The Griffin Coal Mining Company Pty Ltd

[2016] FWC 2085

[2016] FWC 2085

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

The Griffin Coal Mining Company Pty Ltd
(AG2016/2085)

COMMISSIONER CLOGHAN PERTH, 4 APRIL 2016

Production of the consolidated group forecasts.

[1] On 14 January 2016, Griffin Coal Mining Company Pty Ltd (Griffin Coal) made application to terminate the Griffin Coal (Maintenance) Collective Agreement 2012 (Maintenance Agreement).

[2] The application is made pursuant to s.225 of the Fair Work Act 2009 (FW Act).

[3] On 19 January 2016, the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) advised the Fair Work Commission (Commission) that its members employed pursuant to the Maintenance Agreement, opposed the application to terminate the Maintenance Agreement.

[4] The application was the subject of conferences in the Commission on 19 January and 4 February 2016.

[5] On 5 February 2016, I issued Directions for a hearing commencing on 6 April 2016.

[6] On 24 March 2016, the AMWU made application pursuant to s.590(2)(c) of the FW Act, for an order requiring the production of documents to the Commission.

[7] The documents sought by the AMWU were:

“Profit/Financial Forecasts for the Griffin Coal Mining Company Pty Ltd and Carpenter Mining Management for the next 1-5 years (the Forecasts).

Audited Financial Reports for the Griffin Coal Mining Company Pty Ltd and Carpenter Mining Management Ltd for March 2012 to December 2015.” (the Audited Reports).

[8] The application for the production of documents was the subject of a conference on 30 March 2016.

[9] At the conference on 30 March 2016, Griffin Coal agreed to provide the Audited Reports by consent. A Commission order to this effect was issued, with the consent of Griffin Coal, on 31 March 2016 (PR578552).

[10] With respect to an order for the “Forecasts”, Griffin Coal advised that no such document exists, and consequently, submitted that no such order could be made by the Commission.

[11] In the circumstances, the Commission accorded the AMWU the opportunity to make submissions and Griffin Coal to respond to those submissions.

[12] The AMWU made written submissions on 31 March 2016. Griffin Coal responded on 1 April 2016.

[13] In its submission, the AMWU varied its application and now sought:

““The Consolidated Group Forecast” referred to on page 2 of the letter from King & Wood Mallesons to Turner Freeman Lawyers dated 24 March 2016 (“the consolidated group forecasts”).” (my emphasis)

[14] This is my decision and reasons on the AMWU’s amended application for an order for the document set out in paragraph [13] immediately above.

RELEVANT LEGISLATIVE FRAMEWORK

[15] The FW Act provides for the termination of an enterprise agreement after its nominal expiry date as follows:

“225 Application for termination of an enterprise agreement after its nominal expiry date

If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.”

“226 When the FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; and

(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:

(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.”

“227 When termination comes into operation

If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”

[16] The nominal expiry date of the Maintenance Agreement is 26 April 2015.

CONSIDERATION

[17] In light of the submissions of both parties, I am of the view there are three (3) issues to consider.

Does the document sought by the AMWU in the amended application exist?

[18] The AMWU is seeking the “Consolidated Group Forecast”, as referred to by Griffin Coal’s solicitor on 24 March 2016.

[19] The immediate context to the document referred to on 24 March 2016 and being sought by the AMWU, was a request by Ernst & Young (on behalf of AMWU members) that having received historical information regarding Griffin Coal’s financial situation, it was now seeking “information in the form of modified profit forecasts [Griffin Coal]”. This request was made in communication to Griffin Coal’s solicitor on 15 March 2016.

[20] Griffin Coal’s solicitor responded on 24 March 2016:

“…as previously advised, there is no document that answers the request, as only a consolidated group forecast exists. Accordingly, any document provided would need to be created or pulled out of the consolidated version.” (my emphasis)

[21] There is a presumption that Griffin Coal’s solicitor, having referred to a “consolidated group forecast”, that such a document exists. Consequently, the short answer to the question of whether such a document exists is – yes.

[22] However, the short answer as to whether the document exists, may not advance the AMWU’s application, when consideration is given to the text of its submission of 31 March 2016.

[23] At paragraphs [5] and [6] of the AMWU submission, it is stated:

“[5] …It was also agreed that the only forecast material available is that described in the letter of Griffin Coal’s solicitors dated 24 March 2016.

[6] Consequently, the AMWU only seeks that Griffin Coal be required to produce the consolidated group profit and financial forecasts related to the Griffin Coal Mining Company Pty Ltd and Carpenter Mining Management Pty Ltd for the next 3 years”. (my emphasis)

[24] At this point, it is useful to examine the text of the submissions in response and the affidavit of Mr J Riordan, Chief Financial Officer and Company Secretary of Griffin Coal.

[25] Mr Riordan’s affidavit states that:

• he is familiar with and responsible for Griffin Coal’s financial records; and



• that the reference to “consolidated group forecast” in Mr Willox’s letter of 24 March 2016, is a reference to what is described as the Australian group of companies which includes Lanco Resources Australia Pty Ltd, Griffin Coal and Carpenter Mine Management.

[26] Specifically, Mr Riordan states in his affidavit that Griffin Coal does not have any document setting out the “profit and financial forecasts” relating to Griffin Coal and Carpenter Mine Management.

[27] Griffin Coal’s solicitor provides an indication that the Australian group of companies consolidated forecasts are not what the AMWU is seeking, when he states in his correspondence of 24 March 2016, that:

“…Accordingly, any document provided would need to be createdor pulled out of the consolidated version.”

[28] I am satisfied that there is a disconnect between what the AMWU is seeking in its submission, and the actual document being sought by way of order of the Commission. I am also satisfied that prior to its application for an order, the AMWU was seeking, and still is seeking, financial forecasts for Griffin Coal and Carpenter Mine Management, for the next four (4) to five (5) years.

[29] From the material submitted, I find that the document sought by the AMWU exists, but it is not what is being sought by the Union, in either its submission or in previous correspondence.

[30] Finally, I express my concern with any document “created or pulled out” of the Australian group of companies consolidated forecasts. The objectivity of such an exercise is, in the circumstances of an application to terminate the Maintenance Agreement, easily questionable and difficult to resist. Such an undertaking may not be viewed as impartial.

[31] I now turn to the second issue and that is the relevance and utility of the Australian group of companies consolidated forecasts to the application to terminate the Maintenance Agreement.

Relevance and utility of the Australian group of companies consolidated group forecasts

[32] The AMWU contend that “the forecasts are relevant to an issue raised in the proceedings as they go to the financial position of the mine”. 1 (my emphasis)

[33] Further, the AMWU submit that Mr Roy [witness statement], “deals with the financial situation of the Griffin mine” 2. Finally, the AMWU refers to Griffin Coal’s Statement of Facts and Inferences, which set out references to Griffin Coal’s “projected financial objectives” and “becoming a financially sustainable business”.3 (my emphasis)

[34] Griffin Coal opposes an order for the production of the Australia-wide consolidated group forecasts on the grounds, amongst others, of “irrelevance and lack of utility”.

[35] I consider the relevance and utility of the consolidated group forecasts, can be considered by comparing the approach adopted by the AMWU with respect to other financial reports.

[36] With regard to the historical analysis of financial reports from 2012-2016, these reports were initially provided in a consolidated form (Griffin Coal and Carpenter Mine Management), but subsequently requested by the AMWU, and provided, in a non-consolidated form. This disaggregated request was made to enable Ernst & Young to analyse and provide advice to the AMWU members, on Griffin Coal (their employer) discretely. 4

[37] With regards to Ernst & Young’s review of “Griffin forecast position”, it was unable to “undertake any review of the forecast position of Griffin”. 5 (my emphasis)

[38] In such circumstances, I consider it reasonable to infer that Ernst & Young, to carry out its future analysis of Griffin Coal, was seeking specifically forecasts in a disaggregated form and not in a consolidated form of the Employer’s Australia-wide businesses which included, at least, two other business entities, besides Griffin Coal.

[39] Secondly, in any event, I now turn to the utility of the Australian group of companies consolidated forecasts.

[40] Forecasts are generated for internal management purposes.

[41] Forecasts are prepared at a point-in-time, and reflect management judgement. This judgement is based on assumptions made at the time of the preparation of the forecasts. Forecasts are, in short, business expectations.

[42] Forecasts, as the Australian Concise Oxford Dictionary states are a “conjectural estimate of something future” and “prediction”. The fact that outcomes, whether positive or negative, are different to what was predicted is unremarkable. Internal consensus by management is no guarantee of a forecasted outcome – nor is external endorsement or a contrary view.

[43] Information and assumptions contained in forecasts could be incomplete, optimistic, pessimistic, insufficient, vague, imprecise, embryonic and so forth. This is not to say that the Australian group of companies consolidated forecasts suffer from all or any of these factors, except to say that they are a point-in-time exercise, in which circumstances can and do change. Further, and importantly, the veracity of the information which goes into forecasts, is always exposed to doubt and challenge.

[44] In the circumstances of this application, the document being sought is for the Australia-wide entities, of which Griffin Coal, is only one component. Even if Griffin Coal had financial forecasts relating to that entity alone, I would be required to give appropriate “weight” to such forecasts in light of the factors described above in paragraphs [40] to [43].

[45] While it is difficult, in the absence of the consolidated group forecasts, to give weight to the relevance and utility of such a document(s), it can be reasonably inferred that it may lead to a contest of speculation, opinion, re-evaluation, blind-alleys, changes of mind, rejection of assertions and the inevitable statements of unforeseen or unexpected occurrences, such as a “pot of gold”.

[46] In summary, it is difficult to determine the relevance of how Australia-wide consolidated group forecasts will assist in the financial future of Griffin Coal or the mine. Further, forecasts are part of a deliberative process which may be constructed on objective information, but are ultimately an opinion about the future.

[47] Before concluding, I consider it necessary to briefly address one further issue.

Discretion

[48] The AMWU, in its submission, refer to the principles which apply in an application for an order to produce documents: ANF v Victorian Hospitals’ Industrial Association[2011] FWA 8756 (Victorian Hospitals) and the cases cited therein.

[49] While I agree with the AMWU that the document sought is identified with particularity and consequently not so wide as to be oppressive, I do not agree that the Australia-wide consolidated group forecasts, of themselves, will go to the future “financial position of the mine”. I say this particularly, in view of the aggregated nature of the document sought, and forecasts having the characteristic of being predictive in nature and underpinned by various assumptions.

[50] The power to order a party to provide documents as part of Commission proceedings is wide. Exercising that discretion is, in my view, an evaluative analysis and consideration of whether the document being sought will assist in determining the substantive issue. Further, if such a document is to be produced, in what form? Having considered the principles enunciated by the courts set out in Victorian Hospitals, I consider they can be reduced to what is appropriate and reasonable in all the circumstances of the substantive issue in dispute.

CONCLUSION

[51] For the reasons outlined above, having considered the context in which the application has been made, the apparent misalignment between what the AMWU is seeking and the document sought, and the consolidated form and inherent nature of forecasts, I decline to exercise my discretion and order the production of:

“The Consolidated Group Forecast referred to on page 2 of the letter from King & Wood Mallesons to Turner Freeman Lawyers dated 24 March 2016.”

COMMISSIONER

<Price code C, PR578653>

 1   Paragraph 10 of AMWU submission

 2   Paragraph 12 of AMWU submission

 3   Paragraph 14 of AMWU submission

 4   AMWU bundle of documents (18)

 5   Email from Ernst & Young to AMWU, 16 March 2016

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