The Australian Workers' Union v Minebiz Pty Ltd
[2013] FWC 7945
•1 NOVEMBER 2013
[2013] FWC 7945 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
The Australian Workers' Union
v
Minebiz Pty Ltd
(C2013/1013)
Mining industry | |
SENIOR DEPUTY PRESIDENT HAMBERGER | SYDNEY, 1 NOVEMBER 2013 |
Application for costs.
[1] On 4 July 2013 the Australian Workers’ Union (AWU) made an application to the Fair Work Commission (FWC) to deal with a dispute in accordance with the dispute settlement procedure in the Minebiz Pty Ltd Enterprise Agreement 2010 (the agreement). The dispute concerns the appropriate classification of the AWU’s members employed by Minebiz Pty Ltd (the employer). The issue had been raised directly with the employer but had remained unresolved. The employer is a labour hire business which employs a number of AWU members to perform work on the Cadia Valley gold mine site in Orange. The AWU sought a conciliation conference pursuant to the dispute resolution procedure in the agreement.
[2] The dispute resolution procedure in the agreement is set out at clause 21. Clause 21 provides as follows:
‘21 Dispute Resolution
21.1 Where a question or dispute arises out of the terms and conditions of this agreement, or in relation to the NES, the following actions will be taken:-
21.2 In the first instance, an employee should attempt to resolve the matter (in accordance with Company policy and procedure) with their immediate supervisor who must respond as quickly and fairly as possible;
21.3 If the matter is not resolved, the question or dispute will be referred to the manager of the Company for resolution.
21.4 If the matter remains unresolved, the parties may agree to refer the matter to an agreed mediator to assist in resolving the question of dispute.
21.5 If the dispute remains unresolved, it may be referred to FWA by either party for conciliation of (sic) arbitration where both parties consent.
21.6 Whilst the procedure detailed above is being followed, work and production activities will continue as directed by the Company and no stoppage of work or any form of limitation of work shall occur.
21.7 An employee will be entitled to have a representative accompany them during any stage of this process.’
[3] The dispute was initially listed by FWC for a conference on 31 July 2013. The conference was then rescheduled to 2:00 PM on 12 August 2013, at the request of the employer’s legal representative, Mr Boncardo. The application for an adjournment was made on the grounds that the employer’s sole director would be in Western Australia until 5 August 2013. The application included the following: ‘We respectfully request that the Commission adjourn the conference to any time in the weeks commencing 12 or 19 August that is convenient to the Commission.’ At 9:32 AM on 12 August 2013, Mr Boncardo forwarded to FWC submissions relating to a jurisdictional objection to the AWU’s application for FWC to deal with the dispute, which he indicated the employer intended to rely on when the matter came before the Commission at 2:00 PM that day. The submissions were subsequently forwarded to the AWU by the Commission. The conference at 2:00 PM was cancelled and the matter re-listed for hearing at the same time, to enable the foreshadowed jurisdictional objection to be considered. At 11:51 AM the AWU’s Legal Officer, Mr Crawford sent an email to the Commission attaching a notice of discontinuance. The email included the following:
‘We have now reviewed the submissions from Minebiz Pty Ltd (Minebiz) which question the Fair Work Commission’s jurisdiction to conduct a conciliation conference in relation to this dispute. We received these submissions this morning directly from the Commission as opposed to the normal practice of Minebiz serving a copy on us. However, given Minebiz requested an adjournment of the conciliation conference on 16 July 2013 (which was granted) and then subsequently raised a jurisdictional objection on the morning of the adjourned conciliation conference, it is unsurprising that the submissions were not served.
It is apparent from the submissions that this matter will need to be dealt with by a court rather than the Commission. As a result, please find attached a notice of discontinuance.’
[4] The hearing was cancelled.
[5] On 14 August 2013, the employer filed an application for costs under s.611 of the Fair Work Act 2009 (the FW Act). The grounds set out in the application were that:
‘(a) The application for FWC to deal with a dispute was made vexatiously by the AWU:
i. The AWU were not a party to the Minebiz enterprise agreement (‘the agreement’) and could not be a party to any application for FWC to deal with a dispute about matters arising under the agreement.
ii. The AWU ought to have known that it did not have standing to bring an application for such a dispute and that FWC would not have jurisdiction to deal with any application made by the AWU.
iii. The AWU was on actual notice from 1 July 2013, by letter provided to it by Minebiz’s solicitors on that date, that if it filed an application for FWC to deal with a dispute, Minebiz would raise a jurisdictional objection to the application.
iv. The AWU nonetheless proceeded to file an application for FWC to deal with a dispute arising about matters under the agreement.
v. The AWU withdrew its application by a Notice of Discontinuance mere hours before the dispute was listed before Hamberger SDP.
iv. The AWU knew, or ought have known, that the director of Minebiz, Jann Harries would be travelling to Sydney to attend FWC. The AWU knew, or ought to have known, that Minebiz would incur significant costs in sending its sole director from Orange to Sydney.
vii The AWU knew, by virtue of a Notice of Representative Commencing to Act filed 16 July 2013 that Minebiz was represented by solicitors based in Orange.
viii The AWU knew, or to have known (sic) that such solicitors would seek leave to appear on behalf of Minebiz when the matter was listed before FWC on 12 August.
ix The AWU knew, or ought to have known, that Minebiz would incur significant legal expenses in engaging solicitors to travel to Sydney to attend FWC.
x In all the circumstances, the AWU made the application for FWC to deal with a dispute vexatiously as:
1) the AWU knew that Minebiz contested the jurisdiction of FWC to deal with its application.
2) The AWU's discontinuance of its application was untimely, being mere hours before the dispute was listed, conveying that, at all times, the AWU acceded to Minebiz's contention, outlined to it under cover of letter dated 1 July, that FWC had no jurisdiction to deal with the application.
3) The AWU knew that Minebiz would incur substantial costs in attending FWC.
4) The AWU's discontinuance of the dispute mere hours before the dispute was listed before FWC conveys that the AWU never had any real intention of proceeding with the application.
5) The AWU filed the application with the predominant purpose of annoying, embarrassing and harassing Minebiz.
(b) Further or in the alternative, the AWU made the application without reasonable cause:
i. The AWU was not a party to the agreement and had no standing to bring the dispute. The application was beyond the jurisdiction of FWC and therefore was commenced without reasonable cause.
ii. In the alternate, the AWU did not adhere to dispute resolution procedure mandated by the enterprise agreement by engaging in mediation prior to filing its application. Due to this, FWC had no jurisdiction to deal with the application and the application was commenced without reasonable cause.
iii. In the alternate, the AWU did not obtain Minebiz's consent for the matter to be referred to conciliation by FWC, as mandated by the dispute resolution clause, being clause 21 of the Minebiz enterprise agreement. Due to this, FWC therefore had no jurisdiction to deal with the application and the application was commenced without reasonable cause.
iv. The AWU's withdrawal of its application mere hours before it was listed conveys that the AWU accepted at all times that FWC lacked jurisdiction to deal with the application.
(c) Further or in the alternative, it should have been reasonably apparent to the AWU that its application had no reasonable prospects of success:
i. Minebiz repeats to (sic) particulars contained in paragraph (b) above.
ii. Minebiz further says that the AWU are the antithesis of an unsophisticated litigant, being a significant employee organisation registered under the Fair Work (Registered Organisation) (sic) Act 2009 (CTH) and were represented at all times by an experienced industrial officer, being Stephen Crawford.
iii. It should have been reasonably apparent to the AWU that FWC lacked jurisdiction to deal with its application.
(d) The AWU’s conduct in filing the application, knowing full well that Minebiz queried FWC's jurisdiction to deal with a dispute, and its untimely filing of a Notice of Discontinuance, conveyed that it acted in an inappropriate and unprofessional fashion. Minebiz seeks that the AWU pay all of its costs, that is, its costs on an indemnity basis.
[6] On 17 September 20013, the Commission directed that the parties file written submissions, with the issue to be determined on the papers.
Events prior to the dispute application made to FWC
[7] In early 2013 members of the AWU sought the union’s assistance regarding a dispute they had with the employer about their appropriate classification under the terms of the agreement. On 7 June 2013 the AWU wrote to the employer asking that Minebiz review whether all employees working as underground operators were being paid the correct wage rate under the agreement. The letter stated that if the AWU was not satisfied that the matter had been properly addressed by the close of business on 18 June 2013 it was their intention to seek assistance from the Fair Work Commission. The employer wrote back to the union seeking more time to respond. This was agreed to; however the union indicated that it would file an application with the Fair Work Commission if it did not receive confirmation that the issues had been addressed before the close of business on 3 July 2013.
[8] The employer's lawyer wrote to the AWU on 1 July 2013. The letter rejected the AWU's concerns regarding the payment of the employees and noted the AWU’s assertion that if it was not satisfied with the employer’s response it would seek the assistance of the Fair Work Commission. The letter drew the AWU's attention to the terms of the dispute resolution procedure in the enterprise agreement. In particular it stated:
‘The procedure provides that the parties may refer the matter to FWC for conciliation and/or arbitration if both parties consent. We advise that Minebiz does not consent to the matter being referred to FWC for conciliation and/or arbitration.
Consequently, the EA does not, within the terms of section 738 of the Fair Work Act, require or allow FWC to deal with a dispute except if both parties to the agreement consent. Our client's non-consent entails that FWC has no jurisdiction to deal with any dispute the AWU may lodge with FWC. In the event that the AWU does lodge such a dispute, we have instructions to raise a jurisdictional objection and will rely on this letter for the purposes of seeking costs under section 611 of the Fair Work Act against the AWU if a dispute is lodged.
We note that the dispute resolution procedure provides that, prior to the parties considering referring the matter to FWC, the parties can agree on an agreed mediator assisting in resolving the question or issue.
Any application to FWC will be precipitate, as it would involve sidestepping this essential step under the dispute resolution clause.
Furthermore, our client is able to nominate a mediator to mediate the present dispute, should the AWU not concur with our response to the matters raised in your letter of 7 June and is happy for mediation of the dispute to occur, subject to the AWU undertaking to pay half the costs of mediation.’
[9] The AWU responded the same day. Inter alia, it stated:
‘... at paragraph 18 of the letter you state the disputes procedure "provides that the parties may refer the matter to FWC for conciliation and/or arbitration if both parties consent". This is a misrepresentation of what is actually written in the Agreement. Clause 21.5 of the Agreement states:
If the dispute remains unresolved, it may be referred to FWA by either party for conciliation of arbitration where both parties consent.
This provision is poorly drafted. However, the intent appears to be that disputes can be referred for conciliation but can only be arbitrated if both parties consent.
Thirdly, your threat about seeking costs lacks substance. The more contentious issue at the Fair Work Commission is likely to be whether permission is granted for Minebiz Pty Ltd to be legally represented pursuant to section 596 of the Fair Work Act2009. Your letter indicates legal representation will not assist to resolve this matter and we currently intend to oppose the granting of leave on this basis.
If we do not receive a more meaningful response by the close of business on 3 July 2013, we will be launching a dispute with the Commission.’
[10] Mr Boncardo responded by email at 7:59 AM the following day. This included the following:
‘Your contended construction of clause 21.5 is also without basis. The clause clearly contemplates both parties agreeing to refer any dispute to the Fair Work Commission. This is reinforced by the context in which the clause appears, viz., after a mediation having first occurred. If the mediation fails, the agreement allows the Commission to conciliate and/or arbitrate the matter only if the parties so agree...
You have not responded to our client's offer to engage in mediation as mandated by clause 21. Does the AWU seek to engage in mediation? We note that clause 21 mandates that mediation occur prior to any referral to FWC. The third party mediator is a ‘person other than FWC’ as per section 740 of the Act.
If the AWU was serious about resolving any ‘dispute’, surely they would wish to have the matter mediated, as provided for by clause 21? Assuming your construction of the dispute resolution is correct, mediation precedes referral to FWC. The AWU must first partake in mediation before referring the matter to FWC. Failure to do otherwise will be in breach of the dispute resolution procedure and FWC (assuming your argument is correct) will not have jurisdiction to deal with the dispute. Failure by the AWU to adhere to this clause will found an application for costs, for which we will rely on this email.
In respect to your contention about section 596, we note that the matter is complex, involving issues of the construction of the agreement and that an industrial officer of the AWU will appear on behalf of the any (sic) applicant employee. As a matter of fairness and considering the complexity of the issues involved, it is likely that FWC will grant permission for Minebiz to be represented by a lawyer or paid agent.’
[11] At 9:08 AM Mr Crawford responded. His response included the following:
‘Clause 21.4 of the Agreement states (our emphasis):
If the matter remains unresolved, the parties may agree to refer the matter to an agreed mediator to assist in resolving the question or dispute.
Note that clause 21.5 does not state "the parties may agree", it simply states "it may be referred to FWA...” We consider this provision sensibly allows for external assistance to be accessed without the agreement of both parties. We accept this may not be the case for arbitration.
In any event, the Fair Work Commission is a publicly funded resource which provides expert assistance regarding industrial issues. We see no reason why this free resource should not be utilised in preference to a fee-charging mediator. We cannot justify paying "half the cost of mediation" when a free (and probably better) so this is readily available.’
[12] Mr Boncardo’s response that afternoon included the following:
‘Dear Mr Crawford
Your analysis of clause 21.5 is manifestly incorrect.
The dispute procedure provides for steps to be taken in a certain order.
Mediation precedes referral to FWC.
Your contention to the contrary is contrary to the plain meaning of the clause. Our client reiterates its request that the AWU comply with the dispute procedure and agreed to have the ‘dispute’ referred to an appropriate Mediator for mediation. Any Mediator will have the requisite industrial experience and we suggest that former Commissioner Peter Connor of the NSWIRC be approached. Peter Connor, or someone with his experience, would be ably able to deal with the matter....’
[13] The AWU's application to FWC was filed on 4 July 2013.
Consideration
[14] Minebiz has submitted that the AWU’s application to FWC was made vexatiously, without reasonable cause, and when it should have been reasonably apparent that the application had no reasonable prospect of success.
[15] Section 611 of the FW Act includes the following:
‘1) A person must bear the person’s own costs in relation to a matter before the FWC.
(2) However, the FWC may order a person (the first person) to bear some or all ofthe costs of another person in relation to an application to the FWC if:
(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.’
[16] The approach to be taken by the Commission when considering whether the provisions of s.611(2)(a) or s.611(2)(b) have been established was considered by a Full Bench in Qantas Airways Limited v Mr Paul Carter 1 (Qantas).
‘The approach generally taken by members of the Commission as to the meaning to be ascribed to the word “vexatiously” in s.611(2)(a) is to adopt the comments of Justice North in Nilsen v Loyal Orange Trust (Nilsen). Nilsen was decided in 1997 when the then Workplace Relations Act 1996 applied however the relevant provision considered by his Honour was in terms similar to s.611(2)(a) being whether an applicant “instituted the proceeding vexatiously or without reasonable cause”. About this provision his Honour said:
- “should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis rather than a subjective test; and
- a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance to be not reasonably arguable.”
“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage.”’
[18] The approach we have taken to whether Qantas instituted its appeal without reasonable cause, is to consider whether at the time of instituting the appeal there was no substantial prospect of success.
[19] We now turn to s.611(2)(b). The approach to be taken to considering whether such a finding should be made is summarised in the decision of the Full Bench in Baker v Salva Resources Pty Ltd (Baker). The relevant extract is as follows:
‘The concepts within s.611(2)(b) “should have been reasonably apparent” and “had no reasonable prospect of success” have been well traversed:
[20] It is clear from the terms of s.611 of the Act that the point at which the Commission must determine whether or not Qantas' application to appeal was vexatious, without reasonable cause or had no reasonable prospect of success, is when Qantas made the application to appeal.’
[17] I deal first with whether the AWU’s application to the Commission was made without reasonable cause. The approach I have taken, following Qantas, is to consider whether the AWU’s application had no substantial prospect of success. If the success of the application would have depended on the resolution in the AWU’s favour of one or more arguable points of law it would be inappropriate to conclude that the application was made without reasonable cause (following the Full Bench in Mainpoint. 2) In the circumstances of this case, the issue to be considered is whether the AWU had an arguable case that the Commission would have had jurisdiction to conduct a conciliation conference in relation to the dispute.
[18] The employer submitted that FWC had no jurisdiction to deal with the dispute. Section 739(3) provides that in dealing with a dispute under the terms of a dispute resolution procedure in an agreement, the FWC must not exercise any powers limited by the term. The term needs to be construed in context, including the industrial purpose of the agreement, and the legislative background against which it was made and within which it operates. 3
[19] Section 739(5) provides that the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties. Section 739(6) provides that the FWC may deal with a dispute only on application by a party to the dispute.
[20] The employer submitted that as the AWU was not a party to the agreement, and was not covered by it. Accordingly it had no entitlements under the agreement, including accessing the dispute resolution procedure contained in clause 21 of the agreement.
[21] In accordance with s.186(6) of the FW Act, one of the requirements for approval of the agreement by the Commission was that it included a term:
‘(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:
(i) about any matters arising under the agreement; and
(ii) in relation to the National Employment Standards; and
(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.’
[22] Thus it is a requirement of the FW Act that before an agreement can be approved by FWC it must allow for representation of employees covered by the agreement for the purposes of that procedure. The express terms of the procedure in the agreement refer to the right of an employee to have a representative accompany them during any stage of the process.
[23] The procedure in the agreement provides for disputes in certain circumstances to be referred to FWC ‘by either party’. It is probably true that the dispute in question is between certain employees (who are members of the AWU) and the employer. While, on this reasoning, the AWU is not a party to the dispute per se it is clear that the AWU was acting as a representative of some of its members who were parties to the dispute when it made the application to FWC. While it is unnecessary to determine the issue definitively, given the scheme of the Act, it is certainly arguable that the AWU was entitled to make an application to FWC as the representative of its members. This may well be true whether or not the AWU was covered by the agreement in its own right.
[24] The employer further submitted that clause 21 of the agreement made the employer’s consent to FWC dealing with a dispute arising under the agreement a condition precedent to FWC dealing with such a dispute.
[25] The relevant clause reads:
‘If the dispute remains unresolved, it may be referred to FWA by either party for conciliation of (sic) arbitration where both parties consent.’
[26] It can readily be accepted that the word ‘of’ is a typographical error and should read ‘or’. The AWU submitted that the consent of both parties was only required for arbitration. This would be a more natural reading of the clause if there was a comma after the word conciliation. While I am inclined to accept that the consent of both parties is indeed required before a dispute can be referred to FWC, as submitted by the employer, I consider that the alternative construction put forward by the AWU is at least arguable. The clause is not particularly well drafted, and provisions along the lines suggested by the AWU - with access to FWC as of right with arbitration only where there is mutual consent - are far more common than clauses that insist on mutual consent before a matter can be referred to FWC for both conciliation and arbitration. A further argument against the construction of this part of the clause is precisely that one party could unilaterally negate its utility by refusing to consent to a matter being referred to FWC. When one also has regard to the need for mutual consent for referral of unresolved disputes to a mediator, the construction proposed by the employer arguably means that the clause may not - in practice - allow an independent third party to settle disputes about matters arising under the agreement. If that construction were accepted it could mean that the agreement should not have been approved by the FWC in the first place.
[27] The employer also submitted that a series of steps, including mediation by a third party, is prescribed by the procedure before FWC can deal with a dispute. Clause 21.4 does indeed say that if the matter remains unresolved (after it has been considered by the manager of the company), the parties may agree to refer the matter to an agreed mediator to assist in resolving the question of dispute. This comes before the clause concerning referral of the matter to FWC.
[28] It is at least arguable that referral to a third party mediator is an optional rather than an obligatory step. The procedure uses the phrase ‘...the parties may agree to refer the matter to an agreed mediator’. This contrasts with the preceding step that provides ‘If the matter is not resolved, the question or dispute will be referred to the manager of the Company...’.
[29] In summary, while I consider that FWC probably lacked the jurisdiction to deal with the dispute (as the employer had not consented to the dispute being referred to the Commission) the contrary view was at least arguable. In the circumstances I am not satisfied that the application was made without reasonable cause.
[30] I turn now to consider whether it should have been reasonably apparent to the AWU that the application had no reasonable prospect of success. I note the comments in Baker, cited with approval in Qantas that ‘a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance to be not reasonably arguable.”
[31] Given that I have already found it was arguable (even if probably incorrect) that the Commission had jurisdiction to deal with the application I reject the proposition that it should have been reasonably apparent to the AWU that the application had no reasonable prospect of success.
[32] Finally, I consider whether the application was made vexatiously, in other words whether it was made with the predominant purpose of harassing or embarrassing the employer, or with a collateral purpose. The employer submitted that following facts supported a finding that the AWU had brought its application with the predominant purpose of annoying or harassing or embarrassing the employer:
1. The AWU knew it had no standing to bring the dispute.
2. The AWU had been put on notice, prior to the application being filed, that the employer would raise a jurisdictional objection to the application.
3. The AWU nonetheless filed the application.
4. The AWU knew that the director of the employer and their solicitor would be travelling from Orange to Sydney for the dispute.
5. The AWU discontinued its application at the eleventh hour, on the day the dispute was listed before FWC, at which time the AWU knew, or ought to have known, that the director of the employer and their solicitor had travelled all the way from Orange to Sydney, at great expense to the employer.
[33] While the employer had put the AWU on notice that it disputed the jurisdiction of the FWC to deal with the dispute, the AWU had strongly contested the arguments put by the employer. The evidence is that AWU - at the time it made the application - confident that the Commission had jurisdiction to deal with the application. The AWU subsequently might reasonably have assumed - based on the letter seeking an adjournment of the conference - that the employer had decided that it would participate in the conference after all. The AWU only received the employer’s submissions relating to a jurisdictional objection to its application when they were forwarded to it by the Commission at 10-:31 AM on the morning of the conference. These submissions included a new ground for contesting the jurisdiction of the Commission - that the AWU lacked standing to make the application. It appears that this new ground was enough to persuade the AWU that the FWC might lack jurisdiction to deal with the dispute after all, and it discontinued the matter - shortly after receiving those submissions. I am satisfied that the application was made in good faith, and was only discontinued when the issue of the AWU’s standing was raised on the morning of the conference.
[34] In these circumstances I do not find that the application was made vexatiously.
Conclusion
[35] The requirements for a costs order under s.611 of the FW Act are not met. The employer’s application for a costs order against the AWU is dismissed.
SENIOR DEPUTY PRESIDENT
Final written submissions:
25 October 2013
1 [2013] FWCB 1811, 27 March 2013, per Harrison SDP, Richards SDP, and Blair C (references removed)
2 See Mainpoint Enterprises Australia Pty Ltd v E.C. Henderson Print Q3750 [1998] AIRC 274 (2 March 1998), per Ross VP, Watson SDP and Whelan C.
3 Amcor Ltd v Construction, Forestry, Mining and Energy Union and others [2005] HCA 10, per Gummow, Hayne and Heydon JJ at [30] and Gleeson CJ and McHugh J at [13]
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