Karijini Rail Pty Limited

[2021] FWCA 2154

[2021] FWCA 2154

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Karijini Rail Pty Limited
(AG2018/3844)

KARIJINI RAIL PTY LTD RAIL OPERATIONS PILBARA ENTERPRISE AGREEMENT 2018

Mining industry
DEPUTY PRESIDENT BEAUMONT	PERTH, 19 APRIL 2021

Application for approval of the Karijini Rail Pty Ltd Rail Operations Pilbara Enterprise Agreement 2018.

1 Introduction

[1] Karijini Rail Pty Ltd has made an application for the approval of an enterprise agreement known as the Karijini Rail Pty Ltd Rail Operations Pilbara Enterprise Agreement 2018 (the Agreement). The application was made under s 185 of the Fair Work Act 2009 (Cth) (the Act). The Agreement is a single enterprise agreement.

[2] On 29 January 2021, a decision was issued that traversed the history of this application and the matters which were required to be dealt with by way of a rehearing (January Decision). 1

[3] By way of background, the application had been initially granted and the Karijini Rail Pty Ltd Rail Operations Pilbara Enterprise Agreement 2018 (Agreement) was approved with undertakings, on 16 September 2019. An appeal against that decision was allowed by the Full Bench on 3 March 2020 (the Full Bench Decision). 2The application was remitted back to the Commission, as presently constituted, to be redetermined in accordance with the Full Bench Decision.

[4] In the lead up to the rehearing, a directions hearing was convened at which each party made submissions about the programming of the rehearing and the issues to be determined. Directions were subsequently issued on 9 March 2020. The evidence and submissions had been filed by both parties, with the exception of Karijini’s reply material, when the Construction, Forestry, Maritime, Mining and Energy Union (Union) filed six applications for orders to produce certain documents against six entities (the Application(s)). Karijini objected to the orders for production filed by the Union. Furthermore, regarding the five remaining entities subject to the Applications, all similarly objected to orders being made against them. Those entities included: (a) TRRC Pty Ltd (TRRC); (b) Railtrain Pty Ltd; (c) Railtrain Services Pty Ltd; (d) Railtrain Group Pty Ltd; and (e) Railtrain Holdings Pty Ltd (the other entities).

2 Applications for production

[5] The parties were informed at the hearing on 26 May 2020 3 that reasons for declining the production of documents pursuant to the Applications would be provided in the reserved decision. Those reasons are now traversed, before addressing whether the requisite approval criteria have been satisfied.

2.1 The documents sought

[6] The content of each Application against Karijini and the other entities was for the most part in the same terms, save for the named recipient. It is therefore sufficient to outline the content of the Application directed at Karijini.

[7] The Union sought the following documents in categories (a) to (d):

a) The contract between Roy Hill and Karijini whereby Karijini currently supplies train drivers to perform work on the Roy Hill Operation (relevant only to the notice served on Karijini and not the other entities).
b) All documents evidencing or recording any communication between Roy Hill and officers, employees or agents of Karijini (or related companies of Karijini) during the period from 1 January 2018 to 31 August 2018 about the requirement for, desirability of, and/or existence of, an enterprise agreement to cover Roy Hill Operation.
c) All documents evidencing or recording any communications to or from the CFMMEU during the period from 1 January 2018 to 31 August 2018 concerning the making of a new enterprise agreement to cover the Roy Hill Operation.
d) All documents evidencing or recording any communication concerning, or consideration of, the following matters by officers, agents, employees or Karijini (or any related companies of Karijini) during the period from 1 January 2018 to 31 August 2018:

i. Whether to engage in negotiations with employees of TRRC for a new enterprise agreement to cover the Roy Hill Operation; and/or
ii. the business rationale and/or benefits of engaging employee to work on the Roy Hill Operation through Karijini rather than through TRRC;
iii. the advantages, disadvantages or effect of making an agreement to cover the Roy Hill Operation through Karijini Pty Ltd, rather than through TRRC.

2.2 The Union’s submissions

[8] In support of its Applications, the Union explained that the documents sought related primarily to the circumstances in which the coverage clause of the Agreement excluded the TRRC employees from bargaining on, and voting on, their future terms and conditions of employment. According to the Union, this was relevant with regard to two aspects of its case concerning ss 186(3) and 188(1)(c).

[9] It observed that Karijini’s objection to the Applications was primarily founded on relevance. The Union’s uncontroversial submission was that relevance would ordinarily be determined by reference to the pleadings. In the absence of pleadings, relevance was assessed to the relevant statutory tests, and the evidence and submissions of the parties.

[10] The Union pointed out that when determining whether documents were relevant, the tribunal would not finally determine the disputed questions of law or fact. It was the Union’s contention that this was contrary to common sense and to the observations of the Full Bench in Clermont Coal Pty Ltd; Clermont Coal Operations Pty Ltd; Collinsville Coal Operations Pty Ltd; and Glencore Coal Queensland Pty Ltd   v Troy Brown; Campbell Dews; Damien Mason; Gregory Holmes; Jeffrey Mason; and Glynis Sabbo 4 (Clermont); the pertinent paragraph is extracted and set out below:

The consideration of relevance in relation to an application for an order for the production of documents does not require the advance determination of a contested issue in the matter, with relevance then to be assessed on the basis of that determination. To adopt the approach advanced by the appellants would have the undesirable effect of making an interlocutory hearing concerning production of documents a forum for the resolution of the major issues in contest in the proceedings. The position might be different if a party seeks the production of documents to support a case which is not reasonably arguable. However, it was not suggested by the appellants that the applicants’ case fell into this category. We were not taken to any decision in which the issue in contest has been determined. It remains an issue which will require resolution at the hearing. 5

[11] Insofar as the Union sought the documents based on supporting its case under s 186(3), it pressed:

a) the position of employees in related entities (in this case the TRRC employees) may be relevant to the fairly chosen requirement depending on the particular facts;
b) the arrangements whereby the applicant procured an agreement with the two employees, falls within the parameters described by Buchanan J in John Holland 6 at [74];
c) the making of the Agreement made with two employees was intended to, and/or did, frustrate the operation of the FW Act. It prevented good faith bargaining with those employees who were performing work to be covered by the Agreement;
d) there was no legitimate business rationale to the group chosen, in that it did no assist Railtrain’s productivity or other business objectives;
e) the question of “moral authority” for the purpose of s 188(1)(c) may, and in the present case does, raises the position of other employees of Railtrain group (the TRRC employees). The CFMMEU contends that the FWC is entitled, and required, to have regard to the position of other employees in related entities for this purpose; and
f) Railtrain’s proposition that the moral authority of the Two Employees is to be assessed in isolation from all surrounding circumstances, including the position of other employee of the business, is incorrect and contrary to authority. 7

[12] As noted, in addition to advancing an argument premised on s 186(3), the Union sought production of certain documents for the purpose of its argument under s 188(1)(c). It observed that in responding to the request for such documents, Karijini had asserted the following regarding s 188(1)(c): ‘calls for an assessment of the employees who voted on the agreement, and only those employees’.

[13] In response, the Union acknowledged that the quality of consent under consideration was that of the employees who voted, but that did not mean that the position of other employees was irrelevant. In this respect the Union drew upon the decision of One Key Workforce 8 citing the following passage of the Full Court:

…paragraph 188(c) is cast in very broad terms. It is intended to pick up anything not caught by paras (a) and (b). Thus, any circumstance which could logically bear on the question of whether the agreement of the relevant employees was genuine would be relevant.

[14] In support of its Applications, the Union asserted that Karijini had no legitimate business rationale for the group of employees chosen (s 186(3)), hence the justification for the documents sought. It argued that Karijini had cited no authority for the proposition that the question of legitimate business rationale was confined to the situation where there were exclusions to the coverage clause. Explaining further, the Union submitted that where a business or enterprise was conducted through numerous corporate entities, it would make no sense to artificially confine the business rationale to the employing entity.

2.3 Karijini’s submissions

[15] In summary, Karijini and the other entities objected to the Applications on the basis of the timing of when the Applications were made, the relevance of the documents sought, and that the Applications amounted to a ‘fishing expedition’.

3 Consideration

[16] The determination of whether orders should be made under s 590(2)(c) of the Act in the terms sought by the Union requires an application of relevant legal principles in the context of issues which may arise in the proceedings concerning the application. This is, by necessity, informed by both the application and response materials.

[17] The principles for determining whether and if so what form of order to produce should be made were summarised in Australian Nursing Federation v Victorian Hospitals’ Industrial Association (ANF) and adopted by the Full Bench in Esso Australia Pty Ltd v Australian Workers’ Union (AWU), Australian Manufacturing Workers’ Union (AMWU) and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) (Esso).

[18] In Esso, the Full Bench stated:

It is sufficient to observe that the power under s.590(2)(c) to require a person to provide copies of documents or records, or to produce any other information to the Commission is a discretionary power, the exercise of which is to be guided by the principles adopted by courts in civil proceedings when compelling a person to produce documents, records or other things. Matters that will guide the exercise of the discretion to require production include relevance, the particularity with which the documents or category of documents that are to be the subject of the order sought are described, the extent to which the burden placed on a person required to comply with the order is reasonable, the extent to which particular documents sought amount to no more than fishing, and the proper administration of justice in the sense that material that is relevant to an issue or issues that fall for determination is available to parties to enable the parties to advance their respective cases.

[19] Turning to the first category of documents at paragraph [7(a)], namely the contract between Roy Hill Infrastructure Pty Ltd and Karijini, I was unpersuaded that an order for this document would serve the proper administration of justice because that the document sought did not have apparent relevance to an issue or issues that fell for determination.

[20] The contentions supporting the production of the contract, could essentially be distilled into two. First, Karijini had referred to the contract in its evidence and submissions (examples were cited by the Union) and second, the terms of the contract were of obvious relevance to the Union’s ‘fairly chosen’ case. The Union stated this was because Karijini had relied upon Roy Hill’s requirements regarding ‘continuity of supply’; which were said to be the sole reason offered as to why the Railtrain Group utilised Karijini to engage employees for the Roy Hill contract.

[21] While the contract was referred to in Karijini’s evidence and submissions, it does not necessarily follow that this imbued the contract with the apparent relevance, or otherwise warrants, its production. Consideration is also had to the argument pressed by the Union, which in this case was premised on issues arising under ss 186(3) and 188(1)(c) of the Act, and the jurisprudence which considers those particular sections.

[22] Visiting the s 186(3) argument first, the Union spoke of the contract being of obvious relevance to its case because it was Roy Hill’s requirement that there be ‘continuity of supply’ and that was said to have been the reason why Karijini utilised the ‘Karijini’ corporate vehicle to employ the employees. The Union submitted that there was no legitimate business rationale for the group chosen in that it did not assist the Railtrain Group’s productivity or other business objectives.

[23] When one considers s 186(3), the cases that have considered that very section including John Holland, 9 and the materials filed at the time of the Applications, the contract does not appear to inform, or assist in the determination of, whether the group was fairly chosen. While the contract may or may not speak of ‘continuity of supply’, there is no suggestion or proposition advanced that the contract speaks of how that is to be achieved. It appears from the materials filed that at all relevant times, the decision to utilise Karijini as the corporate vehicle was not a contractual stipulation.

[24] Further, and perhaps more importantly, s 186(3) concerns the coverage of the agreement – the group of employees who will be covered by it across the whole operation period. In respect of s 186(3), Karijini makes a salient point – s 186(3) is not concerned with the employees who voted on the agreement, those that did not, or those who were employed at a particular time. Again, the focus is on the coverage clause. In this respect, when Buchanan J speaks to the business rationale for the choice of ‘group’, he refers not to particular employees who are included or excluded, or the decision to utilise a particular corporate entity, but rather to that ‘wider group’. 10

[25] The Union, by reference to the decision of Clermont, had in effect cautioned against the advanced determination of a contested issue in the matter; it is noted that such determination has not been made. It is however the case, in my view, that the existing jurisprudence regarding the construction of ss 186(3) will also inform as to the apparent relevance a document may have.

[26] In Clermont, the decision at first instance dealt with a number of objections advanced by the entities in relation to which the applicants sought orders for production. The first objection was that certain categories of documents sought in relation to work performed by contractors were not relevant because the test for genuine redundancy under s 389(2) did not require consideration of the reasonableness of an employer or an associated entity of the employer engaging contactors as opposed to employees. The Deputy President dealt with this objection noting that the question had not been determined by a Full Bench of the Commission. The situation before me is unlike that in Clermont, the existing jurisprudence, and in this respect the decision of John Holland comes to mind, has illuminated the construction of s 186(3), and as a consequence this Commission as currently constituted, is bound by the same.

[27] In the Full Bench decision of Pacific Access Pty Ltd v CPSU 11 it was said that departing from Full Bench authority, which is binding, was fundamental error that deprived a party of the success which it was entitled to in accordance with binding authority. The Full Bench continued, that the member in that case was under a clear duty to follow the binding authority. In my view, the argument pressed by the Union for the production of this category of document is to be understood in the context of its contentions on the substantive issues in dispute. Some of those contentions in respect to its arguments under ss 186(3) as presented in its written submissions, appear to depart from the existing jurisprudence such that the documents sought by reference to those contentions are rendered deficient in apparent relevance. That is not to say that during the course of the hearing that position may change, and at that point the Union may see fit to make subsequent application(s) under s 590(2)(c) as its contentions perhaps evolve such that they are fairly arguable. However, at this point the production of the category of documents at paragraph [7(a)] (relevant only to Karijini) is declined.

[28] At paragraph [7(b)]of this decision, it can be seen that the Union has sought the production of all documents evincing or recording any communication between Roy Hill and officers, employees or agents of Karijini (or related companies of Karijini) during the period from 1 January 2018 to 31 August 2018 about the requirement for, desirability of, and/or existence of, an enterprise agreement to cover Roy Hill Operation. The Union has argued that this category of document is relevant to the legitimate business rationale for the ‘arrangement’. It is not however the ‘arrangement’ that s 186(3) speaks of, as traversed above, it is the determination of whether the ‘group’ of employees was fairly chosen - in respect of the coverage clause. While the Union has advanced its application for this category of documents as having potential relevance to both ss 188(1)(c) and 186(3), it is difficult to discern how this category has apparent relevance to s 188(1)(c), the argument advanced is not clear from the Union’s ‘[S]ubmissions in Reply – Orders to Produce Construction, Forestry, Maritime, Mining and Energy Union’ paragraphs [30], [46]- [49].

[29] However, at paragraphs [19], [30] and [31] of its ‘Submissions in Reply’ the Union appears to have outlined some of its submissions concerning why the documents sought should be produced. In doing so, the Union spoke of the quality of the consent under consideration and that while the focus is on the two employees it does not render the position of other employees (TRRC) irrelevant.

[30] The Union faces appreciable difficulty establishing apparent relevance between the category of documents sought and the quality of the decision making of the two employees and the position of the TRRC employees. In short, I am of the view that the contention that the documents sought have apparent relevance to the Union’s arguments under ss 186(3) and 188(1)(c) cannot be sustained.

[31] While the Union has placed weight on the term ‘any circumstance’ as referred to in the passage, ‘[T]hus, any circumstance which could logically bear on the question of whether the agreement of the relevant employees was genuine would be relevant’,  12 such ‘circumstance’ is to be understood in light of the jurisprudence which has interpretated s 188(1)(c). In my view, Karijini has correctly surmised that the documentation sought seeks to expose corporate decision making far beyond what is required for the purpose of the substantive proceeding. Communications between Roy Hill and officers, employees or agents of Karijini do not have adjectival relevance to the question of ‘genuine agreement’.

[32] The Union has sought, as detailed in paragraph [7(c)], ‘all documents evidencing or recording any communications to or from the CFMMEU during the period from 1 January 2018 to 31 August 2018 concerning the making of a new enterprise agreement to cover the Roy Hill Operation’. In short, I fail to see the utility of the proposed order given that the Union would by implication of the category of documents sought, already have possession of the same – notwithstanding its submissions concerning Mr Wood.

[33] The documents at paragraph [7(c)] are, according to the Union, to support its evidentiary case that it made approaches to Railtrain seeking to bargain in respect of Roy Hill workers in early 2018 but was effectively kept in the dark about negotiations for the terms which were intended to apply to its members. The contention fails to illuminate the apparent relevance of the documents in respect of the arguments advanced under ss 186(3) and 188(1)(c). Such communications are in my view irrelevant to the issues in dispute.

[34] The final category of documents sought are set out at paragraph [7(d)] of this decision. In short, that category covers all documents evidencing or recording any communication by officers, agents, employees or Karijini (or any related companies of Karijini) on whether to engage in negotiations with employees of TRRC Pty Ltd for a new enterprise agreement to cover the Roy Hill Operation; the business rationale and/or benefits of engaging employees to work on the Roy Hill Operation through Karijini rather than through TRRC and the advantages, disadvantages or effect of making an agreement to cover the Roy Hill Operation through Karijini, rather than through TRRC.

[35] It was acknowledged by the Full Bench in Clermont that this Commission and its predecessors have traditionally been cautious in ordering any party to produce documents which would reveal internal deliberations as to its industrial strategy or policy. 13 It was however further acknowledged, that this proposition had never been elevated to an absolute rule, akin to a privilege, that any such documents will never be ordered to be produced.14 

[36] However, given the Commission has what could be termed as a particular sensitivity in relation to attempts to obtain documents that will reveal internal deliberations of employers or unions in relation to their industrial relations strategy, this underscores the need for a clear basis for the issue of such an application. 15 In light of the observations already made, and noting the following submissions of Karijini, with which I agree:

The CFMMEU’s arguments regarding the relevance of the documents should not be accepted because:

…

Whether there is a legitimate business rational for the ‘arrangements put in place to establish a new enterprise agreement’ relates to the fairly chosen requirement. The fairly chosen requirement’s focus is on the coverage of the agreement. No employees of Karijini were excluded from the coverage of the agreement. The CFMMEU’s submissions on this issue are misconceived. The ‘business rationale’ referred to in the case mentioned in footnote 123 of the CFMMEU’s submissions refers to the business rationale of the employer who has made the relevant agreement. The business rationale of the employer is only relevant if there are exclusions to the coverage clause. This is because it is the rationale for those exclusions which is relevant. Here, there are no exclusion. Documents which allegedly disclose the business rationale of other employers, in connection with other matters, whether they are related entities or not, are not relevant to the proceedings.

The CFMMEU’s contention that the circumstances in which the Agreement was made fall within the exception identified by Buchanan J in CFMEU v John Holland [2015] FCAFC 16 at [74] is also misconceived. That paragraph commences, ‘There was no feature of the agreement…’ To the extent that the paragraph identifies any ‘exception’, which is a tenuous suggestion, it only relates to the agreement itself. The application of the paragraph does not call for any materials extrinsic to the agreement itself. Rather, it eschews their use.

I am not satisfied that the documents sought have apparent relevance, and as such a clear basis for their production has not been made out. 16

4 Undertakings and approval

[37] In the January Decision multiple issues were dealt with, including those identified by the Full Bench and objections that had been raised by the Union.

[38] In dealing with the multiple issues, the Applicant provided written undertakings prior to the hearing on 26 May 2020. Consequently, a copy of the undertakings was attached in Annexure A to the January Decision. The parties were provided with the opportunity to file submissions and other materials concerning those undertakings for the purpose of expressing their views about the same. However, while most undertakings had been provided prior to the hearing on 26 May 2020, in the January Decision, I formed the view that Karijini had not taken all reasonable steps to explain the effect of the notice of termination provision. It followed that Karijini was invited to proffer an undertaking to address this ‘s 180(5)’ concern. Karijini provided, in my view, an undertaking that addressed the concern identified.

[39] In compliance with s 190(4) of the Act, the bargaining representative’s views regarding the undertakings proffered were sought, as were those of the Unions. Again, they were provided with the opportunity to raise and address any objections they had to the undertakings proffered by the Applicant. I have considered the views expressed.

[40] I am satisfied that the undertakings proffered have met the concerns held that the Agreement did not meet the requirements set out in s 186, because of the Explanation Issues about annual leave, redundancy, the rates of pay, and types (modes) of employment.

[41] I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement.

[42] Subject to the undertakings referred to above, and on the basis of the material contained in the application and accompanying declarations, I am satisfied that each of the requirements of ss 186, 187, 188, and 190 as are relevant to this application for approval have been met.

[43] The Agreement was approved on 19 April 2021 and, in accordance with s 54, will operate from 26 April 2021. The nominal expiry date of the Agreement is 19 April 2025.

DEPUTY PRESIDENT

Annexure A

 1   Karijini Rail Pty Limited [2021] FWC 364.

 2   Construction, Forestry, Maritime, Mining and Energy Union v Karijini Rail Pty Ltd[2020] FWCFB 958 (‘Full Bench Decision’).

 3   Transcript PN67.

 4   Clermont Coal Pty Ltd; Clermont Coal Operations Pty Ltd; Collinsville Coal Operations Pty Ltd; and Glencore Coal Queensland Pty Ltd v Troy Brown; Campbell Dews; Damien Mason; Gregory Holmes; Jeffrey Mason; and Glynis Sabbo[2015] FWCFB 2460 (‘Clermont’).

 5 Ibid [20].

 6   Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (2015) 228 FCR 297 [74].

 7   One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union and Another [2018] FCAFC 77, (2018) 262 FCR 527 [89].

 8 Ibid [142].

 9   Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2015] FCAFC 16.

 10 Ibid [38].

 11 (1998) 83 IR 323, 333 (Giudice P, McBean SDP, Lewin C).

 12   One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77.

 13   Clermont [23].

 14   Ibid.

 15   Finance Sector Union of Australia v Comsec Trading Limited[2004] AIRC 708 [27].

 16   Ibid.

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