The Australian Workers' Union v Costa Exchange Pty Ltd T/A Costa (Berry Category)

[2020] FWC 2418

[2020] FWC 2418

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

The Australian Workers' Union
v
Costa Exchange Pty Ltd T/A Costa (Berry Category)
(C2019/700)

COMMISSIONER CAMBRIDGE SYDNEY, 20 MAY 2020

Dispute settlement procedure - jurisdictional objection raised - enterprise agreement replaced and no longer operational - dispute about classification of particular individuals working under terms of enterprise agreement that had ceased to operate - arbitration initially requested then deferred by consent - subsequent request for arbitration to be reactivated after enterprise agreement had been replaced - jurisdictional objection upheld - application refused.

[1] This Decision is made in respect of an application that was taken under s. 739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (the Commission) to deal with a dispute in accordance with a Dispute Settlement Procedure (DSP). The application was made by The Australian Workers’ Union (the AWU) and the respondent employer is Costa Exchange Pty Ltd T/A Costa (Berry Category) (Costa or the employer).

[2] At the time that the application was made, the Commission was empowered to deal with this matter by virtue of a DSP which is found at clause 25 of the Costa (Berry Category) Enterprise Agreement 2015 - 2019 (the 2015 EA). The 2015 EA ceased to operate on 20 December 2019, when it was replaced by the Costa (Berry Category) Enterprise Agreement 2019 - 2023(the 2019 EA).

Relevant Procedural Background

[3] The application was filed on 1 February 2019, and during conciliation proceedings held on 18 February 2019, the employer was granted permission pursuant to s. 596 of the Act to be represented by lawyers. The matter was the subject of unsuccessful conciliation conducted during proceedings held on 18 February, 27 March and 13 May 2019. On 13 May 2019, the Commission issued Directions in respect to an anticipated arbitration Hearing of the matter scheduled for 10 July 2019.

[4] On 31 May 2019, the AWU wrote to the Commission and advised inter alia that “… the respondent conducted a vote of employees on a proposed replacement agreement, the Costa (Berry Category) Enterprise Agreement 2019-2023.” Further, the AWU correspondence indicated inter alia, that the Parties jointly requested that, “The arbitration hearing listed for 10 July 2019 and the associated filing directions be vacated; [and] This dispute (FWC No. C2019/700) be adjourned for report-back by telephone in mid-June 2019 for further programming, following the completion of the vote on the new agreement (and submission of any approval application).” Consequently, the Commission vacated the arbitration Hearing that had been scheduled for 10 July 2019, in accordance with the joint request of the Parties as had been communicated by the AWU.

[5] On 27 June 2019, the AWU provided the Commission with a written update regarding the matter. In this communication the AWU advised inter alia, “The respondent has now filed an approval application for a replacement agreement (FWC No. AG 2019/2033). That application has been allocated to Bissett C for determination. As noted at an earlier report back, it is anticipated that some of the issues raised by this application, or related issues, may be dealt with in the approval process. The AWU remains of the view that the more efficient course is to ‘pause’ this application until the outcome of the approval application is known.” In a response communication of the same date (27 June 2019), the Commission advised the AWU that it was prepared to stand the matter over, with the AWU required to provide an update on the status of the application once the related enterprise agreement approval application had been determined.

[6] On 2 January 2020, the Commission sent correspondence to the AWU which noted that on 13 December 2019, Bissett C issued a Decision approving of the application made in matter number AG2019/2033. Accordingly, the AWU was requested to provide an update on the status of the application in this matter, or alternatively file a Form F50 – Notice of Discontinuance. On 8 January 2020, the AWU provided the Commission with a documentary update regarding the matter in which it was noted that, “…the respondent’s operations are presently in acute difficulty due, inter alia, to water shortage. In light of current conditions, we submit that it would be appropriate to stand this matter over for a period of time, with the parties to advise chambers in 4 weeks’ time of whether it is practical to proceed with a report-back/directions listing.” On 9 January 2020, the Commission granted the AWU’s request for a further adjournment and required further advice by no later than 6 February 2020 as to whether the AWU sought to pursue the matter or for a discontinuance to be provided.

[7] On 4 February 2020, the lawyers representing the employer wrote to the Commission and inter alia, advised; “The Respondent’s position is there can be no current dispute under the previous EA as it has been replaced and there is no jurisdiction for FWC to continue dealing with this matter. … Further, the Respondent is unaware of any employee who is currently disputing their classification under the new EA or how a classification is being applied to their particular circumstances. The Respondent therefore submits that if there is any such dispute the AWU utilises the internal DSP provisions of the new Agreement.”

[8] On 6 February 2020, the AWU provided further correspondence to the Commission which relevantly stated; “…the AWU continues to press this dispute as the classification dispute remains a live issue between the applicant, its members and the respondent. The respondent has proposed that the parties should deal with any ongoing classification issues under the dispute settlement provisions of the new Agreement. However, this approach would not assist the parties to resolve the dispute over whether employees were appropriately classified during the operation of the old Agreement – the central issue in dispute in these proceedings. We note the respondent’s jurisdictional objection to the Commission arbitrating this dispute. The applicant disagrees with the objection and seeks the opportunity to be heard in opposition to it.”

[9] Subsequently, the Commission issued Directions for the Parties to exchange submissions and other materials regarding the contested jurisdictional objection that had been raised by the employer. On 21 April 2020, the jurisdictional objection was the subject of a Hearing by telephone at which time Mr A Sage appeared for the AWU, and Mr R Collinson appeared for the employer.

The Jurisdictional Objection Advanced by the Employer

[10] Mr Collinson appeared for the employer at the telephone Hearing held on 21 April 2020, and he advanced the jurisdictional objection that had been summarised in an outline of submissions document dated 12 March 2020. Mr Collinson summarised his submissions by asserting that the Commission no longer had power to determine the dispute that was the subject of the application made by the AWU, because the Commission’s power was obtained via a term of the 2015 EA which had ceased to operate when it was replaced by the 2019 EA.

[11] Mr Collinson submitted that when the 2015 EA ceased to operate, because it had been replaced by the 2019 EA, what he described as the “DSP ship” had now “sailed”. Mr Collinson said that as the AWU had “untied the moorings and they now can’t command it back into the harbour” as he described it. According to the submissions made by Mr Collinson, this meant that the matter that was now in dispute was really nothing more than an underpayment claim. Mr Collinson submitted that it was clear that there was no live dispute between the Parties that was capable of resolution through the DSP, and therefore the Commission was really being asked to make a declaration of the existing legal rights of particular employees as they stood under the terms of the 2015 EA. Mr Collinson submitted that the Commission could not and did not have power to exercise the judicial power inherent in any declaration of the legal rights of employees.

[12] In further submissions, Mr Collinson asserted that the AWU lacked proper standing in order to have the arbitration that it sought. In support of this submission, Mr Collinson indicated that the AWU operated in a representative capacity only, and there had been no identification of the individuals that it purported to represent. Consequently, Mr Collinson submitted that as the AWU could not bring the proceedings in its own right, and it had not identified the individuals that it claimed to represent, it had no standing upon which to request that the Commission hear and determine the application.

[13] Mr Collinson further submitted that there was no evidence that established any existing dispute. Mr Collinson acknowledged that when the matter first proceeded towards arbitration in 2019 there was clearly a live dispute that was capable of resolution by arbitration. However, according to the submissions made by Mr Collinson, there was no evidence that there was any current dispute, and therefore without any live dispute, the Commission was being asked to exercise judicial power in the form of an underpayment of wages claim that he described as being “dressed up” as a dispute.

[14] Mr Collinson also made submissions about what he described as the essential basis upon which he asserted that the Commission lacked jurisdiction to proceed with any arbitration of the application. These submissions stressed that the effect of the cessation of operation of the 2015 EA removed any power provided by the DSP upon which the application had been made. Mr Collinson referred to a recent Full Bench Decision of the Commission in the matter of Robert Battye v John Holland Pty Ltd  1 (Battye).

[15] Mr Collinson submitted that the circumstances in the Battye case involved a very similar factual scenario to the current proceedings. According to the submissions made by Mr Collinson, the Full Bench Decision in Battye clearly established that at the point in time that the applicant requested that the Commission exercise arbitration of the dispute, the relevant enterprise agreement had ceased to operate, and that meant that the Commission had no jurisdiction and could not exercise any arbitration power. Mr Collinson said that the same position arose when the AWU sought to have the current matter proceed to arbitration in February 2020. In this regard, Mr Collinson confirmed that at the time that the AWU initially sought arbitration, circa May 2019, there was no jurisdictional impediment. However, Mr Collinson submitted that the reactivation of the request for arbitration made in February 2020, lacked any jurisdictional foundation for the same reason that applied in the Battye case.

[16] In further support of this aspect of the employer’s jurisdictional objection, Mr Collinson confirmed reliance upon the authority established by the Decision of the Full Bench of the AIRC in Stephenson v Abetz [PR952743], (28 October 2004) (Stephenson) 2. Mr Collinson submitted that although Stephenson had been decided under the Workplace Relations Act 1996 and that a number of individual members of the Commission had expressed disquiet about that Decision, it represented untrammelled authority particularly in light of the more recent Full Bench Decision in Battye.

[17] In conclusion, Mr Collinson submitted that the jurisdictional objection that had been raised by the employer should be upheld. Mr Collinson submitted that the Commission was being asked to exercise arbitration powers in circumstances where it lacked jurisdiction. Mr Collinson stated that the AWU or its members, could proceed to pursue an underpayment claim based on an alleged past breach of a past agreement. However, critically, it could not seek to have those matters determined by way of the Commission exercising arbitration powers in this application because the Commission was without jurisdiction.

The AWU Case Against the Jurisdictional Objection

[18] Mr Sage appeared for the AWU and submitted that the Commission did have jurisdiction to determine the dispute, and the respondent’s jurisdictional objection should be dismissed. At the Hearing on 21 April 2020, Mr Sage referred to and relied upon an outline of submissions document that he had filed on behalf of the AWU on 27 March 2020. In addition to his documentary submissions, Mr Sage made oral submissions in response to those that had been made by Mr Collinson on behalf of the employer.

[19] Mr Sage firstly rejected the assertion that the AWU had not established proper standing to bring the application. Mr Sage acknowledged that the AWU was not a Party to the dispute but that it acted in a representative capacity. However, Mr Sage submitted that it had always been understood by the AWU that names of the individual employees would be provided if required as part of the evidence that would be introduced at any arbitration Hearing. Mr Sage rejected any characterisation that there was not provision of identification of individual employees as a means to properly establish the standing of the AWU in its representative capacity. In support of his submissions that any challenge to the standing of the AWU should be rejected, Mr Sage referred to the Full Bench Decision in Australian Rail, Tram and Bus Industry Union v Asciano Services Pty Ltd t/a Pacific National (RTBU and Pacific National) 3.

[20] Mr Sage made further submissions which rejected the employer’s assertion that the Commission lacked power to deal with the current matter because there was no current dispute. Mr Sage submitted that the Commission clearly had power to resolve what was referred to as historical disputes even in circumstances where an employee ceases to be employed following the referral of the dispute to the Commission. Mr Sage asserted that the fact that employees may no longer be employed by the employer was not a basis to establish some jurisdictional impediment to the Commission resolving the dispute. This was particularly relevant in circumstances where the Commission might be asked to exercise arbitration powers to resolve a classification dispute even though a particular employee who was allegedly incorrectly classified, may no longer be employed by the employer.

[21] Mr Sage made detailed submissions about the distinction that should be made between the Commission exercising a private arbitration power which was distinct from and did not involve the exercise of a judicial power. In support of his submissions, Mr Sage referred to various Authorities including in particular, the Full Bench Decision in Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Kentz) 4.

[22] Mr Sage also referred to a High Court authority which established the important distinction between circumstances which involve the exercise of judicial power as opposed to the Commission or some other appointed third party, exercising a power of private arbitration. In this regard, Mr Sage referred to the Judgement in TCL Air Conditioner (Zhongshan) Co Ltd v the Judges of the Federal Court of Australia  5. Mr Sage submitted that the Commission is empowered to deal with existing rights and liabilities because the Parties have consented to that arrangement as reflected in a DSP. Consequently, according to the submissions made by Mr Sage, there was no jurisdictional impediment to the Commission exercising the powers of private arbitration established via a DSP and which involved the Commission determining an existing right that would devolve from the determination of a matter such as a classification dispute.

[23] Mr Sage made further submissions which rejected the employer’s assertions that the cessation of the operation of the 2015 EA when it was replaced with the 2019 EA, caused there to be no jurisdictional foundation for the Commission to exercise arbitration powers in the present circumstances. Mr Sage submitted that the circumstances in this instance could be distinguished from the factual position in the Battye Decision.

[24] Mr Sage stressed that in this case the AWU had requested that the Commission exercise arbitration powers in May 2019, which was well before the 2015 EA had ceased to operate when it was replaced by the 2019 EA in December 2019. Mr Sage submitted that the circumstances were different to the position in the case of the Battye Decision where the request by the applicant for the Commission to exercise arbitration powers was first made after the relevant enterprise agreement had ceased to operate. Consequently, Mr Sage submitted that in the present circumstances the application had moved from conciliation to the arbitration phase before the 2015 EA had ceased operation, and the proceedings had been paused until the outcome of the application for approval of the 2019 EA. Mr Sage submitted that in these different circumstances the Full Bench Decision in the Battye case did not provide a basis for any absence of jurisdiction when in February 2020, the AWU sought to reactivate the earlier request for arbitration which had been made in accordance with the then operational DSP provisions of the 2015 EA.

[25] In further submissions, Mr Sage rejected any proposition that the Commission was bound to follow authority that was said to have been established in the Stephenson Decision. Mr Sage submitted that the Stephenson Decision was not applicable to matters arising under the Act and, in any event was wrongly decided.

[26] Mr Sage submitted that the Stephenson Decision was made under the Workplace Relations Act 1996 which contained a particular statutory scheme for dealing with private arbitration disputes which was different to the statutory scheme established under the Act. Therefore, according to the submissions made by Mr Sage, the Commission was not bound to apply any authority that may be evident in the Stephenson Decision.

[27] Further, Mr Sage also submitted that it was relevant to note that a number of single member Decisions of the Commission including that of Lawler VP in the case of Grabovsky v United Protestant Association of NSW Ltd (Grabovsky) 6 had provided direct criticism of the Stephenson Decision and further, there had been no Decisions of a Full Bench of the Commission or of Fair Work Australia, which had upheld Stephenson in the context of the Fair Work Act 2009. Consequently, according to the submissions made by Mr Sage, the Stephenson Decision did not provide any binding authority upon the Commission as currently constituted.

[28] In conclusion, Mr Sage submitted that all aspects of the jurisdictional objection that had been raised by the employer should be dismissed. Mr Sage said that if there was any issue about the standing of the AWU in its representative capacity, the identity of employees seeking to have the classification dispute resolved would be provided so as to remedy any concern as to standing. Further, Mr Sage said that there was no jurisdictional impediment created by any absence of a live dispute. Finally, Mr Sage said that the cessation of operation of the 2015 EA did not establish any jurisdictional barrier to the Commission proceeding to exercise arbitration powers in respect to a classification dispute regarding employees who were performing work when the 2015 EA was in operation. Mr Sage urged that the Commission proceed to hear the merits of the dispute.

Consideration

[29] This Decision is made in respect of a jurisdictional challenge to the application that was taken under s. 739 of the Act. Section 739 is found in Part 6-2 of the Act which relevantly provides the statutory basis upon which the Commission (and others) may obtain powers including arbitration powers, to deal with disputes. Part 6-2 of the Act comprises four sections and is in the following terms:

“Division 2—Dealing with disputes

Subdivision A—Model term about dealing with disputes

737 Model term about dealing with disputes

The regulations must prescribe a model term for dealing with disputes for enterprise agreements.

Subdivision B—Dealing with disputes

738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.

739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.

740 Dispute dealt with by persons other than the FWC

(1) This section applies if a term referred to in section 738 requires or allows a person other than the FWC to deal with a dispute.

(2) The person must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the person dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the person to deal with the matter.

Note: This does not prevent a person from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) If, in accordance with the term, the parties have agreed that the person may arbitrate (however described) the dispute, the person may do so.

(4) Despite subsection (3), the person must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.”

[30] In this case, the application relied upon subsection 738 (b) of the Act, and it referred to a dispute settlement procedure (DSP) in an enterprise agreement. Specifically, the relevant DSP was clause 25 of the 2015 EA which is in the following terms:

“25. DEALING WITH DISPUTES

25.1 If a dispute relates to:

(a) a matter arising under the agreement; or

(b) the National Employment Standards;

this term sets out procedures to settle the dispute.

25.2 An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

25.3 In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

25.4 If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Commission.

25.5 Fair Work Australia may deal with the dispute in 2 stages:

(a) Fair Work Commission will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

(b) if Fair Work Commission is unable to resolve the dispute at the first stage, Fair Work Commission may then:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.

Note If Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under the Act.

25.6 While the parties are trying to resolve the dispute using the procedures in this term:

(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

(i) the work is not safe; or

(ii) applicable occupational health and safety legislation would not permit the work to be performed; or

(iii) the work is not appropriate for the employee to perform; or

(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.

25.7 The parties to the dispute agree to be bound by a decision made by Fair Work Commission in accordance with this term.”

[31] The jurisdictional challenge to the application was advanced on three grounds. The employer firstly stated that it was without contest that the application had been made by the AWU and the AWU was not and could not be a Party to the dispute. Therefore, in the absence of any identified employee(s) for whom the AWU was acting as representative, the employer asserted that the AWU had no standing to bring the application. Secondly, the employer asserted that there was no jurisdictional foundation for the application because there was no live dispute that had been identified. Finally, the employer asserted that the Commission had no jurisdiction to further proceed with the application once the 2015 EA ceased to operate because none of the terms of the 2015 EA, including the DSP which provided the private arbitration power, no longer operated or applied to either the employer or any of its employees.

The Standing of the Applicant

[32] The first ground upon which the jurisdictional challenge was taken, namely, that the AWU lacked proper standing to bring the application because it had not named the particular employees that it was representing, would not of itself represent a jurisdictional impediment that would defeat the application. There is well established authority including the Full Bench Decision in RTBU and Pacific National, that a registered organisation might incorrectly name itself as the applicant in proceedings initiated under s. 739 of the Act but such error is clearly capable of rectification. It is also relevant to note that many enterprise agreements cover and apply to registered organisations, and they frequently also stipulate that one or more named registered organisation(s) is a Party to the agreement.

[33] In this instance the AWU was neither covered by nor a named Party to the 2015 EA. However, the AWU is covered by the 2019 EA although it is not named as a Party to the 2019 EA. As this application relies upon the DSP clause 25 of the 2015 EA, the AWU could not be the correctly identified applicant. However, the incorrect identification of the applicant would be easily rectified, and as the AWU indicated that it would name the individuals that it represented in the dispute, the alleged absence of proper standing of the applicant does not provide for any absence of jurisdiction.

Question of a Live Dispute

[34] The second ground upon which the employer asserted that the application was without jurisdiction involved the question as to whether there was a live dispute that was capable of resolution under the DSP. The employer asserted that there was no dispute between it and any of its employees who were capable of being Parties to the dispute.

[35] Mr Collinson referred inter alia, to the Decision of Sams DP in Johnson et al v St George’s Basin Country Club Ltd  7 wherein it was stated: “It is trite that there is no power under the Act for the Commission to make underpayment orders.”8 However, according to the submissions made by Mr Collinson, as there was no work that was being performed under the 2015 EA, there could be no current dispute on foot. Therefore, without an actual ongoing dispute to resolve it was asserted that the determination being sought was tantamount to the Commission being asked to exercise a judicial power and in effect make an underpayment Order.

[36] In numerous cases it has been held that the absence of any ongoing work being performed under the particular enterprise agreement that contained the relevant DSP, did not create a jurisdictional barrier to a dispute that was previously properly activated under that DSP being finalised in accordance with any powers that were conferred upon the Commission by the DSP. Authority for this position has been clearly established and is well summarised in the following extract from the Kentz Decision:

“[65] The continued existence of that dispute as it relates to persons employed at the time the dispute was initiated under the dispute resolution process during the employment of the relevant employees who were employed, and, on the authority of ING Administration Pty Ltd v Jajoo⁵⁹ (ING) and the subsequent Full Bench authorities,⁶⁰ the right to progress the dispute to resolution remains and provides the basis for the Commission to exercise the arbitration powers afforded by the Kentz Agreement.”

[37] However, it is important to recognise that the Kentz Decision was made in respect to a DSP contained in the Kentz (Australia) Pty Ltd Ichthys Onshore Construction Greenfields Agreement (Kentz Agreement) which commenced operation on 1 March 2013, in accordance with its approval that was provided in a Decision of Harrison SDP 9 issued on 22 February 2013, and which provided a nominal expiry date for the Kentz Agreement of 21 February 2017. Consequently, at the time at which Bissett C exercised powers of private arbitration provided by the DSP contained in the Kentz Agreement it continued to operate and therefore cover and apply to the Parties in the dispute.

[38] Therefore, the circumstances in this instance are significantly different to the underlying position in the Kentz Decision. The Kentz Decision and more importantly the earlier Decision of Bissett C which was the subject of appeal in the Kentz Decision, were Decisions that were made in respect to the exercise of powers under a DSP contained in an enterprise agreement that was in operation at that time, and covered and applied to the Parties in dispute at the time at which the power of private arbitration was exercised. In the present matter, although the 2015 EA was in operation at the time at which the AWU first requested the Commission to exercise arbitration powers, it ceased to operate on 20 December 2019 when it was replaced by the 2019 EA.

The Cessation of the Operation of the 2015 EA

[39] The significance of the effect of the 2015 EA ceasing to operate was the foundation for the employer’s third ground of jurisdictional challenge. The employer relied upon authority found in the Full Bench Decision in Battye which was said to support the absence of jurisdiction in this instance because the 2015 EA had ceased to operate at the time at which the AWU sought to reactivate the earlier request for the Commission to exercise arbitration powers which had been made at a time when the 2015 EA was in operation. The relevant extract from the Battye Decision is found in paragraph [23] wherein it is stated:

“[23] It is clear that at the time Mr Battye first sought to enliven the Commission’s power to arbitrate under the 2013 Agreement, that agreement had ceased to apply to John Holland and to him. The relevant effect of s.58 of the Act is that, once the 2017 Agreement came into operation on 16 May 2018, the 2013 Agreement ceased to apply to any employee within its coverage, because the coverage of the two agreements was the same. Under s.54(2), the 2013 Agreement then ceased to operate, and that meant that under s.52(1) it could no longer apply to anyone. If an agreement does not apply to anyone, it cannot impose any obligation or confer any entitlement (s.51). Section 739(4) provides that the Commission may arbitrate a dispute only where the parties have agreed that the Commission may do so in accordance with a disputes resolution term in an agreement. Here, the relevant term in the 2013 Agreement no longer applied to Mr Battye and John Holland at the time Mr Battye first sought to invoke the arbitration power in that term.”

[40] The AWU contested that the application of the Battye Decision in the present circumstances was correct because there was an important factual distinction. The AWU noted that in the present case it had first sought to have the Commission exercise arbitration powers at a time when the 2015 EA was in operation. In contrast, Mr Battye had not first sought to invoke arbitration powers at a time when the enterprise agreement that contained the relevant DSP was in operation.

[41] Although there is a clearly different chronological position that can be identified between the current matter and that in the Battye case, the fundamental proposition that is identified in the Battye Decision is that when an enterprise agreement has ceased to operate it does not apply to anyone and it cannot impose any obligation or confer any entitlement. However, the question of whether arbitration proceedings that were properly activated before an enterprise agreement ceased to operate would be jurisdictionally barred only because of the passing of a point in time at which the enterprise agreement ceased to operate, might logically depend upon the particular state of the arbitration proceedings at the time at which the enterprise agreement ceased to operate. For instance, if arbitration proceedings had been heard and the Commission had reserved Decision, and then the relevant enterprise agreement ceased to operate, would the Commission be unable to exercise the arbitration powers provided by a DSP that was contained in an enterprise agreement that had ceased to operate?

[42] Respectfully, it would appear that the Battye Decision may leave open the prospect that in particular circumstances private arbitration powers which were commenced properly under a DSP contained in an enterprise agreement that was in operation, may be continued and determined notwithstanding that the enterprise agreement subsequently ceased to operate. This proposition appears to be open because of the reference in the Battye Decision to when any request for arbitration was first sought. By implication, it appears that if Mr Battye had first sought to enliven the Commission’s power to arbitrate before the relevant enterprise agreement had ceased to apply, there may have been no jurisdictional impediment to the Commission finalising the arbitration at a point in time after the enterprise agreement had ceased to operate.

[43] However, potential for the exercise of private arbitration powers at a point in time when an enterprise agreement which contained the DSP that conferred the power of private arbitration upon the Commission had ceased to operate, remains a matter that is governed by binding authority of the Full Bench Decision in Stephenson.

[44] The authority established by the Full Bench Decision in Stephenson essentially stands for the proposition that when an industrial instrument ceases to operate, any DSP contained in that instrument which provided the Commission with private arbitration powers, ceases to operate, and thereby extinguishes the private arbitration powers that had been conferred via the DSP. Further, although the industrial instrument which ceased to operate might be replaced with another instrument that contains a DSP, the private arbitration powers are not enlivened unless the matter in dispute is properly activated via the relevant provisions of the DSP in the replacement instrument.

[45] There has been some conjecture as to whether the authority established by the Decision in Stephenson is the correct legal position. In at least two Decisions of different members of the Commission, some reservation has been expressed about the reasoning adopted in the Decision in Stephenson.

[46] Firstly, Lawler VP in the matter of Grabovsky v United Protestant Association of NSW Ltd  10 (Grabovsky), determined, inter alia, that the Decision in Stephenson “…takes no account of that fundamental feature of the general law of contract and the numerous binding authorities that establish it.” Secondly, Sams DP expressed some reservation about the Decision in Stephenson in a Decision in the case of Mark Launders v Officeworks Pty Ltd 11 (Launders). However, in the Decision in Launders, Sams DP quite properly indicated that, as an individual member of the Commission, he was bound to follow the authority established by the reasoning in Stephenson.

[47] The Decision in Stephenson was also considered by Bissett C in a Decision issued in August 2013, in the matter of The Association of Professional Engineers, Scientists and Managers, Australia v Jemena Asset Management Pty Ltd  12 (Jemena). It is clear from the Decision of Bissett C in Jemena that in the circumstances of that matter, the Commission determined that it was bound to follow the authority established by the Decision in Stephenson. It would also appear that the circumstances in this instance would operate to bind the Commission to follow the authority established by the reasoning in Stephenson.

[48] The conjecture surrounding the authority established by the Stephenson Decision was traversed by the submissions made in this case. The AWU boldly asserted that Stephenson was wrongly decided, and that the Commission was not bound to follow any authority purportedly established by the Stephenson Decision, essentially because it was said to have been made under the predecessor legislation to the Act. Respectfully, some of the criticism made of the Stephenson Decision has in my view been misplaced. The Decisions in both Grabovsky and Jemena appear to have extrapolated the Decision in Stephenson so as to arrive at an erroneous conclusion which I do not believe to have been created by the reasoning that was adopted by the Full Bench in Stephenson.

[49] I refer to the following extract from paragraph [54] of Grabovsky:

“[54] Moreover, the interpretation adopted by the Full Bench in Stephenson has the effect of extinguishing accrued rights.”

[50] I also refer to the following extract from paragraph [37] of Jemena:

“[37] Once the JAM Agreement ceased to apply to Mr Hardy any entitlements available to Mr Hardy pursuant to that agreement ceased to exist.”

[51] The conclusions made in Grabovsky and Jemena as to the extinguishment of rights and entitlements existing under an instrument which subsequently ceases to operate appear to have been extrapolated from paragraph [54] of the Decision in Stephenson. However, I believe that an important distinction needs to be made between the right to have private arbitration powers of a DSP conferred upon the Commission, as opposed to all other rights and entitlements that might arise in respect to the employment that was governed by the instrument during the period of its operation.

[52] In my view, the reasoning of the Full Bench in Stephenson established that the right to have private arbitration powers exercised by the Commission under the terms of a DSP was extinguished when the industrial instrument that contained the DSP ceased to operate. However, importantly other rights and entitlements that existed in respect of the employment during the period that the instrument operated are not extinguished when the instrument ceases to operate. The corollary of this distinction is that rights and entitlements under the extinguished instrument are not able to be agitated before the Commission via the private arbitration powers conferred by a DSP but would, alternatively, be capable of pursuit in a Court of competent jurisdiction.

[53] My consideration as to the authority established by the Full Bench Decision in Stephenson does not assist the AWU in this case. In practical terms, the application of the jurisdictional impediment created by the authority established in Stephenson would simply mean that rather than have the Commission resolve a classification dispute arising from the provisions of the expired 2015 EA, such matters would need to be prosecuted as basis for underpayment of wages claims in a Court of competent jurisdiction. Whether the Court litigation approach provides the most efficient and practical means for resolution of contests arising from the terms of expired agreements is a matter that might exercise the minds of Parties who contemplate invoking a jurisdictional challenge reliant upon, inter alia, the Decision in Stephenson.

Conclusion

[54] The determination of the jurisdictional objection raised by the respondent employer has involved circumstances where in the period between when the application was filed and the subsequent reactivation of a request for arbitration, the 2015 EA had ceased to operate when it was replaced by the 2019 EA. In these circumstances, there is no on-going power of private arbitration available to the Commission. As the 2015 EA can no longer apply to anyone and it cannot impose any obligation or confer any entitlement, the Commission no longer has power to resolve any dispute by arbitration derived from clause 25 of the 2015 EA. In such circumstances, and as jurisdictional challenge has been made, the Commission is required to follow the authority established in the Decision of the Full Bench in Stephenson.

[55] Consequently, the jurisdictional challenge made by the employer is upheld. The Commission does not have jurisdiction to determine the dispute. The application must therefore be dismissed.

COMMISSIONER

Appearances:

Mr A Sage appeared for The Australian Workers’ Union.

Mr R Collinson of Edge Legal appeared for the employer.

Hearing details:

2020.
Sydney (By Telephone):
April, 21.

Printed by authority of the Commonwealth Government Printer

<PR719224>

 1   Robert Battye v John Holland Pty Ltd (JHPL) t/as Territoria Civil [2019] FWCFB 8678.

 2   Stephenson v Abetz [PR952743], (28 October 2004).

 3   Australian Rail, Tram and Bus Industry Union v Asciano Services Pty Ltd t/a Pacific National [2017] FWCFB 1702.

 4   Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FWCFB 2019.

 5 TCL Air Conditioner (Zhongshan) Co Ltd v the Judges of the Federal Court of Australia [2013] HCA 5.

 6   Inna Grabovsky v United Protestant Association of NSW Ltd T/A UPA [2015] FWC 2504.

 7   Mr Mark Johnson; Ms Alison Marr; Mr James Buist; Mr Kevin Cooke; Mr Walter Benson v St George’s Basin Country Club Ltd [2018] FWC 6908.

 8 Ibid @ paragraph [81].

 9   [2013] FWCA 1236.

 10   Inna Grabovsky v United Protestant Association of NSW Ltd T/A UPA [2015] FWC 2504.

 11   Mark Launders v Officeworks Pty Ltd [2015] FWC 5692.

 12   The Association of Professional Engineers, Scientists and Managers, Australia v Jemena Asset Management Pty Ltd [2015] FWC 5617.