under clause 2A(1) of Schedule 7 of the Workplace Relations Act 1996 the (WR Act) to vary the terms of the Colonial Agricultural Company Ltd Certified Agreement 2005 1(the Agreement). The application seeks to vary the Agreement by:
- Changing the name of the Agreement to the Georgina Pastoral Company Certified Agreement 2009;
- Adding the Georgina Pastoral Company Pty Ltd to the parties bound by the Agreement;
- Extending the term of the Agreement to 31 January 2012;
- Increasing rates of pay; and
- Updating certain other terms and conditions in the Agreement.
[2] In a statutory declaration filed with the application, executed by Mr Paul Houlihan on behalf of the Georgina Pastoral Company, the following statement appears:
“Georgina Pastoral Company took over the stations operated by the Colonial Agriculture (sic) Company, and at that time took over the employment of the employees of the Colonial Agriculture Company on those stations that it took over, and applied the terms of the Colonial Agriculture Agreement to them…”
Submissions
[3] The matter was listed for hearing by telephone on 18 January 2010. At that hearing, a number of questions were posed to the Applicant, essentially about whether the application as filed could be granted under s. 2A(1) of Schedule 7 of the WR Act. Mr P.X. Houlihan, who appeared on behalf of the Applicant, indicated that he would undertake further research and respond either in writing or at a further hearing.
[4] On 28 January 2009, correspondence was forwarded to Mr Houlihan, requiring further information or submissions in relation to the following matters:
- Whether the Georgina Pastoral Company Pty Ltd is a person bound by the Agreement for the purposes of clause 2A(1) of Schedule 7 of the WR Act;
- If it is contended that Georgina Pastoral Company Pty Ltd is a person bound by the Agreement, on what basis this contention is made;
- Whether the deletion of a party and the insertion of a new party to an Agreement is within the scope of Clause 2A(1) of Schedule 7 to the Workplace Relations Act 1996.
[5] The correspondence also referred to the decisions in Shop Distributive and Allied Employees Association v McDonalds Australia Limited (SDAEA v McDonalds); 2 and Mobil Refining Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industry Union and Others (Mobil).3
[6] Mr Houlihan responded to this letter by email on 4 February 2010 advising that he wished to have the matter listed for further hearing in Brisbane. The matter was listed for further hearing on 12 March 2010. At that hearing, Mr Houlihan tendered a letter from PriceWaterhouseCoopers dated 10 January 2010, stating that:
“Please note Georgina Pastoral Company Pty Ltd (ACN: 003 963 862) and Colonial Agricultural Company Limited (ACN: 003 963 862) are the same entity as evidenced by having the same Australian Company Numbers (ACN).
The following timeline of events details the change to the company name and change to company status. As follows:
• Georgina Pastoral Holdings and Investments Pty Ltd acquired 100% of the Units in Colonial Agricultural Fund, which wholly owned Colonial Agricultural Company Limited (ACN: 003 963 862) in August 2006.
• Colonial Agricultural Company Limited employed all staff who worked for the Colonial Group.
• Post-acquisition the Colonial Agricultural Company Ltd (ACN: 003 963 862) changed its name to Georgina Pastoral Company Limited (ACN: 003 963 862) with the Australian Securities and Investments Commission (ASIC) on 31 August 2006. (Please see the Certificate of Registered on Change of Name attachment 1).
• Further, on 29 June 2007, Georgina Pastoral Company Limited (ACN: 003 963 862) (formerly, Colonial Agricultural Company Limited (ACN: 003 963 862)) requested the conversion to a proprietary company. This registration was approved and certified by ASIC (Please see the Certificate of Registration on Conversion to a Proprietary Company, attachment 2).
• From 1 July 2008 employees continue to be employed by Georgina Pastoral Company Pty Ltd (ACN: 003 963 862) in its capacity as trustee for Georgina Unit Trust.”
[7] Appended to that letter were the following Certificates issued by the Australian Securities and Investments:
- Certificate of Registration on Change of Name indicating that on 31 August 2006, the Colonial Agricultural Company Limited ACN 003 963 862 changed its name to Georgina Pastoral Company Limited ACN 003 963 862; and
- Certificate of Registration on Conversion to a Proprietary Company indicating that on 29 June 2007 the Georgina Pastoral Company Limited ACN 003 963 862 converted to a proprietary company, the Georgina Pastoral Company Pty Ltd ACN 003 963.
[8] At that hearing it was submitted for the applicant that the present case could be distinguished from that in SDAEA v McDonalds 4on the basis that the present case did not involve adding an employer party that was not bound by the agreement. The decision in Mobil5should not be followed. It was also submitted that there was a transmission of business in 2006 so that the Georgina Pastoral Company Limited and later the Georgina Pastoral Company Pty Ltd were bound by the Agreement. Seen in this light, the name change is simply to reflect the reality of the current situation. Employees who voted almost unanimously in favour of the amendments, consider themselves employees of the Georgina Pastoral Company. It is important that this reality is reflected in the Agreement.
The Agreement and relevant legislative provisions
[9] As previously stated, the application to vary the Agreement in these proceedings is made under Clause 2A of Schedule 7 to the WR Act, which provides as follows:
“2A Commission may extend or vary pre-reform certified agreements
(1) The Commission may, on application by any person bound by a pre-reform certified agreement, by order:
(a) extend the nominal expiry date of the agreement; or
(b) vary the terms of the agreement.
(2) However, before making the order, the Commission must be satisfied that:
(a) all parties bound by the agreement genuinely agree to the extension or variation; and
(b) none of the parties have, after the introduction day:
(i) organised or engaged in, or threatened to organise or engage in, industrial action in relation to another party to the agreement; or
(ii) applied for a protected action ballot under section 451 in relation to proposed industrial action; and
(c) in the case of a variation—the agreement as varied would not result, on balance, in a reduction in the overall terms and conditions of employment of the employees bound by the agreement under:
(i) any transitional award that would regulate any term or condition of employment of the employees if the employer had been an excluded employer immediately before the reform commencement; and
(ii) any law of the Commonwealth, or of a State or Territory, that the Commission considers relevant.
(3) If the Commission extends the nominal expiry date of the agreement, the extended date cannot be more than 3 years after the date on which the order is made.
(4) If the agreement was made under section 170LJ or 170LK of the pre-reform Act, the employees bound by the agreement are taken, for the purposes of paragraph (2)(a), to agree to the extension or variation if a valid majority of the employees bound by the agreement at the time of making the extension or variation agree to it.
(5) Section 170LE of the pre-reform Act applies to deciding whether a valid majority of the employees agree to the extension or variation as if references in that section to making an agreement were references to making the extension or variation.
(6) To avoid doubt, the terms and conditions of employment under a transitional award may, for the purposes of paragraph (2)(c), include terms and conditions that did not apply on the reform commencement, or that have been varied since the reform commencement.
(7) The provisions of the pre-reform Act apply, in relation to an extension or variation to which this clause applies, to the same extent that they apply, because of clause 2, in relation to a variation under paragraph 170MD(6)(a) of the pre-reform Act.
(8) In this clause:
introduction day means the day on which the Bill that became the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 was introduced into the House of Representatives.
[10] An application under this provision can only be made by a person bound by the agreement sought to be extended or varied. The limitations imposed on the discretion to vary agreements under clause 2A(1)(b) of Schedule 7 of the WR Act were considered in SDAEA v McDonalds 6 and Mobil.7 In the former case, Senior Deputy President O’Callaghan considered an application to extend and vary a pre-reform certified agreement. When it was certified, the agreement in question covered 39 McDonalds franchisees, on the basis that they constituted a single business and common enterprise. At the point the extension and variation were sought, ten of the franchisees had undergone ownership changes constituting transmission of business, so that in some cases the agreement covered all new and existing employees and in other cases it covered existing employees for a period of twelve months from the transmission date. The variation also sought the addition of two franchises inadvertently excluded when the agreement was originally certified. Senior Deputy President O’Callaghan held that the capacity of the AIRC to vary and extend a pre-reform agreement, did not include the ability to add additional parties. To do so, would so change the character of the original agreement, that the addition would not be a variation or an extension.8
[11] The Senior Deputy President also said that the effect of adding parties to an agreement would be to enable the endorsement of new agreements involving different parties, and quite possibly excluding certain employers or unions party to the original pre-reform agreement. 9 Further, it was noted that Clause 2A(2) of Schedule 7 requires that all parties bound by an agreement genuinely agree to the extension or variation.10
[12] In Mobil SDP Lacey said that the power to vary an agreement included the power to vary the terms of the agreement or to change them in part by excision, modification, substitution, qualification or otherwise. It was also held that the terms of an agreement must mean the contents of the agreement as they prescribe the rights and obligations of the persons covered by the agreement or affected by it. The name and title of an agreement did not fall within the description of terms, and accordingly such a change is not a variation of the agreement within the meaning in Schedule 2A.
Background to the Agreement
[13] It is necessary to consider some of the background to the Agreement sought to be varied in these proceedings. The Agreement was certified by the Senior Deputy President Richards of the Australian Industrial Relations Commission (AIRC) on 24 January 2005, under s.170LK Division 2 of the WR Act. The Agreement came into force from 1 February 2005 and remained in force until 31 January 2008. At the time the Agreement was certified, s.170LX applied so that it was to remain in operation until its nominal expiry date passed and it was replaced by another agreement, or until it was terminated under any of the provisions which then operated. The Agreement was not replaced by another agreement and no application has been made to terminate it.
[14] When the Agreement was certified, s.170MB(2) of the WR Act applied to it and provided as follows:
“s.170MB(2) [New employer a corporation] If:
(a) an employer is bound by a certified agreement; and
(b) the application for certification of the agreement stated that it was made under Division 2; and
(c) at a later time, a new employer that is a constitutional corporation or the Commonwealth becomes the successor, transmittee or assignee (whether immediate or not) of the whole or a part of the business concerned;
Then, from the later time:
(d) subject to any order of the Commission made under subsection 170MBA(2), the new employer is bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and
(e) the previous employer ceases to be bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and
(f) subject to any order of the Commission made under subsection 170MBA(2), a reference in this Part to the employer includes a reference to the new employer, and ceases to refer to the previous employer, to the extent that the context relates to the whole or the part of the business.”
[15] With the enactment of the Workplace Relations Amendment (Work Choices) Act 2005, the Agreement became a pre-reform certified agreement. Effective from 27 March 2006, there were significant amendments to the provisions of the WR Act with respect to new employers being bound by pre-reform certified agreements. The amendments are found in Schedule 9 of the WR Act. Of particular relevance in the present case, is clause 10(4) of Part 4 of Schedule 9. The effect of that clause is that where an employer was bound by a pre-reform certified agreement, and there was a transmission of business after 26 March 2006, the new employer was bound by that agreement for a maximum period of twelve months.
[16] Section 170MB(2) of the WR Act refers to the new employer becoming the successor, transmittee or assignee of the whole or part of the business concerned. In contrast, Schedule 9 of the WR Act refers to transmission only. In Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd 11the High Court outlined some criteria to establish whether a new employer was a “successor, transmittee or assignee” of a business or part, for the purposes of establishing whether the new employer was bound an award which had been binding on a former employer. It was not contended that the new employer was a transmittee or assignee of any part of the business of the former employer.
[17] For the new employer in that case it was contended that the word “successor” should be confined to circumstances where there has been an actual transfer or passing on or disposal of one and the same business by the putative successee to a putative successor. It was further contended that this confined approach was consistent with past interpretation, where the words successor, assignee or transmittee have been given a composite meaning, with one word not suggested to have a broader application than any other. 12 The majority of the High Court in Gribbles did not endorse the submission that the words should be construed in a composite manner, and dealt with the issue on the basis that the question was whether there was a succession. The majority noted that none of the parties proffered any general definition of “successor” and that it would be wrong to attempt to derive such a definition, going on to hold that:
“Whether one employer is the successor to another is a mixed question of fact and law, and ‘business’ is a word that may have application in a wide variety of different circumstances. But to be a ‘successor’ to the business or part of the business of a former employer, the new employer must enjoy some part of the ‘business’ of the former employer.” 13
[18] The majority were also prepared to accept that in some cases of succession there will be a transaction between the old and new employer, and in other cases, such as an inheritance, there will be none. 14 Succession may occur through amalgamation, consolidation or some other assumption of interest, which results in the new employer being vested with the rights and duties of the old employer. It is arguable, for the purposes of s.170MB, that an employer may be a successor without being a transmittee or an assignee, and may be bound by an agreement on the basis of being a successor only.
[19] It is also arguable clause 10(4) of Part 4 of Schedule 9 deals with a narrower range of transactions that are dealt with in the former s.170MB of the WR Act, and is confined to circumstances where there has been a transmission of the business. A business may be sold in a manner that does not involve a transmission. As Catanzariti and Byrnes point out:
“Transfer (and previously transmission) of business laws are concerned with business asset sales. If a business is sold by way of a share sale, the employment relationship does not change. This is because the identity of the employer is the same after a share sale takes place, and all employee entitlements continue to accrue.” 15
[20] In such a case the employer will continue to be bound by any instrument that was in effect at the point of the sale, subject to the terms of that instrument and the legislation governing it.
Issues for determination
[21] If, as was submitted for the Applicant in this case, there was a transmission of business from the Colonial Agricultural Company Limited to the Georgina Pastoral Company Limited, and consequently the Agreement was binding on the latter company, then there is a fundamental difficulty with the present application to vary and extend the Agreement. On the material provided, if there was such a transmission, it occurred on 31 August 2006, and the Agreement ceased to be binding on the Georgina Pastoral Company Limited, and subsequently the Georgina Pastoral Company Pty Ltd, on 31 August 2007. The agreement also ceased to be binding with respect to the employees of the Georgina Pastoral Company Pty Ltd. Accordingly, in December 2009, neither the Georgina Pastoral Company Pty Ltd, nor any of its employees, is able to make an application to vary or extend the Agreement. If there was no transmission of business, a more fundamental issue arises, as to how the Agreement became binding on the Georgina Pastoral Company at all.
[22] The issues associated with s.170MB and clause 10(4) of Part 4 of Schedule 9 of the WR Act, were not raised at the hearing on 12 March 2010. Further, those issues were not addressed in submissions made on behalf of the Georgina Pastoral Company Pty Ltd. On 26 March 2010 further correspondence was sent to the Applicant seeking information in relation to these issues. In particular the Applicant was requested to consider its previous submission that the series of transactions outlined in the letter from PriceWaterHouseCoopers dated 10 January 2010, constituted a transmission of business and advise whether that position was maintained.
Further submissions
[23] By letter dated 14 April 2010, the Applicant made the following submissions:
- The Certificates provided to FWA prior to the hearing on 12 March 2010 clearly show that the three companies involved in this matter have the same Australian Company Number;
- The Company that was the Colonial Agricultural Company Limited is now the Georginal Pastoral Company Pty Ltd; and
- The Georgina Pastoral Company Pty Ltd is the employer at the present date.
[24] It was also submitted that in 2006 Georgina Pastoral Holdings and Investments Pty Ltd acquired the Colonial Agricultural Company Limited by way of a sale of shares rather than a sale of assets and accordingly the identity of the employer remained the same after that sale. All that has occurred since, is that the employer has changed its name, so that the current employer is the Georgina Pastoral Company Pty Ltd, the applicant in these proceedings.
Conclusions
[25] The series of transactions by which Georgina Pastoral Holdings and Investments Pty Ltd acquired the Colonial Agricultural Company Limited did not constitute a transmission of business. Accordingly clause 10(4) of Part 4 of Schedule 9 of the WR Act did not apply, because there was no former and new employer. The employer did not change and the Agreement simply continued to be binding on the employer.
[26] After considering the further submissions, I am satisfied that the Applicant in these proceedings, Georgina Pastoral Company Pty Ltd, is a party to the Agreement sought to be varied and extended, and that the requirements of clause 2A(1) of Schedule 7 of the FW Act have been met. In relation to Clause 2A(2)(a) I am satisfied on the basis of the statutory declaration executed by Mr Houlihan and filed with the application, that all parties bound by the Agreement genuinely agree to the extension and variation. In this regard, Mr Houlihan states in the Statutory Declaration that a ballot of 29 employees on three stations owned and operated by the Applicant was held and that 26 employees voted in favour of the extension and variation of the Agreement.
[27] Also filed with the Agreement is a statement signed by a representative of the employer and the employees to the effect that the parties agree to the variation as set out in the application, and that none of the parties have, after 14 February 2008, organised or engaged in or threatened to engage in, industrial action in relation to another party to the Agreement or applied for a protected action ballot in relation to proposed industrial action. Accordingly, I am satisfied that the requirements of Schedule 7 Clause 2A(2)(b)(i) and (ii) have been met.
[28] In relation to Schedule 7 Clause 2A(2)(c) I am satisfied that the variation to the Agreement would not result in a reduction in the overall terms and conditions of employment of employees bound by the Agreement under any transitional award that would regulate their employment and any relevant law of the Commonwealth or of a State or Territory. I am satisfied in relation to these matters on the basis of the Statutory Declaration executed by Mr Houlihan which states that the variation provides for increases in rates of pay and “keep” provisions such that employees will not suffer a reduction in their terms and conditions of employment and that the wage increases in the Agreement will be substantially above those contained in the transitional Northern Territory Cattle Industry Award,if the variation is approved.
[29] The application seeks the extension of the Agreement to 31 January 2012. I am satisfied that this will not result in the Agreement being extended for a period of more than three years after any Order in these proceedings is made – Schedule 7 Clause 2A(3). The Agreement was made under s.170LK of the pre-reform Act. I am satisfied, for the reasons set out above, that a valid majority of employees bound by the Agreement at the time or making the extension or variation, agreed to it. Accordingly the requirements of Schedule 7 Clause 2A(4) and (5) and s.170LE of the WR Act as it applies to applications under Schedule 7 Clause 2A have been met. In reaching the conclusion that the requirements of Schedule 7 Clause 2A have been met, I have also had regard to Statutory Declarations executed by three employees covered by the Agreement which state that the Statutory Declaration of Mr Houlihan is adopted and that those employees concur with the statements that:
(a) A valid majority of the employees bound by the Agreement at the time of making the variation genuinely agree to the variation and the extension of the Agreement; and
(b) The Agreement as varied would not result, on balance, in a reduction in the overall terms and conditions of employment of employees bound by the Agreement.
[30] In relation to the variation as it relates to the name of the Agreement, I am of the view that the decisions in SDAEA v McDonalds 16 and Mobil17can be distinguished on the basis that the present case does not involve a change in ownership or identity of the employer party to the Agreement. I am also of the view that in such circumstances, it is desirable that the title of the Agreement as well as its terms, reflect the legal position in relation to the proper name of the employer party.
[31] I approve the variation and extension of the Colonial Agricultural Company Ltd Certified Agreement 2005 in terms of the Application in AG2009/20288. An Order will issue effective from 12 March 2010.
COMMISSIONER
Appearances:
Mr P. Houlihan on behalf of the Applicant
Hearing details:
2010.
Brisbane:
January 18;
March 12.
1 AG838440 PR955237
2 [2009] AIRC 298.
3 [2008] AIRC 705.
4 [2009] AIRC 298.
5 [2008] AIRC 705.
6 Op. cit. [2009] AIRC 298.
7 Op. cit. [2008] AIRC 705.
8 [2009] AIRC 298 at [10] [18] and [21].
9 Ibid at [19].
10 Ibid at [18].
11 (2004-2005) 222 CLR 194
12 Ibid at 196
13 Ibid at 211 per Gleeson CJ, Hayne, Callinan and Heydon JJ.
14 Ibid at 212 per Gleeson CJ, Hayne, Callinan and Heydon JJ.
15 Catanzariti J and Byrnes M, “Transfer of Business” in Workplace Law Fair Work Volume 1 Commentary, LexisNexis Butterworths, Sydney, 2009 at 7007.
16 Op. cit. [2009] AIRC 298.
17 Op. cit. [2008] AIRC 705.
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<Price code C, AG838440 PR996262>
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