O'Keeffe Heneghan Pty Ltd & Rocky Neill Construction Pty Ltd & Auslife Pty Ltd T/A KNF Construction v Construction, Forestry, Mining and Energy Union

[2017] FWC 1127

[2017] FWC 1127

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

O'Keeffe Heneghan Pty Ltd & Rocky Neill Construction Pty Ltd & Auslife Pty Ltd T/A KNF Construction
v
Construction, Forestry, Mining and Energy Union
(C2017/919)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 27 FEBRUARY 2017

Appeal against decision [2017] FWC 780 of Deputy President Lawrence at Sydney on 9 February 2017 in matter number B2016/1245 – application for stay order.

[1] O’Keeffe Heneghan Pty Ltd & Aus Life Pty Ltd & Rocky Neill Construction Pty Ltd trading as KNF Construction has sought a stay of two orders issued by Deputy President Lawrence on 9 February 2017.

[2] The Construction, Forestry, Mining and Energy Union had applied for a majority support determination. It intended relying on a petition of employees to support its application. KNF sought an order for production of the petition and the CFMEU applied to vary the order so that the names and signatures of the employees be made available to the Commission and not KNF.

[3] KNF did not seek a stay of the Commission’s order that the names of those who had signed the petition be confidential and not provided to KNF.

[4] Relevantly for this decision, KNF sought a stay of the order which required KNF to produce a list of its employees with classification/work area covered by the application as at 9 February 2017 by the close of business on 17 February 2017. This information was to be treated as confidential.

[5] It also sought a stay of the order which listed the matter for hearing on 23 February 2017.

[6] KNF did not comply with the order to produce the list of its employees. On 15 February 2017, KNF filed the appeal and sought a stay. On 15 February 2017, KNF asked Deputy President Lawrence that, given the appeal, the orders be vacated pending the hearing and determination of the appeal. On 16 February 2017, KNF told Deputy President Lawrence that they were not in a position to comply with the order. KNF advised that they considered that to do so prior to the hearing of the stay application would defeat the capacity of the Full Bench to give relief. KNF was advised that Deputy President Lawrence would not vacate the orders.

[7] On 22 February 2017, I advised the parties that I would not stay the orders of Deputy President Lawrence. These are my reasons.

[8] KNF grounds of appeal were as follows:

1. The Deputy President erred by finding (at [7]) that the petition is an appropriate method of the Commission determining majority support in accordance with section 237(3). This finding involves prejudgement of a substantive matter that was not listed for hearing before the Deputy President. Accordingly, the proceedings before the Deputy President have miscarried and any further hearing of the substantive proceedings by the Deputy President would be affected by apprehended bias.

2. The Deputy President’s findings (at [40] and [41]) that it is not appropriate or necessary for a final determination of the matter for KNF Construction to view the names and signatures (on the petition) was affected by the following errors:

a. a failure to assess the denial of procedural fairness to KNF Construction of critical material (the un-redacted petition) being before the Commission and not available to one party (KNF Construction), upon which the Commission could make findings adverse to the interests of KNF Construction; and

b. a failure to provide any reasons for the finding that it is not appropriate or necessary for KNF Construction to have access to the petition.

3. The Deputy President erred by finding (at [41]) that “the risk to employees’ rights to freedom of association in a hotly contested bargaining dispute is real” where there is no evidence before him upon which the finding could be based.

4. The Deputy President erred in accepting the submissions of the CFMEU (at [24]) that “one application, alleging breach of s.346 has been lodged in the Commission arising from the attempt to commence bargaining” in circumstances where there was no evidence before the Deputy President concerning that application and the characterisation of the other matter is incorrect.

5. The Deputy President erred (at [33]) by construing the obligation to accord procedural fairness as “a general rule” whereby the Commission “will seek to ensure that both parties are accorded procedural fairness” and erred by misunderstanding the nature of the obligation to accord procedural fairness which is a mandatory incident of the statute and not an aspiration.

6. The Deputy President erred by finding (at [43]) that KNF Construction will have an opportunity to cross-examine CFMEU officials on the process of collecting the signatures and make appropriate submissions, in circumstances where KNF Construction will not have available to it the petition which would be the subject matter of the cross examination.

7. Finally, the Deputy President erred (at [32]) in failing to address the principles concerning confidentiality orders in Peter Hankin v Plumbers Supplies Co-operative Ltd T/A Plumbers Supplies Co-Op and others[2014] FWC 8402 by dismissing those principles as not being applicable to a concern raised by exclusion of a party (as distinct from the public at large) from an aspect of the hearing. The principles of open justice apply a fortiori where the confidentiality order would preclude a party (an necessarily all other people) from having access to that part of the hearing whereby the Commission would view and assess the petition tendered by the applicant and upon which the Commission may rely to make an adverse finding against KNF Constructions.

[9] The grounds it relied upon to support its contention that it was in the public interest that permission to appeal be granted are as follows:

1. The decision is attended with sufficient doubt to warrant its reconsideration.

2. If not corrected, the decision below will visit substantial injustice in that it involves prejudgement at an interlocutory hearing of one of the substantive issues to be determined in the majority support determination application.

3. Further, the issue of employer access to petitions relied upon in support of applications for majority support determinations is one that, until the decision of Deputy President Lawrence, had not been determined by the Commission. It should be noted that, in matter B2016/1334, Deputy President Clancy will shortly determine whether to allow the relevant employer access to the petition documents relied upon by the union in that proceeding. Given the tendency of bargaining representatives to seek to rely on petitions in support of majority support determination applications and, having regard to the procedural fairness issues that arise when employers are denied access to the petition documents, this appeal gives rise to an issue which bears on enterprise bargaining generally, not just in respect of KNF Construction.

The submissions of KNF

[10] KNF relied upon the decisions of Vice President Hatcher in CFMEU v Collinsville Coal Operations Pty Limited 1 and the decision of Her Honour Justice Jagot in Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd (No 2)2 which set out the principles that should be followed in determining whether to grant a stay.

[11] KNF submitted that the denial of procedural fairness had already crystallised. By being denied access to the petition, it had no way of testing the veracity of the signatures. It submitted that once the hearing proceeds without it having access to the documents it has lost the opportunity to have a procedurally fair hearing.

[12] KNF submitted that without the stay, if it were successful at appeal, the matter may be remitted but it would have been the subject of a majority support determination in the intervening period. It submitted that it would have to go through a hearing which was procedurally unfair.

[13] It accepted that a stay in this matter would be a stay in the proceedings.

[14] KNF submitted that there was an arguable case that Deputy President Lawrence had, or there is the appearance that Deputy President had, prejudged an essential matter to be determined at the substantive hearing and relied upon his decision at paragraph [7].

[15] It submitted that petition is hearsay, and while the rules of evidence do not apply, it is not aware of who signed the petition. Even if the hearsay rule does not apply, the maker of the hearsay statement must be identified and by denying access to the petition these persons cannot be identified. There is, it was said, a serious issue to be tried and it raises issues of public importance because it goes to the question of how the Commission determines contested majority support determinations.

[16] It submitted that making of majority support determination is an important step because without it none of the coercive and compulsive powers of the Commission arising in the bargaining process are engaged.

[17] It was submitted that the Commission is an adversarial tribunal which conducts hearings and an essential aspect of the right to be heard is to be able to make submissions and adduce evidence.

[18] It submitted that at [41] the Deputy President accepted the submission that disclosure of the non-redacted petition involves a risk to employees’ rights to freedom of association in a hotly contested bargaining situation.

[19] It was submitted that KNF should not be presumed to engage in conduct which contravened the freedom of association provisions of the Act or that it would victimises its employees. It submitted that the prospect that KNF will have a fair hearing before Deputy President Lawrence, without having these matters determined by an appellate bench, is remote.

[20] On balance of convenience, it was submitted that once the hearing proceeds without them being able to see the names then KNF has lost the opportunity it seeks in the appeal.

The CFMEU’s submissions

[21] The CFMEU submitted that KNF was in breach of the order of the Commission. Given the decision to grant a stay is discretionary, it submitted that no stay should be granted to a party that does not come to the Commission with “clean hands”. It submitted that had KNF complied all that would have happened is that a confidential list of relevant employees would have been provided to the Commission. It submitted that no harm would have been afforded to KNF if it had complied.

[22] The CFMEU submitted that the balance of convenience favoured the denial of the stay. It submitted that the practical impact of the stay is a stay of the proceedings. If the appeal does not succeed the matter would revert back to Deputy President Lawrence and if a majority support determination is granted KNF could appeal that final decision and seek a stay. There is no irredeemable prejudice to KNF if the hearing proceeds. In the event Deputy President Lawrence does not make a majority support determination, the appeal becomes moot. These were powerful reasons why, it submitted, the balance of convenience does not favour the granting of the stay. In support of this submission it referred to the decision of Vice President Hatcher in Collinsville 3.

[23] The CFMEU referred to the decisions of the Full Bench in Hutton v Sykes Australia Pty Ltd 4 and the decision of Chief Justice Jordan in Re the Will of F.B. Gilbert5which noted that courts and tribunals “have generally discouraged appeals from preliminary or procedural rules.” The Full Bench noted that procedural rulings may be revisited and the complaining party my ultimately be successful making the appeal futile.

[24] The CFMEU submitted that this is the case here and this makes the prospect of KNF being granted permission to appeal slim.

[25] The CFMEU submitted that there were three matters to be considered by Deputy President Lawrence in the hearing:

1. whether the petition is an appropriate means to determine if a majority of employees support bargaining;

2. whether the group of employees is fairly chosen; and

3. whether it is reasonable in all the circumstances to make the determination.

[26] Only the first issue is in any way impacted by the decision under appeal.

[27] KNF will submit below that the petition was not an appropriate means because the petition was not always in the custody and control of the CFMEU.

[28] KNF will submit below that there is no evidence or insufficient evidence of the circumstances in which employees signed the petition.

[29] KNF will submit that, in those circumstances, the Commission could not be satisfied that the employees freely signed the petition. Further it will be submitted that there is no evidence or insufficient evidence about what the CFMEU officials told employees about what they were signing.

[30] These are all matters which could cause the CFMEU’s claim to fail. The confidentiality of the non-redacted petition will have no impact on these submissions.

[31] The CFMEU submitted that these are live issues is clear from the decision at paragraph [37]. It submitted that paragraph [37] clearly shows that Deputy President Lawrence has not determined that this petition is the appropriate means to determine if there was majority support.

[32] The CFMEU submitted the decision did not make final or substantive ruling on the matters in dispute. It rejected the submission that Deputy President Lawrence had already decided the petition was the most appropriate means to determine if a majority support bargaining.

[33] It submitted that the remaining two matters that need to be determined are not impacted by the orders that KNF seeks to stay.

[34] The orders, it was submitted, did not impact any substantive right enjoyed by KNF. KNF did not have to do anything except produce the list. The orders did not determine any existing right. The orders did not prejudice KNF at all.

[35] If a stay is granted CFMEU will be prejudiced. If the proceeding is stayed then the application for a majority support determination will become an exercise in futility for the union because two thirds of the employees will be gone by the end of April and all will be gone by the end of September. This delay will prejudice the CFMEU and the employees on whose behalf it seeks to bargain.

[36] It submitted that paragraph [7] of Deputy President Lawrence had been misconstrued by KNF. It submitted that in paragraph [7] Deputy President Lawrence makes no findings. He is simply setting out the CFMEU’s position. It submitted that his findings and reasoning are to be found from paragraphs [31] onwards. In his consideration, Deputy President Lawrence makes it clear that whether the petition is an appropriate method to determine if there is a majority in favour of bargaining is a matter to be determined after hearing the evidence. It submitted that appeal ground 1 is not arguable.

[37] In relation to appeal ground 4, the CFMEU submitted that in his decision at paragraph [24] the Deputy President is merely recounting what the CFMEU put. He made no findings in relation to that submission. It submitted that appeal ground 4 is untenable.

[38] In relation to appeal ground 2, the CFMEU submitted that Deputy President Lawrence provided adequate reasons for his decision at [40]-[41] from paragraph [32] onwards. It submitted that there is no denial of procedural fairness because KNF is able to test the evidence before the Commission and make submissions in relation to it. It submitted that procedural fairness is determined by the circumstances of the case and the statutory framework. It submitted that section 237(3) gives the Commission a very broad discretion to determine if there is majority support. It submitted that appeal ground 2 is unarguable.

[39] In relation to appeal ground 3, the CFMEU submitted that that at paragraph [41] of the decision, Deputy President Lawrence made no judgement about KNF. It submitted that the statement is just a general observation that is industrial common sense as there is a risk if the petitioners’ names are disclosed to the employer. It submitted that appeal ground 3 is not arguable.

[40] In relation to appeal grounds 5 and 6, the CFMEU submitted that there had been no denial of procedural fairness. KNF can cross examine the witness as well as point out that the petition was in the possession of an unnamed unknown union official for a number of days and hence the Deputy President can’t be satisfied that the petition is an appropriate method to determine majority support because that person is not giving evidence.

[41] In relation to appeal ground 7, it was submitted that the decision relied upon is distinguishable. This matter had nothing to do with the disclosure of embarrassing material as was dealt with by the Commission in Hankin 6. This was recognised by Deputy President Lawrence at paragraph [32]. It was submitted that the question Deputy President Lawrence had to determine was whether the names of the signatories to the petition should be disclosed to the employer. It was submitted that no appealable error was made.

KNF in reply

[42] KNF rejected that it did not come with clean hands and repeated what it had done to have the stay dealt with prior to the compliance with the order being required.

[43] It submitted that there is a clear prejudice to KNF if the orders were not stayed. It rejected the submission that paragraph [7] was not a finding by Deputy President Lawrence. It rejected the submission that just because it appeared in the introduction did not mean that Deputy President Lawrence was just reciting the CFMEU’s claim. It also rejected the submission that paragraph [37] supported the submission that Deputy President Lawrence had not prejudged the matter. It submitted that all Deputy President Lawrence is doing at [37] is describing what usually happens but it not what is happening here.

[44] It was submitted that KNF will not be able to cross examine the union officials at the hearing because it will not have the petition which is a key document on which it needs to cross examine. If the CFMEU puts forward the petition as proof that the people who put their names on it want to bargain and that is going to be used to support the making of a majority support determination KNF is entitled to test it and that can’t be done if it does not know who has signed it.

[45] It rejected the view expressed at paragraph [41] of the decision as being industrial common-sense. It was submitted that it was prejudicial. The Commission should not proceed on the assumption that employers would act in this way. It submitted that there was a real question as to whether KNF can get a fair hearing before Deputy President Lawrence.

[46] The refusal to give it access to the petition means that it would be prejudiced by not having a fair hearing.

[47] It submitted that the fact that there was a broad discretion in relation to the determination of a majority support determination meant that it is even more important that there be a fair hearing.

[48] It submitted, in response to the submissions about the prejudice to the union, that the appeal could be argued quickly. Further it submitted that, if the composition of the workforce changes radically or ceases to exist, the majority support determination would no longer relate to the workforce that is seeking to negotiate an enterprise agreement. It submitted that there was no issue of futility.

[49] In response to the submission that KNF might defeat the application for a majority support determination, it was submitted that procedural fairness goes to the process not the outcome. It was also said that given what was said at paragraph [7] and the fact that appellant will be fighting the case with two hands tied behind its back because it can’t cross examine about the petition, there won’t be much point in the hearing.

Consideration

[50] There is no dispute as to the approach to be taken in deciding whether to issue a stay. There needs to be an arguable case with some reasonable prospects of success both on the question of permission to appeal and the appeal itself. Further the balance of convenience must weigh in favour of the order subject to the appeal being stayed.

[51] Here KNF do not seek to stay the order that the petition be confidential. They seek to stay the order that required them to produce a confidential list of the relevant employees. Further they seek a stay of the order setting the matter down for hearing on 23 February 2017.

[52] It was agreed by KNF that the effect of the stay would be to prevent the hearing proceeding on 23 February 2017. In Collinsville 7Vice President Hatcher stated that “section 606(1) does not provide a power” to stay a proceeding. Now in that matter there was no order setting the matter down for a hearing on a particular date. Given my decision, it is not necessary for me to decide if the mere fact that Deputy President Lawrence included in his orders one dealing with the date of the hearing, is sufficient to permit an order staying the proceeding. Arguably a stay on order 3 would simply mean the matter could be heard on another occasion.

[53] I have decided the balance of convenience does not warrant the granting of a stay.

The effect of granting the stay would be to stay the proceedings before Deputy President Lawrence.

[54] If the appeal is unsuccessful the matter will be remitted to Deputy President Lawrence to hear and determine the application and KNF may be successful in defeating the application. This would have effect of making the appeal futile. Further if KNF is unsuccessful on appeal and but does not defeat the application, KNF could further appeal the majority support determination and seek a stay of that order.

[55] Alternatively if the stay is not granted Deputy President Lawrence will hear and determine the matter and if KNF appeals that decision the Commission will be able to hear and determine in a single hearing all the issues KNF wishes to rely upon and dispose of those efficiently.

[56] Further the objection to the petition, if it is tendered, on the basis of hearsay can be taken at the hearing by KNF and submission made to Deputy President Lawrence as to the weight that should be afforded such evidence. If the Deputy President admits the evidence and subsequently makes a majority support determination KNF may appeal that decision and rely on the same grounds raised in this appeal at that appeal.

[57] I do not accept that the balance of convenience favours a stay because Deputy President Lawrence has prejudged the central issue namely whether the petition is an appropriate way to determine if the majority want to bargain. If the appellant is of that view it should make an application for Deputy President Lawrence to stand aside.

[58] I further do not accept that balance of convenience favours a stay because of the Deputy President’s comment at paragraph [41]. If KNF are of the view that Deputy President Lawrence is biased or there is a reasonable apprehension of bias, the appropriate process if for KNF to make an application to the Deputy President, that he stand aside.

[59] A majority support determination is an important step in the bargaining process. Where an employer refuses to bargain, which is of course the employer’s right, it is one of three ways employees can compel their employer to bargain. Here the application was lodged on 24 November 2016. While the appellant submitted that the appeal could be dealt with expeditiously, the facts are that if the appeal is unsuccessful, the matter will need to be determined. By that time, there may be an argument that the very petition the CFMEU seeks to rely upon will not be, at the relevant time, the most current evidence of whether the employees want to bargain 8 and the CFMEU’s application may be rejected. Further given KNF’s evidence about the nature of the project there is a very real possibility if the matter is not heard and determined the employees who want to bargain will be denied that opportunity.

[60] I do not accept the submissions of KNF that the denial of procedural fairness has crystallised. It may be that a cross examination of the union’s witnesses provides a basis for KNF to apply to Deputy President Lawrence to vary order 1. Further KNF may be able to put forward evidence from its employees to cause Deputy President Lawrence to vary or revoke order 1. Further it cannot be said that a refusal to grant the stay of orders denies the appellant the right to rely on the grounds in this appeal, in any appeal against a majority support determination if it is made.

[61] I have not had regard to the failure of KNF to comply with the order of the Commission to produce the documents as I have decided to reject the application for a stay. It would have been a consideration in relation to the exercise of my discretion.

[62] However I do not accept the submission of KNF that it was justified in not complying because the production of the documents would make the stay a nullity. KNF could have produced the documents to the Commission and asked Deputy President Lawrence that they not be inspected by him until the hearing and determination of the stay. Even had they been inspected it is difficult to see what prejudice could have arisen if the stay of the proceedings had been granted. A party the subject of an order is required to comply with an order until a stay order is issued. Applying for a stay does not entitle a party to ignore its obligations. While I accept that there was some delay in the appeal being allocated for the determination of the stay that did not entitle KNF to ignore its obligation to comply.

Conclusion

[63] I consider that the balance of convenience favours the refusal of the stay application. That makes it unnecessary for me to consider whether KNF’s appeal is arguable with some reasonable prospects of success. KNF’s application for a stay is dismissed.

DEPUTY PRESIDENT

Appearances:

Mr S Prince of Counsel for the Appellant.

Mr P Boncardo for the Respondent.

Hearing details:

2017.

Melbourne:

22 February.

 1   [2014] FWC 4276

 2 [2015] FCA 1208

 3   CFMEU v Collinsville op cit at [12]

 4   [2014] FWCFB 3384

 5 (1946) 46 S.R. (NSW) 318 at 323

 6   [2017] FWC 780 at [31]-[32]

 7   CFMEU v Collinsville op cit at [11]

 8   Kantfield Pty Ltd v Australian Workers Union[2016] FWCFB 8372 at [38]

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