The Australian Workers' Union West Australia Branch v Alcoa World Alumina Australia Limited
[2010] FWA 3743
•12 MAY 2010
[2010] FWA 3743 |
|
DECISION |
Fair Work Act 2009
s.238 - Application for a scope order
The Australian Workers' Union - West Australia Branch
v
Alcoa World Alumina Australia Limited
(B2009/11194)
Aluminium industry | |
COMMISSIONER WILLIAMS | PERTH, 12 MAY 2010 |
Application for costs.
[1] This matter involves an application by the Australian Workers Union against the respondent Alcoa World Alumina Australia Limited (Alcoa) for a scope order under section 238 of the Fair Work Act 2009 (the FW Act).
Background
[2] The parties have been in negotiation for a new agreement for some time. The current agreement is the Alcoa World Alumina Australia –AWU Pinjarra Refinery Agreement 2005 (AG842547).
[3] There are approximately 600 employees currently engaged by the respondent at Pinjarra under the current Agreement. Approximately 15 of those employees are cleaners.
[4] The parties had been in dispute as to whether or not a future agreement to replace the current agreement would cover the cleaners. The applicant proposed that it should. The respondent objected to this. This application was lodged by the applicant to resolve this matter.
[5] Prior to the hearing of this application, due to commence on 5 May 2010, the parties advised the tribunal that they had agreed that any future agreement would cover the cleaners. The applicant requested that the tribunal issue consent orders to that effect.
[6] Consent orders consequently issued reflecting the agreement of the parties on 5 May 2009 1.
[7] At those proceedings the applicant requested that the tribunal make an order for costs against the respondent under section 611 of the FW Act. The respondent objected to any such order being made. This decision deals with this outstanding matter.
Consideration
[8] Section 611 of the FW Act provides the jurisdiction for the tribunal to order a person to bear some or all of the costs of another party in relation to an application if it is satisfied that the person responded to the application without reasonable cause or the response had no reasonable prospect of success.
s. 611 Costs
(1) A person must bear the person’s own costs in relation to a matter before FWA.
(2) However, FWA may order a person (the first person) to bear some or all ofthe costs of another person in relation to an application to FWA if:
(a) FWA is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) FWA 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.
Note: FWA can also order costs under sections 376, 401 and 780.
(3) A person to whom an order for costs applies must not contravene a term of the order.
Note: This subsection is a civil remedy provision (see Part 4-1).
[9] The sequence of events and relevant dates in this matter is as follows.
[10] This application was lodged on 15 December 2009 and listed to be heard on 25 March 2010. Following the listing, the applicant requested the matter be relisted to a later date and so the matter was relisted to 8 April 2010. In compliance with the directions of the tribunal the applicant filed submissions and other materials on 22 February 2010. Following this on the 5 March 2010 the applicant again requested the tribunal relist the matter for a later date and the matter was relisted to 5 May 2010.
[11] The directions issued also required the respondent to file any material in reply by 16 March 2010 but this requirement was not met by the respondent. On 19 April 2010 the respondents representatives advised my Chambers that discussions had been held with the applicant and had been expected to result in agreement and so the respondent did not anticipate it would need to prepare to defend the matter however agreement had not been reached and the respondent’s representatives were obtaining instructions to prepare materials for filing.
[12] On 3 May 2010 the Representatives of the respondent formerly advised the applicants and the tribunal that they did now agree to bargain in relation to the disputed group of employees, the cleaners.
[13] The hearing as listed was held on 5 May 2010.
Submissions
[14] The applicant argues that Alcoa did respond without reasonable cause and/or that it should have been reasonably apparent to Alcoa that its response had no prospect of success
[15] The applicant says it is not a case where the respondent had changed its mind after an investigation which followed receipt of the AWU’s submissions and evidence. This is said to be so because there was nothing in the submissions or the evidence that Alcoa did not already know. There was nothing to investigate. The history of the agreement, the fact that cleaners were covered by it whether that be "as a mere convenience" or otherwise was known to the respondent. There was only one set of bargaining going on, there was no proposed alternative or separate agreement in relation to cleaners. The cleaners were part of the workforce that was by and large - if not 100 per cent - predominately members of the applicant union and 100 per cent eligible to be members of the applicant union.
[16] All of those facts were always known to the respondent.
[17] The respondent was alerted to all the issues raised in the submissions and evidence filed by a letter from Mr Mike Zoetbrood of the applicant union to the respondent dated 11 February 2010.
[18] The applicants says furtherevidence shows that Alcoa always had every intention of having the cleaners covered by the proposed agreement. The parties are involved in Federal Court proceedings at the moment in which Alcoa has filed numerous affidavits. That affadavit material is a clear demonstration of the respondent's own position being that cleaners are covered by the current agreement and are going to be covered by the proposed agreement.
[19] The respondent in reply argues that the affidavit evidence filed in the Federal Court proceedings referred to by the applicant do not stand for the proposition that Alcoa always had considered that the current agreement applied to cleaners and intended that the future agreement would apply to cleaners.
[20] In reference to the submissions that Mr Cox for the applicant made that there wasn't any proposed agreement in relation to cleaners and there was no other bargaining in relation to cleaners, the respondent doesn't have to initiate bargaining in relation to a particular group of people if it doesn't wish to. That's not to say that such bargaining can't occur but the respondent has indicated that it doesn't wish it to occur in the manner that the union has proposed, which is part of bargaining for the proposed agreement. There's nothing to say that a separate agreement couldn't be bargained for to cover the cleaners.
[21] The respondent submits that anything that occurred before the application was made was of no consequence because what is relevant in considering the costs application is the response to the application that has been made for the scope order. The respondent's response has been to collect the evidence that might support defending the application, to consider that, to consider the future of cleaners in the organisation and where it may wish to see them, to identify a potential basis on which to defend the application which may include argument that the cleaners are operationally and organisationally distinct, which is one of the criteria on which to decide whether or not to grant a scope order application.
[22] The respondent says contrary to the applicant’s position that there is a lack of historical coverage of cleaners by awards and agreements applicable to the respondent. The respondent has also considered the case law in support of its position. It has taken legal advice on whether or not to defend the application, and following all those steps, it has decided to agree to bargain in relation to cleaners.
[23] Once that decision was made, the respondent did inform the applicant's counsel promptly which occurred in a telephone conversation with Mr Cox on 29 April 2010 which was in good time before the hearing on 5 May 2010.
Consideration
[24] The applicant has referred the tribunal to a number of authorities concerning applications for costs including the decision of Commissioner Whelan in Darcy v Megan Fitzgerald and Associates Pty Ltd 2. At paragraph [24] of this decision Commissioner Whelan reviewed the case law in relation to the phrase “without reasonable cause” as it was found in the Workplace Relations Act 1996.
[23] Section 611(2)(a) also refers to the claim being brought ‘without reasonable cause’. A party cannot be said to have commenced a proceeding ‘without reasonable cause’ simply because the argument proves to be unsuccessful. 2
[24] In considering the meaning of the term in Kanan v Australian Postal and Telecommunications Union 3 Wilcox CJ said:
It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause. 4
[25] His Honour’s approach was adopted by a Full Bench of the Industrial Relations Commission in Henderson v Mainpoint Enterprises Australia Pty Ltd 5 with respect to applications for costs under section 170CJ of the Workplace Relations Act 1996. It was further considered by a Full Bench in Stagno v Frews Wholesale Meats6 which placed emphasis on the test being one of not what should have been apparent to the applicant but what was the applicant’s own view of the facts at the relevant time.
[26] Section 611(2)(b) deals with what should have been reasonably apparent to the person, the test being, should it have been reasonably apparent that the application had no reasonable prospect of success?
[27] We are dealing in this case with new legislation the parameters of which have not been tested by the Courts. The Applicant did seek legal advice and while she made the application without legal representation she did so only after receiving advice from two sources.
[28] In my view, great care should be exercised in coming to a conclusion that a party either instituted proceedings ‘without reasonable cause’ or in circumstances where it should have been reasonably apparent that the application had ‘no reasonable prospect of success’ where the facts of the case and the applicable law have not been tested in a hearing.
[25] Whilst there is a difference here in that the issue is not whether the respondent initiated proceedings without reasonable cause, the principles in these authorities are relevant to this application for costs.
[26] So it is that if on the respondent's own version of the facts it is clear that their arguments must fail it can properly be said that their response lacked a reasonable cause.
[27] In addition the test is not what should have been apparent to the respondent but what was the respondent's own view of the facts at the relevant time.
[28] In terms of the coverage of cleaners by the current Agreement I do not agree that this is self evident as the AWU submits. The Agreement is somewhat confusing on this point. The response of Mr Gleeson for Alcoa in prior proceedings confirms that the respondent had real doubts over this well before this application was lodged.
[29] I have reviewed the affidavits that the applicant has referred me to. Reading the paragraphs that have been highlighted by the applicant in context I have concluded that the various references to the proposed Agreement are references to the draft Agreement proposed by the applicant during the negotiations with the respondent. Such references by these witnesses do not of themselves include an express or implied acquiescence that the current Agreement covers cleaners or that any future Agreement should cover cleaners. Some statements in these affidavits in fact are unequivocally to the contrary 3.
[30] Other references to cleaning in the affidavits the applicant has relied upon are in my view to work done by process workers. Process workers may undertake some incidental cleaning of machinery as workers who service and maintain plant and equipment would commonly do. This work is qualitatively different from the work of “domestic” cleaners who are the subject of the scope order application.
[31] The broad acceptance in one witness statement that the current agreement covers all employees that the applicant is eligible to enrol 4, is a concession made by that witness as a general observation and was not made, when read in context, as a statement regarding the Agreement covering cleaners who make up only a small number of the employees at the Pinjarra site.
[32] The submission that Mr Zoetbrood’s earlier letter to the respondent would have caused the respondent to then recognise it had no reasonable cause to defend the application or no reasonable prospect of success requires the tribunal to assume that the submission and evidence of the applicant self evidently would have succeeded in the face of whatever opposition the respondent may have mounted in reply had it continued to oppose the application.
[33] The arguments and the evidence of the applicant have never been tested in hearing and there is no basis on which the tribunal should conclude that one parties case here was bound to prevail over the others.
[34] As was the case before Commissioner Whelan 5 in this instance we are dealing with new legislation the parameters of which have to date not been significantly tested. The section under which the applicant has pursued this matter is section 238 which came into effect on 1 July 2009. There was no similar provision in the previous legislation. There have been very few applications for scope orders that have been arbitrated and fewer appeal decisions dealing with this section of the Act.
[35] One such Full Bench decision is the decision in United Firefighters Union of Australia v Metropolitan Fire and Emergency Services board, Metropolitan Fire and emergency services board v United Firefighters union of Australia 6.
[36] Whilst this decision was made on its particular facts there are a number of pertinent comments in this decision by the Full Bench that are worthy of note given the argument of the applicant that at a very early stage it should have been obvious and in fact was obvious to the respondent that their opposition to the applicant's scope order application was without reasonable cause and/or had no reasonable prospect of success.
[54] In its submissions AiGroup sought to limit the circumstances in which an order might be made. We refer in particular to the submission that a scope order should not be made against the opposition of a bargaining representative unless one of the bargaining representatives is pursuing a scope for negotiations which is unfair. That submission must be rejected. It involves adding an additional requirement to those specified in ss.238(4)(b) and (c). If two parties to an application for a scope order advance alternative positions neither of which is objectively unfair but the tribunal is satisfied of the relevant matters and is disposed to make an order, it would be an error not to do so.
[55] The relevant consideration under s.238(4)(b) is whether the order will promote the fair and efficient conduct of bargaining. The implication is that the tribunal should be satisfied that if an order is made the bargaining will at least be fairer or more efficient or both than it would be if no order were to be made. The relevant consideration under s.238(4)(c) is whether the specified group is fairly chosen. It may be that a number of groupings might be fair – what this criterion requires is that the group which is included in the scope order is fairly chosen. This issue is also dealt with in s.238(4A), which we discuss shortly.
[56] We disagree with the UFUA’s suggestion that as a matter of statutory construction preference ought to be given to agreements that cover as much of an enterprise as possible. Section 238 permits a scope order which does not apply to the whole enterprise. In such a case the tribunal, in deciding whether the group is fairly chosen, must take into account whether the group is distinct in one of three specified respects. It may follow that if the group is not distinct in one of those respects it may not have been fairly chosen, but it does not necessarily follow in all circumstances. For present purposes it is not necessary to speculate upon the circumstances in which the conclusion might not follow.
(Emphasis added)
[37] These extracts of the Full Bench decision include the recognition that the parties may each have a position which is opposite to the other but neither position is unfair. It may be that a number of different groupings might be covered by an agreement and each might be fair.
[38] There is no presumption in the legislation that an agreement should cover as much of an enterprise as possible. If a group of employees is not geographically, operationally or organisationally distinct it does not automatically follow that it has not been fairly chosen.
[39] The Full Bench has recognized that there is a range of possible options in terms of which groups of employees would be covered by any agreement the parties are negotiating. The decision recognises that it may well be the case that there is no self evidently correct option. This is pertinent in this case in that the applicant argues that to include the cleaners in the Agreement as it has always sought was self evidently the only approach that would promote fair and efficient bargaining. The applicant says only this grouping would amount to a group of employees that was fairly chosen and that being the case their application was always going to succeed and the respondent knew that.
[40] The Full Bench’ s view of the operation of section 238 recognizes that there will often be a variety of alternative groupings of employees that might be covered by an Agreement and there may be groupings that are not mutually exclusive in terms of their fairness of selection. There may not be one self evidently obvious grouping that is valid.
[41] These observations by the Full Bench regarding scope order applications mean the applicants submission that its application here was always bound to succeed should not simply be accepted by the tribunal as correct but rather remains in some doubt.
[42] In a case such as this where the substantive application has not been fully arbitrated there is considerable merit in the approach of Commissioner Whelan in the tribunal exercising considerable caution when considering a cost order.
[43] Separately there is also evidence that in the last week of April the respondent was advising the tribunal that it was in the process of finalising witness statements and this does support the conclusion that at that point in time the respondent was preparing and intending to defend the application 7.
[44] The evidence put forward does not in my view demonstrate, as the applicant submits, that in effect the respondent has always intended that the Agreement cover cleaners. Certainly it has not been shown that on the respondent's own version of the facts it was clear that their arguments would have failed.
[45] The applicant has grounds to complain that the respondents approach to this application has caused the applicant to incur costs that perhaps could have been avoided if the matter was handled differently. I am sympathetic to that however that is not the test for the costs application to succeed.
[46] Considering all of the evidence and the parties submissions I am not satisfied that the applicant has demonstrated that at an early stage the respondent had recognized that it would not be possible to successfully defend this application. The respondent may have concluded that their case had difficulties and weaknesses but that is not the same as concluding their case had no reasonable prospect of success and nor do I find that the respondent opposed the application without reasonable cause.
[47] Consequently I will not order costs to be paid by the respondent in this instance.
COMMISSIONER
Appearances:
Mr M Cox, Barrister, Instructed by Chapmans on behalf of the Australian Workers Union
Ms M Foley, Solicitor, Blake Dawson on behalf of Alcoa World Alumina Australia Limited
Hearing details:
2009.
Perth:
May, 5.
1 PR996805
2 2009 FWA 1547
3 Exhibit A3 Para 64
4 Exhibit A5 Para 29
5 Darcy v Megan Fitzgerald and Associates Pty Ltd, above n 2, at [27]
6 2010 FWAFB 3009
7 Emails to Williams C Chambers 19 and 22 April 2010
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