Iluka Midwest Ltd v The Construction, Mining, Energy, Timberyards, Sawmills, WOODWORKERS Union of Australia - Western Australian Branch

[2001] WASCA 17

ILUKA MIDWEST LTD & ANOR -v- THE CONSTRUCTION, MINING, ENERGY, TIMBERYARDS, SAWMILLS, WOODWORKERS UNION OF AUSTRALIA - WESTERN AUSTRALIAN BRANCH & ORS [2001] WASCA 17

Jurisdiction:	WESTERN AUSTRALIAN INDUSTRIAL APPEAL COURT	Citation No:	[2001] WASCA 17
Case No:	IAC:5/2000	Heard:	1 NOVEMBER 2000
Coram:	KENNEDY J  (Presiding Judge) ANDERSON J PARKER J	Delivered:	8/02/01
No of pages:	19	Judgment Part:	1 of 1
Result:	Appeal dismissed
PDF Version

Parties:	ILUKA MIDWEST LTD ILUKA RESOURCES LTD THE CONSTRUCTION, MINING, ENERGY, TIMBERYARDS, SAWMILLS, WOODWORKERS UNION OF AUSTRALIA - WESTERN AUSTRALIAN BRANCH THE AUTOMOTIVE FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION OF WORKERS - WESTERN AUSTRALIAN BRANCH THE AUSTRALIAN WORKERS' UNION, WEST AUSTRALIAN BRANCH, INDUSTRIAL UNION OF WORKERS
Catchwords:	Industrial Law Retrospective order Special circumstances required Whether this considered by Commission in Court Session No new principles
Legislation:	Industrial Relations Act (WA) 1979, s 39(3)(b)
Case References:	Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Corlett Bros Pty Ltd v Transport Workers Union of Australia, Industrial Union of Workers, Western Australian Branch (1975) 55 WAIG 644 Federated Miscellaneous Workers Union of Australia (WA Branch) v Nappy Happy Hire Pty Ltd T/A Nappy Happy Service (1993) 74 WAIG 1493 Kounis Metal Industries Pty Ltd v Transport Workers Union of Australia, Industrial Union of Workers, Western Australian Branch (1992) 73 WAIG 14 Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 RGC Mineral Sands Ltd & Anor v Construction, Mining, Energy, Timberyards, Sawmills, Woodworkers Union of Australia, WA Branch & Ors (2000) 80 WAIG 2437 Robe River Iron Associates v The Association of Draughting, Supervisory and Technical Employees of Western Australia (1987) 68 WAIG 11 Springfield Nominees Pty Ltd v Bridgelands Securities (1992) 38 FCR 21 ALHMWU v Albany Regional Hospital (1995) 75 WAIG 1798 Australian Airlines Limited v Moore (1995) 59 IR 119 Chan v Minister for Immigration and Ethnic Affairs (1989) 63 ALJR 561 Coles Myer Limited v Coppin (1993) 73 WAIG 1754 Director General of the Ministry for Culture and the Arts v CSA (2000) 94 IR 2235 FMWUA v Catholic Homes for the Aged Inc (1985) 65 WAIG 2236 Hope v The Council of the City of Bathurst (1980) 144 CLR 1 HSOA v Association for the Blind of WA (1982) 62 WAIG 2080 Joye v Beach Petroleum NL & Cortous Ltd (in liq) (1996) 67 FCR 275 Lombardo v Federal Commissioner of Taxation (1979) 28 ALR 574 Maritime Union of Australia v Burnie Port Corporation Pty Ltd, unreported; Federal Court of Australia; 24 August 2000 Minister for Police v WA Police Union of Workers (1995) 75 WAIG 1504 O'Callaghan & Ors v Custom Credit Corporation Ltd & Ors, unreported; SCt of WA; Library No 970709; 17 December 1997 PMT Partners Pty Ltd (In Liq) v Australian National Parks & Wildlife Service (1995) 69 ALJR 829 R v Portus; Ex Parte City of Perth (1973) 129 CLR 312 Re AMWUA; Ex Parte The Shell Company of Australia Ltd (1992) 174 CLR 345 Re Cram; Ex Parte New South Wales Colliery Proprietors Association Ltd (1987) 163 CLR 117 Re Leyland DAF Ltd (1994) 4 All ER 300 Re Manufacturing Grocers' Employees Federation of Australia; Ex Parte Australian Chambers of Commerce (1986) 160 CLR 341 Re WA IRC; Ex Parte Confederation of Western Australian Industry (1992) 6 WAR 555 Robe River Iron Associates v AMWSU (1993) 73 WAIG 1993 Turner v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 388

JURISDICTION : WESTERN AUSTRALIAN INDUSTRIAL APPEAL COURT CITATION : ILUKA MIDWEST LTD & ANOR -v- THE CONSTRUCTION, MINING, ENERGY, TIMBERYARDS, SAWMILLS, WOODWORKERS UNION OF AUSTRALIA - WESTERN AUSTRALIAN BRANCH & ORS [2001] WASCA 17 CORAM : KENNEDY J (Presiding Judge)

ANDERSON J
PARKER J

HEARD : 1 NOVEMBER 2000 DELIVERED : 8 FEBRUARY 2001 FILE NO/S : IAC 5 of 2000 BETWEEN : ILUKA MIDWEST LTD

ILUKA RESOURCES LTD
Appellants

AND

THE CONSTRUCTION, MINING, ENERGY, TIMBERYARDS, SAWMILLS, WOODWORKERS UNION OF AUSTRALIA - WESTERN AUSTRALIAN BRANCH
THE AUTOMOTIVE FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION OF WORKERS - WESTERN AUSTRALIAN BRANCH
THE AUSTRALIAN WORKERS' UNION, WEST AUSTRALIAN BRANCH, INDUSTRIAL UNION OF WORKERS
Respondents

(Page 2)

Catchwords:

Industrial Law - Retrospective order - Special circumstances required - Whether this considered by Commission in Court Session - No new principles

Legislation:

Industrial Relations Act (WA) 1979, s 39(3)(b)

Result:

Appeal dismissed

Representation:

Counsel:

Appellants : Mr L A Tsaknis
Respondents : Ms C J McLure QC & Mr R D Farrell

Solicitors:

Appellants : Mallesons Stephen Jaques
Respondents : Derek Schapper

Case(s) referred to in judgment(s):

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Corlett Bros Pty Ltd v Transport Workers Union of Australia, Industrial Union of Workers, Western Australian Branch (1975) 55 WAIG 644
Federated Miscellaneous Workers Union of Australia (WA Branch) v Nappy Happy Hire Pty Ltd T/A Nappy Happy Service (1993) 74 WAIG 1493
Kounis Metal Industries Pty Ltd v Transport Workers Union of Australia, Industrial Union of Workers, Western Australian Branch (1992) 73 WAIG 14
Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24
RGC Mineral Sands Ltd & Anor v Construction, Mining, Energy, Timberyards, Sawmills, Woodworkers Union of Australia, WA Branch & Ors (2000) 80 WAIG 2437
Robe River Iron Associates v The Association of Draughting, Supervisory and Technical Employees of Western Australia (1987) 68 WAIG 11
Springfield Nominees Pty Ltd v Bridgelands Securities (1992) 38 FCR 21

(Page 3)

Case(s) also cited:

ALHMWU v Albany Regional Hospital (1995) 75 WAIG 1798
Australian Airlines Limited v Moore (1995) 59 IR 119
Chan v Minister for Immigration and Ethnic Affairs (1989) 63 ALJR 561
Coles Myer Limited v Coppin (1993) 73 WAIG 1754
Director General of the Ministry for Culture and the Arts v CSA (2000) 94 IR 2235
FMWUA v Catholic Homes for the Aged Inc (1985) 65 WAIG 2236
Hope v The Council of the City of Bathurst (1980) 144 CLR 1
HSOA v Association for the Blind of WA (1982) 62 WAIG 2080
Joye v Beach Petroleum NL & Cortous Ltd (in liq) (1996) 67 FCR 275
Lombardo v Federal Commissioner of Taxation (1979) 28 ALR 574
Maritime Union of Australia v Burnie Port Corporation Pty Ltd, unreported; Federal Court of Australia; 24 August 2000
Minister for Police v WA Police Union of Workers (1995) 75 WAIG 1504
O'Callaghan & Ors v Custom Credit Corporation Ltd & Ors, unreported; SCt of WA; Library No 970709; 17 December 1997
PMT Partners Pty Ltd (In Liq) v Australian National Parks & Wildlife Service (1995) 69 ALJR 829
R v Portus; Ex Parte City of Perth (1973) 129 CLR 312
Re AMWUA; Ex Parte The Shell Company of Australia Ltd (1992) 174 CLR 345
Re Cram; Ex Parte New South Wales Colliery Proprietors Association Ltd (1987) 163 CLR 117
Re Leyland DAF Ltd (1994) 4 All ER 300
Re Manufacturing Grocers' Employees Federation of Australia; Ex Parte Australian Chambers of Commerce (1986) 160 CLR 341
Re WA IRC; Ex Parte Confederation of Western Australian Industry (1992) 6 WAR 555
Robe River Iron Associates v AMWSU (1993) 73 WAIG 1993
Turner v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 388

(Page 4)

1 KENNEDY J (Presiding Judge): I have had the benefit of reading in draft the reasons to be published by Parker J, with which I am in agreement. I would therefore dismiss this appeal.

2 ANDERSON J: I have read in draft the reasons for judgment of Parker J. I agree with them and there is nothing I wish to add.

3 PARKER J :

Introduction

4 This is an appeal from the Western Australian Industrial Relations Commission ("the Commission") in Court Session. The appellants appeal against the whole of the order made by the Commission in Court Session and seek the quashing that decision .

5 The two appellants are companies involved in the mineral sands industry in Western Australia. The respondents are unions registered as organisations of employees under the Industrial Relations Act 1979 ("the Act") and representing employees in that industry.

Facts

6 RGC Mineral Sands Ltd ("RGC") and Westralia Sands Ltd ("WSL") originally carried on separate operations in the mineral sands industry in Western Australia. RGC had operations in the mid-west of the State at Eneabba and Narngulu and also at Capel. WSL operated at Capel.

7 In June 1993 employees of RGC were offered "over-award or staff employment conditions", which included an annual salary and an incentive payments scheme as part of a "New Directions" initiative. It is common ground that at that time various representations were made by RGC to its employees about the proposed new terms of employment. Most of the RGC employees accepted the offer ("letter of offer employees"). Some employees did not accept the New Directions offer and retained their former conditions ("award employees").

8 In early 1998 RGC offered its employees workplace agreements that largely reflected their existing employment arrangements. Some of the letter of offer employees accepted these workplace agreements.

9 During the financial years ending June 1997 and June 1998 RGC operated at a financial loss. In December 1998 a merger between RGC

(Page 5)

and WSL was completed, and RGC became WSL's wholly owned subsidiary. WSL changed its name to Iluka Resources Limited ("IRL") and RGC changed its name to Iluka Mid-West Limited ("IML").

10 The Capel site ceased production in October 1998 and closed in March 1999 as part of a wider "rationalisation" of the merged organisation and from October 1998 there were progressive redundancies at Capel and in the mid-west region. IRL also had mining interests outside Western Australia.

11 In late 1999 IRL offered new workplace agreements to all its employees, including all employees of its subsidiary IMW, as part of an "Iluka 2000" initiative. The offer incorporated, amongst other things, a 17.5 per cent increase in their remuneration including benefits and a new superannuation scheme. Some of the remaining letter of offer employees accepted the Iluka 2000 workplace agreements.

12 The employees the subject of the claim that was before the Commission are the remaining letter of offer employees who had not become a party to a workplace agreement. These number some twenty employees. There is also an issue in this appeal raised by ground 6 whether the three remaining employees of the appellants in their Midwest operations who remain award employees are included in the claim. The employees the subject of the claim had fallen substantially behind all other IMW and IRL employees in their remuneration. Since 1 July 1997 they have been offered only a nominal increase of 0.005 per cent, which was by letter dated 1 January 2000.

13 On 13 September 1999 the first respondent notified IMW that it was seeking, on behalf of the claim employees and their unions, an increase in base salary of $36 per week from 1 October 1999. There was no claim for a percentage increase in the base remuneration, but there was a claim for base salaries to increase each year according to movements in the CPI. The claim was rejected by IMW.

14 On 21 September 1999 the respondents filed a notice of application for a compulsory conference pursuant to s 44 of the Act. The dispute was not resolved at a conference held on 4 October 1999 and was referred to the Commission in Court Session. Further, Commissioner Parkes prepared a draft Memorandum of Matters for Hearing and Determination that set out the respondents' claim.

15 On 5 October 1999 the respondents also filed another application seeking, in effect, an order that employees to be made redundant should

(Page 6)

have their redundancy pay calculated by reference to any increased pay that ought to have resulted from the employers' performance related review, had that review been made in the ordinary course before the redundancies took effect.

16 On 3rd April 2000, and again at the hearing, the claim of the respondents was further amended inter alia to include an additional claim for 10 per cent increase in pay as well as the original claim for $36 per week from 1 October 1999. The $36 per week is an amount equivalent to the total Arbitrated Safety Net Adjustments awarded by the Commission after 1 July 1997 but before the 2000 State Wage Decision, ie for the period during which the claim employees had received no wage increase.

17 The hearing of these matters commenced on 2 May 2000 and was concluded before the Commission in Court Session on 1 June 2000. Reasons for decision were delivered on 14 July 2000 and supplementary reasons and orders were delivered on 18 August 2000.

18 Relevantly, the Commission in Court Session ordered that:-

1) The base salary and roster allowance of each letter of offer employee be increased by 9% from 21 September 1999;

2) IMW pay the increase on or before 15 September 2000;

3) The increase is to have no effect on the calculation of any PRR [Performance Related Remuneration System] bonus payments made prior to 1 July 2000;

4) On or before 15 September 2000, the respondents shall take all necessary steps within their power to amend the rules of the IRL Superannuation Plan Category BF ("the Fund") to define eligibility for membership of that category to include letter of offer employees. On completion of those steps the appellants shall forthwith offer those employees membership of the Fund;

5) Liberty to apply is reserved to the unions in respect of the terms and conditions of employment applicable to award employees;…

Grounds of Appeal

19 As amended at the hearing of this appeal, the grounds of appeal were as follows:-

(Page 7)

1. The Commission in Court Session erred in law by purporting to give retrospective effect to order 1, that the base salary and roster allowance of each letter of offer employees employed by IMW be increased by 9 per cent from 21 September 1999.

2. The Commission in Court Session erred in law in finding that following the merger, the Appellants' Mid-West operations were quickly restored to profitability, when there was no evidence to support this finding.

3. Further, or in the alternative, the Commission in Court Session erred in law in finding that following the merger, the Appellants' Mid-West operations were quickly restored in profitability, by failing to give consideration to whether:-


(a) the productivity or profitability gains resulting from the merger of RGC and WSL was as a result of closures, including mine closures and the closure of the Sydney office, and the rationalisation of operations or as a result of the activities of the relevant employees; and

(b) the profitability of the IRL was as a result of the Appellants' Mid-West operations or as a result of other activities and operations and, if so, what proportion of the profitability of IRL was attributable to the operations of the former RGC.


4. The Commission in Court Session erred in law in making orders in relation to IRL when there is no industrial matter between it and the Respondents.

5. The Commission in Court Session erred in law in making O 4 by acting on the irrelevant consideration that RGC had previously offered a limited choice of superannuation funds to its employees and having regard to a Superannuation Scheme which applied only to the WPA employees pursuant to s 26A(b).

6. The Commission in Court Session erred in law in granting liberty to apply to the award employees of IRL and IMW when the industrial matter, if any, between the appellants and the respondents did not relate to the award employees.

Ground One - Retrospectivity

20 It is clear that the Commission had power to give retrospective effect to its order awarding an increase in salaries and allowances, by virtue of s 44(13) and s 39 of the Act but, in the absence of agreement between the

(Page 8)

parties, this power could only be exercised where, "in the opinion of the Commission, there are special circumstances which make it fair and right to do so" (s 39(3)(b)).

21 The appellants accept that the combined effect of s 39(3)(b) of the Act and s 44(13) of the Act is that an order of the Commission may take effect before the day on which it is delivered if, in the opinion of the Commission, there are special circumstances which make it fair and right to do so. They submit that the expression "special circumstances" connotes a special feature of the case which justifies the making of the orders sought: Springfield Nominees Pty Ltd v Bridgelands Securities (1992) 38 FCR 217 at 223 - 224.

22 The appellants contend, however, that the Commission did not ask itself the question whether there were special circumstances which made it fair and right to grant retrospective increases. Rather, the Commission confined itself, it is contended, to asking whether the claims should be granted having regard to equity, good conscience and the substantial merits of the case, within the meaning of s 26(1)(a) of the Act. Section 26(1)(a), however, does not provide an independent source of power for the granting of relief or retrospective relief. It deals with the manner in which the Commission's jurisdiction, otherwise conferred, is to be exercised; Robe River Iron Associates v The Association of Draughting, Supervisory and Technical Employees of Western Australia (1987) 68 WAIG 11 at 14, 20,22.

23 The respondents submit that they had made out their case for the relief awarded and that the Commission's reasons disclose that it considered and applied the statutory criteria in s 39 of the Act and that, in deciding to give retrospective effect to the salary increase, the Commission properly took into account all relevant matters.

24 The reasons of the Commission do not contain an express reference to s 39(3)(b), but the reasoning itself indicates that the Commission identified and was impressed by the force of circumstances revealed by the evidence which attached uniquely to this one small group of employees in this one employment situation. Express consideration was given to a number of matters which, at least in combination, were well capable of constituting special circumstances for the purposes of s 39(3)(b), including -

• representations made to the employees of RGC in 1993 to induce them to accept the proposed new terms of employment;

(Page 9)

• an express offer that there would be annual wages reviews, and, in the finding of the Commission, that wages would be directly linked to RGC's economic performance and to the individual's performance, and would at least keep pace with community wage movements;

• the pattern by which effect was given to these terms in the years 1994 to 1997, then interrupted by what the Commission found was a justified salary freeze in 1998, but not continued when, in the finding of the Commission, in 1999 the circumstances which justified the freeze in 1998 had passed and no longer provided a valid reason for not increasing the wages of the letter of offer employees;

• the dramatically improved productivity and profitability of IRL in 1999 and 2000; and

• the finding of the Commission that the wages paid to the letter of offer employees had not been maintained, as the criteria established by RGC in 1993 would require, to the extent that a 9 per cent increase to restore them was justified "… in the context of the special circumstances applying to these operations …"

Further, and with particular reference to the retrospective operative date of 21 September 1999, which was the date on which the application was filed, the Commission in Court Session went on immediately in its reasons to note that just a month earlier on 23 August 1999 IRL had "announced an increased interim dividend to shareholders, a cut in overheads of 30 per cent in Western Australia and a reduction of $23 million in inventories in the first half of 1999 in Western Australia and a substantial increase in profit". Especially as these matters were considered in conjunction with the failure to maintain wages in accordance with the representations made in 1993, without reason after 1998, the extent to which the wages had fallen behind and in view of the actual words used by the Commission, it is apparent in my view that the Commission considered and was satisfied by matters which, at least in combination, well satisfied the requirement of s 39(3)(b) that there be special circumstances.

25 For these reasons I am not persuaded that the Commission overlooked and failed to give consideration to s 39(3)(b) in reaching its decision to order that the increase be paid retrospectively.

Grounds 2 and 3

26 In its reasons for decision the Commission said -

(Page 10)

"It is clear from his [Mr Gazzard, Operations Manager of IRL for the Midwest] evidence that until the merger in December 1998 the respondents' Midwest operations were unprofitable. Following the merger, operations were changed and profitability was quickly restored."

27 The appellants say that there was no evidence to support this finding that profitability was quickly restored and that therefore in the absence of evidence to sustain the finding the Commission erred in law; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-6. Ground 2 can only succeed if there was no evidence capable of sustaining the finding, whereas ground 3 seeks to contend, in respect of the same finding, that there was an error of law because the Commission failed to consider other factual possibilities.

28 It is apparent, in the context, that the Commission's reference to "operations" is to the Midwest operations of IRL in Western Australia.

29 The appellants argue that there was no evidence that any of the profits of the appellants was as a result of productivity increases, rather than from efficiencies or rationalisation resulting from the merger of the appellants. In particular, it is contended there was no evidence of any increase in profitability of the Western Australian operations. In particular, they rely on the Directors' report to the Stock Exchange for the year ended 31 December 1999 which indicated that a significant increase in profitability following the previous year's loss was primarily as a result of the merger. Accordingly, they contend there was no evidence that the increased profit of IRL was due in large part or at all to factors other than rationalisation following from the merger.

30 Further, or in the alternative, in support of ground 3 the appellants contend that the Commission placed too great a weight on factors from which a finding or inference could be drawn that there had been an increase in productivity and, as a result, its decision that there had been any such increase, or any sufficient increase in productivity independent of the merger, was manifestly unreasonable. The appellants submit that this gives rise to a question of law and rely on the decision in Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 41 per Mason J. But there his Honour was considering the weight to be given to relevant considerations in the exercise of an administrative discretion, not to the question whether evidence is capable of supporting a finding of fact. In my view ground 3 does not raise a question of law.

(Page 11)

31 With respect to ground 2, while there is an abundance of evidence of the significantly increased profitability of IRL since the merger, there is little dealing with the profitability of IMW or the Midwest operations which are, in substance, the operations of IMW. In part, this is because, since the merger, the respondents have reported as a group. There was evidence given by Mr Gazzard, however, which contrasted the efficiency of the operations under RGC with the new Midwest operational system for which he was primarily responsible and which was introduced after the merger in December 1998. He had corrected what he described as the lack of integration of the Narngulu and Eneabba sites, which he considered "had been the cause of significant problems for RGC", and concentrated on the quality of production as the "lack of focus on quality had virtually bankrupted RGC" and led to the "mining of material that could not be treated, or turned into saleable products". He described a "period of disarray in the mining operations of RGC" from mid to about December 1998. These matters led him as a first priority "to rectify the operational problems that then existed and to devise a viable mining plan for the future" and to give major priority to the quality of the production, rather than quantity. This was done while he was "turning around" the former RGC operation. He had noted in January 2000 that Narngulu is now setting production records and that while production tonnages are down from Eneabba there was a much greater focus on grade and quality of ore mined. These matters were noted as having "a significant affect (sic) on company profits", and when looking ahead in 2000 he noted the "productivity improvements achieved in 1999". In cross-examination, Mr Gazzard indicated that while productivity in the Midwest had declined, profitability was better. He stressed though that the fall in productivity, by which he meant only tonnes of ore produced of both rutile and ilmenite, was deliberate and in part was the result of closing some poor mine sites. This was done to match volume produced to the level of demand. At the same time the quality of the product had changed so that what was produced was saleable and was being sold. He also accepted that a statement by the Chairman of IRL in January 2000 that during the past year the unit cost of production has been reduced applied also to the Midwest operations, although Mr Gazzard did not regard that as indicating improved productivity as he considered that the productivity involved only volume of production or output and not the efficiency or profitability of the operations. He did, though, accept there had been an "improved result" and that more valuable products were being produced with profits going up. He described the result of the changes in the Midwest operations he had introduced since the merger in December 1998

(Page 12)

as having the result that "we are producing at the lowest cost we can for what the market requires".

32 Further, in an address to the Stock Exchange in April 2000 the Chairman of IRL reported a 35 per cent increase in earnings per share and an 11 per cent increase in dividend with profits higher than forecast in April 1999 and noted in reviewing the 1999 performance that "most of the improvements in earnings are the result of the cost reductions and productivity gains implemented by the Company's management and employees". The 1999 results for IRL represented a 29 per cent increase in net profit after tax before abnormals over 1998.

33 Further, employees of IMW, who were subject to or who would change to a workplace agreement, had been offered a salary increase of 17.5 per cent in November 1999. This is in marked contrast to the 0.005 per cent increase offered a month or so later to those employees who sought to remain as letter of offer employees. This salary increase of 17.5 per cent offered and paid to the main workforce could also have been accepted by the Commission as an indication of the actual profitability of the IMW operations, which were in substance the Midwest operations.

34 While, in his evidence for the appellants, Mr Gazzard sought to view productivity as solely a matter of volume of ore produced, a view apparently not shared by the Chairman of IRL judging by his April 2000 comments noted earlier, it is to be remembered that the 1993 offers to the employees of RGC did not refer to productivity but to economic performance. It is also to be noted that while grounds 2 and 3 seek to focus on one finding about profitability, the decision of the Commission was based on a number of considerations and was not dependant on the particular finding to which grounds 2 and 3 refer.

35 Nevertheless, while the references to the evidence are not exhaustive they are sufficient, in my view, to reveal that there was an evidentiary basis on which the Commission could properly make the challenged finding that profitability was quickly restored for the Midwest operations following the merger.

36 For these reasons grounds 2 and 3 have not been made out.

Ground 4

37 The ground as formulated contended the Commission erred in law in making orders in relation to IRL when there was no industrial matter

(Page 13)

between it and the respondents. During argument, however, the ground was "confined" to persons who were not employees (it seems of either IRL or IMW) as at the date of decision, 18 August 2000, but who had been letter of offer employees on 21 September 1999 when the application was commenced. It is contended in respect of these persons that there was no "industrial matter" as these persons were not employees as at 18 August 2000, It follows in the submission that the Commission had no jurisdiction to make orders in respect of them. The issue is raised by the supplementary reasons for decision published on 18 August 2000 after the point had been canvassed at the Speaking to the Minutes.

38 The brief written submissions of the appellants were directed to a distinct issue, namely that all letter of offer employees were employees of IMW following the merger, not IRL, so that there was no jurisdiction for an order against both IRL and IMW. This point, if successful, would have left the order valid as against IMW. In the absence of written or oral submissions on the ground as "confined", it was not made expressly clear what position the appellants sought to take about the point originally raised, ie the distinction between IRL and IMW. From what was said by counsel when "confining" the reach of the ground the position appears to be, however, that this distinction was no longer pressed and, instead, the absence of an employer/employee relationship for those who had resigned or changed to workplace agreements since 21 September 1999 is the point now advanced. This involves some shift of ground as well as a confining of the original ground, but there is no objection to this.

39 For the appellants it is contended that by virtue of the definition of an "industrial matter" in s 7 of the Act, no jurisdiction is conferred on the Commission by s 23(1) unless the relationship of employer and employee exists at the time of decision. The appellants rely on Kounis Metal Industries Pty Ltd v Transport Workers Union of Australia, Industrial Union of Workers, Western Australian Branch (1992) 73 WAIG 14 and Robe River Iron Associates v The Association of Draughting, Supervisory and Technical Employees of Western Australia (1987) 68 WAIG 11 (Pepler's case).

40 There are difficulties with this submission of the appellants. First, it appears to be in direct conflict with the reasoning of this Court in Corlett Bros Pty Ltd v Transport Workers Union of Australia, Industrial Union of Workers, Western Australian Branch (1975) 55 WAIG 644. In that case the submissions of the employer were rejected that when the award was made on 4 October 1974, to operate retrospectively from 22 July 1974, there was no contract of employment and no employer/employee

(Page 14)

relationship with the employee as she had ceased her employment on 30 August 1974. The short point was that the retrospective order made by the Commission gave the award effect from 22 July 1974 at which date the employee was employed. That case was decided under the former s 92(aa) of the Industrial Arbitration Act 1912-1973, but for present purposes there is no material distinction between that provision and s 39(3) of the Act, which, as noted earlier, is expressly applied to this order by s 45(13).

41 Secondly, the decisions in Kounis Metal Industries (supra) and Pepler's case (supra) have been considered in a number of decisions of this Court including RGC Mineral Sands Ltd & Anor v Construction, Mining, Energy, Timberyards, Sawmills, Woodworkers Union of Australia, WA Branch & Ors (2000) 80 WAIG 2437 in which Parker J, Kennedy J concurring, reviewed this line of authority.

42 The point which comes nearest to the submission of the appellants appears to be the observation of Owen J in the Kounis Metal Industries decision at 19 that:

"Unless, at the time when the application is made, the relationship [of employer and employee] actually exists, or is expected to come into existence in the future or did exist and is to be restored, the key matter of an 'industrial matter' is missing."

This passage would contradict the appellants' submission, however, as at the date of the application the letter of offer employees in question were still employed. Further, as is apparent from [75], [76] and [78] of the decision in RGC Mineral Sands Ltd, the observation of Owen J must now be read in light of the decision in Federated Miscellaneous Workers Union of Australia (WA Branch) v Nappy Happy Hire Pty Ltd T/A Nappy Happy Service (1993) 74 WAIG 1493, where this Court held that the continuation of the contract of service is not a jurisdictional fact having regard to the terms of the definition of "industrial matter" in the Act.

43 Thus, it has not been shown that there is any substance in ground 4 as confined (and modified) by the submissions of the appellants.

44 Ground 4 must therefore fail.

(Page 15)

Ground 5

45 Order 4 of the Commission made on 18 August 2000 required IRL and IMW to take all necessary steps within their power to amend the rules of the Iluka Resources Superannuation Plan Category BF ("the IRL fund") to define eligibility for membership of that category to include the letter of offer employees and then to offer membership of the fund to those employees.

46 In 1993 RGC specifically proposed that employees who accepted staff conditions, ie the letter of offer employees, would have a choice of superannuation funds. The choice was between two funds then operated by RGC, an employees' fund which was funded by a 5 per cent of Award rate company contribution and a staff fund which required a 5 per cent of salary contribution by both the company and the employee. Both funds appear to have been defined benefit funds.

47 The provision of superannuation benefits for employees was also the subject of Federal legislation introduced in 1992 which required contributions by employers, at a percentage of an employee's income, to a complying superannuation fund or scheme. The percentage level of contribution has been increased progressively from 5 per cent, which was the minimum level applicable in 1993. By 1 July 1998 the level was 7 per cent and it has been increased since then. Section 49C was also introduced into the Act in 1995 to regulate the circumstances in which the Commission might require contribution to a superannuation fund or scheme by an employee or employer in respect of an employee.

48 In June 1998 RGC advised employees of changes to its superannuation arrangements. This was done in conjunction with advice that salaries would not be increased in 1998 because of the "poor profit performance" of RGC. By these new arrangements existing employees would be offered the option, from 1 January 1999, of staying with their existing superannuation fund, or of determining their own level of contributions (but not less than 7 per cent) to either a new company accumulation plan or "outside" plans.

49 Before 1 January 1999, however, the merger had occurred. It was IRL, not RGC or IMW, which offered a company accumulation plan - the IRL fund. Its rules define who is eligible for membership. Their effect relevantly is that only staff employees of IRL and IMW, including shop floor employees who accept staff conditions by entering into a workplace agreement, are eligible. As a consequence the letter of offer employees

(Page 16)

were not eligible to take advantage of the option of joining the IRL fund. The order made by the Commission seeks to alter that position.

50 IRL also maintains two defined benefits superannuation funds, one a former RGC fund and the other a former WSL fund. This suggests that only one of the two 1993 RGC funds remains. It is not disclosed which of these it is. The two IRL defined benefits schemes are now closed to new membership, however, so that letter of offer employees do not have the option now of transferring from one to the other of them.

51 Apart from detailing these matters, the claim and other facts relevant to the superannuation claim, the reasons of the Commission are limited on this issue. The Commission considered, but rejected, a contention of the appellants that s 26A of the Act precluded an order as sought. The material reasoning is at [48] where the Commission say:

"The point made by the unions, is that the respondents have had a history of offering choice of superannuation schemes to their employees, including staff superannuation conditions and on that basis, and not merely because it is a scheme dedicated solely to employees on workplace agreements, that allows an order to be made that is not contrary to the requirements of s 26A(b). We agree with that submission. It is clear from the aforementioned documents that RGC Mineral Sands Limited represented to the letter of offer employees that they would be offered staff conditions and they would be offered a choice of superannuation schemes."

The first two sentences of this passage deal with the Commission's conclusion concerning the s 26A point. The third sentence appears to be the only material reasoning for the decision challenged by ground 5. This reasoning turns on representations by RGC to the letter of offer employees that they would be offered "staff conditions" and they would be offered a choice of superannuation schemes.

52 There is presently no effective choice of superannuation schemes maintained by the respondents available to the letter of offer employees. While that might possibly - as a matter of equity, good conscience and the substantial merits of the case (s 26(1)(a)) - persuade the Commission that the respondents might be required to offer a choice, it is difficult to see that this could extend to a requirement that the choice must include the IRL fund.
(Page 17)

53 Relevantly, therefore, the decision of the Commission must turn on the other stated reason, ie that RGC represented that letter of offer employees would be offered staff conditions. By its 1993 proposals RGC allowed letter of offer employees staff conditions which included the ability to choose to join the staff superannuation fund. This appears to have remained the position until the takeover. The June 1998 proposals of RGC were never implemented for existing staff as the takeover occurred before the proposed date for change of 1 January 1999. In the merged operations, staff conditions include access to the IRL fund, but its membership has been confined by the rules so as to exclude letter of offer employees.

54 There is, therefore, a factual basis for the finding of the Commission that the letter of offer employees were offered staff conditions, and it is demonstrated that with respect to superannuation they are now precluded from enjoying the present staff condition of membership of the IRL fund. That being so it was a matter for the Commission whether an order to enable letter of offer employees to become members of the IRL fund was appropriate as a matter of equity, good conscience and the substantial merits of the case. As a matter of law it would appear to have been open to the Commission to reach the decision it did.

55 These observations are also enough to deal with the submission of the appellants that the RGC proposals of 1993 are an irrelevant issue.

56 With respect to s 26A(b) the submission was renewed before us that this provision has been contravened by Order 4. The statutory prohibition in s 26A(b) is on the awarding of particular conditions "merely because those conditions apply to" employees who are parties to a workplace agreement, whereas the gravamen of the Commission's reasons is the failure to honour representations made in 1993. It is an immaterial side issue on that reasoning that the condition is presently available to employees who are parties to a workplace agreement.

57 The appellants also sought to argue that Order 4 contravened s 49C(2)(a) of the Act which precludes the Commission from making an award or order or registering an industrial agreement, which requires contribution to a superannuation fund or scheme, unless the award order or industrial agreement - "(a) permits the employee to nominate a complying superannuation fund or scheme". The respondents validly object that this point is not raised by the grounds of appeal. In any event, Order 4 does not appear to attract the operation of s 49C as it does not require contribution to a superannuation fund or scheme either by an

(Page 18)

employee or the employer. The force of the present Order is directed to a different issue, ie the optional availability of a further superannuation fund should an employee wish to nominate that fund.

58 Ground 5 has not been made out.

Ground 6

59 It is contended the Commission erred in law in granting liberty to apply to award employees of the appellants when the industrial matter did not relate to them.

60 As indicated earlier there are three award employees affected by this ground.

61 The appellants contention depends on the proposition that there was no claim to vary the award in relation to the award employees. The respondents contend that the claim lodged was not restricted to the letter of offer employees and was, in terms, applicable to all relevant employees which includes award employees.

62 The problem, as thus identified, is a product of a level of informality in the procedures. So far as the materials before this Court reveal there were two applications for a compulsory conference lodged, No C270 of 1999 on 21 September 1999 and No 1528 of 1999 on 5 October 1999 which dealt with the calculation of redundancy pay. The application in C270 of 1999 does not provide a clear answer, nor does the memorandum of matters for hearing and determination prepared in C270 of 1999 by Commissioner Parkes pursuant to s 44(9).

63 At the hearing before the Commission the respondents made express reference to these award employees saying -

"Whilst these employees are not the direct focus of the union's claims, those employees should be affected by any order which issues in the union's favour."

These observations sought to suggest that in the respondents' view the scope of the claims being pursued extended to the three remaining award employees. As has been indicated, however, the focus of the case was on the letter of offer employees and it was the representations made by RGC in 1993 on which those employees acted which were seen by the Commission to be compelling. The award employees did not act on these

(Page 19)

representations so that the reasons of the Commission do not deal with the award employees.

64 In its decision at [52] the Commission noted it had received no substantive submissions concerning the three award employees but extended liberty to apply to the respondents "in order that no injustice be done to them". This was somewhat inconsistent with the statements at [1] of the decision where the Commission, in the first two sentences, identified the claims as concerning "letter of offer" employees "who accepted an offer made by [RGC] in 1993". This description would exclude the award employees.

65 While it is not clear whether the award employees were ever formally within the scope of the applications or the matters identified for hearing and determination by Commissioner Parkes pursuant to s 44(a), all that the Commission has presently done is to grant liberty to apply. That is in the nature of a procedural order. The question whether there was an industrial matter properly raised for hearing and determination concerning the three award employees has not been considered and no substantive orders have been made. In these circumstances this present issue appears to be raised prematurely.

Conclusion

66 For these reasons the appeal is dismissed.